Live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world.
I'm cory johnson in for emily chang.
Our focus is on innovation, technology, and the future of business.
Let's get straight to the rundown.
Cisco slashed another 4000 jobs.
It is the latest round of surprise cuts from the ceo.
Textbook rental service chegg files to go public.
We talked to the ceo about taking the public -- the company public.
And hitting theaters this weekend "jobd." -- "jobs." first, to the lead.
Jobs being cut at cisco.
They will emanate 4000 jobs.
That is 5% of the workforce due to lingering concerns about the economy and inconsistent demand for products.
Revenue is $12.4 billion.
Of 18%. -- up 18%. all of this comes after cisco made about a dozen acquisitions.
Shares are down in after-hours trading.
We bring in one of our bloomberg reporters.
When you look at this quarter, they have sold more stuff than ever.
They have made more money than ever.
That was not enough?
This was not as a press to most folks.
Talking to analysts ahead of the call, they said cisco was doing well.
They have laid off a number of employees.
They are doing better.
There are some rough spots.
Overall, they are expected to do pretty well.
And they did it well.
They have an ounce of the kolbe will be cutting 4000 cuts.
That's about 12,000 job cuts within the past two years.
Cisco was able to deflect a lot of blame.
They were able to say the expansion got away from them.
There was a complaint there were too many layers of management and cisco.
People did not have bosses.
They had committees they had to report to.
They talk about slimming things down.
It seemed to work.
Very unusual management structure there.
They were able to cast some blame on some of these endeavors.
Maybe there is something wrong with the core business.
He blamed the business in china.
The chinese government basically said not to do business with cisco because of allegations of them by a against huawei.
There will be friction because of while way.
They have been hovering around the low 60's. a constant complaint is that analysts analyze incorrectly.
When the guidance came out on the conference call, the stock pulled up in after-hours.
Analysts were guessing revenues would get 5%. cisco said they would be up about 4%. cisco will come out or teen weeks from now and beat the estimate.
It seems like a game of guidance and not a measure of how the company is doing.
Cisco beat by a penny.
Maybe the revenue.
-- it beat the revenue.
It is understandable.
What the stock is really selling off on is the idea that cisco is dealing with slowing growth.
That is a trend that cisco has not gotten a handle on.
I cannot blame consumer businesses.
Thank you for sorting out wall street.
Jordan robinson of bloomberg news.
Tomorrow morning, the cisco ceo will be on "in the loop" with betty liu." chegg as file for initial public offering.
In silicon veteran talks about what it means to take the company public.
Take a listen to what he had to say.
In silicon valley, for those who are here, it is a separation of the better companies from the not so strong companies.
It is sort of this is -- consumer internet taking control of which companies will be around 100 years versus the ones that are sort of should ups and run into trouble.
Levy joins us from the newsroom.
This chegg ipo, we might have seen for a while, but we did not see any numbers.
What did you see?
The numbers were not so off from what we expected.
It has lost a lot of money, over 40 million dollars last year.
What is interesting is still they are getting 87% from their traditional textbook business.
They are focusing much more on digital businesses such as homework help and question and answers.
Things that can make money.
That is where they're putting the emphasis and innovation.
They are still getting 87% from the classic textbook rental business.
That will be something they will have to address.
We will be hearing from them because the guy likes to talk.
Listen to what he said and described his business.
We took the risk and raised a lot of capital.
We bought the textbooks.
We used technology data and algorithms to successfully grow that business.
So, ari, any sense the business has meaningfully change?
They have many more users for all other digital projects -- products.
Frankly, there's not a lot of competition for them.
The pennies have not really gone after this market.
-- companies have not really gone after this market.
We do not know how profitable they are.
They have not broken those numbers in a meaningful way.
The traditional textbook rental business is low margin.
It is a money-losing business historically.
When you get into digital business, you compete with the amazons and googles of the world . web startup wants to be left with that?
There will be a lot of questions that arise.
Yeah, it is an interesting business indeed.
When you go through the risk factor, that is often where you start to see some of the dirt.
They are required to lift the risk factor.
There was this notion of textbooks as a big part of their business.
It is an interesting business.
It was a cumulative deficit . a write off from about a third of their acquisitions that has failed.
They had to take a write-down last year.
I wonder how much of this is fundamental in the technology business and not the textbook is this.
Reed hastings and netflix, for a long time this is that netflix affect.
Their decision was to get as far away from physical goods as possible.
This is the guy that pioneered the model.
Anything that involves sending feasible goods by mail and expected those things to return and try to get margin on that, that is not a business for the next generation, for the next 20 or 30 years.
Lately the future of chegg is how well they can serve college students and potential high school students with digital content they are willing to pay for or are valuable enough that advertisers can go after them.
That is very much up in the air.
You can do the math.
The digital business is not very big right now.
Another interesting company at a crucial point.
Ari levy, missing.
Armstrong publicly fired one of his employee is, but now says he is sorry.
You can watch "bloomberg west" on your phone and on bloomberg.com.
? this is "bloomberg west." i'm cory johnson.
Shuffling executives as he tried to turn around the social games maker.
Three employees are leaving.
They are taking layers out of the executive branch.
They want to get senior leaders lows are too important product initiatives.
This seems like the revolving door.
These are top management.
There are a lot of chiefs of the company and not many indians.
Too many people in management.
He is trying to prune down the company.
They have a really popular game right now.
Failing have 540 employees.
-- they had 540 employees.
Now they have less.
Building a political infrastructure at the company -- when you look at those who are let go in the shuffling, they were responsible for the blow to the company.
They had to build up this company.
They are down to 2300 employees.
They still have 1000 to go.
I cannot imagine the more out when you lose 1100 employees in a year.
Most of the people who were there before and are still there and things are down in the dregs, how important is this?
You talk to people at the company and there is a lot of paranoia.
People are not very happy right now.
That is why you do not need the chief people officer in the first place.
They clearly have a lot of issues to deal with.
It is not her problem anymore.
Staying with the notion of executive changes, aol ceo tim armstrong has made an apology for making some changes.
He was preparing the tech division for layouts and management changes.
He saw someone holding a cell phone shooting video.
Take a listen to what happened.
If you think what is going on is a joke and you want to joke around about it, you should take your stuff and leave.
I will be specific about this.
Put that camera down right now.
The tape went public.
Armstrong is apologizing.
He set out a memo saying, i am writing technology a mistake i made during the meeting when i publicly fired abel lens.
It was an emotional response at the start of a difficult time and many people's careers and livelihoods.
This was remarkable to put yourself in that room.
There are big cutbacks happening.
The apology is remarkable.
It is remarkable and unusual.
The context is that it is usual there was an audio recording that leak out on the internet.
It became fodder for everyone to click on and criticize tim armstrong for the way in which he did it.
The fact that he was having a meeting with at least 1000 people listening in and he basically fired the guy in front of all of those people, that is not cool.
He realized he had to apologize publicly.
It was unusual.
There is a media website that has media gossip for well over a decade.
Did he apologize because it went public?
Or did he apologize because he was too -- i remember when there was mediagossip.com.
Most of them are right.
He got the first leak of that.
He is widely read among media folks like us.
That is reverberated.
That is the context.
You have to wonder and question had this not leak out, would tim have apologize?
I talked to tim all the time.
He is a passionate chief executive and a good salesman.
He is a pretty forthcoming executive.
I'm certain he would have apologized, but the fact this public nature made him force disease of the out loud, that is a big -- forced him to apologize out loud, that is a big factor.
Don't put a camera in your bosses face.
Edmund lee, thank you.
We will be back after this.
? we have something really special to share with you.
1000 songs in your pocket.
I would like to introduce you to the ipod.
[applause] people will celebrate him.
I was at the real steve jobs event.
That was asked and could sure lighting steve -- that was ashton kutcher playing steve jobs.
The film was produced independently.
Jon erlichman, looking to the future, is in los angeles.
What does the future hold for this movie?
What is interesting is that the world of blockbusters, they have spent a career taking small films and getting them in front of the bigger audiences.
Good of you to join us again on "bloomberg west." it feels like the buzz surrounding this one is bigger than anything that open road has released so far.
Is that fair to say?
There was a fair amount of interest in "jo bs." the subject matter is very important to techies and consumers.
It has been fascinating to watch.
2000 plus screens.
It is in part in honor of steve jobs.
Can you tell us more about that?
2400 theaters come friday.
All digital release.
We're not doing any 35mm prints.
In honor of steve and his memories and innovation, it would be an appropriate time to do it all digital relief -- release.
When you talk to buy being an unconventional man, for the market approach, you took on conventional approaches.
Tell about the marketing behind this.
Certainly steve jobs is one of the most unconventional men of our time.
I think the film does a terrific job of honoring that legacy.
We felt it incumbent upon ourselves to do a similar job in the marketing of the film.
We have done some unconventional things.
We had an instagram trailer.
A digital marketing group did a good job of uploading 15 second trailer in instagram that had never been done before, but they did it.
He had a very successful google chat and reddit live.
Ashton kutcher and others, very tech savvy and entrepreneurial.
He lends himself to the spirit of a tech savvy campaign.
Open roads has a deal for films to make their way to netflix.
Did they get involved in the marketing or help?
Additionally, when can we expect to see this film make its way to netflix?
Netflix has been a terrific heart and are of open roads.
We are appreciated of that support.
They do not get involved too much in the marketing of our theatrical features, but the film will be available on netflix in early 2014. probably in the late spring of 2014. we'll have our theatrical run.
We will have it be turned into dvd and blu-ray.
This bigger picture were george lucas talked about the future of hollywood, even more big lock busters that maybe you get charge more at the theater, but that kind of movies you guys are focused on are somewhat different.
What do you think about those comments.
When steven spielberg and george lucas speak, only a fool does not listen.
They referenced the potential for bigger blockbusters failing because the studios are relying more and more on those blockbusters, but there are more of them.
More of them will fail because they are doing more of them and crowded on top of one another.
The box office will reach an epic record level.
There have been some big- budget failures in terms of what they're talking about invariable prices, i am not so sure.
Open road will happily follow the industry.
Do you think steve jobs would have been a fan of this movie?
I really think steve jobs would have been a fan of this movie.
I know he would be a fan of ashton kutcher.
Tom of open road films.
" jobs" is coming to theaters this week.
"bloomberg west" will be right back.
? this is "bloomberg west," where our focus is on technology and the future of business.
I'm cory johnson with your -- bloomberg top headlines.
Tencent posting a gain.
They are embarking on big ad campaigns.
It is trying to take out e- commerce leader alibaba.
Shares are down since their ipo last year.
Ibm has one of the biggest cloud computing contracts with the government.
Ibm's new deal is valued at $1 billion.
There are similar contracts with other companies.
The new york times website e- mail says there was an outage caused by an internal malfunction.
While the site was down, the new york times turn to social media for help to post entire stories on its facebook page.
It's facebook is it contingency plan.
We have a bloomberg contributing editor.
Nicolas, this is strange.
They are publishing -- the publishing platform for two hours was facebook.
It is reliable and has lots of readers.
They have lots of fans.
It was a smart move.
People wanted to know what "the new york times" was going to say.
They smartly took full articles and put on facebook.
Normally they would put a headline and a link to get people to read it on the website.
"the new york times" says it was an internal issue.
It was all sorts of rumors and gossip that there might have been hacking.
Should we believe "the new york times"? "the new york times" has been honest regarding these issues.
They are being cautious in what they say.
Nothing to indicate there has been hacking.
When this happened, a lot of people thought it was hacking.
They caps on was time to take down "the new york times" site.
Now it does not seem like that.
There were a series of options during hurricane sandy.
A lot of sites were down and they turned to tumblr.
You could have a customizable look and make it look more like your site then you can on facebook.
I do not know what the internal decision-making was, but when any organization is in a system -- situation like that, they have a variety of platforms.
I was thinking about "the washington post" and jeff bezos.
Here we had "the new york times" who had to find an alternative fishing platform.
They had to innovate on the fly.
The current owner of "the washington post" -- it struck me that this is the kind of experimentation they can get going forward.
It might be.
"the washington post" experimented.
There is a long period of extermination of "the washington post." the experiment were if i read something on "the washington post" and link it to my feed, a great a lot of.
Facebook backed away from that.
"washington post" has experimented heavily with facebook.
There is the real opportunity for that kind of experimentation . maybe they were forced into doing something they have not thought about before.
It is interesting with the social media experimentation is intended put out this exciting multimedia story.
It was a day of innovation.
Do you think it was a horse jockey story?
When they announced this facebook event, graham came up to me with a laptop in his hand and showed me this "washington post" thing.
They were trying innovative things, but he kind of gave up.
They really did try to experiment with technology over the last few years.
It really has.
They continue to.
There are a lot of small innovations and things that "the post" did that did not really handle the fundamental flaws in which they got their lunch eaten by politico.
Then on the national site, they have their lunch eaten by "the new york times." as i said before, looking forward to what they try.
Nicholas thompson is being modest by not talking about the lunch meeting going on at thenewyorker.com.
[laughter] thank you.
Pandora is not afraid.
We hear from the pandora ceo when we return.
You can always watch us on your tablet or someone else's phone or on bloomberg.com.
? welcome back.
I am cory johnson.
This is "bloomberg west." you can catch our early edition at 10 a.m. the number of music listeners on mobile devices is expected to rise to 78%. that means more opportunity for advertising on internet radio.
Jon erlichman is in los angeles with more.
Talk to me about this.
A lot of times we talk about growth in mobile ad revenue, to talk about google and facebook.
The third largest when it comes to generating mobile ad revenue is pandora.
I spoke with the chief financial officer at pandora.
I met up with him in boston at a conference.
I asked about the company does he strategy when it comes to making money on mobile.
We have been working on mobile monetization for some time.
It has been a cornerstone of our growth.
We lead the internet radio market by a longshot.
We have over 70% market share.
We have been working on monetizing mobile listening for years now.
I got the sense from your comment today that he felt like you could do even better.
That can help the bottom line.
You guys have these fixed costs that you have to pay, royalties, licensing fees.
If advertising trend gets better, that is better for your bottom line, right?
We have a native product for the mobile environment in audio.
There was a natural advertising market for that advertising unit.
We have been investing aggressively in sales people to drive more dollars out of the broadcast radio market and into the internet radio market.
We think that will continue to grow pretty substantially.
Out of the 70 million users we have, 80% of them listen to mobile connected devices.
Just to build on that, you made some headlines today.
You were asked about itunes radio.
Apple is moving into this business.
You suggested that you think they could benefit your business . there is awareness that it creates.
Can you elaborate?
I think there are arguments to be made that it will accelerate the trends that e- marketer highlighted.
We have been in this business for 8 years.
When we entered the business, there were other well-funded companies.
As the market has grown, we've had taken more than our share.
As this market continues to get larger, there will be additional -- it will allow the market overall to grow.
When that happens, it will grow along with it.
Is there a number you can give us on the issue of how much of your advertising models -- dollars is coming from traditional radio?
Or is a lot of the money new advertising dollars?
Well, we are definitely moving dollars from broadcast radio to the internet radio.
That is a relatively new phenomenon that has occurred in the last 18 months.
We have rolled out sales force that has targeted at those ad dollars and built infrastructure and the and the gratian into the platform to enable that to be applied to internet radio.
That movement as early in its lifecycle, 7% of market share in the u.s. and less the radio market from advertising budget today.
It is a trend to watch.
He also talked about the business you have been building in australian and new zealand.
When we think about pandora and international expansion.
Where she would the -- where should we thinking of places on your radar?
Technologically, you are ready to enter the markets.
There are just a lot of factors in play.
The key hurdle to get over international market is a licensing market.
That is the rights to use the content created by artists in order to provide a listening experience and to drive revenue on top of that.
Today, only australia and new zealand have emerged in areas where we can get favorable licensing terms to drive a profitable business.
We have not seen those terms emerge in other locations, but it is our job to show that we win best -- when we invest in these areas, we can create a new revenue stream that benefits copyright holders and also helps musicians access audiences and drive value to them.
We are hopeful that other locales will open up.
Jon, he talked about driving profitable business and driving more dollars from broadcast to the internet.
Did he talk about driving?
Funny you should ask.
A lot of times when we think about businesses like pandora, we think about a presence on the phone and tablet.
There is a new battlefield, and it is the car.
Many people are listening to pandora on their car.
Coming up, we will do an in- depth story on all of those drivers in markets like right here in l.a. they are getting to where it is integrated with the car.
There is a huge development for auto manufacturers and people in the industry whether it is pandora or apple.
Drones the sending of the district of columbia.
They show off the latest technology.
What role will they have in business?
That is next on "bloomberg west." ? welcome back.
I'm cory johnson.
Drones -- they are showing off the latest innovation at an annual convention in d.c. today.
The companies talk about how they are making money using provoke a load -- remote- controlled planes.
It was a few weeks ago in late july the faa gave two companies certification to get into commercial drones.
One of those has a certain model and the other company is a subsidiary of boeing.
At the drum conference this week , i spoke with executives from both companies about getting into this new market.
The commercial side is very much -- their applications in use right now.
They can monitor whales and different cultural activities.
There are some applications on the police agencies side of it.
The other kind can land and water.
The plan is it can help response crews.
The other company will not name its customer, but says it is a major energy company and the vehicle will help in exploring alaska.
Executives there say they are looking for global and commercial markets to help fill the gap created from defense cuts.
Both of these vehicles were previously used by the military.
This certification is one of the first steps.
Back to you.
Megan hughes, thank you.
Add targeting is getting smarter.
Those issues have been following you.
Joining me is my guest.
Good to see you.
For people who do not think of how advertising works, what we have seen in advertising online has changed dramatically.
We are used to almost ignoring all of those banners we see everywhere.
Something happen were all of a suddenly noticed the banners again.
We notice them because they were doubters that reflected places we have been before.
When we are thinking about buying that pair of shoes or those eyeglasses, that exact pair showed up when we went somewhere else in those banners.
That is called retargeting.
That is programmatic retargeting the ad?
A little piece of code is stuck on your browser that you are unaware of.
That code is activated when you go to another website.
Inventory is made available on a programmatic exchange.
Someone buys it to be target that same content to you on that site.
It is fairly amazing.
You mentioned issues.
It is shocking that everywhere i go, i see the same ad.
You are experiencing the metrics of conversion, conversion, conversion.
They know if they show you 7, 8, maybe 10 times, you have a higher chance to click on the add.
Does it work?
It does work.
This is driving much of the boom.
But to us that we are doing is we think the content should be what you are shown and not just things to buy.
What is next?
You have got this amazing invention.
What is the next thing we will see?
Companies have been eager to become publishers and start joining the conversation online and on twitter and instagram and be part of what people are talking about.
This is the rhesus peanut butter cup of marketing?
They're having things to say and they are telling stories and putting them up online and hoping people engage with them.
When people do, it is usually ones.
They want to remind them of the stories and follow them around like those shoes follow you around.
What would this look like?
When i think about the content that the corporations make for me, it is not the kind of content i want to read.
It is getting better.
Corporations are doing better idea -- doing better.
Starbucks is doing a good job of taking pictures of people taking a first step of their frappuccino.
American express is good at making content for small businesses.
Sometimes people only go to that site once.
Surpassed -- son has gone to that site and haslett -- someone has gone through that site.
Now the person is understood.
The cost of creating that content is much were difficult because it is highly specified.
One of the big secrets of media is -- that is exactly the point.
The costs are high.
What you want to do is once you have made it, you want to distribute it as much as you can to as many qualified prospects as possible.
This is adding efficiency to the high-end content created.
That is why you have the reese's peanut butter cup.
Let's go to the bwest byte where we focus on one number that reveals a lot.
Jon erlichman, what have you got?
7 feet, 1 inch.
That is the height of the social media came and and a legend, shaquille o'neal.
I was on my way to an assignment when her did i see wearing his pajamas?
No one other than shaq.
Shaq in his jammies.
We are suspicious this is a bit for -- their response was, no comment.
Were you also in your jammies?
I should have been.
I would have gotten more social media attention for it.
You have interviewed shaq before.
I have interviewed him many times.
He is very large both on twitter and in life because he is more than seven feet tall.
Jon erlichman, thank you.
You can get the latest headlines at the top of the hour on bloomberg radio and all the time on bloomberg.com.
We will see you on "bloomberg west" tomorrow.
This text has been automatically generated. It may not be 100% accurate.