Blackberry Seeing Red: Bloomberg West (12/20)

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Dec. 20 (Bloomberg) –- Full episode of “Bloomberg West.” Guests include Madrona Ventures’ Matt McIlwain, Bain Capital’s Ajay Agarwal, NYSE Euronext’s Scott Cutler and Bloomberg’s Sarah Frier, Paul Sweeney and Andy Fixmer. (Source: Bloomberg)

Live from pier three in semper cisco, welcome to the early edition of "bloomberg west." i am emily chang in our focus is on, technology and the future of business.

Blackberry takes a page from apple and begins to outsource manufacturing of its phones to foxconn.

The news comes the same day the company reported another huge financial loss.

Which state would you consider the most innovative in the country?

The answer might surprise you but here is a hint, it is not california.

" duct nine this team" is -- doc --"duck dynasty" , how much could it hurt the network?

R blackberry'sedit -- blackberry's red ink is getting worse.

It posted a $4.4 billion loss in the third quarter.

Revenue fell 56% to one point $6 billion but shares are trading higher after announcing a five-year partnership with foxconn which is best known for making apple gadgets.

Fox, make life very smart phones in a move that could cut production costs for blackberry.

John chan says the deal will allow blackberry to better serve fast-growing markets.

Cory johnson has more from new york.

Does this mean blackberry will be around for another five years?

That is not clear.

The issues at blackberry -- you cannot believe how dramatically bad every quarter is for this company.

They just surprise in amazing ways with big losses or declines in their business.

You look at the last five years, the stock is off well over 90% in that time frame.

We will call it 84% but i thought it was useful to look at what this quarter looked like for each of the last five years.

You can see how much smaller the business is becoming with every passing year.

A quarter that used to do $5.5 only four years ago is now $1.2 billion.

It is a very small business and shows you have quickly things can change.

We know that businesses are allowing employees to bring their own devices to work.

They are not bringing blackberries.

Who still buys blackberry?

Their focus was supposed to be all enterprise but now it looks like they are considering some consumers.

The number of sales of the smartphones, one of the numbers is incredible to look at.

A year-and-a-half ago when things looked really bad, they were selling 7.4 million in the quarter and now they are doing 4.3 million.

Sales have continued to drop off a cliff faster than anyone expected.

What about talk of blackberry selling itself or spinning off part of the business?

They have formally removed this from the sales process.

One of the assets that could be important for the sale if it ever were to happen -- john chen said it was not for sale -- what is the lasting value of their patents?

They had a big asset impairment in write-offs and what it was was not clear.

Let me read you what was said in the conference call.

They said the bulk of the impairment -- if that seems murky, i think it is unclear.

It was not clear what was left of the patent portfolio.

We will have a better i did after their filing.

What is concerning is that as companies book value is declined dramatically in sales are declining dramatically.

Maybe they have a better chance of not making every phone itself but even there, it would not fully commit to making phones.

There are questions about blackberry still.

John chen just took over and we will see if he has what it takes to do what needs to be done.

Foursquare just raised $35 million placing the company and a more than $600 million valuation.

Foursquare has been on the hunt for money and close a $41 million round of that from silver lake earlier this year.

American express and microsoft were considering an equity stake in the company.

How does foursquare plan to use this funding?

We have more.

Did i say foursquare raised $35 million?

How did this happen?

This time last year, we said foursquare was on his deathbed and it stalled in interest from users and investors do not want to touch it because they had not figured out how to monetize.

This year, they have new revenue products and figured out how to make them work.

They are starting to be worth more than they were in 2011. as far as i understand, the foursquare growth has stalled.

I know dennis crowley has a vision and there are plenty of problems with local advertising that have yet to be solved but he is trying to solve them.

Is he really solving them?

At the end of the day, it is a consumer app and they need people to use it to bring data to the service.

Foursquare told me in april they had 6 million chickens per day and today, they have 6 million per day.

48 million in their user base but engagement is not at its height.

What about the products not working.

Dennis crowley has always envisioned a world where you can walk down the street and your phone will tell you that something interesting is happening nearby.

The coffee you have been wanting before your meeting is on sale around the corner at your favorite coffee shop.

It might be one you have not discovered yet.

Dennis crowley wants people to interact with the world that way and he has figured out a way to make that work.

So this is location-based recommendation passively.

What is making money?

They have added new ad product so when people check into a location, you might check into best buy, it will tell you there is a sale on samsung tv's. they have had a lot of national advertisements.

They have had search ads that they have added and all sorts of ways they are using the service for advertisers which has started to work.

We reported that microsoft and american express were potentially interested in taking part.

What happened with that?

Dennis crowley said he is looking for somebody who knows what his mission is and understood what foursquare could be.

He has been working on this vision for about 10 years.

He is very committed and will take his time and make it right.

The question is whether consumers can get excited again.

Can it happen?

It was so hot for a while.

Between 2009-2011, everybody used it.

Can it re-accelerate?

Is hard to say.

In silicon valley, things come and go in when they go they really go.

Foursquare has a steady base of people that continues to use it.

The number of users has not declined so maybe the money they just raised them a they can expand and advertising get people to use the service.

We will be watching.

Dennis crowley feels very strongly about this and is committed to it so we will be watching.

Thank you so much.

When it comes to tech and innovation, california's silicon valley is thought of as the place to be.

New data from bloomberg shows another state has taken the title for the most innovative.

That story is next.

? this is " bloomberg west," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com.

I am emily chang.

Oracle is buying responsis four $1 billion.

It resells -- it sells marketing software.

Is the latest acquisition for oracle just trying to get more cloud business.

When you think of an area that is leading the place for tech and innovation in the united states, most people would think of sala con valley and california.

Washington takes on the crown for the most innovative state according to bloomberg.

We look at the percentage of professionals in stem fields and patents and public technology companies and seattle is home to the likes of microsoft and amazon and their early presence in investments in the city have led to a budding technology community.

Everyone from facebook, google, and salesforce have large offices in the state and a number of startups.

Joining me now to discuss this is mattmcilway.

First of all, the most innovative state is the state you live in according to bloomberg.

I'm assuming you agree.

We do agree but now the secret is out.

We have been finding, for the past couple of decades, that washington state keeps getting more and more innovative.

Amazon, microsoft, the 10 most highest market cap companies in the tech world are here and we believe we are becoming the cloud capital of the world.

How much of this can be attributed to just amazon and just microsoft?

It really isn't just those two.

You have a whole ecosystem at the intersection of innovation that we see in washington state.

You have a mobile ecosystem going back to mccaw and t mobile who are based a peer and you have the research ecosystem which has the university of washington and microsoft research, of course.

Paul allen has the artificial intelligence research center and the cancer research area with fred hutch and others.

What can startups get there that they cannot get here in silicon valley?

They can get access to the people that have built innovation here.

You take a look at a microsoft which begat realnetworks to a company like iselon and we have personally back multiple companies that are the next generation of people from iselon and that gives you access to people an insight and innovation that you cannot find anywhere else in the world.

Silicon valley has a lot of great things going on.

It is a far bigger place to date but where the future is going, a lot of those intersections of innovation are right here in seattle.

Let's talk about amazon.

You guys were an early investor.

What do you think of drones delivering our packages?

Is this a short term reality?

I would not sell them short.

I absolutely think you could see drones maybe three or five years.

The big thing is that microsoft first and now amazon have become these anchor tenets of innovation here in the pacific northwest.

Amazon deserves the ground right now as an innovation factory.

Whether it's a drones or cloud computing or the mayday button on the kindle device, they just keep at a torrid pace delivering innovation into a broad cross- section of what is going on in the technology community.

You think package delivering drones will happen in three years?

It's possible.

I would not underestimate amazon.

They take a long-term view.

They invest in the kind -- in these kinds of ideas.

Not all of them will work out but i would not be surprised.

Let's talk about overestimating.

You mention innovation at microsoft where they say innovation has stalled.

How do you respond to that?

I think those people are forgetting areas like the continued innovation in xbox and maybe, more importantly, what the company has done in building and over $20 billion service over the last decade.

They have done an amazing job of not only building that business but now extending it through azure into the cloud.

Amazon is the clear leader in cloud is here and microsoft we believe is the strong number two in that category and is a distant third from there.

Why is that happening here?

Notwithstanding the bad rep that microsoft gets, they continue to be innovative in important areas.

You mentioned a long-term microsoft executive as as successor to steve ballmer.

It seems like the ceo search has slowed down.

Some people say they don't want the job.

Who do you think should be ceo of microsoft?

If you were to make an external pick, the guy that would be best served to do that externally would be paul moritz who has a great history with the company but i doubt he will take the job.

That might be one of the challenges in this search.

A number of the best external candidates are has didn't to take the job.

If you were to make an internal choice, i think satkin nadella would be a good an excellent choice.

We will add those to the list.

Thank you for joining us.

The future of "duck dynasty," one of the most popular reality shows on television is up in the air after a star makes controversial comments.

We dig into how important the show is to the amd bottom line next.

? this is the early edition of "bloomberg west," and you can also catch us at her later time.

A&e 's "duck dynasty" is one of the most-watched reality tv shows of all-time.

It follows a louisiana family that sells hunting equipment.

One of the show's stars made homophobic comments in an interview with " gq magazine." he has been suspended and the network is not responded to comments.

N/a post, the robertson family says we cannot imagine the show going forward without our patriarch at the helm.

We are in discussions with on bloomberg television, streaming on your phone, your tablet, and bloomberg.com.

A&e to see what that means for the future.

What does that suspension mean for the a&e bottom line?

I have to admit that i don't watch the show.

I watched a few clips this morning and it's pretty funny but this is really the most watched cable reality show of all time?

Yes, this show has been a phenomenon certainly for a&e. 12 million viewers and they are about to start their fourth season.

There is a tremendous amount of merchandise tied to this program, about $400 million per year.

This has become a phenomenon.

This is a challenge for a&e how to manage this process.

If they decide that the head of the family should be suspended and the shimmies to be canceled, how big a blow with that be to a&e? i think in the near-term, it would be a blow to their ratings.

It is the most watched show.

It sets up a lot of their other programming throughout the week.

It is a very important show for them.

A&e is a diversified media company with several cable networks.

Long-term, it is not a big issue but i know they will work hard to try to maintain this show and whether robertson is a part of it.

They would like to keep the show going.

Any numbers on how much this brings in terms of revenue for a&e? they don't really break it out but what we know is that reality programming is extorted merrily profitable for the studios and the networks.

The cost of programming is relatively low.

It is not george clooney and julia roberts on screen.

There are advantages of reality programming which are the production costs eating low.

If you have a hit, it can be extraordinarily profitable for the network.

I'm sure a&e is working with their advertisers and the show producers and the talent on the shed to figure out what can be done to save the show.

The reality tv industry seems to survive and thrive on offensive comments sometimes.

Where do you see a&e drawing the line?

We saw the case with all the dean and the food network who lost her show.

Is that what they will do here?

I think they want to avoid that at all costs.

These big networks have to be accountable to their stakeholders.

One of the stakeholders as their advertisers.

If they feel they are going to lose advertising support for a program, that puts that program at risk.

I think that was the issue with paula deen.

We will see what the fallout is and i think they will be in consultation with everyone involved and see which way the wind will blow and a&e will try hard to preserve the show because it is too important to them and their network programming.

And their parent company is disney and hearst, we will see where they come down on this.

Thank you so much.

"on the markets it is time for," a look at what is moving in the markets.

Julie hyman joins us from new york.

Do you watch "duck dynasty." i do not that i was aware of it before this kerfuffle.

We have a rally in stocks and better than estimated gdp rising last quarter.

The revision is higher than was estimated by economists.

It looks like we could be setting up for the best week since july for the s&p 500. jones group, the owner of nine west, is selling itself to a private equity firm, about 1.2 ilium dollars, $15 per share.

The other stock we're looking at is carnival posting a fourth- quarter profit that beast -- that beat analyst estimates.

? this is the early edition of "bloomberg west," and you can catch us at our later time.

Janet yellen's nomination as the head of the federal reserve has cleared a big hurdle.

The senate voted today to advance her nomination, setting up a final vote early next month.

The senate also confirmed josh koshkonnan to head the irs.

Part of the ceiling collapsed at the apollo theater last night in london.

At least seven people were seriously hurt and dozens more suffered minor injuries in the collapse.

An investigation is underway to figure out what caused it.

A former nba star, dennis rodman, is in north korea where he is training a basketball team.

He says he hopes to bring 12 x nba players to the country next month to celebrate the birth day of leader kim jong-un.

It comes less than one week after kim ordered the execution of his uncle.

4k ultra hd may be the next frontier in television technology and netflix says the new season of "house of cards" will be available in the 4k format.

Will this be a game changer?

We talk about4g. what is 4k? it is the new high definition.

It is twice the resolution of hd we have now.

It is super crisp and clear and developed by sony and they call it 4k but the and history is adopting it as ultra-hd.

If netflix is on board, do i have to buy a new tv?

Probably not just yet.

They are still working out some kinks with this.

The file sizes are really big.

Streaming these files, you will need at least a 50 megabit connection, not a lot of u.s. households have that outside of maybe the biggest cities.

Also, there is not a lot of content yet in ultra-hd.

Sony is the only major studio that is doing all of their films in ultra-hd.

There is not a lot of content and distribution is still a little limited or it what do you make of the fact that netflix is trying to get out in front of what they think could be the new standard?

I think netflix has always tried to get out in front of whatever the next standard is.

They carried blue ray discs early on.

When you had the dvds instruction by mail, for a few bucks extra, you could get those same films in blue ray.

They push the envelope when it came to streaming and were the first to get law a large library of film and tv shows on the web.

It makes perfect sense they would want to do this.

It's interesting they are doing this so far without any added fee.

It is twice the resolution, twice the video quality for the same price.

How do we know this will not be another 3d? 3d tv has not really taken off so many people did not invest in it are in i compare it to the transition from vhs to dvd.

There was a big spike and that is what happened from standard definition to vhs to hd-dvd.

When they tried to move the dvd to the blue ray, a lot of people shrugged.

They said maybe that's not for me.

There is definitely a market there and in interest from a segment of the market that was willing to pay a premium but the adoption was much slower.

What we are seeing with the ultra-hd and the 4k is adoption is slower and it will be a slow rise.

As that heats up in the prices come down, you will probably see a broader adoption.

We will be watching.

Thank you.

Awsomeness tv was acquired by dreamworks earlier this year.

The multi channel network said it recently hit 83,000 partner channels and has 6.3 billion views.

Jon erlichman went to santa monica to meet the man at the helm.

We are in santa monica california.

If you have never heard of awesomeness, you are probably not a teenager.

This company is giving traditional teen television a run for its money.

It is basically the online destination for teens and between's. we are a youtube channel.

The main channel of awesomeness has one million subscribers print we have an 85,000 market channel of kids basically that like to not only watch the content that make their own content.

They can start their own channel.

This is the agent of change.

It is popular with my son justin and of is not for teens, this would not have happened.

I would not have been as tuned into the behavior of teens.

We look at our schedule not unlike a tv network.

We schedule monday-sunday.

This is our studio, our soundstage where we should most of our shows.

There is a green screen set up.

A lot of the time, te ouren talkshow -- our team talkshow comes in here.

Dreamworks animation ends up acquiring you.

It's very exciting.

Jeffrey katzenberg came in seven months ago and it was a quick tour ship and it's been a great relationship.

He understands what is going on in the space.

Let us know by liking this video.

There is a song reflecting off of a mirror.

It is an iphone prompter.

Do you have the same hair styles at bloomberg?

That was awesomeness tv founder.

Still i had, the nyse beats the mastec for the first time in 15 years for the most tech ipo listings.

How did they do it?

We will talk to the head of global listings next.

? jeff bezos said he is working on delivery by drum which could become a huge part of the amazon delivery service in the future.

For now, the real money may the in the fleet of robots that amazon is quietly building for its distribution centers.

Bain capital was an early investor in a robot company that amazon bought last year.

Ory johnson spoke with them about how the robots are helping the fulfillment centers be much more productive.

You think about the issues like amazon around the holiday season when they are probably doing 50% of the revenue and the number of workers they have to hire to fulfill that demand, with something like keva, those workers can fulfill three times as many orders.

That allows amazon to be more efficient and allows them to manage the peak demand during the holidays.

What is a robot?

How do you define what a robot is?

It's essentially a combination of hardware and software that can perform a particular task using a set of software commands.

If you think about the keva robot, these were robots that maneuvered on the warehouse floor.

They were intelligent enough to follow a grid pattern.

The software algorithms would control literally a fleet of these robots to optimize exactly where the robots would go and which shelf to bring over to the worker.

That was the power of the robots.

Is there something about technology that is allowing robots to do more?

Are there innovations in hardware or software that have changed that made this more possible than in the past?

Absolutely, some of the trends we see across technology have affected robots in the sense that you now have cloud- based computing.

You know how does you now have massive massive computing power at lower cost manufacturing that can bring down the cost of these individual components.

Those things have advanced.

With some of the acquisitions google has made, particular robot tasks and problems in the robotics fields are now getting solved.

You think about the company that google bought recently, boston dynamics, solving the idea of how you have a robot operating in a terrain that is unpredictable.

It is wanting to have a robot operate in in a warehouse in a controlled environment but now to have a robot that can walk across uneven pavement and can climb up a hill and skill is knowing mountain, that's an incredibly powerful concept.

Until now, it was a difficult problem.

Is a drone of robots?

A drone is a form of robotic, absolutely.

Do you think we will get to a place in the drone arena?

We have a value weighted investments.

Drones posed a different problem in that you have elements around the airspace which is regulated.

You have safety considerations.

You have tremendous limitations in terms of the range of these drones and how far they can travel given a certain size and safety requirements.

From a venture investment standpoint where we see more interesting opportunities in the robotics field and leveraging robots inside different fields whether it is manufacturing, logistics, healthcare.

I think that's where we see more near-term opportunity.

I think drones will come in the commercial arena but for the short-term, it will be more in the military arena and in more humanitarian situations.

We will be right back.

? this is "bloomberg west," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com.

All this year, the nasdaq and new york stock exchange have been battling for tech ipo listings.

For the first time in over 15 years, the nyse has met on top.

The new york stock exchange landed 22 tech ipo path this year versus 15 for the nasdaq.

Cory johnson is at the new york stock exchange with more.

Yes, here is the new york stock exchange, a place i like to be.

We don't talk a lot about stalks on open up bloomberg west." the ipo business was huge this year.

You guys got a lot of tech deals this year.

We had a majority of technology offered this year.

This is a huge year for technology generally highlighted by the twitter ipo.

This is the first year since 2007 when we had a meaningful ipo market in technology.

There a lot of trading that happens here.

To what do you attribute that to?

I think there was a bond with technology.

We have been focused on making sure the execution platform around the ipo works extremely well.

That was the focus for this particular transaction.

Our story started about five years ago where we really focused a network of the nyse on that sector.

We have been extremely successful at attracting growing technology companies to the nyse.

I remember whenoakley went to look -- i remember when oakley went public.

They decided the ticker tape should beoooo and people are writing checks with that on it.

How has the ipo process differed from what it was back in the day/ the technology that underpins the market is incredible prayed we are processing two point $5 trillion of transactions per day which is 40 times more.

We are processing a tremendous amount of data on the technology.

The people here who are active around the ipo are essentially the balance of that.

That is the analytics and human judgment.

In terms of the ipo itself, is that process different?

The process is not that different.

It comes in electronically and we can see that at the point-of- sale.

You can see where buyers and sellers are but ultimately it is the underwriters making the decisions where to open the stock and that takes people to do that.

If you are here at the twitter ipo, you saw in early 100 people around the post leading to that price discovery process.

The price discovery seems to have held.

Talk to me about the listings that you want.

There have been big changes in technology this year.

This year is the biggest transfer of or in history.

The biggest one in history was oracle.

Oracle has been one of about 50 companies that transferred to our market over the last couple of years.

We continue to see if low companies.

It is worked by the number of new listings and ipo path that we have had over the course of the year.

I would imagine the size of oracle dwarfs what the new ipo's have done.

It is a large company and it trades really well.

It has been a great partner, another big technology name in the network of names we bear.

Talk to me about what the sales process is when you meet a company.

What is the message you give to them?

This is a relationship business.

Everyone of these transactions is safe and we are building those relationships over the course of 1-2 years before the ipo.

We know the management teams are at work for the equity firms and we talk a lot about the value of this as a platform.

For us, the focus on an is making sure that process is seamless, transparent, and reliable and trustworthy.

What do you see next year in terms of the deals?

We've got a lot of higher profile technology names that everybody is focused on.

There are some big ones in asia and some big ones coming out of the valley.

They are in enterprise and social and data -- the same trends will continue into next year.

I expect a healthy pipeline of tech deals for 2014. thank you so much, scott cutler.

Thank you.

We will have more of "bloomberg west" after this break.

? welcome back.

Coming up in the late edition of "bloomberg west," one venture capitalist believe silicon valley should be it's own state.

We will tell you more about his vision for slicing up california at 3 p.m. pacific and 6 p.m. eastern.

It's time for "on the markets." julie hyman is with us.

Can you imagine new york city being its own state?

I can, actually.

It kind of already is.

The work week is coming to a close and if you are sitting at your desk with bags packed waiting for the hour hand to release you, you are not alone.

Supply projects 94 million travelers will travel -- aaa projects 94 million travelers will travel this holiday.

You could also take a private jet.

You can keep it classy in the sky.

Who is using private aircraft?

Customers breakdown in four groups -- you've got your charter companies.

You want to take the gang down to miami for a weekend?

Do you have $10,000? you got yourself a plane.

Next are pre-paid plans.

Instead of getting 1500 minutes on your phone for $30, you're getting 25 hours of playing time for $100,000. then you have fractional ownership, which is like a timeshare and you can use it whenever you want but you have equity so if things go south, you sell your share.

The bolder option is to own your own plane.

Buying a plane is only part of the deal.

Private aircraft are less like cars and more like horses, they need to be stabled.

That's where companies like jet aviation comes in.

It is only 18 miles from newark airport that is worlds apart.

I'm going to meet my pilot who is waiting here for me inside the terminal building.

It's nice but nothing special.

You will not spend a lot of time in it.

Your aircraft is likely just outside.

There is no tsa line.

If you wanted to charter a plane to take you from teterboro to london, it would run you $75,000-90 $5,000 which gives you a pilot, copilot and a flight attendant.

You may be wondering how this feels.

It feels amazing.

I have to fly commercially next week.

Going from this to that is going to be a huge letdown.

I weep for sam and his commercial travel.

If you don't have the money to jet, there are other options.

Travelzeus president was talking about the recent trends she sees with holiday travel.

Hotels this year have done a great job of marketing to the locals.

They are offering great packages that include not only room only but also amenities that go with it.

There could be hotel credits and

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

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