Live from pier three in san francisco, welcome to the early edition of "bloomberg west" where we cover the companies that are reshaping our world.
I'm emily chang.
Let's get straight to the rundown.
The holidays may not be so holly jolly for apple.
It lowered its sales forecast as samsung takes a bite out of the tablet market share.
How bad will it be?
China is one country apple has yet to get a foothold in.
Highlighting the challenges of tech companies in this growing market in a rare and exclusive interview, i asked baidu ceo robin li why the market is hard to crack.
A recent report says facebook is actually failing marketers.
The author of that report joins us.
First to the lead.
It may not be a merry holiday season for apple despite the release of the new ipad and the new iphone.
The company is forecasting a slow holiday sales growth.
Revenue for the quarter will rise anywhere from one percent- 6.4% and its margins will be lower as the company takes higher cost to introduce the new devices.
All of this as competitors introduced their own stream of new and cheaper products.
Joining us is jon erlichman in l.a. how much of this is samsung competition and how much is sound duration -- saturation?
And the fact apple is so big.
It is a combination of things.
You will get a different story if you're talking about the headlines overall and the wall street action versus the comments coming out of apple headquarters.
Tim cook on the conference call last night described it as an ipad christmas.
Apple thinks it is well- positioned for the holidays these and thanks to be rollout of wtwo new ipads and multiple mac devices.
There is a lot of pricing pressure in the marketplace right now.
Apple has had to be conscious of that.
Or is a lot of competition.
Samsung, amazon, but if it is a question of is growth slowing?
The answer is yes.
Is apple in a position where it could generate $58 billion in sales?
The answers also yes.
I think this is a story that depends on perspective.
What about innovation?
Tim cook has talked about new product categories.
What are we going to see going forward?
It was interesting on the company call when an analyst asked, i thought you're going to introduce a new product category by the tail end of this year into next year.
Tim cook corrected the analyst saying we talked about new products, not to new categories.
All he would say on the topic of new categories is apple feels confident in its ability to enter new categories.
We obviously know that.
A lot of people are confident in their ability to move into new areas, television, or watches.
We are waiting to hear what apple really wants to do in any area.
What about china?
Apple is working hard to open more stores in smaller cities.
What are their plans for china and how do they plan to reverse?
Definitely by opening some more stores.
Some highlights from china in the year that generated $27 billion in sales, the growth in the quarter out of china was roughly six percent.
Tim cook would have liked to have seen it be stronger.
A few factors play into that.
They have done a better job in building relationships in carriers and the government.
The way to solve that issue is through distribution and a key part of that is more stores.
Jon erlichman, thank you.
And in an interview, i spoke to baidu's robin li about his relationship with tim cook.
That conversation later on this hour.
It is day two of twitter's investor roadshow and the twitter team is in new york city today trying to drum up demand for the stock after a stop in philadelphia yesterday.
Cristina alesci joins us with more.
Will today's events be different from the philly presentation?
We heard it was low-key.
It was a low-key kickoff to the roadshow.
At the end of the day, there are two kinds of meetings when it comes to retail roadshows, it is going to gun down to the one-on- one meeting with invest reason that meeting we reported on, which was a group meeting in a small room at the philadelphia ritz-carlton, 25 was the maximum capacity.
But that is not the important meeting.
The important meetings are with the big institutional investors like t. rowe price.
They will give an indication to management and bankers about what the size of their order really is and that is when the look starts to come together.
In terms of new york, we're going to see more one-on-one happenings, possibly a lunch tomorrow.
When facebook had its meeting, there was a line around the corner.
Are we going to see that with twitter?
It is not likely.
As much as much as we like to compare them, and twitter is a course of a different color.
There was so much celebrity around facebook, mark zuckerberg was a celebrity.
When i was staking out the facebook ipo, there was, as you mentioned, people waiting on line to get in with no interest in buying the stock, only to hear with mark zuckerberg had to say.
We do not have that star quality with twitter.
The bankers and the companies probably want to dampen expectations at this point because they want to manage volatility.
They do not want this to be a runaway offering on day one.
Even still, analysts have these price targets of 22, 25, 20 nine dollars a share.
We had earlier today, even though they want to keep the high down, or it is going to be -- hype down, it is going to be hard because if the demand surpasses supply, we will have a problem.
What is the number one question inventors one answered?
This is still a late stage venture company.
To look at measures of profitability is tricky, even if you look at the adjusted numbers . they are a good indicated but most investors are not going to buy that number.
Right now they are looking to hear whether or not this management team is the right wine to bring twitter to the next level.
You know this, this was a company that was heavily supported by its venture capital management team.
They turn to those backers that every twist and turn when they had challenges.
What happens going forward?
What is the commitment from those investors to stay in this for the long term?
Of course they are not going to sell out of it tomorrow but what is the commitment from the smart money?
That is what the institutional investors want to know.
To a certain degree, all of the investors are going to have in their mind the top, that cap is.
At what point do they sell?
If it is too hot to fast to have a price in which they're going to sell because they do not want the risk on their books.
Even though they may be telling management they are in this for the long term.
If he gets out of hand, they're going to sell.
Shareholders have not plan to sell, but they could sign up to sell.
They are planning to old line, which is different from what we saw with facebook.
That could give investors confidence.
Cristina alesci, i know you will be following every step of the roadshow.
Thank you for that update.
80% of companies market on facebook, but the company does little to support social experiences between branson customers.
More on why they say facebook is failing marketers, next.
You can also watch us on your tablet, phone, and at bloomberg.com.
? this is "bloomberg west," i'm emily chang.
Next door has raised to $60 million in new funding.
The round was led by kleiner perkins with john doerr a leading kleiner's investment, it values next-door at more than $500 million.
The number of neighborhoods on the website have seen a fivefold increase in the last year.
Marketers are spending billions to advertise on facebook every quarter.
A new report suggests it may not be worth it.
300 95 marketers were surveyed and released a report titled why face look is failing marketers.
The survey found facebook -- facebook is failing marketers.
The survey found facebook -- only 51% were satisfied, placing it behind google, linkedin, and yahoo!. here is the vice president and principal analyst at the research company.
The bottom line is you are saying basically facebook is not making the connection between her hands and users that it promised to.
How did you come to this conclusion?
More importantly, it is something we see in our survey data.
Marketers want to create genuine connections and engagement with our customers.
They are telling us facebook is not making those connections.
How did you do the research?
How accurate is that?
Give me some numbers.
We surveyed 395 marketers.
97% of them are employed that billion dollar businesses.
These are the type of large businesses facebook reit -- needs to attract if it is going to keep its business growing and they told us while they are using facebook, they have questions about the value facebook provides them.
You say facebook creates less value than linkedin, youtube, google class, and twitter?
It is not us, it is the marketers.
Some of them were channels, like search and e-mail and mobile, others were websites including competitive social sites.
Facebook came last of all 13 channels we surveyed.
Facebook released a statement saying wild we agree the promise of social media is still in process, the conclusions in the report are at times illogical and irresponsible.
The reality is facebook advertising works, that is why we have more than an at -- million active advertisers and countless studies have shown the return on investment from facebook.
How do you respond to that?
We stand by our research.
Facebook has one million marketers right now.
There are bound to be some that are happy.
Many more are dissatisfied and are struggling to find the value.
That is what we see every day.
That is what the data says.
You say facebook is too reliant to 1.0 display ads.
Facebook is getting 40% of its revenue from mobile.
That does not sound like anything but traditional, web 1.0. they may be a new format but at the end of the day, they are targeted using the same targeting criteria websites like yahoo!
And msn have offered for a decade.
Instead of innovating and offering new ways to reach and connect with customers, instead of leveraging all of that social data, they are relying upon very basic forms of targeting and delivering basic advertising, the same as all of the other websites have been doing for a decade.
What is your device to marketers?
Should they invest in facebook?
Should they invest less and more in some of these other options?
We are not telling their marketers to pull their budgets.
We do not expect many are going to leave facebook entirely but we are telling workers at facebook's wants to be another ad seller, like everyone else does, it is time to start treating them that way and instead of dedicating specific budgets that have to run on facebook, put facebook in the mix.
Let your platform do the math and make your buys where they are most effective.
Not on what seems sexy.
Focus on facts when you are buying ads, not on faith or fascination.
Twitters about to go public.
Executives in new york today.
What does this mean for twitter?
Why are you seeing -- how are you seeing twitter is more effective at marketing?
If you look the data, twitter is only a little bit more effect if.
Marketers are less satisfied overall with twitter as a partner.
Twitter is a relatively newer company.
They do not have time or resources to build up the same infrastructure of case that is an research facebook offers today.
Part of it is that all of the social sites are still struggling to prove their value.
Marketers are excited about social media.
They want to make it work but right now they are still looking for that value.
Not only in facebook but twitter and a lot of other social sites.
All right, nate elliott and analyst, thank you very much for bringing us the details of your report today.
Still ahead, what kind of phone does china's third richest man use?
You can also watch us on your tablet, phone, and at bloomberg.com.
? this is the early edition of "bloomberg west," i'm emily chang.
You can also catch us at our later time.
The obama administration official who saw the building of healthcare.gov has apologized for the website hospira problems.
-- website's problems.
She says they are not acceptable.
Well these problems will require a lot of hard work, the conclusion is the healthcare.gov site is fixable.
To get the job done, we have identified a lot of fixes that will be undertaken one by one.
She says she is seeing improvements with the website every week.
On the troubles with healthcare.gov to challenge of the protect and the nations cyber networks, president obama has been meeting with ceos from tax, defense, and other industry to talk about ways to improve cyber security.
So mattingly is with us now.
Who was there today and what is the administration trying to do?
The administration brought in ceos from across the business spectrum.
Cap, defense, banking, i saw brian moynihan.
We also had symantec, renee james of intel, across the board.
They have not been able to move legislation.
What they need as they need the private sector to be willing to engage, to be willing to work with the federal government to identify and counter cyber threats.
The president signed an executive order putting in place a structure to try to counter these threats.
They need the private sector to be willing to help.
Draft guidelines were released last week.
Now they need the private sector to work through those guidelines before they are efficiently put into place in february of next year.
Collects what about legislation on capitol hill?
Is that initial?
It looks like it is.
This is a problem on law enforcement and administration.
2012 was a big push from the obama administration and the ei, intelligence agencies.
Robert mueller told reporters basically cyber is the issue.
His biggest problem, what he's turning over to his predecessor, is the cyber threat.
Congress's inability to coalesce around a piece of legislation was a concern for him.
I do not think they expected to go forward right now.
That is what makes these meetings important.
They want to see if they can give incentives to the private sector to agree to a framework.
Obviously this meeting is coming at a time the administration is facing criticism for its surveillance of foreign leaders.
Where did they stand on that today?
Another day, another time to be on the defensive.
Jay carney started his briefing right now.
He is going to get hit with a number of questions.
Here is the big issue, diane feinstein is a democrat from california and there has been no daylight from her as edition and the administration over the last couple of weeks, since the disclosures began.
That changed last night.
The survey wing of world leaders , feinstein said this was a major problem.
She is going to review it and said the administration has said they will stop surveilling allied world leaders.
They have not made any concrete decisions yet.
They have a review on going.
It should be completed by the end of the year.
Phil mattingly at the white house, thanks.
Time now for on the markets, a look at what is moving.
Julie hyman is in new york.
How is apple looking?
We have seen apple actually not as much changed as you might anticipate, emily.
Shares are down .9%. there was concern about the gross margin forecast from the company.
The shares have been bouncing around in today's session.
In terms of broader markets, we are seeing more upside today.
All three major averages are higher.
People are focusing on the fed.
I also want to talk about the nasdaq.
We had a faulty data feed earlier today preventing the nasdaq from being updated for almost an hour.
Individual stocks were not affected.
Basically you had a halted training and then it did resume.
You are looking at a chart of the nasdaq, that took a little bit of a hit on the technical issue at the index.
More on the markets in 30 minutes.
? this is the early edition of "bloomberg sho -- bloomberg west." i'm emily chang.
Now for your headlines, the leaders of the three pacific coast states and british columbia have signed a new law for carbon dioxide emissions.
They will also encourage the use of alternative fuels and electric cars.
One year ago today, hurricane sandy hit the northeast, dealing a devastating blow to new york and new jersey and damage to other states.
The recovery effort is still a work in progress.
The small business administration has only paid out 24% of the $2 billion in loans it has approved.
The former u.s. congressman jesse jackson junior has reported to a federal prison in north carolina to serve a 30 month sentence.
Jackson pleaded guilty to miss using campaign funds to support his lavish lifestyle.
Often called the google of china, baidu is the world's fifth most visited website.
All this week, we are bringing you my exclusive conversation with the founder and ceo robin li.
Yesterday we covered bill gates and how he turned down takeover offers from google and yahoo!
In the early days.
Today we talk about apple and whether the iphone maker has been innovating enough in china.
What hasn't apple had to do yet and will it happen?
Both of them are strong companies, strong not only meaning their market position is strong, they have a lot of cash, it also means they are strong- minded.
Apple has their way of doing things and china mobile has their way of doing things.
If they match, they have a partnership.
Tim cook has been to china many times.
What do you think of him?
He is good.
He is reasonable, smart.
He understands the chinese market better than many of the other u.s. internet companies.
How does he compare new steve jobs?
I don't know.
I have never met steve jobs the form.
But from the media, i think he is different.
He has a strong opinion on all kinds of things.
He does not care too much about markets.
Tim cook is more of a typical ceo.
China is a big market.
Apple is losing market share in china.
Why do you think that is?
That also has to do with the mentality of one-size-fits-all.
Apple has experience in the u.s. but in china, china's characters are different from english.
Apple does not have a good strategy.
They do not allow good ones to me uploaded in the app store -- to be uploaded in the app store.
The chinese users are not so pleased about the iphone.
There is room for improvement.
They do not like the smaller screen compared to the samsung phone.
They do not like the fact they can't upload or download their own instant messaging.
A lot of things, the needs of chinese specific that may not be available on the ios system.
Is apple not as cool in china as it once was?
Apple is cool.
They have a very loyal following . a lot of people, including my wife, use apple.
For me, i am different.
I'm an internet executive.
I need to know the true market, android has a larger market share.
I need to understand how the average mobile phone user feels.
So i use an android phone.
The galaxy note.
You have the larger size.
I like the large size.
I have grown up with pcs.
I am used to a larger screen.
I do a lot of things online.
A smaller screen makes things uncomfortable for me.
So these days when a carry a phone, i really use it more or less as a pc.
What do you think of this smart phone maker, they have risen super fast.
Now they are neck and neck in terms of market share with china -- with apple in china.
What do you think about them?
That is the opportunity.
I mentioned about the iphone, xiaomi understands how to design software for the end- user.
He did great.
I like the company and i like the product.
Xiaomi has a smart tv.
Baidu has a smart tv.
I don't know.
I think the world is moving into the internet, including home.
So eventually all of the tvs will be internet-enabled.
But exactly in what kind of format, what kind of roddick, i do not know.
People -- what kind of riot act, i do not know.
People are trying, other companies are trying.
It is too early to tell.
Should apple be innovating faster?
Apple is a great company.
They are innovating quickly, but apple is just one company.
You can expect them to do everything for everyone.
When i talked to tim, he said the same thing.
We do not try to be everything for everyone.
We have our rules, we have the principle of things we do and things we do not do.
Us talk about expansion of chinese companies.
Xiaomi, what kind of challenges are they going to face?
I think most of the chinese companies are not really familiar with international markets.
In part because china is a large market and it is also growing very quickly, when you think about where to invest, china is always first for a lot of people.
So it took companies like us, like xiaomi, many other chinese internet companies a long time to realize we need to go out of china.
Eventually, it is really a global competition.
We need to go out and serve users elsewhere.
That was baidu ceo robin li.
Watch us all this week for all of my exclusive interview covering mark zuckerberg, government censorship, the nsa, and more.
Tomorrow i will be talking about the deal and why baidu was late to begin.
And you can watch each interview on the bloomberg tv plus mobile app.
Next, we bring you day two of our series.
Today we hitch a ride with lyft.
? this is "bloomberg west." i'm emily chang.
Ibm is increasing the share of its buyback program.
It will have more than $20 billion to buy back the shares.
Shares are down six percent this year and the company has posted revenue declines in six straight quarters.
All work will -- all week we are looking at how technology is fueling a change in how we live by making it possible to share items in that of owning them.
Today we introduce you to lyft, ridesharing found around the united states.
What distinguishes lyft from other options is the look in the field of the experience.
Let's take a listen.
If you see a giant pink mustache on the streets of san francisco, don't be alarmed.
It is a lyft car that'll give you a lift and maybe even a laugh.
Often times the passenger is smiling, the driver is smiling, it helps to break the ice.
Lyft is a new share -- car sharing service that uses a card to get a ride.
Owning a vehicle is the second-highest household expense.
They had to be a better way to connect people who needed rides and those that could offer rights.
Open an and map, enter your location, and a car shows up.
The average cost is $10. that is cheaper than a black sedan or a taxi and it looks cash in the pockets of regular people.
He started offering lyft after being laid off from his finance job.
He says he can bring in up to $200 a day.
I like the community helps out.
A lot of people, you are there for them.
Lyft says his driver's give 30,000 rides a week in the u.s. and it raised 60 million dollars from andreessen horror awaits.
Now operating in 16 cities across the country.
This is the future of transportation.
It is more community powered.
Stay tuned for more of our sharing economy series.
We will stay to the ceo of the online financial community the lending club.
Electronic arts is ending a 15 year partnership.
What this could mean for the gaming giant.
You can also watch us on your tablet, your phone, and bloomberg.com.
? this is "bloomberg west" on bloomberg television, streaming at bloomberg.com.
I'm emily chang.
Electronic arts is saying goodbye to tiger woods.
The gaming giant says the decision to and their 15 year partnership was neutral.
Shares are down three percent today i had that second-quarter earnings report.
A big was the franchise and how much will it impact ea sales?
I want to bring in a gaming analyst.
How big of a losses this?
For ea, it continues a problem for them, which is their sports franchises, which has been a key things he a has represented has been stagnant and lackluster, outside of a game like fifa.
Losing tiger is not helpful right now because they are looking to transform these games into something more digital and more online.
Not having a brand does not help.
Do you think tiger wanted to pull out?
They say in a press release and things aren't mutually agreed to and whatnot, but i do not see why he would want to walk away from this.
If you are ea you can see tiger is a huge brand but he has not won any majors in the last five years.
Ea perhaps did not see many marketing opportunities after a good 10 year run.
Unless you're going to do something like more simulation games, this could be like motion sensors in consuls moving forward, i do not see why tiger would want to leave.
Ea had problems with its ncaa games and the issue of using players' likenesses.
Taken together, how serious is this with ea, and new ceo, they are trying to weather a transition in the gaming market overall.
They are definitely deemphasizing sports and the company.
They have to go to more agile games, first-person shooters, they have to take on "call of duty" and the social games.
Backing away from the football genre, backing away from tiger, it is not a good trend for them but a has been a tough is this for them that has been stagnant because the packaged goods business has been suffering from franchise fatigue.
Right now, they are deemphasizing its, which is the right call.
But they have to embrace visual faster.
Pj mcnealy, thanks so much for weighing in.
Linkedin reports earnings after the bell today.
Shares are up more than 100% and the company has new mobile apps as more of its visitors access the site on the go.
Jon erlichman joins us from more on what we can expect.
What are we looking for in these numbers after the big reveal?
More reminders of the business works.
You highlighted the stock this year, facebook gets so much attention for its stock surge, linkedin is not just an advertising business.
The majority of its revenue is coming from the job recruiters that pay for the access to potential candidates.
Linkedin has been transforming the traditional approach by being able to more effectively target people through the service and that is a big chunk of their revenue, 56% in the last period.
The other parts are advertising that pops up on linkedin and of course those people who decide a want an enhanced version, a premium subscription a cousin maybe they are more interested in finding a job right now.
So is it -- it is a well-rounded business.
They put out impressive numbers.
The outlook for the fourth quarter will be important.
Wall street is looking for 394 million dollars for the fourth quarter.
Jon, linkedin has been working on boosting subscriber numbers by boosting business content and getting people like richard branson and bill gates to write prose featured only on linkedin.
I will compare them to twitter because twitter is going public.
Twitter benefits a lot of times because, talking about tiger woods, a celebrity will tweet and it brings the conversation back to twitter.
Getting influential people to be talking about stuff on linkedin is a way to drive traffic to the site.
That is the strategy.
Jon erlichman, thank you.
More on "bloomberg west" after this.
? welcome back.
I'm emily chang.
Coming up, at 3:00 pacific, are apple fans inc.
Priced -- impressed with the new ipad?
Find out in this survey monkey shakedown.
The ceo will be joining us at 6:00 p.m. eastern.
It is 56 past the hour which means bloomberg tv is on the market.
Julie hyman has more from new york.
We are seeing a rally today.
The s&p 500 is at a record, as we arrayed the results of the fed meeting tomorrow.
Any commentary that indicates how longer stimulus could go on without any kind of tapering.
I also want to get a check on commodities, we are seeing a lot of action in sugar today.
It is falling from a one-year high on record stockpiles in china, and exports from india.
More than offsetting a loss of supplies from a fire at a brazilian warehouse.
And also coffee is down, actually the longest slump we have seen since 1972. wet weather in brazil, the largest grower, we could see bigger crowds than forecast.
That could be the case in columbia.
Turning to earnings, caesars is announcing its performance today.
The casino operator runs the largest network of casinos in the united states and generated $7.5 billion over the past year.
For more, brian miller joins us from our princeton office.
We can talk about the quarter and we can talk about some of the headlines recently about some regulatory and approval issues in massachusetts.
How much of a problem is this going to be for caesars?
Not right now for this quarter bed looking forward this is going to be a knock on their future revenue.
The massachusetts project was a billion-dollar market.
They did not have it locked in but if they had it in place, it would have been incremental revenue.
Massachusetts is not the biggest part of the company's revenues.
That is las vegas.
About 35% of sales.