Bringing Karma to Wi-Fi: Taking Stock (08/01)

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Aug. 1 (Bloomberg) -- On today's "Taking Stock," Pimm Fox helps you to think like a professional investor and discover the next "big thing." (Source: Bloomberg)

This is tourre --"taking stock." we're going to focus on distribution.

That has all changed and it continues to evolve.

Motorola unveils its new phone, the moto x to challenge apple and samsung.

And bringing a little karma to the world of wi-fi i'm going to speak to the chief executive looking to bring social to bandwidth.

And we introduce you to a medical doctor using an open- source approach to share his cancer research with the world.

All that and more over the next hour.

First, carol massar has a look at some of the earnings that came out over it -- after the close of trading today.

Aig a mover.

Its first dividend since being bailed out by the u.s. also $1 billion in stock and reporting adjusted profits of 17%. the link in issuing a sales forecast that lagged estimates.

The biggest services oslo growth in advertising and subscription -- slow growth in advertising and subscription.

Activision topped estimates.

The video game publisher recently announced deal to buy most of vivendi's stake in the company.

Back to you.

Now to another headline coming this afternoon, a jury has found vice president fabr ice tourre libel.

For more details, let's go to the courthouse with su keenan.

It was a big victory for the sec, its first major fraud case since the collapse of the mortgage market.

The trial coming to an end after 3 p.m. today when the jury came in with a verdict.

They found tourre, the former executive, liable for six out of seven counts that he misled investors in a billion- dollar deal gone bad related to mortgage backed securities.

He said nothing as he left surrounded by cameras.

Oldman said "as a firm, we remain focused on being more transparent and more accountable and responsible to the needs of our clients.

" that is interesting in light of the charges.

In counts 1-3, tourre was found liable for making misleading statements in the marketing materials related to this deal which involved a german bank, ibk.

4-6 he was found liable on two of three counts related to a fraudulent deal with aca.

Aca's executives were the star witness for the sec and they justified they never would have invested had they known john paulson was on the other side of the deal betting it would fail.

They found tourre liable of aiding and abetting goldman sachs in violating securities laws.

What is next and what does this mean for goldman sachs?

Tourre will go home again.

We have talked to him every day.

He did not say anything today.

His mood changed this morning when the jury sent the first of three notes asking questions that indicated they were going to find him liable.

His attorney and the sec have three weeks to submit briefs on what his fine should be.

This is a jury finding that a lower executive aided and abetted the firm in violating securities laws.

It definitely complicates the litigation taking place between goldman and the participants in this deal.

Aca feels they were defrauded.

Thanks very much.

Su keenan in new york.

I am joined by ron geffner, a former commissioner and a partner now.

Just to understand more, did he get thrown under the bus?

A great question.

It would seem he has been thrown under the bus.

I am surprised we have not seen any other people raise this in the hierarchy.

This idea the sec had a case against him, they do not have to prove intent.

I do not believe it is required.

This means the trial is an opportunity for him to appeal or what happens?

Everything will be appealed here it what about the actual liability?

Talking about a billion dollars.

As we just heard, they are going go back and determine what fines he is subject to him and if there is a band.

As part of the suits against tourre, he could have made mistakes in these materials.

It does not mean he purposely misled people.

I am not necessarily aware of all of the details of what was presented in court.

In part what you're seeing is we have a jury of nine citizens.

This may well be a conviction against wall street.

With regard to the particular facts that were presented, every account seems to be the jury livened up when they heard e- mails between him and his girlfriend and less about the complex products.

Isn't that at the heart of the case?

People have learned this from the e-mails at goldman sachs.

He was not going to do this on his own.

He was not going to do this on his own.

There are obligations in the chain.

It is hard to imagine a 28-year- old could have operated without supervision and would not have had other people reveal -- review his correspondence, participate in conversations with clients of the firm as well as an electronic correspondence.

The idea he was convicted on six of seven counts, does that mean there is some horsetrading between him and the sec gecko maybe they get others involved -- sec?

Maybe they get others involved.

I would not think that is the case.

The sec seems to have made their case.

I imagine they have that information.

In and of itself, a conviction would lead others to enter into a settlement with the sec provided there is other information.

Ike other e-mails?

Other correspondent gathered regarding other people.

You have brought up a case against a defendant, the next person you bring a case against has to weigh the odds of winning or losing, or is it a fresh start?

Or the fact they have convicted somebody or had litigation brought, does that way negatively against my scenario?

If you're dealing with the sec you have to contemplate what your likelihood is.

What is the likelihood of my winning?

What is the cost?

What is the ramification?

In this case, tourre's cost was covered by goldman sachs.

He went back to school.

He is young enough or he is trying to clear his name.

What he had to lose, i do not know.

Thank you very much, ron geffner.

And also in the world of legal rulings, a decision is expected in the patent wars between apple and samsung.

The u.s. trade agency says it needs more time to decide the case in which apple claims samsung infringed on its smartphone patents.

They can hughes is in washington with the details.

-- megan hughes is in washington with the details.

Until august and nine.

What was at stake, apple claiming that samsung deliberately copied apple's technology and then undercut prices.

Apple has been saying for more than two years samsung copied its products.

What would a loss mean for samsung?

That is the question.

It is not clear.

The company said it has ways to design around apple's patents.

It said a decision could cause major disruptions for the industry and a shortage of smart phones.

On the one hand you have samsung saying this is not a big deal either way.

They are saying it could be a warning for the market.

Together the companies make up almost half of the smartphones sold in the world.

Today's decision delayed until friday.

Also we are watching on sunday and decision for apple.

It is the deadline for a presidential review of an import ban.

If they do not decide to remove the ban it would mean apple would have to stop selling in the united states some version of the iphone 4. megan hughes reporting from washington.

We're going to talk about a lot that is riding on a small device.

A new smart phone from google called the moto x. we will tell you about it next.

? google unveiled its moto x today, this is chandra g seems to rest on the phone.

It is made in america, assembled in america anyway and one of the big features is customization.

Jon erlichman was there for the launch.

Everybody was there.

It had more than 100 devices to be tested.

Todd hazelton joins us.

He was also there.

Jon erlichman, you just talked about the moto x. is this a phone that would get you to buy when?

How are they going to get people to give up their iphone?

They spent half $1 billion on marketing.

That could help get it in front of your eyes.

That is always a hard question to answer.

He put together a nice looking product.

A lot of people say, there is smartphone fatigue out there.

I think that is a fair comment.

It was important for motorola to make a bold move under google and there are some important symbolic pieces to this announcement.

You are so diplomatic.

What are the features of the phone.

What is going on?

When you think about it, it is a midrange phone.

$199. we do not have to get too technical.

It is fully customizable.

You can choose 16 colors, -- only if you are at&t. at launch.

Other carriers will have that option.

You have to use this new portal, you go through and you can choose different colors of the phone to see which one you like.

You are a colorful guy.

Is this a big deal?

You get to have a different color phone.

Gee.

They are hoping it will make it better.

They need something.

Haven't they heard of smartphone cases?

You do not want a case.

You want to personalize the phone.

People love to configure the nike sneakers or they spend a lot of time on websites.

You have one.

You can hold it up.

This is the white one.

4.7 digital screen.

Not completely hd.

It has a 10 megapixel camera.

You shake the phone to activate the camera.

It has voice-activated features.

They are always on.

You do not have to push a button.

You just speak to it.

It will tell you the answer directly from google's database.

Is this going to use up all of the battery life?

They are promising 24 hours of battery life.

The ceo said 24 hours.

I do not see that often.

They actually used it to go through the back of the phone.

Can i get back to something, you were talking about the marketing budget.

Half a billion and marketing.

I think that is going to be vital.

There have been a lot of companies that have come out with a good phone.

This is a good phone.

Sony ericsson.

Nokia.

Palm, if you go back far enough.

Could not get it in front of the customer.

That is going to be the trick.

It is something samsung does very well.

Apple also.

But that is a big part of it.

And dare i say, even if they do not sell five of these, google has a trick of saying here is what is possible.

When they made their nexus device, you can make a great device at a low cost.

It's a see with the competition can do.

To sort of raise the bar.

You get the sense with motorola even though it is a separate business inside google, and you talked about the colors, the idea they can bring the assembling to the united states and the only way you can allow people to go online and pick turquoise, whatever -- olive green.

And get a phone within four days, you can do with us, we have taken the steps to make that possible.

They have a nice number of talking points.

They can continue to throw out there in a larger battle with companies we could name or not name, including apple.

And maybe they win just from doing this as an entire marketing ploy.

I am not saying that is what they are doing.

What about being assembled in the united states.

They have 2000 people in texas.

He took over an old nokia plant and turned it into an assembly plant.

The reason is it is the only way you could get the customized phone within four days.

Coming from asia, it is going to be weeks and people do not want to wait that long.

Well done.

We will check on the photos utep.

-- the photos you took.

Jon erlichman, our senior correspondent from los angeles, todd hazelton, thank you.

Great stuff.

More on the world of mobility.

We are going to turn to karma and find out what that means for wi-fi.

? this is "taking stock." you want some karma with your wi-fi?

The next interview is for you.

It is looking to change the game when it comes to your data plan.

Offering a pay-as-you-go wi-fi service.

It's chief executive and cofounder joins us now.

Stephen, thanks for coming.

Explain for people that may not be familiar, wi-fi and what is different between wi-fi and the signal you get from your mobile phone provider?

Wi-fi is a way to connect it to the internet.

If you own a tablet or mobile phone, do connect it to wi-fi and wi-fi connects to a cellular network.

So we get you online in one easy way.

You would be at the office or your home.

You have an idea you pay-as- you-go.

You pay for the data you use.

That is right.

We wanted to make an end to monthly subscriptions.

So you simply by data and you pay for what you use.

That is in.

Where is this available?

We have tens of thousands of people using karma today.

It works on top of a mobile hotspot, which is a wi-fi device.

It is a tiny device that gets all of your wi-fi enabled devices online.

How does that connect to the internet?

The same way your mobile phone is connected to the network.

We have a network in 80 cities that get you online whenever you need it.

You had to build an actual network.

We borrowed a network.

From our friends at clearwire.

They help us get this device connect to to the internet.

It gets you online.

How much data can you come through the pipe?

It is fast enough to stream a netflix movie.

You can watch a netflix movie in the same way at home or at the office.

What about cost comparison?

And is best thing about karma.

A gigabyte of data gets you online for a month or two months.

If you share it with others, it you will get rewarded war -- with three data.

That makes karma even better.

How do you raise the money to keep the building the network?

Karma is talking to investors to raise money to make this happen.

And our customers help of course.

They by data and we help them earn more free data.

You have done this before.

You are a serial technology entrepreneur.

This is my fourth company and the one i am most excited about.

I just want to go outside, open my laptop, turn on my tablet and i want to connect.

I want to get online.

Karma lives up to the promised.

Is it designed for companies in a coffee shop or a public space, they want to be able to offer wi-fi but they do not want to give it away.

We offer a beautiful login.

You sign up with karma and without you having to remember your password or id, it is an open signal.

It is called karma wi-fi.

When you are ready, you log on and are online.

Very interesting.

Cofounder of karma, steven van wel.

Much appreciated.

It is 26 minutes past the hour.

The s&p 500 gaining 21 points, 1706 on the close.

The dow jones higher by 128 points.

The nasdaq was up more than 49 points.

Taking a look at the stocks, gold extending the day's decline.

It was down 910 of a percent.

Taking a $9 billion write-down and cutting its dividend as gold prices fall.

Posting a second-quarter loss of more than $8 billion.

Coming up, we have more on "taking stock." distribution, going from a to b. ? greg's this is "taking stock" on bloomberg.

I'm pimm fox.

Greg's russia has decided to grant nsa whistleblower edward snowden asylum for one year.

The white house was not pleased with the decision.

We are extremely disappointed that the russian government would take this step despite our very clear and lawful request in public and in private to have mr.

Snowden expelled to the united states to face the charges against him.

Mr.

snowden is not a whistleblower.

Snowden had previously been in a moscow airport transit zone since june 3. dell shareholders are proposed -- are poised to vote on a proposed buyout.

Carl icahn is looking to block the vote.

The vote is scheduled to happen tomorrow in texas.

Gm and toyota topped the list of automakers reporting vehicle sales gains in july, with increases of 16% and 16.5% respectively.

Sales of ford, chrysler and nissan all rows in the light truck category.

At this pace, the auto industry is on its best track -- is on track to have its best year since 2007. pam, back to you.

Thank you very much, mark crumpton.

Adp released fourth-quarter results today.

More on the company's earnings and u.s. jobs market.

We are joined by jan sigmund.

Tell me about adp advanced m.d.. what was that all about?

About two years ago we acquired advanced m.d.. it is one of the adjacencies we have in our portfolio.

We serve car dealers, and in this case, physicians in small practices.

It is an attractive growth market.

Since it was an acquisition in our portfolio, we had to make some adjustments to our business model going forward.

Is that the reason you believe earnings-per-share were not exactly where analyst had estimated?

Take that away for a minute and tell me about the business.

We were excited this year to have record new business bookings, which is the most important factor for our business going forward.

We sold 11% more recurring business this year compared to last year.

Ahead of our own expectations.

Net new business bookings being excellent, together with the record high retention rates in our client base, which also bodes well going forward.

Stanley crouch, would you be interested in buying adp stock.

I did not look granular early at adp, but i know they are an important cog in the financial wheel because their jobs report is looked at very carefully as a precursor to employment statistics.

They process so many payrolls and they have such a good hold on that market, that you are really seeing what is really happening.

And also a aaa credit rating.

Yes, and we were talking off- camera.

There are quattro left.

There used to be sex, and you are one of -- there are four left.

There used to be six, and now you are one of the few left.

We are a big payroll processor, and our clients do want to know that their funds are safe with us as we process their payroll, so it is a good thing for us.

What about more acquisitions, expansion overstayed -- in the states and overseas.

We have been the number one provider in brazil for a long time.

The acquisition in chile gives us a great foot rent in -- footprint in latin america.

How much money flows through adp?

We process more than one dollars trillion through our system.

We are the largest taxpayer to the -- one $one trillion through our system.

We are the largest taxpayer to the irs.

Our numbers on jobs are a great example about the depth and detail we have about client information.

We make it available in a national employment report to the public, but our clients benefit from it by providing them insight into how their business is run and how they can improve hr operations.

Jobs report is the big thing tomorrow.

What do you think we're going to hear?

It is hard to do an exact prediction, but it seems to be the other numbers are leading into a pretty robust number and some improvement.

The question remains, what are the quality of those positions, are they full-time or part-time, how much money are they actually earning?

Let's see what the participation rate is.

What we don't want to hear is that folks who were working at a high level and where high- level ea earners are not able to find a working need.

What are you doing for smaller businesses?

Thank you for that question.

Adp services more than 400 thousand small businesses.

It is a real strength of ours.

The real success we had in gaining clients was in a down market.

We serve one person proprietors to the largest company in the world.

I think that is one of the great strength s 80 p has.

What about convenience for the customers?

What kind of products services will adp be introducing?

Rex the health care act and doma will present challenges to our clients.

Adp presents a wide range of solutions, way beyond the payroll that you would think of first.

We are a provider of benefits and have a big footprint in hr solutions.

And smart cards.

And we offer a variety of a meant at mechanisms -- for riot if payment mechanisms -- variety of payment mechanisms.

Our most growing method is a pay card that you can load up and use like you would a normal debit card.

That sounds pretty good.

Thank you for joining us.

Stanley crouch is not going anywhere.

He is the chief investment officer of ages.

Coming up, a newly discovered molecule that could one day bring an end to cancer.

A look at what wall street has on the agenda for tomorrow.

We go to carol massar.

Tomorrow in the u.s. we get the july payroll report.

The jobless rate is expected to ease from 7.6%-7.5%. in texas, dell shareholders are expected to vote on ceo michael dell and silverlake's proposed buyout of the computer company.

We will also get spending and income data for the month of jan.

Earnings parade continues with berkshire hathaway, toyota, chevron and viacom.

My next guest has made the discovery that one day may bring an end to cancer.

Rather than keeping the findings in house, he sent them to 40 competing laboratories.

Shortening me from boston is.

Or are james bradner -- is dr.

James bradner.

Joining the onset is the former commissioner for the new york city department of health, dr.

Celine gardner.

Tell us about this thing you are working on that could actually solve the problem of cancer.

10 years ago as i was training as a cancer doctor, i learned something that most patients and families experiencing cancer already know, that cancer drugs don't work well enough.

I went back to school to retrain in chemistry, the science of making molecules.

Today, i lead a laboratory at the dana-farber cancer institute that attempts to undertake the new steps of a cancer drug discovery.

-- first steps of a new cancer drug discovery.

This molecule has a tendency to cause some types of cancers to forget that they are cancers.

In drug discovery, this is typically a pretty secretive, private moment where you lock away your secrets and don't tell your colleagues, certainly not your competitors.

But we're not a drug company.

We we are an academic center trying to have an impact as broadly on science as we can, so we did just the opposite.

We have made the molecule freely and immediately available to scientists around the world who may have an interest in studying this compound in their labs.

Today, we reported in the journal "cell," that this compound has the ability to prevent damage to the heart after overwhelming stress.

He is giving away information about a molecule that make your cancer.

Is this going to spur the acceleration of finding a cure?

It is interesting.

His lab has shared the molecule with over 400 labs across the world.

This is very much counter to what the pharmaceutical industry would normally do.

Usually, it is very much about intellectual property.

You patent it and make money on it.

But his lab has patented it with the idea of protecting it as something open sourced that others can study.

I would be curious to hear what he thinks -- what do you think this means in terms of commercialization?

Is an antagonistic to doing commercialization of medical research?

There are two really important components to the formula for a winning drug molecule.

The first is to have a terrific substance, and fair, patents are very important to ensure that the technologies they deserve.

The second is that we should know exactly what to do with these molecules by the time they reach the clinic.

Open source drug discovery, as we call it now in our laboratory, really solves the second problem.

It allows all of us to come up with better solutions to diseases than any of us.

Basically, so we don't get in our own way.

It sounds great.

It even sounds like it could get a nobel prize.

But is it going to make people a lot of money?

Isn't that what really drives drug discovery?

If you cannot make money on it, why are people going to develop it?

Is a cancer doctor, i am glad there is money out there for people who are creative and resourceful enough to cure this awful disease.

So yes, these molecules that go into the clinic must be protected.

But for every molecule that goes into at the clinic, there is a molecule on the shelf that could be an important tool for scientist around the world to make important findings like the finding today about heart failure.

Surely, those findings are more important than just the commercial side.

Are there other benefits to using open source technology?

It is an nascent field, i would say.

This molecule is being studied for multiple myeloma, leukemia, lymphoma.

But he is a pioneer in this area, for sure.

Even the incentives in academia are that you are the person who gets the grant.

Your name is on the paper.

So you want to protect that information.

In the pharmaceutical industry, it is a profit motive.

This is a groundbreaking approach to science.

What are some of the pharmaceutical companies you're working with or talking to -- what do they say about this?

They are very interested.

It is clear they are following this work with real attention.

Beyond our own effort, there are already two or three pharmaceutical companies delivering chemical derivatives of the molecule to the clinic.

Whether or not they will experiment with it themselves remains to be seen, but as in the information technology industry, more and more we believe that unless they to embrace an open-source approach, they may not be competitive in the future.

When do we get the cure cure for cancer?

How many years?

Cure is a big word in our field.

We do not treat it lightly.

This year, the molecule will enter drugs that go to cancer patients.

If they are tolerated, they will go into drugs to study cardiovascular disease.

Thank you for joining us to talk about a new cancer killing molecule.

Just ahead, what business lessons can we actually learn from "breaking bad ," the television program.

We are going to tell you about walter white, next.

In less than two weeks, fans are going to get what they have been waiting for, the second part of season five of "breaking bad." we spoke with vince gilligan about how important netflix and itunes have become for series survival.

I don't think it is a stretch to say that "breaking bad" might have been canceled in its second or third season if not for video-on-demand technology that allows people to catch up.

The show has also made it into the latest addition of "bloomberg businessweek yuriko ." i am not going to come to you, stan, because i do not think you have seen the show.

Walter white is the protagonist in the series.

What is this about him being a guide for business?

Last night, war and buffet said he loves -- warren buffett said he loves walter white.

And he is a guy i would like to do business with.

But that is not what our article is saying.

Walter white is a chemistry teacher -- he was -- he finds out he has cancer.

In order to get money for his cancer treatment, he starts making mess.

The product he makes is incredibly to your, better than anything else on the market.

He is in some ways a pretty good boss.

His employee is a former student who he mentors and teaches how to make this amazing math.

He also is a very good negotiator with other people in the drug trade in albuquerque.

Where he is not so good is he has a huge ego.

He is not very self aware.

And he also murders people.

As a ceo, that is not a good thing.

Do you think walter white is reading "the innovator's dilemma," one of your summer reading recommendations?

What else do you recommend?

"the innovator's dilemma" is about why companies succeed, and it is not necessarily why you would think they would.

What is on your reading list?

I think a lot of us should reread "the quant's ," which is about the precursors to the crisis.

If we realize how all of these hedge funds and things got to be so big, we will realize that a lot of things have changed post- crisis in the way business has changed.

But see if we can see any of those markers and hopefully head off another crash.

Just a little light reading.

Thank you for being with us.

A reminder, this issue of "bloomberg businessweek" is on the stands now.

The dow jones industrial average is higher by 100 28. the s&p is up 1.25% and the nasdaq is up 49 points.

Cbs is america's most-watched television company.

Thanks for taking stock.

I am pimm fox.

Good night.

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

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