High Price for Apple-1: Bloomberg West (07/09)

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July 9 (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 f9om Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

Day number four of the rally for the s&p 500. that is it for "lunch money." emily change live in san francisco.

Come to the early edition of bloomberg "west" recovered global technology and media companies covering the world.

Going straight to the rundown.

Barnes and noble is running out of pages to write a comeback story.

What could the future hold for the ones giant bookseller?

The ceo is out in the ninth business is climbing.

The blackberry c.e.o. asked for patience as he tried to play off weak sales of the company phone as just an early phase of the turnaround plan.

How much would you pay for an apple one hand computer handbill in 1976? plenty are naming their price as christie's closes the auction.

First, to the lead.

The story of barnes and noble may be nearing its end.

William lynch ceo has resigned and the company says will not replace him.

Sales of the tablet have failed to keep up with rivals.

Instead michael pules be promoted to president and ceo.

Michael huseby.

This comes two weeks after the pope -- posted lackluster earnings.

Shares are up today.

How what could happen next?

For more on that, we turn to the editor at large?

. i think it shows that he has always run the business.

Someone else is probably more in charge.

I think it shows this is a classic story of american business today.

This is the story we're telling all the time.

How technology is selling business and companies are struggling to adopt.

If you look at the stock of burns and noble, what you see is lots of little events that move the stock quite a bit but the fundamental struggles of the company are not well reflected.

Eventually they will cleave these companies apart.

In part because the revenues are so strong.

That this is a small percentage of the overall revenues.

It is really in how the business is structured and sucking a lot of the cash flow away.

You say the book business itself, the big chain stores we have all come to know, that business is doing ok?

It is doing ok.

They have brought down the number of stores to the stores that are more successful.

People still buy physical books.

Sales are faltering.

When you look at the revenue, the revenue in terms of millions of dollars ain't nothing.

The slowdown, the year over year changes when you look at the business, and that is the right way because the fourth quarter, these are so important, but nokes business has been around.

They have really missed it on a product cycle last time around.

It seems counterintuitive, but it least if they separated the business it seems the book business could survive.

What they have seen is other companies have an interest in that the business and are willing to put money into it.

Big barnes and noble may not be.

Listen to what wench had to say shortly before his tenure ended.

The most compelling thing is we will scale the business, reduce operating losses.

We know we are investing like a big market.

We're scaling the business.

Scaling the business means shrinking.

It did not shrink enough.

As we always say.

Should i? shrinkage is bad, growth is good.

What we have here is a business.

There were trying to shrink the losses, but they miss the product cycle.

This is very difficult.

Barnes and noble learned about the hard way.

Interesting to see how that chapter ends.

Corey johnson, editor at large, think you.

From struggling hardware sales to blackberry.

The ceo is facing shareholders today at the company's annual meeting asking them to look beyond the wheat sales and focus on the long-term.

Dominic chu is in new york.

What did he have to say this time?

He has to address this trend is -- shrinkage issue as well.

He made interesting comments.

He said they have a way to go in the united states.

They did not deliver what analysts expected short-term.

He said we are not the device for the company.

We will explore every opportunity to create value.

More than 1-2 winners in the smartphone wars.

Blackberries 100 percent open to partnerships to drive scale.

-- blackberry is 100 percent open to partnerships to drive it sales.

This will be the real key.

All about trying to figure out whether or not there is a way to get investors to be patient.

That will be the real key.

Patient for a little while now.

We all know what the real negatives are.

What about the positives?

They have a new operating system.

The blackberry 10. whether or not that will be key for them.

Do not count the blackberry out yet.

They have the keyboard models.

They have about $2.7 billion in cash on the balance sheet, so they can last a little while.

They have emerging-market demand to look forward to as well.

A big story with regards to why they have value.

They have a patent portfolio.

They have the idea that you can see is server network already in place those are key things for them right now.

That is why it will be huge.

If you look of the reason why the ceo is saying the things he is, he addressed the concerns during this particular shareholder meeting.

Take a listen to what he said during the meeting today.

This year we are embarking on the second stage of this very transformation.

It will involve additional investment and involved a continued drive for efficiency throughout the organization.

Remember, this is fine and dandy but still have to do -- deal with the idea that they have less than 3% market share globally for smart phones.

They control 90 +%. a formidable hill to get through.

That is why everyone is focused on blackberry.

Not just the short term, but long-term as well.

Market share has plummeted.

Dominic chu in new york.

Thank you.

New details about the pilot at the control during a crash landing in san francisco.

We will visit the perspective of a former ntsb chairman.

? first bloomberg.

This is bloomberg "wets.

St.

day two of interviews from the pilot -- pilots flight 214. they plan to interview the pilots at the controls later today.

One of the survivors is san francisco resident, then thben levy.

Everyone was screaming.

It was hard to believe it was actually happening to us.

Then all of a sudden everything stops.

You realize somehow you are alive, sitting in a cockpit of a plane and had no extent of the knowledge of the outside.

There was no inside -- no smoke inside.

It took awhile for everyone to start snapping out of it and realize we are alive and have to get out of here.

That was a passenger on flight 214. the ntsb is looking at everything that cut have been a factor in the crash, and that includes technology.

And joining us is jim holland, chairman on the ntsb during the clinton administration.

He said over reliance on technology is partly to blame because pilots are to depend on automated cockpit controls.

First of all, we will get to the technology question in a moment, but we have information about who was at the controls, and it was the pilots' first attempt at landing this plane at san francisco airport.

The board during my tenure made recommendations.

The pilots are going to be interviewed.

The board at some foreign will need to interview management to find out how they put someone in that seat under the circumstances, and their first time landing at sfo.

You are saying this should not have happened essentially?

Definitely not -- should have not happened.

It is a tragedy, but also remarkable that so many people were able to walk away.

The issues they're going to be looking at, i believe, in addition to the operational error, which -- will be looking at the crash worthiness and how decisions are made.

So what sort of changes does the faa empyrean aviation officials, what sort of changes do they need to make to make sure something like this does not happen?

I lit had apparently landed several times at other airports, but never at at sfo.

One of the reasons they have been so successful in providing such of excellence safety record is these are very thorough investigations.

It is certainly premature to say what type of recommendations the board will make.

We can look at certain areas and understand these are things that will be pursued and it may be the subjects of recommendations when the report is completed.

Officials have said every detail is being investigated, including the use of technology.

You had said the pilot and airlines have become over reliant on technology.

Why do you think that is?

We have a whole generation of pilots trained in the military that are retiring.

They fly worldwide.

Their military -- there are military pilots and other countries.

The generation change, the new folks, young people, they are trained to fly the aircraft on the computer and not hand fly.

There has to be more attention given to be sure that if there are computer problems or the avionics are not there, that they can fly the aircraft.

I think that is something the board will look at very closely in this.

In this case we are told auto pilot was disengaged.

However, we know the indicator on the runway was out of service.

Do you think if that had been on it could have changed the outcome?

It is a possibility.

The ntsb will have to look very closely at the avionics of the airport, the decision that was made to take the ils out.

The decisions made in regard to all of the other avionics on the airport.

They will also have to look at the emergency response.

It is correct, one of the victims may have been killed or reported as a result of a vehicle accident, rather than aviation accident.

One last question in terms of whether there is too much technology in flights, i have been told by people that are pro-tech that tech can help planes be almost too precise.

Why would you want to be too precise?

Would that be beneficial?

Instruments are dust additional support.

-- just additional support.

You can tell from my age that i am not the best person to talk about technology.

It is a two-edged sword.

It can provide great safety, but at the same time we have to be if the tech -- we have to be prepared if the technology is not available, as it was in this case.

Think you for joining us.

We will of course be falling all of the updates to the investigation throughout the day here on bloomberg television.

Edward snowden says the nsa has direct access to information from google, facebook, and microsoft.

Find out how he describes the close relationship between technology and the new -- and the government in a new video next.

Brazilian authorities are investigating data storage policy after accusations the u.s. may be spying on the e-mail traffic.

The brazilian president said she is taking a look at where brazilian data is stored, especially collected through google.

This was sparked by a newspaper report cited documents released by edward snowden.

Bove companies like google, facebook, apple, microsoft -- they all provide the nsa direct access to the back ends of the systems you use to communicate, stored data, and even just to send birthday wishes and keep a record of your life.

Google, facebook, apple and microsoft all said they have denied the government direct access to servers and had not heard of the prison surveillance -- of their surveillance program prior to the leaks.

Pushing for more information about the national security requested to receive.

President obama says one of the main goals of his second term is to create a smarter, more efficient government.

He hopes technology will help him do it.

He has appointed the first chief technology officer for the united states.

I had a chance to speak with todd park and asked how he will help him achieve the goal.

Multifaceted agenda he is championing.

How can technological innovation do three things in terms of a government?

One is deliver better, faster, smarter services and make government cost less and how government can support economic growth.

As an example, and the latter category, which may be of great interest to the viewers, one idea is the idea of opening up data in computer readable form.

Part use the example of how the government opened up weather data and gps data to the american public that ultimately can troops prediction -- contributes tens of billions of dollars annually.

President obama recently visited austin, texas, where he issued a new executive borge -- -- order on data.

That will actually change the default to government data to open in readable and really turbocharge the supply of fuel to american entrepreneur worse to help create businesses and jobs.

This is american data.

We should give it back to the public come back to entrepreneurs as fuel for economic integration.

You can catch my fall interview with the u.s. chief technology officer, todd park at bloomberg.com.

Carlos slim just poured 40 billion into an app.

How the company plans to use the cash next.

-- 40 million.

This is the early edition of bloomberg "west." i'm emily chang.

Pandora says listeners were up to 1.3 billion.

It was up 30%. pandora's share was just over 7 percent last month.

An increase of 6%. more after the break.

This is the early edition of bloomberg "west." i'm emily chang.

A check of the stories making headlines outside of technology today.

Trish regan.

Each of its interim president has made an interim prime minister and vice president.

The government will be charged with holding new elections and working to turn around the struggling economy.

The muslim brotherhood tradition -- transition timetable.

The deadly free tradinfreight train derailment investigation continues.

The derailment and explosions killed at least 13 people.

Rupert murdoch has been summoned to parliament again to testify about the phone hacking scandal at his british newspaper.

This comes as people try to allege crimes -- the bribery.

More than 100 people have been connected with the phone hacking scandal.

Those are the headlines at this hour.

Going to dominic chu.

Let's talk about what is happening with the stock market overall.

The s&p up near session highs.

About 0.7%. some nice moves.

The dow jones up about 70 points.

The nasdaq at 17. three stocks he will want to keep an eye on is intuitive surgical systems.

They make medical robots, the ones used for surgery.

Those are slowing down, the sales of the surgical robots.

The most and a decline in almost five years.

What shares.

Also want to watch is fedex.

Why, because there are at least rumors in the marketplace right now that fedex may be the target of activist investor bill at men.

-- bill ackman.

One of the biggest moves we've seen for quite some time and that it shares.

Keep an eye on this.

This is according to an analyst to as a buy rating on this particular stock.

Init is joining the nasdaq 100. they're moving to the oracle nyse.

There will be listed there.

We will need another stock replace tesla.

This opens you up to demand will invested your company.

Back to you.

All right.

Can -- we turn out to the digital read next, ongoing series about how technology is changing the music business.

Carlos slmi just poured $40 million into the music and media identifying app shazaam.

-- carlos slim.

The deal includes an agreement to sell it on smartphone sold and that america.

Joining us is the ceo.

He is in town for mobile beats.

I know you are making a transition from music into television.

Explain how the transition is going and where your focus is now.

Shazam is used by over 350 million users around the world, adding over 10 million each month.

As part of that, we are extending engagement from not just music, but tv.

Today in the u.s. and user can shazam most every tv show and commercial.

Very committed to music.

That is really our routots.

We will continue to invest and continue to be a huge destination.

To do just that a huge investment from carlos slim.

-- you just got a huge investment from carlos slim.

We have many users.

The numbers have tripled since three years ago.

The original shareholder introduced us to carlos slim.

There are the leading wireless carrier and that america.

It is of mobile company.

The match was extremely natural.

What in particular attracted him to a media app company?

Shazam is one of the top 10 in the world.

We sell 500,000 songs per day.

Over 300 million in music last year.

Moving into tv, radio, retail.

Opportunities are enormous.

I think they saw fantastic investment opportunity in very natural partnership.

Often when you watch television news think i like that and want to know more about that thing someone is wearing.

There really is not a true second screen app yet.

In my opinion the closest thing closest to that is twitter.

How do you make it more mainstream?

The reality is 85 percent of the smart device with them when they're watching tv.

Connecting the screens is a big opportunity.

A lot of companies are trying to figure it out.

Twitter has success.

A unique proposition.

A very simple device.

We can deliver more information about the cast, what people are worrying -- wearing.

The songs that are being performed.

There is a lot we can do.

Where partnering with networks and programmers to optimize the experience.

I have used it a couple of tides.

It is cool.

How do you get people like me to go back and use it every time?

Absolutely.

We want to surface, what are the top 10 things right now?

Interactive maps so you can see based on a very small neighborhood level detail, what are differences in music?

Recommended music.

When you are watching tv and have those kinds of questions, the instinct will be to shazam it.

So for example, a coupons delivered right to your phone.

For tour the new jet wire car.

More content, etc.. a richer and richer experience.

In terms of watching a television show, what sort of information -- what is your vision for what you would be able to see?

I think of the show by show.

What does the consumer really want to know?

Some fashion shows, all about what someone is wearing.

A cooking show, all about the recipes and ingredients.

Other shows more about the cast or scenes not included.

We think there's a wide variety and one to custom fit it.

It has been around 12 years.

You took a big private investment.

What is the future?

I mentioned we have fantastic momentum.

People are using a 15 million times every day.

So we will expand the user experience, partner with more networks and advertisers.

Our ambitious -- ambition is to go public sometime in the next three years.

And we're sprinting as fast as we can to be in position.

Thank you for joining us.

Closing the book on the tenure as barnes and noble ceo.

Could that spell the end to the struggling nook business.

That is coming up.

This is bloomberg "west." i'm emily chang.

I want to go back now to the top story, the resignation of william lynch.

Corey johnson has been following the developments of the company and joins me now with more.

Take of the shake-up comes as the same time -- this shake- up comes at the same time that the nook tablet has really failed.

A long-time analyst knows this business well.

How has this barnes and noble, electronic business gone in the course of the past 12 months or so?

I think don is probably the operative in expression.

I think $1 billion plus later, it is partly subsidized by microsoft to some extent.

Microsoft got an app out of it and that is about it.

My son -- microsoft gets a $300 app.

Is this a sign that a deal with microsoft is closer or further?

I think you can argue it both ways.

It is not quite clear what the dog was going to be going forward, given there were not going to manufacture it anymore.

Also given that it was an injury-based product.

There were a number of factors in this deal.

Certainly whinge -- obviously quite aggressive in building this out.

It has not worked, and now he is associated with something that has imploded.

Not as constructive going forward.

Microsoft can figure out what they really want to do.

What really is happening is hulesby is being brought forward.

As a finance guy you do what traditionally finance guys do, to rationalize it, at which point it will be easier to know what there can be a deal for.

Indeed, i wonder what the existing books business looks like.

Are they in the places they need to be and out of the places they were losing business, such as real estate, and the books business can stand alone?

The books business is terrific.

Obviously it is an iceberg.

What is the theoretical digital locker?

How long will you keep buying true that app and is there any value there?

It will continue to face challenges obviously, but still a lot of books as.

I still wonder about the about the numbers from last year.

The migration to ebooks will migrate away from the business.

Every time something negative has happened, obviously it has stopped, which improves the price he will have to pay.

In that sense, perhaps there is a difference between the investor base and management base, by which he had played better than anyone else in the past.

Certainly no fool.

Neither are you.

We appreciate it.

Senior media analyst of the maxxam group.

Think you.

The first computer for apple makes history on the auction block.

How much did one of the first computers made by steve wozniak sell for?

That is next.

This is bloomberg "west" on bloomberg television.

A piece of technology history made auction history today.

And the original apple computer known as the affable one that sold for more than $387,000 at christie's today.

That makes the computer the highest-priced item to ever be sold through christie's new online platform.

When of the first ever assembled.

It was designed and handled in 1976 by the apple code-pounder, steve wozniak.

-- co-founder.

We decided to take a look back at history and evolution of the computer.

It took 3,000 tons of fuel to send a man to the moon and a computer processing millions of operations per second.

Time has changed and so has cost.

Nasa spent $150,000 on the system.

10 years later an equally powerful pc was a 10th of the price.

A decade after that your average tabulator was more powerful than both.

A police station2 -- playstation2 with 300 times faster than the computer on apollo.

There are super computers and supercomputers.

The fastest in the world today is tightened, owned by the u.s. government.

More powerful than the curiosity rover.

Now, to a bloomberg tv special that was jessica howard.

To a bloomberg tv special inside chipotle.

They are known for breaking the fast-food rules but also has an untraditional approach to marketing.

Carol massar went inside and spent time with key executives at the chain.

She joins me from new york.

Tell me about the non- traditional way of marketing.

This is a company that spent a lot on marketing.

They do it very differently.

Recently there were filming a mini-drama series and cliff -- called "farmed and dangerous." they hope the series will be some eventually on cable and broadcast tv.

The chief marketing officer, he help -- hopes that it develops an audience that likes it just for the entertainment value.

That is what the goal is here.

I do not recall ever seeing big, national tv campaign from them.

Because you have not.

Only one national tv ad is a two-minute animated film about a farmers that lets the pigs at a buout to roam free.

This mini flick that they did first what i wrote.

More than 4 million hits and then it went to movie theaters before ever hitting the broadcast airwaves.

Something very different.

Also something different, the annual cultivate festival.

It is where our -- where there a lot of cooking demos coming heating, cooking.

It is all really about the philosophy and food with integrity in the form of an all-day party.

Books like a lot of fun.

I would love to figure out how they make the carne asas da.

Let's talk about social media.

They are on twitter and facebook.

And they have an app.

There is options for ordering, allows you to pay with their cards and links to nutritional information.

It is ranked no.

18 as the free food and drink apps on the apple app store.

Carol massar inside chipotle allen and co annual conference kicks off this week.

The big superstars is expected to attend next year did you can watch as streaming on your tablets, ipad, and bloomberg.com.

Welcome back.

Coming up on "bloomberg west" -- "despicable me 2" is dominated the box offices.

We was due to the production company behind in a minute hit.

-- the animated hit.

You can hear more about herbalife's strategy on our "inside chipotle." tech and media moguls are heading to sun valley, california for allen and co.'s annual conference.

Sun valley has traditionally been a breeding ground for major media deals.

Time warner and aol came up with their merger there in 1999 and disney ceo bob iger says there acquisition of abc in 1995 was also conceived at the conference.

But the sun valley crowd has changed to include more tech titans in recent years.

Cory johnson has more on what to expect from a quarry -- sun valley.

You have been there yourself, how is it changing?

I do not know if they want to take credit for the a zero l time warner merger, it did not work out so well.

Allen and company has really focused on the media business.

There are not too many boutique investment banks with consequences such as allen and company.

They have branched out more to

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

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