In 30 minutes.
.. ? live from pier three in san francisco, welcome to the early edition of bloomberg west where he covered global technology and media companies that are reshaping our world.
I am emily chang, our focus is on innovation, technology, and the future of business.
Google shares surged to an all- time high after it proves it is still the king of online advertising, including ads on smart phones and tablets.
The price advertisers pay per click is going down.
Eight he'll may be done in washington but the problems are far from over.
The enrollment website is riddled with problems, leaving many frustrated and without coverage.
And call it a dress rehearsal, the new york stock exchange is presence -- is prepping for twitter's ipl.
First, to the lead, google's rising revenue and profit is sending shares to a major milestone.
They soared above the $1000 mark for the first time ever today after the company reported a 36% gain in third-quarter profit revenue, including sales passed on -- if you look a little deeper, mobile is creating opportunities and challenges for google.
Add prices fell eight percent in the quarter due partly to the fact that mobile ad that mobile is cheaper but i is up 36%. jon erlichman has more from l.a.. what do we make of all of these mixed things happening?
I feel like this google story is very similar to the story of facebook that we have discussed for months.
It seems like wall street and investors are watching to companies that are transforming their businesses to a new reality, a world where people are viewing things, searching on their phones, searching on their tablets more than they ever have before.
Two companies were built in a time when people were doing much of that on their pc, that requires a lot of legwork.
You do see that show up in these result.
As you make that transition, in the beginning the options are not as great for the advertising space so the pricing is lower.
The number of ads that people are clicking on the google ultimately gets paid for our big and growing.
The fact company has been able to maintain growth in the high teen to 20% range has made people say, ok we are understanding what they are up to these days.
What about the social aspect of this?
Google plus has struggled to catch of the facebook.
It is getting a social boost through youtube.
I think this is an important part.
Youtube is a social network.
There is a high level of interaction there.
The move to mobile for youtube has been huge.
The ceo has discussed this on a call last night, roughly 40% of the youtube crowd thick comes from mobile.
That is a huge advertising opportunity.
Video ads bring in higher ad dollars.
That is what youtube does.
They have highlighted a number of examples, that are spending big box tied to youtube.
If you think about the next leg of this chapter, youtube being available through streaming services like chrome cast, if more people are watching youtube and a home, all of a sudden the conversation becomes if this company is gearing up to take more traditional tv advertising in a way.
Those are huge numbers.
Jon erlichman, our senior west coast correspondent.
While google stock is soaring and not everything is soaring -- not everything is rosy at the search engine.
You have been digging through the numbers more closely.
What are you seeing?
I hate to be the better -- the bearer of bad news.
I have not much of a shock -- of a stock chart that.
The stock has had a fantastic run on this thing.
45% movement over year, that is not too bad.
The motorola unit is looking to be a propyl.
That be a problem.
The sales have come off quite a bit since the acquisition.
The sales numbers are pretty weak.
What about the new phone?
It is not doing it yet.
They give qualitative numbers about how the fund is doing.
Larry talked about how great it was and how excited they are and how it is going to change things.
It seems to suggest they fixed design issues.
That division is losing money.
It is nearly at $1 billion.
Is google's business doing so well that what is going on does not matter right now?
I think it is going to start to matter.
There are some interesting things.
Is it just growing pains?
Is nokia growing pain?
They have been around for a long time.
Google just bought motorola.
And motorola is continuing to do what motorola does without google.
We have not seen the evidence of that yet.
Their click business -- there are some issues there as the company is taking this tremendous shift into mobile.
The number of clicks is rising a bit.
The value is declining quite a bit.
The quarter was better than what analysts looked at.
There is an important change happening.
It is letting advertisers it on all different sites at once, alternate types of advertising at once.
People thought that this quarter might be a difficult one because of the mid-corner transition into the campaigns.
What about some of the other metrics you saw?
Anything jumps out at you?
We look at those numbers of what is going on in their business.
I think it is honestly the most important thing -- they're going to have to start to address it.
It is entirely possible that advertising and mobile is not as valuable as the way people used to.
Our editor at large, thank you.
Twitter's public offering is just around the corner and the new york stock exchange is about to hold a dress rehearsal.
That is up next.
I am emily chang.
Since it went to live, i website meant to allow the uninsured to sign up for the federal health care exchange has been a technical disaster.
Of course you can't to u.s. said sites, it has had -- according to cantor u.s. insights, it has had -- the first week of the health care were that's the first week of the health care rollout was plagued with technical problems.
Only one million completed registration paid about 270,000 successfully logged in, just 36,000 enrolled.
That is fewer than one percent of visitors.
We talked to the former chief technology officer for the obama administration to find out what went wrong.
Nothing in here was the to get us to the moon and back.
This is essentially a complex integration challenge.
Each individual component is a known or understood technical piece of work, making sure they all fit together and that they can handle the volume that is expected.
It is where the judgment came in and that is where the glitches were uncovered.
Users ran into problems setting up usernames and passwords.
Have you valued -- how do you validate the person's identity?
It is in that intersection of public sources and private sources that we see the challenges.
Was at the idea to have more people use the system?
Was their precedence to create this amount of havoc?
Too many auto dealers were trying to login at the same time and upload their documents.
Take a look at the stock market.
Even nasdaq had a glitch.
I recall in the 2010 fee for world cup they had their famous fail whale appear.
Who's to blame this time?
At the highest level, the department that oversees medicare and medicaid is on point.
They work with private companies to build up the pieces and parts that we now know.
Private contractors build the system.
In 2011 quality software services got $69 million to build out the data hub, edge draws and information from the irs, dhs, and social security administration.
Cgi won a $94 million contract to develop the code.
The government did not give cgi respects until the spring, according to the new york times.
That meant contractors had little time to write the code.
If we had political certainty about how the rules were set up given all the dynamics, if all of that happened earlier it would have been helpful.
Customers continue to have complaints about the government site.
Megan hughes, bloomberg.
As the u.s. tries to fix this insurance exchange problem, the new york stock exchange is preparing for twitter's ipo.
This is the most anticipated tech ipo since facebook.
The new york stock exchange is trying to avoid the glitches that plague that the bp the julie hyman has been looking at how it is going to work.
What is the game plan here and how unprecedented is this?
The new york stock exchange has just announced today that next weekend on saturday, october 26 it is going to allow trading firms to run a test run of the twitter ipo to try to avoid some of the glitches that flag that ipo.
Trading firms will have the opportunity to do this sort of test run.
More details will begin out on monday and it is not clear who will participate or how it will work.
Clearly this is an effort to run interference on any of the potential problems we have seen in the past.
It did not admit or deny wrongdoing in the facebook ipo.
That is the template of what not to do.
There were widespread complaints about how they were done.
Is there any guarantee that if the practice section works well it will not happen on the day of the ipo?
Nasdaq has said in the past that he did run test prior to the ipo.
It is not clear if it will be different on the day of the ipo itself.
Obviously new york -- obviously nyc is attempting to avoid these issues.
You never know what is going to happen on the day of the ipo itself.
You wonder if that was part of their promise to twitter in terms of winning the ipo.
They said we are going to do a practice run, we can almost promise you there will be no problems.
We are going to watch how that practice session goes.
What should microsoft look for in its next ceo?
We asked a partner in the world's largest executive search firm coming up.
You can watch a streaming on your tablet, phone, and bloomberg.com.
Let's look him back to bloomberg west.
You can also catch us at our later time.
Apple filled a key role by hiring a new retail head.
The ceo of fashion label burberry will be the ceo of retail stores.
Ron johnson exited to take the helm at jcpenney.
Joining us now is someone who knows a lot about the process of recruiting for high-level executives.
It is the world's largest executive search firm.
You focus solely on technology.
What you think about hiring her?
I think it is great.
They have found a great ceo to come in and take a large division of apple.
They also brought in very senior -- a very senior female to silicon valley.
It is a little bit unusual and much needed.
It only lasted six months before.
Are there risks here?
They spent a year to find her.
The biggest issue and big focus is how she art -- how she is going to be assimilated into the culture.
I know there is going to be a lot of times -- a lot of time thinking about that.
She is the first woman on the top executive team.
Why did it take so long?
Amazon is very demanding.
It is a specific culture the people fit in or they don't. they dug deep to find someone who is going to fit in with their culture.
They are looking for somebody that has been in the ceo seat.
It is a very much ceo type of role.
Twitter has been criticized for not having any women board members.
We reported that they are looking for one but they are finding the process difficult.
Is it hard to find capable women at tech companies?
It depends on what you are looking for.
There is a huge demand for females.
20% of the tech companies do not have any female board members.
We are finding huge demand for those individuals and the tech company's that do not take advantage of that, those women are sitting on boards outside of tech.
The companies outside of tech are going after the technology focused females.
The new york times put out a list of 25 women who could serve.
We don't know what twitter thinks of these candidates.
Is it really that hard to find them or are they not looking hard enough?
I believe they are not looking hard enough because not only are their name brand females out there but also a lot of up-and-coming female executives.
It could be the next generation that adds a lot of value.
Sheryl sandberg has come out with this big book.
Why don't companies make this a priority?
I think some of them are making it a priority twitter would be a great board to be on.
It is difficult for a lot of other boards.
A lot of these executives are really engaged in their own work right now.
You really have to dig deeper and have a very specific value proposition on why that person might want to join that award.
Twitter is wrapping up their ipo.
They're spending 50% of their revenue on r&d. a large chunk of that is salary.
Why is twitter spending so much?
Is it too much?
I never think it is too much to invest in your employees.
I think the demand for those types of employees, the demand is so high that they have to put a lot of emphasis on that, whether it is salaries or recruiting or retention situations.
Speaking of retention, is it a risk?
How do you maintain paying people at these levels?
Our clients are asking us to get much more involved -- much more involved not only in intention -- not only in retention and development.
How do you provide training opportunities and development opportunities for your candidates or your employees?
30% of our business is looking for clients to retain and develop their own thing.
What you tell them?
Pay is one thing but it is not the only thing.
Hthey want a place to go to, they want their work in social situations to be much more blended.
They want to have a whole ecosystem is not just work but personal situations, as well as life situations.
Microsoft is looking for a new ceo.
I don't have an individual but knowing microsoft and the size of microsoft, they probably have 10 people internally they were thinking about or grooming for that.
It sounds like they are looking outside.
They're looking at both for my understanding.
Should they hire someone from outside or inside?
Clicks they should look for someone that is not going to only fit in with a very specific microsoft culture that someone who can actually help change that culture.
That person might come from the inside but more than likely they might come from the outside.
What mine -- what kind of background might this person have?
Clicks i think they need to find someone who is incumbent to win new situation, a very large organization, and make decisions quickly, hold people accountable, and get a new vision for microsoft.
Could allen mullally be that person?
I do not know.
Moving from where he was to fort was a bit of a jump.
Moving from four microsoft might be a very large jump.
He could probably do it.
What about sheryl sandberg?
I think that would be ideal.
Senior client partner, thank you so much for sharing your perspective today on bloomberg west.
It is time for on the markets, a look at what is moving in the markets on the hour.
Julie hyman is in new york.
Let's get you caught up on where stocks are trading right now.
We have a rally here.
The perception that the fed may not be tapering into next year, particularly the nasdaq.
Let's take a look at a couple of stocks and individual movers.
A drugmaker is ending a leukemia treatment study after blood clot risks were found, forcing the company to find out a new operating plan.
This is the end of areata as we know it.
We are looking at morgan stanley.
Ceo james gorman -- we will have more on the markets in 30 minutes.
Lexie seeking cap is at our later time.
And now for your bloomberg top headlines, in just about half an hour president obama will nominate jay johnson as the next homeland security secretary.
That is according to a administration official.
The top lawyer at the pentagon will replace janet napolitano if confirmed.
Firefighters are trying to get a handle on dozens of brushfires earning in australia.
About 100 fires have damaged hundreds of homes.
Warm temperatures and strong winds are fueling the fire.
It is a commuting nightmare for many here in san francisco and the bay area as bart workers went on strike again.
We are looking at videos of bay bridge traffic both sides closed a deal on economic issues.
Union leaders say talks broke down over changes in workplace rules.
Intel capital has invested nearly one left -- nearly $11 billion since 1991. the portfolio ranges from companies such as hardware and software services to mobility, health, and consumer internet.
One market they are focused on is wearable computing.
Cory johnson is back with more.
Interesting, there track record has been powerful.
This is not stop -- this is not small stuff.
The venture is interesting because you are trying to make money on these investments and we are looking for financial return as well as benefits for corporation.
A lot of technology developments were taking place around us.
We wanted to develop various ecosystems that would help products come out into the ecosystem.
Talk to me about what you are doing to get that to work.
Wearables is a new category.
We recently announced the quark processor.
It is intended to go into wearable devices in the future.
Wearables are particularly interesting in the sense that they generate a lot of data.
Those data -- that data has implication in storage and data centers.
Those are all areas we are interested in investing in.
You brought some props.
I brought some recent investments.
I think that you would think i'm too proud to wear this.
This has a heads up display in it for skiers and snowboarders.
It is a canadian company that has a heads up display inside it.
It gives you all kinds of information, it tells you where your friends are.
This is an actual investment.
Here is another.
This measures blood pressure and a noninvasive way.
This is the kind of thing you are investing in.
These generate a lot of data.
They measure your vitals and statistics.
It is now able to measure your blood pressure with a noninvasive -- that makes it very exciting.
Does the research that you do carry over to the next one?
Our approach is to build an ecosystem, to build an entire ecosystem all the way to data analytics and shows how your health is doing, how -- how your health is doing, are you a candidate for diabetes, for stroke, over time what will happen is with the collection of all of that data and the ability to predict analytics, i think there will be opportunities to predict health.
I am surprised this is an investment.
I cannot imagine this ultimate market for ski goggles is going to be more than 10 million per year.
Did you size the market like that?
Clicks our belief is that virtually every grown-up and every kid will be wearing a wearable down the road.
I can see that as a likely event.
When you pick what should investments to get into, are you looking at the size of this product and if it will add to all of it happening?
Clicks we look at the entire -- we look at the entire ecosystem.
We will become very successful when it comes out.
I want to talk about your conference next week.
This is intel capital.
It will be in san diego next week.
It is an opportunity for portfolio companies to meet their customers.
It is an opportunity for our industry executive partners to meet exciting new technologies.
It also we are going to be announcing a dozen new investments.
Lowe's companies will be there to present to potential customers.
One development in venture capital, it is a sales job -- a sales job of introducing their company to potential company or that potential customers in a very big way, is that something changing your business as well?
We have been doing that for years.
We have been doing intel capital and technology base.
We take 15 of our portfolio companies and introduce them to our partners, our customers all over the world.
We have been doing this for years.
Thank you very much.
We will see you next week.
Which company pays the most for engineers?
We are breaking down the surprising list next on bloomberg west.
You can watch is streaming on your tablet, phone and at bloomberg.com.
Engineers listen up, you do not necessarily have to work at the hottest tech firms to get a high-paying job.
According to a study by the last tour, engineers at juniper networks make the most with an impressive 150 $9,000. linkedin comes in second, followed by yahoo!
Facebook takes a surprising ninth spot on the survey.
I want to bring in scott the brodsky, who is a community expert who helps put this research together.
Why is juniper on top?
We are getting that question a lot.
When you look at software engineers in their annual base salary, that is an important keyword, open -- keyword, "base salary." other companies, not as much.
Twitter we have been talking about, they have spent a lot of their revenue on r&d. 50% goes to r&d. the google, 14%. why is twitter spending so much yet -- so much?
They care about their product going forward, really competing.
We know they continue to rage on here.
Twitter is obviously taking a proactive stance ahead of that.
Some of the figures you mentioned might be showing some other companies might need to step up.
Twitter comes in at number five.
It comes in at number five but not too far behind.
I believe twitter is 20 $400,000 in the past year and -- $24,000. these talented software engineer stick around.
Facebook is number nine.
Facebook is still a pretty good salary.
Looking at base salary, that is where they rank.
If we look at total compensation, facebook is an interesting case.
Their software engineers report about $60,000 plus in total compensation.
One of the other things you look that is tech engineers being hired elsewhere in the country.
Obviously we know a lot of people are being hired in the bay area.
Where else across the country are software engineers getting hired?
Clicks it was interesting to see that.
Seattle ranks second for the highest number of employers hiring software engineers right now.
These are not huge surprises.
Let's dig a dude -- dig deeper.
Missouri appears in this comparison we looked at, companies such as american express, mastercard, are looking for software engineers.
Miami florida is hiring software engineers based on the beach in miami.
It is a simple explanation, walmart is the largest retailer, they need to be online, and who is going to bring that online service?
One last thing i wanted to ask you to get yahoo!
Is number three.
A pretty good salary, $130,000. what we hypothesize is there are two things going on in yahoo!. when we read the them that the engineer reviews, great leadership i marissa mayer.
She could be trimming the fat of underperforming software engineers or boosting the salary to lower integrate software engineers.
She knows exactly what google is paying.
Why not pay more?
Thank you so much for joining us today.
Soon tesla drivers will be able to get high speeds on their mobile devices.
We will tell you about the new wireless partnership next.
This is bloomberg west, streaming on your phone, tablet, and bloomberg.com.
Another hp executive is leaving the chubb old smart phone maker.
-- another hp executive is leaving the troubled smartphone maker.
She remained a consultant.
Htc recently posted its first quarterly loss.
A high-speed car is now getting a high-speed connection.
Tesla is teaming up to offer high-speed wireless in all vehicles.
Cory johnson is back to explain.
Anything with tesla seems to be new.
The stock seems to move like wildfire.
The movement over the course of the last year has been just simply incredible.
There is an announcement that at&t is going to be wired into all of these cars.
Is every car going to be a wi-fi hotspot?
One of the chief features is this ipad device that gives you all of the controls of the car, including gps.
That has been one of the complaints that a lot of owners have had, that connection is sometimes slow, the maps update slowly.
People say this is a way for tesla to address that.
How big a deal is it?
There aren't that many tesla's out there and -- out there.
To any other cars have anything like this?
No car has this kind of feature read it is a unique feature of the car.
Tesla owners have been complaining about the slow speed.
Fundamentally there have not been that many teslas sold.
Is this going to be attractive to other potential buyer seattle it sounds cool but it is just a fix on something -- buyers.
? it sounds cool but it is a fix for something that tesla has had some issues with.
What are we going to be talking about when it comes to tesla over the next year?
Do you think the sale story is going to be remarkably different?
The interesting thing about the company is how many cars can they ultimately sell?
They put a chart -- they put a target of 24,000 per year.
We will see if they can hit the 21,000 number.
That is going to be a crucial issue.
Then there is the question of profits.
Much of the prophet has been not been selling cars but even growth path it's. the company has said those are going to go down dramatically on the second half of the year.
We will see what impact that has on their profitability.
How difficult is it going to be to get 21,000? it is not a difficult of making 21,000, it is a question of selling that much.
Who knows of the cars can be that popular.
They have jacked up the prices quietly.
It is good to be an interesting year.
We will be watching.
More bloomberg west after this quick break.
Bucks welcome back, i am emily chang.
Coming up on the late addition of bloomberg west, it is the hot new app that simultaneously takes a photo with front and rear iphone cameras to capture what the photographer and subject both see.
It is 56 past the hour, which means bloomberg tv is on the market.
Julie hyman is in new york with more.
The deal is done.
How are the markets looking?
Still around here.
We are seeing the rally continued.
The s&p 500 is higher.
The nasdaq is higher.
In part that has to do with some individual movers.
We will get to the biggest one in just a moment.
I also want to talk about intuitive surgical, the stock has fallen the most since july.
U.s. regulators are asking for a resurgence.
The stock that has a lot to do with the game today is google.
Let's dig more into google and where it can go from here because i want to bring in brian millwall, senior analyst at a financial group.
Like most analysts he has a buy rating.
Your price target is 1110 for google shares.
The gain today is huge for the stock.
Why is this optimism built into google?
It is a big move.
I think google is showing how they are taking advantage of online advertising dollars and advertising dollars moving to mobile.
This company is best positioned with all of the online advertising companies taking advantage of the mobile transition.
One of the things we saw is the actual cost per click and down at the volumes went -- the points made up for that.
Do they have to push those retire at some point?
It is a good question.
It is more of an output than an input.
Cost per click can be pressured sometimes where clock's -- where costs per click are lower.
You can make a case where volumes are stronger just because you have more people clicking.
It is a good sign of health and the business.
They can be week and they may continue to be down for the next few quarters because mobile is growing in the mix, but it is not a sign of pricing weakness.
I am curious of where we are in the mobile cycle.
Ugo is the giant search on
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