Live from pier three in san francisco, welcome to bloomberg "wetsst." more job cuts coming at cisco.
The networking giant laying off an additional 6000 workers or eight percent of the workforce on top of another 12,000 employees who have artie then let go over the past three years.
The layoffs come as cisco failed to report significant growth in the fourth quarter.
Revenue was flat at 12.4. net income dropped one percent.
The company is struggling with weak demand as well as competition from companies making cheaper networking gear.
Joining us is peterborough lows who covers cisco.
Obviously the yost were not expected.
There are probably people relieved because it was as high as 20% rumored.
Now i think they are seeing emerging markets a lost -- a lot worse than they thought.
They are also having issues with phone carriers, about a third of their business, a very big market.
There is a whole lot of change ahead of this company.
Phone companies are struggling.
They need to become more like google and facebook and change the infrastructure so it is less about telecom equipment that has to be tested and proven out over 3-5 years and be more like google and can crank out software eric quickly.
So it is all about software and not hardware.
All about software.
That is the transition they will have to get through.
This kind of happens every year or has happened the past several years, they buy a lot of companies as well.
How does it all add up?
They are adding talent at the same time.
You have to feel for them.
The stock has been stuck in the range for 10 years.
They made a lot of changes but the market is moving so fast.
There is a lot moving through the cloud.
It feels like the changes are faster.
The ceo moving toward retirement becoming more up runt about the plans.
Is it a sign a new -- needs new leadership and blood?
No one is really calling for that.
Most people feel like they are in the middle of the transition.
He is definitely a proven hand.
If there is a criticism it is maybe they have lost talent from people who are blessed because they were not becoming ceo.
That also argues that you may want to have a guy like him at the tiller.
He has been pretty outspoken about how the nra regulations have impacted the business.
How much of some of the things we are seeing is because of other companies have lost trust in american companies?
China was found 23% last year.
They spend more on r&d than cisco does.
While wabut there are other serious challengers.
A very small company just ipo to and grew sales 90% from year-over-year.
Cisco is kind of flat, down.
They have a lot of different challenges from a lot of different directions.
Will we see as strategy shift?
he said how many different ways he is happy with his hand, likes the strategy that yields like they are making headway.
They are making headway with some of the new product lines and software defined networking products, software stuff but we are talking about one of the key businesses just hit 100 million, $47 billion company.
Going to take a while for that matters.
Fax shares are down.
-- shares are down.
Why is he not budging?
I think he is playing a long-term game.
Networks can change overnight.
Companies -- a phone company cannot change out infrastructure overnight.
It would take a long time.
That is i think one of the things that is really in their favor that is if there is a criticism is that it is not changing too quickly.
Thank you for bringing us the update.
Right now asia's most valuable internet company.
That could change when alibaba goes public.
We will look at the growing tech rivalry when bloomberg "west" returns.
Welcome back to bloomberg "west." i'm emily chang.
Alibaba starts the road show september 3, which means it could go public eye september 16. the rival reported bigger earnings.
The owner of wii chat said revenue rose in the second quarter.
I spoke to the owner of the site that sells luxury goods to the chinese market and leslie picker who covers ipos.
I started by acting her -- asking her what impact it could have on ali baba.
All of the al wish and metrics are still fluid.
The eta will certainly cover alibaba.
My sources tell me that if a company they are looking to compare it to.
When it back out it will be compared -- will be compared.
The bigger it the valuation cometh the bigger the offering size usually.
How much of a challenge is this to alibaba?
Where do they compete the most?
It is a tremendous challenge for alibaba.
There was overlap today and more strategic.
Alibaba has owned e-commerce in china now for basically since the advent of e-commerce in china.
What $.10 has been able to do -- tencent has been able to do is encroach on alibaba's turf.
I would say it is more about defense rather than offense or alibaba.
What are investors saying about that?
Are they worried or it do they feel like it stands on its own?
I think the focus is users, back to the old, how do you value a big internet conglomerate?
It is all about users and how many people are visiting.
Now if they do appear to be taking users away, that could impact the way they view the company and make it a lower valuation going into the ipo.
If they maintain the same user stronghold they have been able to exhibit over 15 years in existence, that would be something they also pay attention to and will subsequently looking at it -- look at it and a more favorable light.
What you are working on is trying to bring luxury goods to china.
Both of the companies are struggling with counterfeit goods, all to come -- common in the chinese counterfeit market.
It is a little bit catch-22 as it relates to alibaba and how they work with the west.
Essentially what they have done is built the business off a mass of consumers and illegitimate settlers -- sellers of products.
On the put side, they are waking up and saying we need to own the relationship direct with the chinese consumer.
And if alibaba will play a role, has to be a constructive role.
The challenge is how to construct a positive relationship with the brands while not diminishing the value they bring to the consumer, which is primarily discounted conduct.
That's one of the big questions is can the companies succeed on a global scale?
Can they be the e-commerce giant for the world?
Are investors more positive about one or the other and alibaba specifically with regard to amazon?
Alibaba has taken the investing approach.
They will invest in startups in silicon valley and their way of penetrating the u.s.. not much evidence they are looking to replicate the model that they have been so successful in china and bringing it over to the u.s. yet.
That said, not completely out of the question option for them.
Right now their strategy has been to take stakes in startups here and benefit that way.
Something else happening is so much and may -- so much m&a. buying other companies and making strategic investments.
How does that play out when you look at the giant players?
I kind of liken it to the red sox and yankees about 10 years ago where they just have more cash and capability and soon to be greater market value than any other business in china.
Basically the market in china is right now to be bought by one of the companies or a few others.
Really it is about tecencent and alibaba in arms race and then trying to set up asia and the developing world and eventually making the strategic investments outside of china in north america and europe.
Which company is red sox and which is the yankee?
That is the good -- a good question.
What they have essentially been doing is not to the labor this.
They have been playing moneyball.
They have been using insurgent position on the mobile device through mobile link -- mobile and medications to gain market share from alibaba.
The relationship has been a little bit complicated since jack ma spun off this part of the company back in 2011. i remember coming through this word or words to understand what the relationship is today.
Back in 2011, the whole purpose of spending it off is because it restricts forward ownership and list the transaction on marketplaces.
Once they sign off, a little bit controversial because of the way they left major shareholders out of the conversation.
So it was spun off, and what yesterday's restructuring agreement does is says if they were to do their own initial public offering that alibaba what have an unlimited ability to get a windfall from that.
Before they were cap that $6 billion.
Unlimited potential in taking the equity stake in the company.
I remember yahoo!
Was pretty unhappy with this move when it was spun off.
Is the new deal dead or bad for the investors?
Good or bad for yahoo!
Most people would say it is a good and bad thing because it gives them a greater profit sharing within the overall financial services asset.
Profit sharing directly.
Profit sharing with all of the financial services have increased, giving it a bigger access to a larger pool of assets.
That said, if they were to do an ipo, that would mean a much bigger windfall for ali baba in and of itself, but because of the restrictions on foreign ownership him it would have to do the ipo in china.
There has been a big backlog in china.
This is not something we would see in the near term necessarily.
Could be several years away.
You used to be attacked thinker at morgan stanley.
So many interesting and potentially confusing things in it comes to alibaba.
It is a chinese company to start and are dealing with the chinese government.
How you think investors will think about some of these issues on the roadshow?
Are there going to be a lot of questions?
I think the biggest challenge alibaba faces with regard to the ipo is the governance issue.
He is an amazing, charismatic executive leader.
He is also mercurial and controls his company.
There are certain relationships that go on behind the scenes that western executives that are not quite is used to that relies some time on selective enforcement of different regulations etc.
And china that we are not used to hear.
Coming up, amazon getting into mobile payments.
That is next.
? that is a look at some other stories making headlines today.
For the latest you can always visit bloomberg.com.
Another story we're following, at&t wants to clear out old apple inventory ahead of new iphone and ipad launches.
As a result, at&t offering discounts for those that by the iphone 5s and 5c. it is unusual for tablets to be included in the discount.
E-commerce giant amazon now expanding into the mobile checkout business.
The company just launched amazon local register that it helps physical stores will use.
Also taking aim at mobile payment competitors like square and paypal.
I am joined by the chief research officer and our technology officer who covers this in bloomberg -- a bloomberg.
This is another move of amazon being the disruptor.
They are basically starting in retail.
Moved to out services and now that they are at scale, they are in a very enviable position.
They have a machine they can drive through different kinds of experiments and disruptive efforts.
So the phone we saw earlier this year, that is really about understanding the retail experiment.
They will probably learn a lot.
This is potentially a double whammy.
They will learn a lot and can undercut, have a ton of scale, relevance and move it through the machine and potentially damage the competitors out there.
This is a long game.
This is a big, disruptive move on their part.
90% of commerce still happens in physical retail stores.
This puts amazon into the stores potentially.
This is a full percentage for -- point lower, that is kind of hard to beat.
If you are asking whether it is too late for amazon to come into this, if you charge the user less, they will want to use the product.
I think square prove there is a market for this.
Obviously when you looking at physical stores, sounds big.
You are often talking about smaller merchants.
There was a question about how big the market could be.
The mobile payments based.
We think it could be a $20 million market by 2017. that will only represent 2.5% of all payments out there.
80 it is a crowded space but it has a lot of upside.
When you get into small businesses, probably about 20 million small businesses but the vast majority are really filed for tax reasons with zero employees.
7 million actually have employees.
It is about getting a small piece of the fast-growing mobile payments segment, which at two point five percent in 2017, maybe a crowded space but a lot of upside and growth.
. paypal also ones into the space.
I want to ask you about square.
They have been doing a lot of interesting things.
They recently bought a food delivery company called caviar.
They have been on the receiving end of bad press recently.
This part of the strategy or just throwing stuff at the wall to see what sticks?
I think they need to look beyond the payment came -- basic payment service to see where else they can be useful and maybe that would make a broader case for the business strategy.
Rumors they would ipo and then people saying they were not going to ipo.
So there are a lot of doubts about the future.
The bigger they say they can eventually be, maybe things will look better for them.
Amazon, paypal am a which is owned by ebay -- these are giants.
Can square really compete?
It will be tough to compete without some kind of an acquisition deal.
Again, they invented the category to some degree.
They took it to the next level?
Now the scales rise exponentially with the larger machines attached to them.
What i mean is you look at amazon.
They can learn a heck of a lot about what they are doing in the mobile payment space.
When they see you buying something i'm at when they see you making a move on a specific product, they can start coming at you with the online experience and marketing to you that way.
Square will need partners to pull those maneuvers off.
I think it gets pretty steep foursquare from here if amazon is able to move this through and get serious volume.
Crocker del pratt, thank you both.
Wearable devices are capturing all kinds of information about the human body these days.
Information that could be extremely helpful to understanding serious diseases.
We will be back with the new strategy that could change the way medical research is next on bloomberg "west." time now for a bloomberg television on the markets.
I am julie hyman.
Taking a look at where stocks traded today.
We saw a rally in stocks despite the fact that retail sales came in weaker than expected by economists.
That would lead some to say the fed has more room and will not raise rates as aggressively as some had feared.
The nasdaq and wishing the day up i one percent.
-- finishing the day up 1%. ? . you are watching "bloomberg west." i'm emily chang.
Could wearable technology be to a cure for parkinson's disease?
Intel has announced a partnership with the michael j fox foundation for a study.
It will use wearable's to track patient sleep patterns and tremors to understand the degenerative disorder.
Michael j fox's foundation ceo joins us now.
Thank you for joining us.
And first of all, diane, what kind of wearable devices are you using, and what are you tracking?
One of the objectives is to support as many different wearable devices as possible.
We support a variety today.
We will be adding more to it, including intel's wearable device that we acquired through that company.
But the idea is to give patients and research institutes as many options and solutions as they choose.
We are tracking many different activities of the patient.
We are tracking their gate, hand -- their gait, hand tremors, and other information.
What kind of value does this information have for providing better treatment for parkinson's disease?
It is incredibly important and valuable.
Parkinson's is very complex and there is a lot of variability in the symptoms the patient cap.
-- that patients have.
The symptoms could change within a day.
We have no current way to object in a way what is happening with the disease, how the patient is responding, and how a treatment is working.
This is the first time ever we will have this opportunity to leverage technology to advance our understanding of the disease.
Diane, once you gather the data, what kind of patterns will you be looking for?
How do you find those patterns?
That is a great question and that is why this partnership with the michael j foxconn -- fox foundation is so important.
We can use algorithms to analyze the big day that solutions, but it takes the expertise of the medical researchers from the michael j foxx foundation and their network of partners.
It is that combination of the technology expertise with the medical researchers core domain expertise that allows us to extract meaningful information from the wealth of data being collected.
What is the status on finding a cure for parkinson's disease?
How could this help?
We're making great progress in finding a cure for parkinson's. it is a difficult disease with a lot of complexity.
We have a robust drug development pipeline.
We are trying to find treatment that slow the progression, stop it in its tracks.
There is a lot going on in clinical testing.
This work we are doing is clinical -- is critical.
We have to determine if these medicines are having the effect we want.
Do you see ways to focus on other diseases as well?
Is that part of the plan?
It absolutely is part of the plan but there is a pent-up demand for big data analytics solutions.
This will be extensible to other diseases as well as other scientific discoveries, and even extensible into other verticals, like transportation, industrial, retail.
So much of this platform is reusable.
And our effort and intel is all about making a platform robust, easy to deploy, reduce the complexity so we can use the data analytics solutions more pervasively.
What other diseases have you been thinking about, or have discussed?
Alzheimer's is another directly applicable disease to parkinson's. we have also discussed cancer, and the use of genomics data to help create a better correlation between a patient's cancerous tumor and the wealth of data available through genomics, which is now becoming cost-effective and quite pervasive.
I understand that you are starting with 20 patients.
How will you scale this?
What will it take to scale this beyond that?
We started with a small study to get a feasibility approach and start to get a handle on managing the data, tracking the data, how the patients use the devices.
And we have a plan now to roll this out, do more trials, get more patients involved.
The power of this approach will come from large numbers of patients participating actively in improving our understanding of their disease.
All right, ceo of the michael j fox foundation and ceo of , intel, fascinating stuff.
Rolls-royce is the definition of a luxury car.
Luxury car maker is using high-tech features to attract a new generation of luxury car drivers.
That is next on "bloomberg west" and you can watch us on your phone, tablet, apple tv, and amazon fire tv.
I'm emily chang, and this is "bloomberg west." rolls-royce is one of the most luxurious cars on the road.
The british carmaker unveiled its latest ultra high-end automobile last month.
The company says it is their most luxurious way to stay connected at all times.
But with technology changing faster than a roles can get to -- from zero to 60, how do they make sure they stay relevant?
Matt miller joins us now.
Are you are car reporter, or are luxury car pull -- car reporter?
We're always talking about aston martins or rolls-royce, not hyundai.
I cover hyundai.
But i have had the pleasure of driving in a couple of rolls-royce is.
One of them with the ceo of the company.
He joins us now to discuss the predecessor to that car.
I drove the ghost with you in new york city.
Now we releasing the series two.
What is it about this car that needed to be improved?
I thought it was, honestly, the most amazing driving experience in my life at the time.
I don't see a you could improve on it.
What did you do?
Rolls-royce is all about striving for perfection.
We are always searching for the latest technology and to make sure our cars are living up to the unbelievably high expectations of our customers.
For that reason, we made it a series two with led headlights, and related transmission, and many other features to really ensure customers are getting the best car on the road.
A lot of people watching will wonder what the satellite aided transmissions do.
Could you explain to the viewer how that helps your experience?
It is basically a connection between your transmission and the satellite guided navigation system.
It allows the transmission to think already miles ahead what the right gear is for you.
And to really sure that you are always in the best year for your current -- the best gear for your driving conditions, and of course, effortlessly.
Effortless is the name of the game for rolls-royce.
Every few years, i have to have the best and the newest.
I feel like it that way in the car industry as well.
How do you build the ghost two so that i don't feel like i have to get rid of my ghost one?
How do you build it to elongate the lifecycle?
You are right.
You might see the design changes in the ghost series two, they are subtle.
And for good reason.
We are very interested in high resale values, and that is particularly what our clients are looking at them and you don't want to see your car being outdated after a couple of years.
That is why we are following a completely different strategy.
We are making sure our cars are technology wise up to date, but never change just for the sake of your changing the design of our cars.
We think our cars are timeless masterpieces.
I have to ask you about suv's because it is a craze that has gone too far for some carmakers.
I think it is unforgivable for porsche to make an suv, and kind of laughable for lamborghini to do so.
But rolls-royce has history here.
You made a shooting brake in the 1920's. are you planning on coming out with a new suv soon?
We have not confirmed any plans yet, but we are working on it.
It is an interesting segment for us, and the more we are talking about it with our clients, the more we get feedback from our clients saying, why aren't you bringing such cars to the market?
We are making progress.
There is no final decision yet.
It is very important at the end of the day that it needs to be a true rolls-royce, which lives up to all of the expectations that our clients have toward our brand.
Please call me when you make a decision.
You have been driving on the streets of san francisco there.
Obviously, it is an incredibly successful place with silicon valley nearby.
Are you going to open new dealerships there?
You are hitting record numbers.
For the first six months, you sold almost 2000 cars, which is a record for rolls-royce.
We have sold 3% more than the -- 30% more than the same timeframe in the previous year.
We are looking to open up a dealership here that will take probably between 12 to 15 months before it's open.
But we see more and more demand coming particularly out of that area.
For that reason, it's time to have a dealer.
We are showing video of me driving your race, which is your fastback coupe.
It is also an amazing experience.
I wonder how many of those you are selling.
What is behind the big growth in sales for rolls-royce?
On the one side, we see the economy is doing good in many countries, particularly japan, for instance.
But we also see it here in the u.s., that confidence is in a market.
And that makes people also by rolls-royce is.
-- buy rolls-royces.
And of course, the third part of the success story is wraith, which is sold out for the next four to six months.
It is great to see that.
60% sales growth in europe, the first half, especially germany.
That must be a huge sign of confidence.
It is germany, our home market, as well as the u.k. and switzerland, as well as many others.
I'm very pleased to see that europe is coming back on track.
Let's say it that way.
Emily, back to you.
Thank you so much, matt miller, our core -- cars correspondent in new york.
Electronic arts is giving -- getting an assist in its upcoming fifa 15 game.
Making the game more realistic, he spoke with us about what it was like.
A really tight suit.
It is kind of fun.
I am used to the tight close.
Once you see yourself on the screen, how quickly they capture the images, how accurately, which is what we're are doing with motion capture.
Tim howard, a national hero for his amazing performance in the world cup.
Fifa 15 comes out next month.
Speaking of fifa, electronic arts got a big boost from the world cup.
Ea says sales for its ultimate fantasy league was up 80% during the games in brazil.
World cup mobile drove the user engagement to a franchise record high.
Join us to discuss about this and everything gaming related, just how much of a boost are they expecting?
There was a lot of interest in the world cup.
A gay fifa a boost initially.
-- it gave fifa a boost.
Tim howard is going to help.
They do try to make everything as realistic as possible.
For example, fans of tim howard are more likely to play this game as well.
They recently signed the english premier league.
English fans will also be playing along.
What happens with the ultimate team is that people buy player packs and try to make their own teams in real life.
Most of the revenue is coming from digital now, right?
Right, 60% of their revenue now includes ultimate teams.
Fifa, nfl, madden nfl, nhl, these are all franchises.
They have this whole sports arena that other companies do not have.
Football season is also starting.
Are gamers going to be more focused on that than fifa because of that?
They might be.
The way that people watch on tv actually emulates the way that they play.
They want to play along with the players that they see on tv.
They say that people who watch fifa during the season and not just the world cup are more likely to play all year long.
I also want to ask you about keene digital, the maker of candy crash.
Wally worried about happened -- happening seems to be happening.
Are they a one had wonder?
-- one hit wonder?
It seems like they have not been able to monetize other titles.
Right, and actually, they did mention they had trouble monetizing their other titles as well.
They were not able to monetize them enough to make up or the klein in candy crash.
The decline in candy crash.
They are having trouble monetizing the other games.
-- --king digital shares are down.
Thanks so much for weighing in.
It is time now for the bwest byte, one number that tells a whole lot.
Our bloomberg news reporter mark milian is here with the bike -- the byte.
Following tim howard is not easy, but we've got a good number.
Number 32, which is the percentage of facebook users who interacted with an ad on their phone and later went on to their computer to do some kind of action within 28 days, usually to buy something or sign up for a subscription.
Whatever they saw and the ad.
The study was conducted by the alternator group for facebook, which was trying to demonstrate the effectiveness of its ads in getting people to buy stuff.
Facebook lands to let -- facebook plans to let advertisers do more of this kind of cross device tracking in the future, which has some creepy potential.
Let's talk about that.
Facebook is letting advertisers track us on different devices.
Is that the bottom line echo -- is that the bottom line?
That is the bottom line.
Fleury enables a lot of this cross device tracking and ad tracking.
Google does something similar to this.
Facebook is really trying hard to demonstrate that their ads are getting people to go into a store or onto a computer to buy stuff.
And in terms of the numbers, 32%, that sounds pretty good.
At least, from their perspective.
What are the implications?
They are seeing the network kind of split their a little bit with the move toward mobile.
There are close to a billion people who use facebook i primarily from their mobile devices.
They need to find a way to show that people who see something on their phone and then clicked onto their computers are actually being influenced.
Mark million of bloomberg news, thank you for the byte today.
Thank you for watching.
You can get all the latest headlines all the time.
We will see you later.
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