H-P Expands Board: Bloomberg West (07/15)

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July 15 (Bloomberg) -- On today's "Bloomberg West" the focus is on innovation, technology, media and the future of business. Hosted by Emily Chang with Editor-at-Large Cory Johnson and Senior Correspondent Jon Erlichman from Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

Welcome to the late edition of "bloomberg west." we talk about global technology and media companies reshaping our world.

Technology and the future of this mess hewlett packer adds three new directors to its board, all with plenty of experience.

How much can a fast food guy, a media guy, and a turnaround guy do for the plan?

Could verizon be left holding the bag with apple?

A report saying verizon could owe apple billion's of dollars for unsold iphones.

Things have changed since the first days of dora.

We go inside nickelodeon to see how network is using tech to bring a new generation of narrators to life.

Three experienced executives and a wide range of injuries, expanding the board to 12 members.

Hp named jim skinner, job bennett, and ray o -- dob bennett, and ray ozzie to its board.

They fell behind lenovo in market share in the second quarter.

Pc shipments overall fell for a fifth straight quarter.

Hp says it will search for more directors and is looking for a new nonexecutive chairman to replace ray lane, who left in april under shareholder pressure after the autonomy write-down.

Hp shares closed up slightly today.

I spoke with someone at bloomberg industries to ask him about what strengths this brings to the board.

A company as large as hp struggles with the constant question -- what is the right size of the board?

What is the right makeup of the board?

Do we have old world industry perspective?

Do we have new world software/media experience?

If we look at the three members who have come on board, there is a bit of balance.

You have former mcdonald's ceo, who has significant experience reengineering the product line -- how to make a product that has mass-market appeal from a low-cost perspective appeal to the broadest consumer base?

That is one.

You have a software architect who clearly is in the direction of where hp wants to go.

It is the higher end, higher- margin product in the technology industry.

That is another addition.

The media executive addition is another forward-looking at dd to the slate of the board of hp.

If you look at it from that perspective, one old world person who can help mitigate costs and make operations world class, coupled with executives who can steer the company from a -- where do we need to be?

What acquisitions do we need to make?

What are the markets we need to be targeting?

There is a bit of allen's. -- of allen's. h -- of balance.

Why not add someone who is known for being forward thinking, or known for innovation?

All of these guys are known for innovation, but there is not one name that stands out as extremely innovative.

Hp is a big, big company.

I do not think you are going to get a steve jobs person and one unparalleled mind to steer the company that way.

I do not think, here, the combination of right man's -- right minds, from diversified industries, is going to be the right mix.

What about the numbers?

Going from nine to 12 -- is that too many cooks in the kitchen?

That is an interesting question.

I do not know if there is a magic number.

I do not know if there is a number that people have in mind, relative to the size of the company, relative to the employee count and the revenue base.

It is also -- companies struggle with this all the time.

One part of it is, how many people do we need to have to form a quorum to get things done?

Second is, what is the kind of experience we need to have, from an industry background, to have or experience?

-- board experience?

I do not know that there are magical formulas.

From hp's struggles to microsoft -- a bad sign for the company push into hardware.

Microsoft slashing the cost of its surface tablet by 30%. the market in expensive model will sell for $349, down from $499. with a keyboard, it has dropped from $549 to $449. could this gain market share against ipad?

I have been reading more about this today.

A lot of people out there saying the prices are not going to help.

Even if they did, what do they get you?

They cut your margin even if they get you more volume.

But there is a much bigger problem at issue, and that is the struggle between microsoft and those players in the market like apple, like samsung, who have already been there a couple of years.

I was looking at older numbers.

The first quarter, microsoft sold 900,000. apple sold 19 million.

We will get a further indication thursday of how market -- microsoft did in the second quarter.

When there is an individual family consumer or business going into buying the tablet, they are buying into the main players that have been there -- apple, samsung, working with google.

Microsoft has struggled to get into that market will stop their sales have missed their own projections.

Their partners are disappointed.

You have this vaunted for a ay into tablet computing where microsoft would become a fact -- a manufacturer.

It has been a disappointed.

-- disappointment.

They announced this big reorganization thursday.

They are putting a bigger emphasis on hardware.

They put in place julie larson green, who will be in charge of all hardware -- the xbox as well as surface.

Microsoft is trying to present itself as more of a -- they are focusing on services and hardware.

It is a tall order.

Microsoft has never been seen as a hardware player.

They have had some success in xbox, but far less in smart phones and tablets.

Are we expecting any new numbers?

I think we will see a further indication of trends that have them in place for a while.

Probably some strength in xbox.

We are probably going to see some strength in the in the business side.

They are selling software, for example, for servers.

Cloud computing, they need strong server software.

Those are areas where microsoft is doing well.

Much harder in the area of pc's. a fifth record quarter of declines in tc sales in the second quarter.

That hurts microsoft in their main windows division.

We will see further struggle in windows phones, and yet again struggling in sales of the surface.

What are you hearing about the reorder -- reorg?

Is this just rearranging the deck chairs, essentially?

Every few years, steve ballmer reorganizes management, in hopes of turning things around.

The stock has not done very well.

Steve ballmer really needs for this reorganization to have the impact it needs.

He needs people in those key positions to deliver in areas where microsoft has been week.

Tom giles, bloomberg tech team leader.

Thank you.

Could verizon be on the hook for billions of dollars worth of unsold iphones?

We will ask a top telecom analyst, who says yes.

? welcome back.

This is "bloomberg west." lenovo just unseated hewlett- packard to become the world's largest computer maker by shipment volume.

According to researchers, bonobos shipped at least 12.6 million -- lenovo shipped at least 12.6 million in the second quarter.

A record decline, shipments dropping for an 11th straight quarter.

Despite the slowdown, the asia- pacific president says there is still room to grow.

The total size of the market -- the market is 300 million units.

If we add another five points of market share, that is still 15 million.

That is $7 billion of revenue.

This is still very much alive.

He added the company is focusing on smart phones, and plans to have as many as 50 different devices at multiple price points.

The $1.2 million bid to buy leap wireless is part of a flurry of activity as small u.s. carriers look to partner with larger companies.

What motivated at&t on this deal?

I am joined by the top-ranked telecom analyst.

Who got the better deal?

Shareholders got a better deal, as measured by the equity valuation.

It is a huge premium to where the stock was traded last week.

And a few weeks ago, before it ran up on speculation.

At&t gets value.

It is not a terribly large deal.

It grows at&t by less than five percent.

It gives them spectrum in secondary markets and has nice blocking value.

It keeps t-mobile from getting the same for purdue.

You mentioned this is a good way to stick it to t-mobile.

Is this more a defensive play than anything else?

I would not characterize it quite like that.

Sticking it to your competitors is part of competition.

T-mobile could put this spectrum to good use.

There is value in at&t saying that we can get there and prevent t-mobile from adding spectrum in certain secondary markets.

I do not want to overemphasize how strategic this is for anyone.

It is a relatively small asset.

If i zoom out a little bit, all of the transactions i have seen have been, in the grand scheme, small transactions -- t-mobile buying metro.

Sprint buying clearwire.

At&t buying leap.

All pretty small deals.

The potential for a dish- direct tv march or -- merger?

For dish, it has a nice valuation.

It is more than people are valuing dish's spectrum for.

That is a nice number.

More importantly, it is a somewhat perverse dynamic.

The reality for dish is, anything that keeps them from the wireless market is probably good news for dish investors, particularly if it channels them toward a likely merger with directv.

This takes away some options that are less attractive to investors than a merger.

To the extent that this is the direction we are headed in, this is good news.

I want to turn to a note you put out last week, talking about verizon potentially being on the hook for billions of dollars worth of unsold iphones.

How did verizon get itself into this mess?

It was uncovered by my research associate, when he was going through the 2011 20-f filing for vodafone , and found purchase commitments for verizon wireless.

There was a pretty clear step up in 2000 team that steps back -- to 013 -- that steps up and steps back in 2014. the shortfall got rolled into 2012. a larger shortfall got rolled into 2013. the commitment is now $23.5 billion from what had originally been $17 billion.

Last year, verizon sold $10 billion worth.

The question is what happens.

The short answer is, i do not know.

It is clear they will not meet that level of commitment.

They are not acting as though they are in dire straits.

They are pushing android phones rather than apple devices.

One wonders, and i do not know the answer, how it will be resolved when the contract expires.

Does it roll to next year?

Are they ever going to have to pay up?

I do not know.

If you simply roll it into next year, the contract itself had no value.

There is an interesting heisenberg principle.

The fact that it is now public, after all these years, by virtue of having found it and discussed it publicly, it changes the dynamics somewhat.

Apple investors will be putting pressure on apple to make sure they recoup some of that value.

Other carriers around the world who might find themselves in a similar situation will be watching more carefully to make sure, if verizon gets let off the hook, so to speak, that they will as well.

The stakes have been raised by this becoming more public.

It changes the dynamics in ways i would be lying if i said i fully understood how they would play out.

Other carriers around the world -- a long time has passed since apple inked its initial contract with at&t, the first carrier of the iphone.

Russia's third-largest carrier recently cut ties with apple because of the contract requirements in working with apple, which they said had been difficult, and the phones too expensive.

Do you see the potential for other carriers to cut ties with apple?

I suppose so.

But let us not overestimate how far apple has fallen.

When verizon entered into this deal, at&t was doing as much as 80% of its volume with apple.

Apple is not doing that level of volume anymore, it is still doing half of verizon's phones.

That may not be 80%, but half your volume is nothing to sneeze at.

I would not go too far out in -- out on a limb and say there is any prospect they would cut ties with each other.

I do think it is interesting, and it tells you how quickly things change in the handset space, that three years ago, when they entered this contract, it must have seemed reasonable to think that 80% of their volume would be iphone.

Interesting.

Thank you for joining us here today.

Apple says it will investigate reports a chinese woman was electrocuted answering a call on her iphone while it was plugged in.

Should you be worried?

That story is next.

? i am emily chang.

Cory monteith of "glee " was found dead in a hotel room in british columbia.

The cause of death is not yet known.

His death comes just before production of season five was set to begin.

We are joined by an entertainment industry reporter for bloomberg news.

Finn had graduated, but was now working in a car repair shop in ohio.

How does the show go on without its reg out star?

This has been -- without its breakout star?

The cast is still grieving.

Fox has not made any plans about rescheduling the premier or changing what they have planned for the season.

So far, they are still regrouping.

It is especially sad when this happens to someone that children and teenagers loved watching.

He really was sort of a role model, especially the character he played.

What is the impact going to be on fox?

Can the show be as successful as it has been for all these years?

"glee" has essentially six lead characters.

While this character was important, there are others who can take those roles and take the weight of the show and move forward.

There is going to be a fifth season.

It will be likely as successful, if not more successful, then the last season.

It is a show that started off strong and is very popular with younger viewers.

That is a reason it has been such a success on fox.

The show will be used next season to launch new shows on fox, because that is the formula.

You have a hit show, and you take the next show you are producing and use it to launch it.

We will see that again next season.

It may not air as early as they had planned.

We do not know that yet.

Fox originally planned for the new season to start ahead of the major league baseball playoffs, which fox airs exclusively.

We do not know if that is going to happen now.

It may air later in the year.

It is still a fluid situation over there, and they have not made any plans.

We will be watching to see if there is a delay.

Thank you for joining us on this very sad story.

? we focus on technology and the future of his miss.

The investigation into the fire on an empty boeing 787 dreamliner at heathrow airport is focusing on an emergency beacon made i honeywell.

The company has sent tech experts to heathrow to help with the probe.

Experts have not ruled out other possible causes.

Dane -- they see no link to the battery problem earlier this year.

A station broadcast incorrect and racially offensive names of the pilots on board the plane that crashed in san francisco just over a week ago.

A xeon on -- asiana said the fox affiliate damage to them.

The ntsc said an intern wrongly confirmed the names to the station.

Elon musk says he will unveil plans for a hyper-looped transport system on august 12. he says he will be willing to work with partners.

So far, he has given no details.

He has said it will whisk people from san francisco to l.a. in 30 minutes via some sort of tube.

Apple says it will fully investigate reports a chinese woman died after answering her iphone 5 while it was still charging, and getting electrocuted.

The incident happened last friday, and the family of the woman is not seeking compensation, but wants to warn others.

Apple wrote, we offer our condolences to the family.

I had a chance to speak to the engadget senior associate effort -- editor, asking him if there was any way this could have happened.

It is certainly possible.

As i understand it, the woman had just gotten out of a top.

When you are wet, it provides a better conduit for electricity.

If there is a flaw with the charger or the phone, they do pull enough electric current to potentially kill someone in this fashion.

It is not impossible.

It seems like it is a rare occurrence.

There have been a number of theories.

Possibly she was using a counterfeit charger.

Possibly she was soaking wet.

She had just come out of the bathroom.

Barring those issues, what are the chances that this could have happened with a legitimate iphone 5 and a normal charger?

I think it is highly unlikely.

These chargers go through lots of testing.

They are engineered to keep people from being electrocuted, just because there is current flowing through them.

I think you are looking at a possible defect with the charger, or with the particular phone she was using at the time, for something like this to happen.

Generally, the electrical wires in chargers are well insulated.

They are isolated from people so that this kind of thing does not happen.

It would be extremely unusual for this to be on actual apple charger or phone that caused the problem, but it is certainly possible.

Apple has faced reports of devices overheating, catching fire.

Could all of this he somehow related?

I think probably not.

What you are looking at here is more of a charger issue.

When phones were catching on fire -- i believe that was an iphone 4. those are with the batteries themselves.

They overheat.

There is chemistry involved.

That is how those situations happened.

This sounds like something different.

What do you think is the most likely scenario?

China has had problems with counterfeit chargers in the past.

It has been raised there might have been on a shoe with the her home.

There could have been a split in the insulation somewhere that caused the problem.

It could have been an off brand charger that not as thoroughly engineered as we expect things to come from major manufacturers.

I would say probably one of those two issues.

Certainly, if she was wet when handling the device, that would increase the chances as well.

That was the senior associate editor of engadget will stop you can catch the full interview at bloomberg.com.

From best buy to barnes and noble, we have seen a lot of major retailers take from the rise in e-commerce, which topped $1 trillion for the first time last year.

Should physical retailers be afraid for their future?

This man says no.

He has invested in an application that is helping companies like neiman marcus and pottery barn customize their websites to increase by them.

He is live in the studio to tell us more about it.

Thank you for joining us.

Yahoo, target -- what exactly do you do?

This leverages the power of big eta and technology to make sure that consumers are finding the products they are looking for.

That could be by a website, a mobile site.

You think about the nature of a consumer going on to a search engine, typing in long search terms, and seeing a set of results on the retailer website that do not match what they are looking for.

Our technology is essentially mines the demand that happening out in the world, via social networks, making sure that retailers present the right product at the right time for that consumer.

The right product in front of the right person at the right time.

The website has to be able to read your mind, essentially.

How does it work?

What is special about the technology?

It takes him three or four different data sources.

We take in the data about what people are doing on the website.

We take data from retail customers, in terms of buying history and transactional data.

We also look at what is trending on the social networks -- interest -- pinterest, facebook, twitter.

We put it through proprietary algorithms to make sure we are presenting the right option to consumers.

This is a big that at a time when other venture capitalists are pulling back from e- commerce.

If you go to a shopping mall these days, it is not as crowded as it once was, and yet you say retail is not dead.

Retail is a $10 trillion industry.

E-commerce is jawing like -- is growing like crazy.

Still 90% of retail commerce takes place in physical retail.

Physical retail has to change, and it will change.

Large companies like target, neiman marcus, and others are moving quickly to make sure they can leverage things like the mobile device inside the is a cool store to transform that experience.

I think you are going to see a lot of interesting changes happen.

Do you think physical stores will be around for ever?

I do.

Consumers want to browse, look and touch and feel the marketplace ashley merchandise.

There will be a role for retail.

The question is, can you take all the power of technology that we benefit from on the web and bring that inside the walls of physical retail?

This is about how to leverage that power inside the hands of those shoppers when they are shopping inside is a cool retail.

You mentioned the power of the data.

In this age where everyone is concerned about what the government, for example, knows about us -- some of these stores know far more about me than the government does.

How do you make sure the data is protected?

That is a great question.

This does not take possession of or use any personally- identifiable information.

That is all in the hands of the retailers.

What we do is, we take data on a more aggregate aces.

We essentially use that information to provide the recommendations and the relevant results.

Any data that does exist that is sensitive will be in the hands of the retailer, not our hands.

We try to stay out of anything that might result in privacy issues for our customers or ourselves.

What about the potential to integrate or stream some of this data into a watch, a smart watch, or google glass?

We started with the phone.

You are going to have google glass.

You are going to have watches.

This information will be physically on your body at all times.

Imagine you walk into a retail store and the application knows what you have bought before, what you have browsed before, and you can visually see the images of personalized product recommendations, along with a map that says, here is the file that directs or shirt is waiting for you.

Thank you for bringing your vision of the future.

Thank you, emily.

Coming up, nickelodeon is using some cool new technology to change the way it makes cartoons.

We take you inside the animation studio.

? i am emily chang.

Radiohead front man thom yorke has pulled his music from spotify.

He said it does not pay enough to musicians.

Shareholders will soon get rich.

Spotify has responded that it has already paid-or million dollars to musicians and is committed to making the most artist-friendly music service possible.

The evolution of digital content has gone through incredible changes since the days of "the flintstones," but cartoons have hardly evolved.

One show on nickelodeon has a new approach to animated storytelling, finding ways to embrace technological change.

Cory johnson has more.

What is up?

This is modern storytelling.

It is the new nickelodeon show created by these three guys.

They met in a san francisco bar, and were soon making goofy cartoons in their bedrooms, all created on laptops.

Technology has been giant.

It is within your reach.

Anybody can do this.

It is revolutionary, starting with technique.

You can use different tips that interact with the screen.

He draws the essentials of every scene on his computer.

Week try to provide a very intense map to how the cartoon gets made.

Animators in korea draw the thousands of nitty-gritty animations, using the latest, greatest software.

Photoshop, after effects, avid media composer.

The results can be thrilling.

But here is what is really groundbreaking.

The show is not just written as linear tv.

It is short bits, written for the game, the web, or iphone apps.

There is a lot that would not lend itself well to television that we want to see on other platforms, such as tumblerr.

The hope is that this will help ratings.

The disney channel has made up lost ground, riding the coattails of hits.

Nickelodeon execs hope this will lead to glory days the network has not seen since the introduction of dora and spongebob.

Helping their cause -- clever app experiences, like the don't touch button.

This is not going to blow up, is it?

Find out.

A nickelodeon executive says sanjay and craig everywhere will transform their business.

Sometimes kids want to play a video -- play a game or look at photos, or hear from their favorite stars and characters.

For us, it is understanding that all of those are part of the content they consume.

Bloomberg, or bank, california.

Imacs and its south korean partner announced 35 new theaters in asia today, including 30 screens in china and five in south korea.

China is the second-largest movie market by box office revenue and number of screens, right behind the united states.

This will bring the total number of imax screens scheduled for construction in china to 140 and in south korea to camp.

The ceo -- we asked about the growing ambitions in china, and what competition there is like.

We have relationships with the major directors and studios.

Many of the studios in china.

The talent in china.

We have a network which is about 118 theaters right now.

When we build it out, it will be about 275 theaters.

We have marketing.

There are people trying to get into our business, but i think the closest competitor has something like 12 screens.

I do not think they are doing what we are doing.

I think they are trying to create a bit of a premium, but no one but imacs can be imacs.

You mention potentially 275 screens.

Some have estimated maybe china is a market that could have 400 such screens.

Do you see imacs having upwards of -- imax having up to 2/3 of the market?

That is our estimate of how many screens we are going to do in china.

I think we will achieve that level.

How the country grows, and the share other people have, is not a major concern to me.

I always worry about the money we make and the network we have.

We are in 54 countries.

This year, we will have 35 films on a worldwide aces.

Our brand is recognizable to consumers everywhere.

The fact that someone picks up 10 or 15 theaters here or there for a less premium product is not really the way we look at the world.

All your partners are obviously important.

The wording in your press release -- your largest exhibitor partner in asia at present.

We know you guys have a strong relationship with wanda, which has been equally ambitious.

Would you expect they would like to claim that title?

As you point out, they are our partner.

I think we have something like 19 theaters with wanda.

I think we have an excellent relationship with them.

That relationship has been going on for a number of years.

The theaters performed extremely well.

I would hope over time they add more screens, but we will have to see.

Let us talk about a movie that is in theaters right now, "pacific rim," which by some measures had been a disappointment.

As far as imacs goes, -- imax goes, the word on the street is, you guys have been doing well.

Over the weekend, we did $11.5 million worldwide, $7.2 million in the u.s. the north american market, we were 19% of the total box office.

For everyone in north america who went to see "pacific rim," 19% were imax customers, and we only have 330 screens, a small percentage of the screens.

We were pleased that audiences chose to see it in imax.

South korea, we did about $65,000 a screen, the second- best we have ever ever done in that market.

Taiwan was strong.

Russia was strong.

It opens in china in a couple of weeks.

I think the fact that it it well in taiwan bodes well for china.

The most gratifying part was, we did a significant part of the box office.

We are just glad consumers chose to see it in imax.

19% is a massive number.

Is that sustainable with other films?

Does this represent the greatest opportunity for companies like yours?

I think we have done more than that on other films.

It is a high percentage.

This movie was marketed to fan boys initially.

I think the message got through to fanboys.

If you want to see this movie, see it in imax.

They came out in big numbers to do that.

Up next, stick around for our bwest byte.

? it is time now for the bwest white, one number that tells a lot.

We have a special byte from doug macmillan.

365. the number of days since marissa mayer began as yahoo ceo.

One year anniversary is coming up.

Tomorrow, she is set to do her fourth earnings call to investors.

We should see some good results.

On the one hand, it seems like she has done a lot.

Tumblr, attempts to improve morale.

Some analysts say they do not know what her strategy is.

On the one hand, there is a new management bench -- a new cfo, new head of m&a. the stock is up around 70%. but you are right.

What has she done to ramp up growth?

What has she done to get advertisers back in the mix?

Analysts are expecting flat growth, stagnation tomorrow.

She is not moving the top line.

She is focused on bringing in products, getting a mobile strategy in place.

Advertisers, people driving the top growth of yahoo, are not yet convinced to shift budgets back.

I wonder if we will be seeing more acquisitions from her.

Then you for stopping by, and thank you all for joining us.

We will see you tomorrow.

?

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

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