Death of the PC?: Lunch Money (07/15)

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

July 15 (Bloomberg) -- On today's "Lunch Money," super-charge the day, and devour all that's driving the markets: stocks, bonds, currencies, commodities, options. (Source: Bloomberg)

Welcome to "lunch money" on bloomberg television.

I am adam johnson.

We have the best video anywhere.

Let's take a look and menu.

The life and death of the personal computer.

The wild card, the most dangerous jobs and pay that goes with it.

The best from the director in honor of his new movie.

The tale of the twinkie and sweetest comeback ever.

Funny business.

It is the next step following change at the top.

To the first item on the menu, the life and death of the pc most likely everyone in your office still has a computer at their desk, even if it is from the 1990's. the numbers for personal computers are not looking good.

The latest data shows personal- computer shipments fell 45th street corner, for the fifth straight quarter, the longest streak on record.

It is too hard being published in a falling market.

Shareholders will vote this week on the proposed $24 billion buyout.

The ceo-founder says the pc business is changing faster than anticipated.

Do not forget about carl icahn.

He wants dell and boosted his offer last week trying to derail michael dell's bid.

He is feeling good about the future of dell and the pc.

I think they are in an area , the pc area, with change going on.

Dell will be able to take advantage of that.

People worry quarter to quarter too much.

That is why we have a great record.

You do not have to look quarter to quarter.

You do not make money from that.

You lose.

You buy things when things are changing.

Dell has spent $14 billion in acquisitions over the last year.

They are starting to click in.

Dell is in a great position to take advantage of the secular change in our opinion.

The pc is not going away.

It will end up being a screen, a mouse, and keyboard.

Dell is at the forefront of technology to take advantage of that.

Dell is embedded in these companies.

People did not like motorola solutions for a while.

It is simple.

Motorola solutions is imbedded in every fire station and police station.

People were ignoring them and saying it is not good.

We ran a great deal of money without.

-- we made a great deal of money with it.

I possibly sold it to sen.

I think the same applies to dell.

Carl icahn is not alone.

Craig barrett says that pc's still have a pulse.

The pc market is still alive and healthy.

There has been a lot more movement in the mobile market and in the transition between smartphones and pc's , the devices that will serve either as a tablet or pc.

I think the pc market is still alive and well.

What are we missing only see the numbers -- when we see the numbers?

I think you are looking at a combination of the smartphone business taking off.

You are seeing great competition there.

You have seen leadership changes with those guys fighting.

Intel is starting to play a net gain from the microprocessor standpoint.

You are also seeing a transition in the pc market as it goes to more convertible devices.

Ibm got out of the business in 2004. profit margins were too slim.

Big blue now provides i.t. services.

They report earnings wednesday.

The company that took over the ibm pc business is now no.

1 in the world.

Guess what?

They are not stopping, even setting up shop in the usa.

Carol massar takes us to raleigh, north carolina.

The sound of a time nearly forgotten.

We're thrilled to be making computers in the u.s. we're the first to have done it in over a decade.

Lenovo is part of a growing trend as others are slowly bringing manufacturing jobs back to the u.s., a way to literally get closer to the consumer.

The benefit of the facility is the locality and being able to get there quicker.

We are importing components, which is much cheaper.

We're saving their.

We're paying a bit more in labor.

Overall, there is still an incremental cost to manufacturing in the u.s. higher wages and shipping have made manufacturing in china more expensive.

Lenovo is the biggest pc maker in the world.

It is headquartered in beijing.

They will now be assembling servers in north carolina.

We consider ourselves to be a global company.

This happens to be one part of the globe.

The desktop giant has made leaps and bounds since purchasing the ibm component in 2005. you know what the numbers say.

It is a market people are interested in.

They want tablets and smartphones.

It is crucial for us to move in that direction.

We're focusing on winning in pc's expanding into tablets and services more aggressively, and eventually smartphones.

The pc market makes up 87% of lenovo revenue.

Also important, expanding the brand.

It is not easy considering is not a household name.

Our brand has been a barrier historically.

A lot of customers do not know of.

The good news is our brand has no baggage.

Lenovo brand is recognized in china.

In the u.s., smartphones are not even on the table yet.

We have to continue to build our brand and network.

Ultimately our manufacturing capabilities to make that a reality.

We did not make this multimillion-dollar investment thinking it was an experiment.

We are committed.

We would like to believe this is the beginning.

Carol massar, bloomberg, north carolina.

Lenovo's north american chief with carol massar.

He also sat down with erik schatzker and sara eisen last week.

Against all odds, he remains confident in the future of the pc.

How i tell you there is still reason for optimism.

It has been a great business for us.

We are on a good run.

We have outgrown the market 16 quarters in a row.

We believe we can continue that.

It is still a $200 billion industry.

We only have 17% of that.

There is a lot of growth to come for lenovo in this space.

Growth of the top line only or of the margins?

At the end of the day, you want the pc business to be profitable.

You want to be expanding margins.

It is a low-margin business.

How will it look?

In our fiscal year earnings announced in may, it showed recruit top and bottom line.

Our earnings were up 34% in the last fiscal year.

We are excited about those results.

We think they can continue.

I will say we understand the reality of the market.

We are expanding into smartphones, tablets, smart tvs and servers.

Those are businesses that can lift our results over time given what is given -- going on in the pc market today.

The american manufacturing operation, carol massar has been bringing us the story.

Show us the factory in north carolina.

It is still a small part of the overall manufacturing and you do.

How much you expect to ramp up in the united states?

It depends on the growth in the u.s. the numbers that came out last night showed weaker 20% in the u.s. last quarter.

Despite what is going on in the market, we are thriving.

We would expect to continue to expand our presence in the u.s. we have about 2200 employees as part of our headquarters in north carolina.

Down the road, we have 300. we will look to continue to expand.

Right now we make several hundred thousand products out of that facility.

It can get bigger.

It will be some time before your pc joins the antiques were shown.

But this one is the apple 1, the first computer they made back in 1976. it is one of roughly 200 made.

It fetched over $387,000 last week, less than half a million expected.

Another sold for more than $670,000 in may.

They are flooding the market.

Coming up, here is something that will probably last for ever.

The sweetest comeback ever.

Plus the most dangerous jobs on the market.

How is the pay?

Here is something just plain dangerous, the annual running of the bulls in spain.

Do you want to do that job?

Ouch.

? bloomberg is out with a new list, the most dangerous, low paying jobs.

You will not believe which job made number one.

Let's find out.

? ? and you say you want to go fishing?

If those workers want a safer job, they may want to turn up the volume.

One man that knows about jobs is the career builder ceo.

Carol massar asked him about the job market.

The biggest jump in projections for the next half of the year will be in the temporary and contract area.

We saw the 10 point jump from last year in that.

I think we will see more hiring temporary or contract in nature.

If people continue to think europe will solve their problems or not cause issues around the world, if china can continue to move forward even though their growth rate will be slower, if we can handle our fiscal issues, i think 2014 could be by far the best year of hiring in the u.s. since 2007. mobil, social, cloud, a big data, those are things we see growth in hiring.

Every company is trying to grapple on how to leverage those technologies to grow and enhance their businesses.

Those will be big drivers.

Things around health , those are some of the they can drivers.

One thing i was surprised about is the midwest showed the biggest jump in optimism for forward-looking hiring.

The southeast and northeast showed flat and down side.

The midwest manufacturing story continues to improve.

We saw the biggest how in optimism there -- the biggest jump in optimism there.

The next jobs are in health and the midwest.

Next, hulu decides to stick around.

He is the master of dark and twisted cinema.

His latest movie opened this weekend.

Next, we give you an update on the last five movies he directed.

Enjoy this little piece.

You never considered our ability -- go fishing.

? welcome back to "lunch money." khartoum's ruling at the box office again.

-- cartoons ruling at the box office again.

"pacific rim" the latest from guillermo del toro brought in $38 million.

It cost $180 million to make.

Robot mayhem.

Today we face the monsters . today we are cancelling the apocalypse.

In honor of the release of "pacific rim", we break down some of guillermo del toro's best films.

Number five, his most recent director feature in 2008 with a production budget of $82.5 million.

No.

four, "pan's ladbrok brynthe" brought in over $87 million worldwide from the box office.

That is crazy stuff.

Number three, "hellboy" made over $90 million worldwide.

"blade 2" made over 154 million from box offices worldwide.

That works.

At number one, "devil's backbone" brought in over $5 million just from mexico.

He considers this his most personal film as he rode it before his first feature film.

? ? [dramatic music] ? that wraps up our breakdown of guillermo del toro's top five films as a director.

Hulu has canceled its auction for the second time in two years.

Owners said last week in sun valley that they would provide $750 million in cash to drive growth and making it more competitive against netflix and amazon prime.

I would like to call good reporting when jon erlichman got the exclusive with bob igor after the decision.

This had nothing to do with the offers on the table.

They were compelling.

When we compare them with what we saw the potential future to be, we decided because we were aligned in addition, we would be smarter to stay in.

There was no disappointment with the process or offers.

They were solid and generous offers.

It was trying to continue to focus on what this could become.

Expand on the $750 million.

Give us an idea on where that money will go, the kinds of things that will help to grow the business.

People, technology, and content.

The success of hulu has been a result of talent, the technology platform that created it, and the content available.

We believe by attracting great people -- coming up, the latest from the fugitive nsa leaker on "lunch money." ? it is time for bloomberg to take you on the market.

I will take you to what is happening in stocks.

Take a look of what is happening with the major averages.

We see further gains but not much to speak of.

Retail sales falling short of economists' estimates.

In terms of movers, citigroup shares are gaining after profits beat estimates on the strength of stock trading.

The wireless company is trading above the offer price.

We're seeing no direct link to the battery blazes in london.

That is it for bloomberg "on the markets." ? this is "lunch money" on bloomberg television.

We are everywhere you are.

I am adam johnson.

Here is the latest video grabbing headlines.

Thousands across the country took to the streets to protest the verdict in the george zimmerman case he was found not guilty in the killing of trayvon martin.

Zimmerman says he acted in self- defense.

Protesters are calling for the justice department to file civil rights charges.

The rallies were largely peaceful, but there were still a few arrests.

In egypt, supporters of mohamed morsi are continuing a series of mass protests demanding the army and reinstate the ousted government.

They called on other countries not to recognize egypt's new leaders.

The army has said it will forge ahead with a swift kind able to amend the constitution and hold elections by early next year.

In china, a typhoon forced the evacuation of hundreds of thousands.

It also killed to the people in taiwan after causing massive disruptions to transportation and commerce, also cutting power to 520,000 homes.

The storm has weakened.

In southern china, rescue workers are digging to reach people still trapped by landslides.

Parts of china has seen the worst flooding in 50 years.

The former goldman sachs baker is getting his day in court.

He used to be known as the fabulous fy.

He is accused of misleading investors.

Erik schatzker looks at how he became an infamous symbol of the images -- financial crisis.

He was a low-level banker when the fcc -- sec accused him of fraud.

After testifying, he became one of the basis of the financial crisis.

Chances are you know him better by his self-styled nicknamed, the fabulous fab, made infamous by an e-mail he sent on the eve of the mortgage meltdown.

In 2007, he was hunting for investors to take one side of the complex trade.

It was a derivative instruments based on subprime mortgage bonds.

What made it different was the bonds were handpicked by john paulson betting against the housing market.

Austin to create an instrument he could short, an instrument designed to fail.

The sec says he withheld bought from investors who took the other side and eventually lost more than $1 billion.

You knew he helped select the mortgages.

Goldman settled the allegations for five and $50 million.

Tourre decided to fight the charges with goldman footing the bill for his defense.

Another of his e-mails may help to explain why.

Tourre is currently working on his ph.d. in economics at university of chicago.

It sounds like he has more to learn.

The future of edward snowden remains up in the air.

He has been stranded at a moscow airport where he met with human rights activists this weekend.

Here is what he said during the meeting.

Individual citizens have the duty to violate the must have loss to prevent crimes against peace and humanity from occurring.

Accordingly, i did what i believe was right and began a campaign to address what i witnessed.

I did not seek to enrich myself.

I did not seek to sell u.s. secrets.

That moral decision to tell the public about spying that affects all of us has been costly.

But it was the right thing to do.

I have no regrets.

My number one request would be that i have some kind of legal status to travel and perhaps stay in russia while this situation is resolved.

On sunday, political talk shows were critical of mr.

Snowden.

But he was not the only one in the hot seat.

The obama administration came under fire as well.

We essentially have secret laws that direct secret surveillance largely interpreted by a secret court.

I do feel strongly this is a debate that should have been started by elected officials and not mr.

Snowden.

He is a traitor to this country.

He took an oath of loyalty to the united states.

He is running for cover with our enemies.

Also discussed this weekend, immigration.

Republican representatives left the wednesday conference united on the need for reform but divided on what it should look like.

Moving on, coming up, there is something that will probably last for ever.

There they are.

It is the sweetest comeback ever.

They are on the shelves today.

"lunch money" will be right back.

? this is "lunch money" on bloomberg television and streaming live.

I am adam johnson.

The return of the twinkie.

It is back from the dead.

20's have been out of production cents a hostess declared bankruptcy months ago.

They purchased the brands for $410 million.

They are putting twinkies back in the stores today.

It is happening today.

Here is a taste in case you forgot.

[applause] ? creamy filling.

? try one, mom.

Tastes great, less filling.

That is different.

Betty liu spoke with the former chairman of hostess.

He was in charge of bringing hostess' out of bankruptcy and putting twinkies back on the shelf.

Any time you restart a business from zero, that is a difficult proposition.

I think the team that resulted had a very good plan about how they wanted to ramp up production in the plant they purchased.

I think they have done an excellent job on the marketing side.

That is what these products needed.

They needed some sort of kickstart.

What did they do different on marketing?

I think they have done almost everything differently.

If you go back to where hostess was, we had almost no money to spend for almost a decade on capital expenditures or marketing.

If you look at the banners , los angeles, social media, it was well thought out.

Twinkies is a well-known brand.

Did it need much marketing?

Was that the reasoning of the former owners?

I think it did.

It is a once-in-a-lifetime opportunity.

When we were selling those brands, that is what we were selling.

Not very often can you relaunched a 70-year-old brand and generate excitement.

I think what they have done it makes a lot of sense.

They will be made differently.

10% will be frozen going to the stores.

Is this part of the change, the new management that will think differently about twinkies?

We were working on extending shelf life prior to selling the brand.

Those things make sense because they go more towards how you distribute and what markets you can distribute into.

It broadens the customers you can distribute to.

Other than that, you are talking about the same product.

Where are the new markets?

I am not there now.

I am guessing.

He would like to see the products show up in dollar stores, for example.

They were largely in big box and a grocery stores and convenience stores.

There are other segments of the market.

That was the former chairman and ceo of hostess brands.

When we come back, how to make money in the family business.

Funny business.

We have an interview with the founder of college humor.

We will be right back.

? this is "lunch money" on bloomberg television and streaming live.

I am adam johnson.

Being funny is big business online.

It is hall college humor landed more than 4 million subscribers.

It has now released its first feature film.

Last week, it was reported he would step down as ceo.

Deirdre bolton sat down with him to talk about the growing media empire.

I think having been in the digital media ecosystem as well as the media landscape for the past 25 years, i have come to understand not only how media companies work but also what consumers need.

I got fired from my job at the food network.

? mitt romney star of ? -- your mission is to create funny videos that go viral.

That is a simple idea.

The secret sauce i imagine has lots of ingredients and adjustments along the way.

How do you do it?

It is something we call the sieve, how are secret formula of what needs to be added to the is to make them go viral.

I imagine with the social platforms, you get immediate feedback to know what is working and not.

Absolutely.

With the social platforms and our net how book -- our network, we can see how many hits it is getting.

If we see something start to accelerate and extraction, we will promote it more on our home page or facebook or any of the platforms out there for us to reach users.

We actively try to work on helping something already going viral go even more viral.

Are you at the money ball stage at?

We're getting there.

We are dated driven.

We have a sophisticated platform that helps us in real time understand how things are doing.

Not just videos.

We have a lot of non-video, -- content as well.

Those go viral.

We can see how those are doing.

We work with partners.

We have a great marketing and p.r. team that helps us reach out to partners and say, we have something topical or that you would like.

It is a combination of making all those leavers were -- levers work with each other.

In new york city, i am assuming you do not have a hard time finding.

Writers or designers.

We have high standards.

We want to find the best.

Our teams create a very high quality work.

It is silly jokes sometimes and funny videos, but we still believe high-quality great ideas win.

Is one of the reasons we have been successful.

We do work on finding the best people we can.

We have a rigorous hiring process.

Is it helpful to be part of barry diller's isc in that you are more legitimate than some of the companies that will try to erode your market share?

From a business perspective, it is.

Consumers do not know we're part of it and do not care.

It is about creating great comntent.

From a business perspective, it has a strong brand.

That helps.

People want to work with you.

What it helps with is having the support of iac and the opportunity to work with someone like barry diller, a captain of industry who is a pioneer and has done incredible things com, having access to his knowledge and experience in and showing interest in the business giving us support has been amazing.

We're lucky to be part of it for that reason.

What is his favorite video or game?

That is a good question.

I do not want to guess for him.

He has liked a lot of our videos.

I think he appreciates a lot of different ones.

One of the ones he really enjoyed was teh dora fake movie trailer that went viral.

I know someone who specializes in covert artifact recovery.

She prefers the term "explore." you need the world's greatest explorer.

Dora!

He gave us a lot of kudos for about one.

We talked about the videos.

You mentioned the cartoons.

You are printing into movies.

This is your first feature film.

There are video games as well.

What is a win for you with this?

Obviously we want to make our money back and a lot more.

We also want to elevate the brand and have people understand college humor is not a website.

It is a multimedia studio that creates great content aimed at people 18 to 34 and beyond reaching people wherever they are.

We're using our unique talents to expand into those areas.

Paul greenberg left college humor on friday.

He has not yet said where he will go next.

Tomorrow, coca- cola cracking open its latest earnings report.

We will give you its most bizarre flavors.

There are some weird ones.

Skateboarding bulldogs in peru.

They meet every saturday to practice.

? it is time for bloomberg to take you "on the markets." let's start with what is or is not going on in the stock market.

We're seeing small gains across the board for u.s. averages.

Retail sales missing economists' estimates by half.

We're also getting empire manufacturing on the plus side.

One other positive factors, earnings from citigroup.

The company with earnings rose by 42%. it beat analyst estimates partly on the strength of stock trading revenue.

We've seen a lot of investors rotate into the stock.

Citi holdings showed its smallest loss ever.

The turnaround for the company is in the early stages.

It is coming off a very low base.

Thus new ceo trying to cut costs to improve the bottom line.

We have now heard from citigroup, jpmorgan, and wells fargo.

Alden shown strong gains outpacing the market.

-- all of them have shown strong gains outpacing the market.

Let's preview what is going on for earnings out tomorrow morning.

Joining us from london is the managing director to her talk to us about how to play goldman in the options market.

What are you looking for from goldman sachs?

What will you be paying attention to?

To follow-up on citigroup and jpmorgan earnings last friday, we are looking for a positive number on the headline with goldman sachs.

Analysts are looking for around $2.80 a share, a 20% increase on revenue.

We're sitting around that estimate as well.

The top end of the estimate is around $3. with goldman, jpmorgan, and other banks, they have had a strong start to the year.

The first half was very strong.

We're looking for the second half to be similar.

We will talk about a strategy that gives a benefit to the upside move after the announcement and the end of the year.

What is that strategy?

You are looking at a 170 calls.

. it looks like that is assuming the stock will continue to go up.

Exactly.

Before we came on the air, we had goldman at $1.62. we're looking at a long call spread.

We're looking to pay around $2 for that.

The maximum value would be around $5. we have a cap that the $5 level.

By paying two dollars debit, we mitigate some risk.

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

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change