Live from pier 3 in san francisco, this is "bloomberg west." we are covering innovation, technology, and the future of business all stop i'm cory johnson.
Can hp make a comeback?
Is it dying a slow death?
Is it too late for the silicon valley pioneer?
Amazon is fanning the flames.
It is refusing pre-orders for upcoming books.
We will look at how the standoff could impact the publishing industry.
Let's take a look at the top headlines.
Ibm is reselling technology.
They're trying to steer customers to ibm products.
That is according to an internal memo.
This is a big blow to net apps.
The founder and ceo is worth one point $6 billion after his company went public.
It sells all sorts of products directly to consumers.
It is the biggest chinese internet company in the u.s. for now.
It is a massive deal expected later this year.
Google ranks as the number one company for pay and benefit in a new glassdoor survey will stop tech companies dominated.
Intuit at number six.
The survey found that the average base salary is $128,000. that is slightly lower than apple.
To our lead story will stop hewlett-packard is facing a critical time in its history will stop sales fell 1% in the second quarter will stop this was the 11th straight quarter that sales have declined.
The company did post a higher profit.
Stock is gaining today.
There were new cost cuts.
The total number of cuts is nearly 50,000. for meg whitman, cutting costs is one thing was stop boosting sales is more difficult.
They may have a tough time in the game.
There is a big slowdown in pcs and printers.
Jon erlichman is in los angeles with more.
Death by 1000 cuts.
It is amazing when you look at the ballooning number of cuts at each the over the last couple of years.
Meg whitman had unveiled a huge number of cut.
Lucky 7000. it did not stay at that number for very long will not this year they were talking about 34,000 job cuts by the end of 2014 will stop we have seen a number clean.
Meg whitman asked if this was a confidence issue and she said, no, it is not.
I am getting deeper into what hp is all about.
The more you see the observations, the more you can see a potential to cut costs.
A lot of businesses feel very fine.
They are ok with the idea of not having clunky hardware in our offices will they're taking advantage of the cloud will stop you have hp competing with the likes of google and amazon will stop i ensure that as you look through the operations and you see one business and another business and they are not necessarily getting the sales they once did, do you need the same sales staff?
Is a great chart that you showed us.
It seems like that is a place to be, not knowing who will be next.
Profits were up all stop where were the bright spots?
What i find interesting is that for all of the knots against the pc business, business sales of pcs is relatively a bright bot for hp.
We are not talking about big growth, but there is a need for companies to buy pcs and that brings cash into the company.
The bigger thing is that no one is expecting that to fuel hp going forward.
It does not even that much mentioned.
It is a story about how hp can transition.
Jon erlichman, thank you very much.
For more on hp's challenges, i want to bring in the chief research officer from boston was stop this was not the worst quarter ever.
I have been following this story for 10 years.
Hp's putting out one crummy quarter after another.
It was an interesting quarter.
Pc showed some growth.
They showed nice growth will stop that is indicative of a better front . as well as the cessation of support.
When you get beyond that, you see some interesting weakness and some areas where they are challenged.
It is a big part of that.
They are not contribute into growth.
One area that was traveling was this pod around storage.
They spent a lot of money and they have been getting results.
It has been growing and contributing continuously to the growth.
Let me back up and sent that out.
Three car was a company where there was a big battle -- an acquisition battle between dell and hp will stop hp spent a couple billion dollars on an acquisition.
They had an aging storage product line will stop they need a platform where you can bring different storage types together.
They got it.
It has been growing.
Like the rest of the industry, the whole storage market is slowed.
They need to get that market growing.
They needed to grow fast.
They cannot continue to caps on commodity servers being a long-term engine of growth.
We are seeing so much commoditization.
And the move to a cloud is a headwind that they face.
We hear about companies that are working at amazon will stop they are designing their own servers with their own components.
They are bypassing the need for hp.
You think that hp and intel would be beneficiaries from the move to the cloud will stop they seem to be in this weird space where they are competing with the cloud.
Hp is on this.
They are aware of it all stop that is why they announced a deal with foxconn.
They are really going to focus on trying to take advantage of a lot of these tales that foxconn brings and bring an hb -- hp brand.
They are using standard servers, but they do not want to pay the same length.
What we need to figure out is, what does that business look like?
Will they get any technology services for some of these emerging suppliers.
How much can they lower the cost going forward?
But it is a way for them to participate in a fast-growing segment all stop i remember doing a model on these guys.
I realized that almost all the profits wasn't selling papers and ink.
It did not occur to me that that would decline.
What is the problem with the printer business?
What is happening in printing is that -- a couple things happened.
They underinvested in the product line will stop it took them longer than they would like to stop they had to push their laser line longer than they wanted all stop they are not seeing a significant demand on the inc.
Side to offset the deceleration they are seeing in toner all stop that is the old-school current market.
They also released the print management services game.
They come into companies and they help them consolidate their printing so that they can have 50 people using the same printer.
Now the product line is stronger.
They are consolidating and they have the services growth earning to happen.
When they get that engine going, they will have higher margin inc.
Sales as opposed to toner sales.
Before that, they had too much inventory and supply.
It is still a little bit of a problem.
I believe that print can reemerge and be a area for growth going forward will stop it all comes down to ink and toner all stop thank you very much.
We appreciate it.
Still ahead, why you cannot order the latest j.k. rowling novel on amazon.
There is a big battle against the book publishing giant.
You can watch a streaming on your tablet, phone, and bloomberg.com.
? this is "bloomberg west." i'm cory johnson.
Amazon is refusing orders from upcoming hachette books.
They have been trying to force ahachette to accept terms that are better for amazon all stop one author is directly impacted by this.
She wrote a letter to amazon saying -- nina joins us now via skype from seattle.
Particularly in seattle, this has to be really upsetting all stop your local company, amazon, will not sell your book.
It is painful.
Especially because issa poured it in my entire career will stop talk to me about how you found out about this and what the reaction has been.
It started leaking out on the internet and through facebook.
I believe it was may 9 when i got a letter by e-mail.
Is the publisher of little brown stop he published one of my books.
I went to the amazon site to look at my book and i saw the evidence on the page.
Do you support what little and brown is doing?
These are two big corporations negotiating all stop i support that they both need to do it they are doing a stop i wish that we as authors and illustrators were not used as pawns.
It seems like the role of amazon is so much greater in the publishing industry because we do not have small bookstores over the country, in the way that we use it, but we do not have the same waltons and borders and barnes & noble's. that is because of amazon.
They have a wide range.
I think a lot of people have become more accepting of ordering things online.
They have made themselves very popular because of their lower pricing.
That is what they are using here to hurt the hachette group of authors and illustrators.
I want my readers to know that you can order books online from independent bookstores will stop how are you doing this?
I looked for you on twitter.
How are you letting your readers know?
And what can authors do?
That is a business negotiation that i would not even want to does best.
From my own personal response, i use facebook.
I am not on twitter.
I do not have enough time to write as it is.
I am reaching out to my friends and asking them to share my frustration.
I wrote a letter when i was extremely frustrated seeing what is happening to my current books.
You have young readers.
Have you heard from any of them?
I have not heard from a young readers with regard to this.
It is their parents were buying the books.
My young readers approach me because they love the books.
They have questions they want to ask.
When they are probably hounding you for your next book.
You already finished it.
The book ironically within the top 100. it had just won awards.
It is now ranked at half a million in sales.
It is available.
I wanted to know that my other books are available and will be available all stop i know that this will pass.
I want to reach a -- read a statement from hachette.
They said -- in what ways has your publisher and author centric?
They have approached us from the get-go.
They have said what is going on all stop as authors and illustrators, we are not welcome at the negotiating table stop we do not know what is going on.
What we know is what we see on our amazon page.
That is the only thing that i am going by.
I would like it to go back to what it has been.
I hope that will happen soon.
I wish i could download your book for my daughter's kindle.
I will find another way to get it to her.
I want to thank you for your time and your book.
Thank you so much.
"bloomberg west" will be right back.
? i'm cory johnson and this is "bloomberg west." cisco was the feast of the networks.
It was dominant.
These days it is much more.
I cut out what blair christie, cisco's chief marketing officer full top i asked her to describe the new cisco.
You have been warned.
This year is really exciting for us.
It is our 25th anniversary of stop the first event was held in 1989 will stop fast forward 25 years and we have over 25,000 people here in san francisco.
Many are joining us online.
This is a fantastic event.
They come to learn and get certification.
There is a 24-hour hackathon.
We play around with technology and we talk to experts.
It is five days of all things i.t.. i understand the numbers are different.
How does the customer base look different?
10 years ago, we had a less significant portfolio.
Now we have network engineers and routers.
We also security buyers.
We have application buyers.
The amount of buyers has expanded.
The portfolios have expanded.
This is the last of the.com bubble will stop technology for technologists.
They reached every consumer.
It is different now.
So far she is knocking it out of the park.
I was just saying, this is a different area of technology will stop i agree.
Are you sure you don't want to jump in?
John chambers with the photo bomb.
We are seeing this next wave of the internet will stop we call it the internet everything.
People, profits, and things are coming together.
We are trying to create business outcomes, not just amazing technology.
We have a ton of customers sharing with the activities.
It is better.
Give me an example.
Think about retail.
The number one way for retail to grow revenue is to improve the customer experience.
One of the worst experiences you can have is waiting to check out all stop the numbers are amazing.
People do not finish a transaction in the store.
They go online and say, more cashiers are needed all stop you put your stuff down and you leave.
We are working to put sensors in the parking lot so they know where the traffic is going.
They can predict when those lines will get busier.
They can get people to the registers a you can have a smooth customer experience.
They have reduced the waiting times by 30% will stop every second that they produce -- reduce the waiting times, they are saving $10 million.
That is a position -- business decision.
It is a networking products, software, you have a whole bunch of conversations about the data coming in.
You have profits.
You have to train your employees to understand what to do.
There is a whole combination.
The same as the chief technology officer.
D.c. the role of a network guy coming closer?
There's only one place for all this.
That is the network.
All of the data goes over the network.
If you can combine network analytics with information by the individual, it is pretty powerful.
A lot of what you say is engineers in the middle of it all will stop in terms of using acquisitions to get to that place, you guys are more successful.
But this event see a way to find new things?
We have an investment pavilion downstairs.
It is all of our startups and early investments.
The leaders from those organizations are here to share with our engineers.
In their giving us all sorts of insight.
It gives us an idea of what we need to build ourselves or go out and acquire.
There was at least one photo bomb.
There may have been to.
That was the cisco cmo will stop the market for management software is growing quickly will stop one of the dominant companies in that spot, how will they hold it?
We will talk to the ceo next.
? you are watching "bloomberg west ." i'm cory johnson will stop netsuite makes cloud-based internet management programs.
They work with the oakland a's. they are leveraging their services to grab more market share.
Joining me now is my friends, the netsuite ceo.
People are looking right behind the catcher.
They might see you stop you will see the netsuite logo.
Tell us about your customers.
I mention some of the smaller companies.
When you announce earnings, what about your customer base?
Netsuite was the first cloud company established in 1988. it was a small company.
You see the next generation companies.
Go pro and similar companies.
You are starting to see mainstream companies shift their infrastructure to these new cloud-based architectures.
Williams-sonoma roll this out outside the u.s.. the state of texas is using us.
We are their primary procurement system all stop they are using it to serve all the agencies within the state of texas.
The largest carpet manufacturer in the u.s., when they move manufacturing to china, they did on that we.
Now there are mainstream companies.
Grant that is exactly why we created this show will stop we were talking with the cisco cmo.
Technology is not just for technologists anymore.
It is about this rollout to the broader world of stop when you look at the results from hp, i felt like you can see that struggle happening where they could not figure out the cloud.
They have to respond to companies with lower cost in the cloud.
Hp has really smart people running it.
I know they can respond to the challenge.
It is the challenge that every company faces.
I would like to say that every company is becoming a cloud company will stop they have to figure out how to use this ubiquitous network to serve customers in new ways, ways where the customer is defining how they want to interface with a company.
They may want to interface through a device.
Your car will call back.
Order new wiper blades.
Those sort of things.
When you think about the internet of things, you have to act on behalf of the owner of the thing.
All of those things are causing massive disruptions.
You have to think about producing products.
How do you respond to these types of services and products.
A customer you story that is true today for netsuite that may not of been typical five years ago.
Things like the carpet company.
A berkshire hathaway company out of georgia all stop it is a carpet store in western michigan.
Their story was great because they have a big infrastructure based on traditional systems.
The pressures that the cloud was putting on their businesses and the opportunities to expand globally.
Interestingly, they said, we will not take the old infrastructure.
We need a new infrastructure.
The industry was being manufactured in massachusetts, often by hands, two machines in north carolina.
They are used to that kind of change.
Interestingly enough, when they first broke the system, netsuite was not on the list.
They looked at traditional systems.
Oracle and similar companies.
They added netsuite to the list and we ended up winning head to head with all of those traditional systems.
I do not mind not being on the first list.
I like being the last name on the list.
What can they do with your software that they could not do with others?
Time to value.
We were up in my -- up and running in six months.
Is that because the purchases of the software are smaller?
You do not need guys to come in and all this?
Quite a real benefit of a system like netsuite is how much more flexible it is.
You can get it in quickly.
Traditionally people thought these systems were not as flexible as the large systems.
They are much more flexible.
You can change your business in real time will stop you do not need to take a year to propagate a change to the system.
Not to get too arcane, but we were running the software or companies and we knew every customer wants to customize their application all stop we had to include customization.
That is a problem.
Once you customize, it is hard to change.
Some of those systems are sold by hp.
All three of those companies.
I think our revenue growth has declined.
You are really seeing a change.
You have gone to 34% growth will stop to what do you attribute that?
I think a lot of it is the move to the cloud.
You put a system in place and it is the heart of the company.
No one does that elected lay.
Something is changing and all of these industries.
Retail is changing massively.
You have to retool the infrastructure to be a modern company will stop it is a necessity.
The systems were designed before the cloud existed.
They were designed to prevent access.
You could not get through the firewall systems.
If you are running your system i business like that, you will not have an effective business.
You are seeing that move.
You can change a fan belt while the engine is running, but it is hard.
The ceo of netsuite, thank you.
The senate may have just killed tax reform.
We will talk about patent trolls next on "bloomberg west." ? i'm cory johnson and this is "bloomberg west." we are streaming on your phone, tablet, and who knows where else.
Are these hideous creatures truly innovation's worst enemy?
Our friends made this video to define patent trolls.
Check it out.
They're called patent trolls.
Companies acquire the rights to a patent but don't sell anything.
They have built arsenals, expanded -- collected from the abandoned stockpiles of universities and tech companies.
Then they go out for blood.
They target companies whose technologies are similar to those outlined in the patents.
They threaten costly lawsuits and less licensing fees are paid out.
Most issues are settled out of court will stop 4700 patent laws expired in 2012. -- were filed in 2012. 3000 from these trolls.
This week the senate took the innovation act off the agenda indefinitely.
They essentially killed the reform.
My guess joins me right now.
What do you make of this bill getting killed?
I know this is news.
Trial lawyers in washington have influence that is alive and well i'll stop -- alive and well.
[laughter] the stack of money that his biggest wins will stop what would this bill have done that will not happen now is jamar --? the ambiguity is how it works.
Trolls work because no one knows who they are who is paying for them.
It seems you have to disclose those things, now becomes much more difficult to become anonymous.
Anonymous is what allows these models to work.
We watch the show in 2011. we talked about the america indents act.
I thought that would solve all these problems.
It did one good thing.
It made the u.s. play on the international playing field.
That is a good thing.
We had to make sure we had patents that worked.
But it did not do anything to address the fundamental issue of anonymity.
It did not address other issues will stop among bees are patent review.
That just meant that it used to be if i got a patent issued, the presumption was that it was valid.
Now there is a mechanism where people can say, i do not think you invented it.
There is a mechanism to say, this thing was not innovative.
The patent should not have been issued.
That is a good thing.
That improves quality.
This innovation act, what was in that that would have made things so much better and why was the house able to get approval?
If you would have said bipartisanship was going to happen in the house and not the senate, i would have said, that is not possible.
But people realize that the cost of this problem, which is that you do not know who is suing you , that anonymity is what is killing business.
That is trying to figure out who is the beneficiary.
How can you know?
It can get so impossible with a tiny minority interest.
Are the single front of one owner?
If you wrote a bill that identify who owns it, you will find another shell behind another shell.
Finding out what the real party interest is is an interesting principle.
You know from corporate accounting that knowing who is involved is an impossibility.
Did you see my lombardi drawings?
You get to a place where you know that at some point the beneficiary will not disclose.
The more you put the responsibility on the involved party and you say, i will throw an allegation at the business, i had better disclose who i am, what is in it for me, and how deep is the pocket than i am fighting.
If i am getting sued, i will be in a situation where i have no idea whether settlement is a necessity or whether i can actually fight this.
Let's say you have a giant company that has a motto patents in seattle suing -- it creates a shell company.
It creates a little shell company.
It will file suit.
You do not know if it is important or if i am dealing with this giant company.
In those situations, the courts are complicit.
They have made a barrier to getting these things done so looks pensive that the cost of settlement is cheaper than the actual figuring that question out.
Because of that, the troll model is alive and well all stop not knowing who you are up against, and knowing that you have to figure that out, will cost you $2 million.
That sounds like a legal strategy.
It is a way to win in court, opposed to making sure the correct inventor gets credit.
Somewhere around 1981, we forgot about getting proper credit.
This is about the cold war strategy playing out at the end of the cold war will stop we are going through millions of patents.
Most of them are indecipherable by you or me.
We are trying to figure out where they actually attached to real business.
Trying to figure that out has been a puzzle.
In the complexity of it, it has made the troll business the way to harvest value.
Is there any hope for this?
The crazy thing is the supreme court has said if congress is not going to take legislative steps necessary to move forward, they will start acting.
The supreme court has a number of cases in front of it.
There were two decided in april.
If you throw an allegation and it turns out it was privileged, you are on the hook to pay for it.
That is a big piece of reform.
The troll model has its first shot against its achilles' heel.
That is coming from the supreme court.
Now i understand all stop thank you very much.
Always glad to be here.
Coming up, is pinterest lost in translation?
They have a problem attracting international users.
That is next on "bloomberg west ." ? lock him back to "bloomberg west." pinterest has been valued at $500 billion will stop it has trouble attracting users internationally.
Sara from bloomberg news joins us now.
You have an interesting story about the trouble that this business has getting international.
What we need to keep in mind is that pinterest is a cultural aim will stop -- cultural thing.
If you go on the front page of pinterest in the u.s., you will see ideas for weddings and tattoos and burger recipes.
People don't know that i'm covered in tattoos.
Those are things that do not translate abroad.
What print dress needs to do -- pinterest needs to do is go in and figure out the nuances of other cultures.
They have to figure out how to of content that is relevant to users.
When they make this ridiculous valuation, do they realize they are only in the u.s. will s? what are they doing to grow international users?
Translation is the easy part.
There are 31 different languages now.
The hard part is getting relevant content on the platform . a person who loves cooking in japan can see that this is a great idea i could use.
I want to contribute to this community.
How did they do that?
One of the guys that is heading up this effort is actually going house to house and talking to people and doing some research.
He's trying to figure out what makes them tick.
He has been hosting these events . he is pretty people together to try to get them to talk about using the site to organize their thoughts and desires.
Investors see pinterest as an attractive property because people use it to say what their hopes and aspirations are all stop i want to travel to this place and buy distressed.
That is great for advertisers.
What is more actionable than that?
I did a story about linkedin back in 2004. they said, we are really big in turkey.
We have one very connected user there.
He connected all the people that he works with.
Then they were exploding in turkey.
It was a network effect.
It did not require them introducing it.
It just required planting the seed.
That is a network effect.
It simply pinterest does not have that.
They're trying to get that by talking to influential bloggers.
They are going to people who have important travel blogs in france or cooking blogs in the u.k. all stop they are convincing them, why don't you share what you think on pinterest to all the people that follow you so they will start using pinterest?
It has just turned out revenues.
This is a pretty crucial time for them to be growing.
It is extremely crucial.
They are only 30% owned by the u.s.. most of twitter users are outside the u.s.. sarah frier, thank you very much.
It is time for the bs by -- bwest byte.
Jon erlichman in los angeles with the bite.
You might like this.
10. as in $10. the potential cost to get into the new star wars film.
Disney and lucasfilm and jj abrams of the new felt, they are trying to raise the money for unicef.
Disney has kicked and $1 million.
If you contribute $10, you could potentially be in the new film.
If we all kick and $30 between you, me, and emily, who knows what could happen with the new film?
There are some great possibilities.
We can season cory johnson chest.
Emily's hair in a new fashion.
Will i understand what chewbacca is saying?
There you go.
Emily has always wanted me to be sealed into carbonite.
Now it will actually happen.
That is needed they are doing this.
They are giving back.
There will be so much hype.
Let's breeze a little cash for charity.
Thank you for that disturbing image.
You can read the latest headlines at the top of the hour and on bloomberg.com.
We will see you on tuesday.
Have a great holiday weekend.
This text has been automatically generated. It may not be 100% accurate.