Apple Tech Head Steps Down: Bloomberg West (07/29)

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July 29 (Bloomberg) -- On today's "Bloomberg West" the focus is on innovation, technology, media and the future of business. Hosted by Emily Chang with Editor-at-Large Cory Johnson and Senior Correspondent Jon Erlichman f29om Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

Option, where you may get stocked out if you are trading out right.

Thank you.

We will be back in 30 minutes for a check on the markets.

Right now, "bloomberg west." ? live from pier 3 in san francisco, welcome to the early edition of "bloomberg west." our focus is on innovation, technology, and the future of business.

Big data is changing the game and advertising as two multi million-dollar deals are forming the biggest agency in the world.

Was it mean to the likes of google and facebook?

One of the highest-paid executives in america and a key to apple's hardware operation is stepping oil for management to work on special projects.

What could be next for bob mansfield?

It is all in the design -- from the sleek devices if we cut it to the high-tech chips that power them, we ask the intel how his company is capitalizing on the global -- gold -- global more market.

Two traditional ad is are joining forces.

Omnicom and paris-based publisher groupe are emerging.

The deal is approved, it will create the largest advertising company.

Together, the two companies did about $23 billion in revenue and that is a huge number but it is still less than the roughly $40 billion that google posted in revenues on the strength of its ad business.

Here is what some of the ceo of omnicom says.

Don draper and the creative guys are not going away.

They are important part of the portfolios that we have.

Baghdad is also important.

Google sometimes is competitive with us and sometimes not competitive.

Most times, it is collaborative.

We want to make certain that we can give our people the tools.

The don draper of the future knows who to write a spot for.

The two of them will run the company as co-ceo's. here is more on the merger.

This is a big deal.

Advertising usually as big companies gobbling up a little companies.

Omnicom holds many little companies and their portfolio.

There are many fiefonm's there.

Who are the winners and who are the losers?

The stock is complicated because there are more shares outstanding for omnicom, but we have two giant advertising companies.

The combined revenue is $23 billion but the growth has slowed in terms of growth rates.

We have seen them struggled in recent years.

Publicis has had more growth in recent months but growth is falling off because of the competitive environment.

How does this stack up against competitive threats and the industry?

When they talk about how they work with and against google, you have to look at the change in the places or advertising happens and the way that media is consent.

It is what of the fundamental tenets of our show.

The chains that google and facebook have brought on the advertising business is profound.

We are talking about companies that are taking advertising dollars away from traditional media.

When you look at traditional media and you compare it to what is happening with google and facebook, you look at companies like cbs and time warner and facebook, google, the old world of advertising of cbs and time warner is no where near as big as this no advertising.

Google is doing well in batter and display ads but adds to not use advertising agencies as much.

The role of a bigger ad company to find better ways to use this will be important.

What is the role of big data?

Running a big ad agency is like running a fiefdom.

They did not create big data so you can use the power of big analysis to figure out what emerging trends are emerging in a given moment and make real time live at auction and put the ads that the company or working for want to identify the latest trends and put those trends and reach their brand message.

That is what a modern ad agency could do.

These guys will be in a better position to do that.

Thank you.

For more on this merger and what it means for the future of the ad industry, i want to bring in a former digital lead at wpp and chief innovation officer at blue rubicon joins us now from london.

You say this merger would be a blow for competition and creativity?

There is only really two winners here.

It is an ego-based deal.

We have an aging, outgoing ceo at publicis and an aging ceo at omnicom who have come collecting strategies.

Omnicom has not invested in emergency strategies but publicis has.

I don't see what the logic of this is.

I cannot see a win for clients are talent or competition.

There is currently only three holding companies of this size in the industry and there is now about to be two.

That cannot be good for competition or giving clients the best deal.

What does it mean for clients?

What will change in practice ? these classes are going to major transformations as to where they put their dollars.

But think that keeps getting pushed is efficiency and buying power.

I'm not sure -- prices can be pushed down much further.

I don't think it's a scale of the merged business that will allow clients to capitalize on lower media prices.

I think clients will only have one choice.

To have a network agency group looking after business increasing advertising for you, you only have two choices.

If you look will add a duopoly in any of the market, that ends up increasing prices.

That is all that can happen here.

I hope the rise of independents network agencies happened.

Perhaps it will give other companies a fair ground to play in.

What does it mean for the guys on the receiving end like facebook or google?

Will things change for those companies in the short term?

I really don't think so.

Facebook is one example.

Facebook market happened.

Cap a still bigger than all three of these holding companies put together.

Facebook is very much in control.

If it can leverage its situation the same way as as leveraged before these rumors started, the focus and the spotlight will be as facebook got into the skill they have gotten to without these networks.

If you look at revenue per heqad, google likes the floor with any advertising business, earning millions of dollars per employee.

What happens down the line?

Something has to change in terms of how these firms are operating.

Does big data play a bigger role?

It judge, but these companies are not ready for it.

Data exists in media and trading and and platforms but it is not affecting any creativity in ads or anything else.

Data is not affecting any of that and it should be.

That is the advantage of twitter and facebook.

Thank you so much for joining us today.

The apple $85 million man is stepping down as technology cheap but staying on to help with special projects and will take a look at the executive transition next and you can watch us streaming on your phone, your tablet, and bloomberg.com.

? this is "bloomberg west." the china lever watch says it down to dozens of labor violations at an apple supplier.

It found under age workers, excessive overtime, and poor living conditions at 3 pegatron factories assembling apple products.

Both companies say they will investigate.

Apple pointed out it is the only technology company that has joined the fair labor association.

The companies technology chief, bob mansfield, is stepping down to work on special projects.

He presided over some of the toughest jobs in the past decade that apple including the transition of its mac personal- computer is and it ships to the development of the ipad . he retired in 2012 and returned when he was offered $85.5 million that made him the second best paid executive at any s&p 500 company.

Here to talk more about this is brad stone.

Obviously, apple is an incredible moment and we are waiting for him to release been changing products.

Why would he leave a time like this?

He has been there a long time and is clearly tired.

He has been at apple since 1999 and built up a ton of equity in the company.

If he tried to retire and that brought him back.

We are hearing he did not want the extra obligation of sitting on the executive committee.

We are starting to see him on one day level.

Could there be internal politics here?

I think that was the case last year.

When he left, folks in his heart or organization did not want to work for his replacement.

He has had a year to transcend suit -- transition into that role.

My sense is that he has been ready to detach.

These guys a been through a lot, not just steve jobs passing by friend of bob's passed away about a month ago.

The guy was 49 years old.

These guys have been through a lot.

We are hearing that bob did not want the extra responsibility.

How could a product guy is bob?

He has been is -- there hardware guide for so long.

Why is he worth $85 million which is more than tim cook?

They say he is the anchor he has that keep tabs on logical expertise and the credibility within the organization.

He is not just the hardware guide of the software guys say that and all of their partners.

What impact will this have on the product?

Everybody is waiting for the iwatch.

Or the tv sets.

Our sense is that bob mansfield will work on future technology.

Devitt -- inevitably, you have to find fresh blood and the people still hungry to prove themselves.

Perhaps is a good thing.

Time will tell.

Thanks so much.

>tel i had, we catch up with the intel ceo.

You can watch us streaming on your phone, your tablet, and bloomberg.com.

? welcome back.

Icon, the organization that controls domains.

They're doing part of a process in which many new suffixes many.com be added to the internet.

Joining us now to explain how this process can about and why some of amazon requests were denied is the senior director of icon.

First of all, .amazon was rejected after protests from latin american countries because of the amazon.

What do you make of this rejection?

Is this a big blow for amazon?

It is interesting and it came as a surprise because the u.s. government, prior to the meeting where this occurred, announced they were going to stay neutral and that clear the path for this other governments to raise their objections.

It is not final as i understand it.

How do you expect it to play out?

Correct, ultimately the ican board of directors will make a decision on these requests.

The recommendations of governments are typically going to be followed.

I think it would be a long shot of the board of directors went against his recommendation and it would probably create a new controversy.

The odds are is that they will go along with this and i will block that application.

There are many other domain names up for grabs.

Big companies are vying for some, and names.

What are the issues that icann weighs when it decides whether they will approve a name and to to give it to?

There are a number of factors.

Each applicant has to demonstrate that they have the technical and financial acumen to operate a domain name registry.

Once that evaluation is clear, other checks come into play like everyone claims to represent a bandar a community, or representing a geographic name, that they have the sponsorship of those organizations behind them.

Once all of those things are through, the process moves on to the board of directors or they can prove that for contract and that moves into a testing and launch phase.

What do you see happening to a domain name like .book that amazon.com likes but publishers have complained about.

? are still discussions going on between the icann board of directors and the governments that have raised this.

They're calling this a category two registry.

We are expecting some additional announcement on that at this last meeting in south africa.

This seems like everything got hung up on the . amazon issue.

It is much as amazon that is applying for these strings.

Other companies are applying and they have different ideas of how the strength like .bvook book be operated.

13 different companies have applied for .app.

Many companies out there could use that domain.

When you have so much competition, what happens?

Does nobody get it in the end?

Eventually, someone will get it but it is a question of who and when.

They all have different ideas on how these domain name registries of the opera and you can register these extensions and what markets they will serve.

Godaddy is excited because we want to carry them all and give our customers the widest variety.

That was my next question.

How do you want this to play out?

We want to see as many of these top-level domains entering the market as soon as possible so that we can start to offer them for our customers.

We work closely with icann and the registries to make sure we are marketing them to folks who may need these top-level domains but maybe aren't aware they are coming out or aware of this program.

That is what we are looking forward to in the next few months.

Are there any no-brainers in terms of domain names and what are they?

In terms of these top level -- right.

There are a few that are not contested.

There is an arabic strength that is launching cent.

If there is no con tending applications, there is no objections and no concerns from governments, these things can proceed into the contract and and launch phase.

It an interesting process and thank you for being with us.

It is time for "on the markets." alix steel is in new york,. stocks are holding steadily in the red but the s&p 500 is off its lows of the session.

Asian markets disappointed as well as disappointing home sales and weaker manufacturing activity is the triple whammy.

Facebook hit its highest level since 2012 and tesla hit its intraday high.

We will be back in a few minutes.

? ? this is the early edition of "bloomberg west.

Let's check on stories making headlines.

Pope francis reaches out to gay people as he had some from his first trip overseas.

The pope says he will not judge gay priests to serve the church in good faith.

Earlier, the pope urged young people to be agents of change as he celebrated mass before 3 million people in rio de janeiro.

The faa has ordered all foreign airlines to use gps for landing at san francisco international airport.

It says it has found more situations where planes aboard landings before trying to land began.

Glide slpoes would sell planes land will be out of commission until next month.

The french prosecutors as the value of money stolen from a diamond show is estimated at $136 million, double the initial estimate.

French police say a lump thief waving a hand gun bursts into the show at a luxury hotelthe faa has ordered and stuffed a suitcase full of jewels.

Police are reviewing surveillance cameras as they hunt for a suspect.

It is not just intel credit that say it has been slow to respond to ultra mogul trends.

Brian krzanich has launched an internal reorganization creating focusing on growing intel market share and market technology.

I went down to intel headquarters in santa clara.

We talked with stacey smith, the its chief financial officer and he was forthcoming about the falling prospects of the desktop pc and the intel struggles.

Why is this quarter you just reported importance?

I think it is not so much the quarter that is important.

It is the year and we are refreshing our product line this year across the board.

We have hazwell coming in at the high end of the market with computers with great products in great battery life and other computers are coming in and the second half of the year.

We refresh our product line as well.

For us, this year is a product story.

I think this quarter was good as we got some products on the market.

It is stunning but fall off in pc sales.

Is pc growth ever going to come back to what it used to be?

This is an industry that is marked by transitions.

If you think about the pc as being the class a computer that you used to test three years ago, that device will decline but i think it is replaced by things like 2-in-1 and ultranbooks and i think it is an ever-evolving market.

It does not look doespc's go away but the growth rate is falling off a cliff.

If you go back 10 years, those would have been desktop pcs.

Five years, they were big notebook pcs.

Today, they are these really sleek devices.

I think you see a transition of the classic pc market transitioning into these kind of things.

When you think about the next couple of years, the vice you what will be the best of both.

-- the device you what will be the best of both.

You guys have been at mobility for a long time.

What gives you the confidence -- you have been making mobile acquisitions more than one decade -- this time you may have it figured out.

What is different this time?

For us, it has been a question of how we leverage our manufacturing leadership in terms of how we target our designs.

With got this great manufacturing leadership that has been extending over the rest of the industry.

It allows us to invest that leadership in one of three ways -- either more performance, lower power, or lower cost.

What you have seen us do over the last couple of years is we are investing that manufacturing capability and driving into lower-powered devices.

How we target our designs and focus on that market with the full might of the company is the difference and the full power of our manufacturing engine.

But think that should give you the confidence and what gives me the confidence is the kind of designs we have.

We are winning phone designs and iconic tablet design.

You can see the pc market transitioning from desktops to notebook and out these two in one sleek devices.

That is happening because of our product line.

The sales numbers of the tablet was heavily discounted last weekend.

Is that because it is early?

In terms of share, you would measure our share in funds as close to zero today and our share in tablets' being a low number but intel does not enter into markets that have small amounts a share.

If we enter into becoming a big player.

Why you have heard from the management team and brian is that we will use the full might of the company to focus on the ultra-mobile market and tablets and we are really just starting.

The product line is more broad than it has been.

You make chips for everything.

Some say you should focus on a few designs.

What are the advances of the -- advantages of going abroad?

The most interesting thing is the market for devices that are connecting to the internet is exploding.

We're taking our manufacturing capability and focusing get across the broad spectrum of devices.

The common stages are that they all require leadership in silicon but they use it in different ways.

They may drive it to drive powered down our costs down court may use it to drive performance of.

Up.

balance the equation different for different segments of the market and intel is the only company that can target that broad range of devices that connect to the internet and bring a good solution to every segment of the market.

You can catch part two of that exclusive interview on our late edition of "bloomberg west." boeing is calling on robust to keep up demand for its 777 aircraft and we will show you how it works and you can watch us streaming on your phone, your tablet, and bloomberg.com.

? this is the early edition of "bloomberg west." the bolling 777 is one of the most popular plans and the world.

The company is increasing its production rate to a record 100 planes per year.

How is boeing handling the increase?

We look at the robots behind the plane.

It is a fundamental shift the way we are producing our airplanes.

You have to start bringing in modern technology.

Bowling is taking the elbow grease out of the finishing an airplane and is turning to robots.

They have invented an automated one that does everything from a timing to cleaning.

Step to the other end of the boat.

-- booth.

What is the secret sauce of these robots?

They do the finish as much faster and more consistent than most of the painters.

It is difficult to achieve when you are spraying for "4.5 hours.

The robots can work in the dark.

And they don't need bathroom breaks.

The robotic system has consolidated their painting facility from a three-one and they place as high-grade upgrades.

They are always working as much as possible.

There is another booth on the other side and the same rabat works on both.

Goes on the track to the other side.

The real gain is with the airline's. you save 80 pounds over 20 years.

What is that?

The boeing questar automation includes several robotic machines.

This is only be implemented with the bait 777? it will dramatically improve the cost of producing airplanes.

There will be certain applications we can use.

How much are you saving right now?

We are seeing 10, 20, 30% savings.

Am i going to fly in the airplane made completely by robotics?

Probably within the next decade.

Boeing has been in the news lately with problems with its new high-tech plant, 787 dream liner.

One at heathrow airport was track to a faulty beacon.

Amazon is boosting staff at its alltel month centers and the united states as obama gets ready to visit one of the warehouses to marron that story just after the break on "bloomberg west." ? michael dell and civil -- sober like a breeze their limit.

They will not raise their buyout offer after having bonds their price by one dime.

Michael dell commented on why he wants policy and shareholder counts to be changed.

He wrote -- in today's new hollywood, it is deadline day in the battle between cbs and time warner cable.

They don't retain a broadcast agreement by 5:30, cbs shows could go at the air in markets like new york and l.a. les moonves called the negotiations difficult.

Tell us more about what he had to say.

This was an event put on by the television critics association so that cbs could talk about it shows that the first question everybody had was what is going on in the fee fight with time warner.

He said he does not want cbs to go off the air in some markets but he also wants cbs to get paid properly for content.

This is a back-and-forth that has developed over the last decade.

The cable players have been paying cable channels more for their content.

The networks have looked at that trend and said we get more viewers in many cases.

Cbs is right at the top.

They say we want to get paid more and time warner cable and other pay-tv providers in the past have said how much.

Time warner cable has gone public with this.

Don't be surprised that even though there is a deadline today if they have to push the deadline back because they cannot get on the same page.

Les moonves also talked about the rise of netflix and amazon and original programming and how that is changing the way cbs 6 shows.

A great example is the great"under the dome"from a stephen king book.

That is a show that does well in the ratings but then airs on amazon streaming service four days later.

Les moonves said it was working out great for them but cbs has like shows that stand-alone one episode odds on like"csi" which works well when you sell it to the cable channels.

With binge viewing, that may change their approach.

Those shows with those great cliffhangers.

Jon erlichman, thank you.

Amazon is going on a hiring spree.

It plans to add more than 5000 full-time jobs to its warehouses.

This comes ahead of obama's visit to an amazon where house in chattanooga, tenn.

Tomorrow.

Cory johnson has been inside these fulfillment centers.

You have seen the robots and the people at work.

What do you make of all of this?

It warms your heart.

And hiring, it has been unbelievable.

They have been on a frantic hiring spree.

The stock is the stock and does not tell you what is going on.

The numbers have gone from 15,000 or so employees five or six years ago to big numbers.

They only give us a number once per year.

From 17,000-88,000 employees that is just a really big ramp up that is picking up more we talked about amazon earnings in last week and now the margins are getting slimmer and they are adding 5000 more people?

Can they afford to do this?

The hiring ramp those with extra spending they have been doing.

You look at the free cash flow and that is one place you can see the investment and hard goods.

The billions of dollars -- so far this year, they have spent $4.3 billion in capital expenditures and compare that to two years ago where they spent 1.8 billion the entire year.

This is having a big impact on the bottom line.

Their operating profit margin is our razor-thin.

They are squeezing every penny they can out of this business.

Now 5000 more employees, thank you.

Coming up, more of "bloomberg west." ? welcome back.

Coming up on the late edition of "bloomberg west, "do not miss the second part of our exclusive interview with the intel chief financial officer, stacey smith.

He will tell us how intel is making money off innovation.

It is time for "on the markets." this is how markets are trading.

They are in the red but the s&p 500 is off its lows of the session.

Pending on sales and weaker manufacturing activity is moving markets lower.

Interpublxc one of the biggest movers.

The company made 7 million last year.

Facebook is hitting its highest level since may of 2012. that is on the hopes that the company can be cut sales for mobile advertising.

It has never closed above its $38 ipo price.

We have to look at test of what the stocks hitting its highest intraday level ever.

You don't call it murder monday for nothing.

These are the deals happening.

-- merger monday.

Can we categorize m&a as juicy?

Yes, today.

Deal activity has been flat to down for most of the year.

One would think we had a perfect storm for deal activity to take off at the beginning of the year.

We had rising equity values, low cost of capital which cheap money and yet we have not seen that many deals in terms of overall volume.

That is because buyers are being very disappointed on price.

If you look at deals, over $1 billion, you're looking at a handful of getting a premium over 50% while last year, we looked at seen or 16 deals getting a premium above that.

If this is more indication that buyers are starting to step back and be more choosy, is that cash, this choice?

This text has been automatically generated. It may not be 100% accurate.

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