iPhone Heading to China: Bloomberg West (12/23)

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

Dec. 23 (Bloomberg) –- Full episode of “Bloomberg West.” Guests include Piper Jaffray’s Gene Munster, Mosaic’s Billy Parish and Bloomberg’s Adam Satariano, Alex Nussbaum and Julianna Goldman. (Source: Bloomberg)

Garage live from pier three, welcome to the early edition of bloomberg west were recovered the companies that are reshaping the world.

You have thatwe're focused on the technology and the future of business.

Let's get straight to the rundown.

A deal six years in the main down.

A deal steve jobs could not get done.

The recent agreement to bring the iphone to the largest cell phone carrier in the world, china mobile.

How big of a deal is this?

It is the last day to order the to arrive on time.

Shippers have been looking for this holiday season.

We will go inside ups.

The retail stores, we will visit the target store to see just how this works with interest.

After six years of talks, apple has finally struck a deal to sell the iphone through china mobile, the world largest wireless kate -- carrier.

They will sell it starting next month.

It gives apple access to the subscribers cared it could be a big boost for apple market share and may also help china mobile again some new high-end subscribers.

Shares trading higher today.

It is good to see you.

This deal we have been talking about the possibility for a long time.

Even for the last few months it seemed imminent.

Why now?

Six years in the making.

There has been a lot about and forth.

There have been a few big things that have stood in the way.

One is a technical thing.

The network has not been compatible with the way that the iphone is built.

On the other side of that, they came down to money and what the terms would look like.

While we do not know the actual financials are yet, obviously the recent sort of agreement.

Apple would do special flavors of the iphone for different parts of the world.

You think they would have done one for the largest carrier in the world.

China mobile has said they were looking for something that was fair and that they were not going to do something that would not be harmful to the business.

If you have to subsidize the iphone to a point where they cut into the profit margins too much in the company did not see it as worth it.

When he control over 60% of the market, you have a certain leverage that you can use.

In some ways they probably both think they have leverage.

Not that the people at apple that we talked to are full of themselves but they are quite proud of their work.

They think they have the best thing going.

I would imagine china mobilize the exact same feeling.

Apple has been very patient about how they roll out the iphone.

Look at how they did it here in the u.s. with verizon.

Those negotiations took a long time to get done.

Apple waited for a deal to come around.

There is some of that that goes into this.

What is the competition like in china for china mobile?

How do they differ?

China has the lower market shares than they do elsewhere.

They are about a fit.

Some of the bigger players, samsung and a lot of homegrown manufacturers that are also there.

You have to keep in mind what apple is going for is more the high-end customer who, that is where a lot of the prophet is to be made.

That is where this can be a real challenge for samsung who is that the run of the roost on china mobile.

It seems that china mobile widget does not have the same kind of smart phone users as a competitor has the opportunity to go upstream with this new offer.

If you look at japan, they recently started telling the iphone that they had seen their share of the markets start to deteriorate without the iphone and other carriers around the world.

Particularly that high-end.

The customers are very valuable because of the amount of data they use.

This is an area where carriers can start to make some money.

Changes going to come.

What does this mean for apple's bottom line?

They have been looking at is coming for a long time.

You had a difficult task of having to write about this for weeks.

Now that the deal is done, what is your big take away?

The first thing is they actually got it done.

We have been waiting for so many false starts for investors.

It is a relief that they could get it done.

It is a sign that apple is being more flexible.

I would say the technology piece is in there as far as the china mobile network.

The first thing is they got it done.

As far as the impact, it is a big market.

We think this can freeze the estimates by 5% in 2014. this is a big deal.

When you look at the size of the market, there is a big number there are subscribers that china mobile has.

Compared to the 240 million of at&t and verizon.

It is more than 230. i do not have to tell you that.

Even within that, the breakdown of smart phone users is a really sizable number.

I think i got to 76 million.

Probably about 115 million and verizon and the u.s. a big take away.

The market is already bigger than the u.s. that is exactly it.

You have to look at it in the context of who is able to pay for these phones.

That is the right number to look at.

The $176 million.

These are the biggest customers.

Essentially you're adding one that will be the equivalent of their biggest customers.

They will be able to afford these.

This is a really big deal.

I think more importantly is the trajectory of analyst estimates have generally been down with apple over the past year and a half.

This is something that can get these numbers to start moving upward again.

If we look at this, only $176 million on smartphones.

There is a chance for that to come up.

Is this a function of the general economics in china?

Smartphone growth in china is close to 60%. globally it is closer to 30%. it is moving at a faster pace.

It is going to get bigger and bigger.

Fast-forward 10 years from now.

It will be 90% of those.

It will be a huge number.

There are two lovers.

You having longer secular thing of smart phone growth.

Not to get to eat out on wall street, and the rest of china you say the iphone was a 6% of sales but you're estimating only 2% in china mobile.

Is that your midwestern conservatism?

Is that something is different about the china mobile customer?

One of the things that has happened is there something that is different.

Of the 25 million phones that were sold in china last year, there are phones that were sold in china but other phones were bought in other places in the world and sold on the black market.

As you know, i've seen you on the opening day event where high portion of the people in line 10 to be from asia.

When think we need to be, part of the reason why we have the conservatism is to fact or tor in that there are phones that have been in other markets.

Got it.

Smartphone prices in china are interesting as well.

The average price according to your note of a smartphone in china is $270. the iphone fives could be as much as $846. i wonder if the cost of the iphones could be less because they are made in foxconn in china and will be sold in china.

That may reduce some shipping costs.

That maybe some of the substance of some of the contract he details that might have really gotten china mobile to move at this time.

Typically, it is selling outside the u.s.. they do charge him slightly more.

They can give a little bit more on things like that in shipping and logistics.

That would make sense.

It is not going to come down enough to really close that gap with the average price being about 200 $70. you're still looking at a gap.

Merry christmas.

Thank you very much.

Pbs will ship over 130 2 million packages around the world during christmas week.

How do they do it?

We will go inside ups to find out next on "bloomberg west"." ? welcome back.

We have some breaking news.

A key deadline has been extended for americans looking to sign up for health care.

The deadline extended to midnight tomorrow.

This is just crossing for health care coverage effective january 1. it is supposed to be today.

Heavy website traffic prompted the extension.

A reporter has been covering this for some time in our new york studio.

This is something of a surprise.

That is right.

Another day.

Another obamacare change.

It extended its so people can sign up until the end of the day tomorrow.

This comes after they had extended the deadline from december 15 two the 23rd.

They announced they would get people extra days to pay their bills.

They are doing everything they can as high as they can.

That sounds only like a good thing.

Is there something that is less than a silver lining in the cloud?

Of course you're going on about who will be helped and he will not be by the affordable care act.

The concern for insurers right now is that the administration has made a number of rule changes i can make it easier for some people to delay or not even signed up.

Last week a said they would let some people whose plans are being canceled because they do not meet the affordable care act requirements, they will let them take a pass on the mandate.

The concern is that you are going to discourage people who are younger and healthier produce fewer medical claims from signing up.

They really need those folks to balance out the older, sicker group was expected to flood into the system.

The website, how is it performing on this latest deadline?

It seems to be performing fairly well.

The administration said they are seeing very high volume.

No surprise as we near this deadline.

We are not seeing the adages, the brig downs as far as we know that you were seeing in october and november.

When they declared this fix, they said they could handle up to 50,000 simultaneous users.

They appeared to be at least to this point which is why they say they are extending the deadline.

Fundamentally, this is a contract between the consumer and the insurer.

Is the inflexibility the law in the white house or the insurers themselves?

The insurers are reluctant to make too many changes.

They are very concerned about the technical aspects of this.

Mark was speaking at a conference a couple of weeks ago.

He said this has to work right away.

They get the blame if it does not.

And she needs medicine for her baby, she finds out she cannot get it.

Even though she thought she had signed up for health care.

Aetna perhaps gets the blame.

They are very worried about not only discouraging people or confusing people from signing up altogether but technically making us work in getting these hundreds of thousands of new people into the system.

7 million is the total target.

It is an interesting story.

This extending by 24 hours.

The deadline will be effective january first.

Thank you for helping us break this down.

Retailers have been using twitter and facebook to remote their sales.

Target is turning to pinterest to sell popular online items in their stores.

More on that when "bloomberg west" continues.

? welcome back.

I am cory johnson.

Retailers large and small grappling with social medias, confusing them all as they tried to draw customers to brick-and- mortar's store.

Target having success by setting up displays in storess, flagging popular items on the board.

Pinterest is featured in target stores which is great.

Why do you show me a little bit about how that works.

They are calling out items that have been very popular on pinterest.

People are visiting target.com and saying i love this rug and i will save it in a special collection.

It is happening over and over again.

They have created this signage.

They did this on their own to call out the items that users that use pinchers have decided are the most popular.

One of the most popular items this season is out on a shelf.

I do not know a lot about this because my son is 15 months old.

Apparently this is a big thing.

The elf will observe and make sure everyone is on the nice live and fly back to the north pole and give a report to santa.

It sits in some really fun places in the house.

Target has managed to catch some pictures of where the elf sits in the beautiful border they have created.

What are some other retailers doing with their products.

Do you have other stories were they have use pinterest in a creative way and the result has a price to?

In of our partners are using it for their black friday and cyber monday strategies.

Lowes created some boards that showed silhouettes of items that were about to go on sale.

Pinterest starting to experiment with ads.

Do you see an opportunity to make money through e-commerce and through these partnerships, to take some sort of a commission on the things that people are buying?

We are doing some testing.

We will work with a handful of partners to test the system.

We are in the very early stages of seeing how do our users react seeing this.

What kind of results drive our partners?

That will reform how we think about an eventual business model.

Facebook has been if you're renting for a long time.

Twitter hired ahead of commerce.

How do you think pinterest ins out from others out there?

They think of us more as a complement to google.

When someone knows it want something they can search for it and find it.

The other side of that is i do not really know what i want.

I do not have a formed idea.

When i see it i know i will like it.

It is coming to a store.

You may walk down the aisle.

When you see it, you will want it.

That is the experience we are trying to provide.

That was emily chang from pinterest.

It is time for "on the markets." julie hyman joins us in new york.

She joins us with more.

I am still in new york.

Let's talk about what is going on with the stock market.

We have more records for the s&p and the doubt.

The imf that it will raise these growth forecasts for next year.

Apple is signing the deal with china mobile.

That gave a little extra impetus for stocks to move higher.

We are entering the santa claus rally phase.

It is a week or so of trading.

It tend to be a positive one for the stock market and what tends to be a positive month.

We are seeing all three major averages rallied.

Nasdaq trading at about a 13 year high.

I want to highlight individual stocks.

Michael kors falling the most since december 6. it is due to slower than expected mulled traffic that results in a higher-than- expected markdown and inventory.

Kb home shares, they are going in the opposite direction.

The company sells single-family homes.

It target of first-time buyers and upgraded to neutral from sell at citigroup.

It is a more favorable earnings outlook.

Citigroup raised the price target from $13. we will be back in 30 minutes time.

You will get more "bloomberg west"." ? this is the early edition of "bloomberg west." i am cory johnson in for emily chang.

Now, to your bloomberg top headlines.

Four people hurt after a knowing jet hit an office building in the johannesburg airport.

A wing struck a building after going down the wrong taxiway, sending debris.

An investigation is underway.

More than 400 45 thousand households are without power in ontario and quebec after a major ice storm hits quebec.

The storm also caused the cancellation of dozens of flights, making it a christmas travel nightmare, and fantasy tops the return of ron burgundy.

"the hobbit" beat "anchorman 2," despite a heavy, heavy marketing campaign.

And a lot changing as large energy providers are increasing solar, and these days, you can own pieces of solar projects and collect interest area mosaic, an interesting company helping people to do just that, from schools and military bases, they have connected investors with solar projects that need the money.

I am joined now to talk about this interesting crowd funding model.

You described this business to me, and my job was on the ground.

Describe it to me.

Yes, mosaic is the first clean energy platform.

People go to the website, and they can browse projects, and those projects make money, and investors are paid back with interest.

You have been working on different ways to bring solar after you dropped out of college back east.

Which one was that?

You dropped out of college to do what?

To build the clean energy movement.

I think in this generation, we can shift from fossil fuels to clean energy.

We do not want to wait.

I think this is an interesting financial model.

Why do we need this model?

One of the things we hear from investors is they like the transparency of our investment.

Even more than the yield, we offer 4.5%, seven percent.

That ain't nothing in a zero interest rate environment.

These are good investments, and people like them.

They like the environmental performance, but more than anything, they like that they know what they are investing in, so at a high level, i think people do not like the opaque quality of other investments on the marketplace, and solar is something that is real.

They can go and visit it, and it generate strong returns for our investors.

For the people getting the panels on their rooftops, the companies getting the panels on their rooftops, what do they look like?

What kinds of businesses are they?

So there are a couple of leaders in the space.

Sun power.

Mostly residential.

Mostly residential, and they are offering people no money down, save money on your utility bills, a strong value proposition.

Solar city, and there are solar panels at my house i just paid for, but the solar city model, for example, they will not pay for the panels upfront.

We will get money from investors, and in a few years, you will own those panels on the house.

That is the model.

Instead of financing the panels, we allow people to finance the panels and then get paid back as those panels generate electricity.

We really do not know the panels going on the market right now.

What is it, and how is that affecting the business model?

Solar has been around since the late 1960's, and there are still panels that are still operating.

Most analysts say that the panels built today should last 30 or 40 years.

Most are warring teed for 25 years, so it is a proven technology, and the markets are that.

Let's call it a five percent yield and does that five percent pay in perpetuity, or does that pay during the warranty installation?

That is typically in the five to 10 year space, and people get principal and interest monthly, so it is similar to a fixed income type of investment.

And then at the end of that period, who is the owner of that panel?

Whoever develops the project.

One of the things we have seen is that making solar panels, it is so much greater, and one of the effects is the collapsing of prices, and a lot of the solar panels out there, that you are selling investors the opportunity to back, they do not have valid warranties anymore because companies have sold them.

Is that true, and is that a risk?

No, that is true.

-- you have zero default.

What is the transaction volume?

-- what is the size of the average loan?

It is in the $200,000 to $500,000 range.

So big enough for wealthy investors.

Exactly, and retail investors.

When he five dollars.

We are opening that up.

And you are putting all of the money together.

Exactly.

How do you make money?

We make an origination fee, and there is a platform fee for investors.

Thank you very much.

"bloomberg west" will be right back.

? this is the early edition of "bloomberg west." i am cory johnson.

27% more than the company closed on friday, a purchase that should help seagate expand its storage solutions as well as new technology manufacturing.

The deal is expected to close next year.

All hands on deck at ups, and what does it take to make sure packages are delivered on time?

We have a look inside of how they prepare for the christmas week rush.

This is the biggest challenge in our career.

They are trying to find the most efficient net worth that they can.

We are going to see mike smith.

It is a challenge.

You have so many variables.

We controlled chaos here.

Every day, we control chaos.

It is a big issue.

We do a debriefing, and we look at the weather for the next 24 hours.

Our mission is to set the plan up so that packages can be delivered on time where they are supposed to be.

It is based on what is going on that day.

Last year, the wind shifted.

It was a tough operation.

Based on what is going on, we are working to come up with it.

Every season is a little bit different.

We have to react.

We have no choice.

Things come together, and it may be something not that big.

That is basically it.

We are good to go.

That was bloomberg businessweek.

And how can technology make surfers even cooler?

Two of the most legendary names embracing 3-d and new technology to make one of the coolest things i have ever seen.

Also, with the tablet phone.

Look how awesome it is.

It could be.

? this is "bloomberg west." i am cory johnson.

Given that, looking to win antitrust approval, and meredith will be expanding, dealing with struggling magazines, like "be tter homes and gardens." how can two surfing legends use technology to make what they do even more awesome?

Using 3-d cameras and a series of innovation to hunt for the biggest waves in the world.

We have a first-hand look at how technology is changing what they surf and how you can see it.

Check it out.

There are surfing waves, and then there are surfing waves, three or four stories tall, ones that terrified.

It almost feels a little bit too much sometimes.

Angst to technological innovation, this experience has been captured in a cutting edge surf movie.

The film follows famed surfers as they try to catch the biggest waves in the southern sea, and this could not happen without the latest in tech.

They start with imagery, from weather satellites, following the changing direction of storms, with google earth pictures looking for unknown big wave spots, and buoys measuring the ocean.

So many things, like resources we can tap into now.

They then raced to the expected spots with van loads of specialized equipment, with equipment mounted on surfboards, with handles and helmets.

Tricked out, powerful jet skis, with more 3-d cameras.

3-d cameras on helicopters, experimental splitters for focus on both the foreground and background, and when the lens got wet, an air knife to blast the lens with compressed air.

A handheld camera on me.

I had cameras on the board.

There was a jet ski shooting me.

There was a helicopter shooting me, and there was a boat shooting me, so there was overkill.

There was some tech casualties.

You did more damage than me.

To be sure, they are struggling for air.

3-d tv sales have disappointed, and 3m killed their 3-d station, a surfing technology may have gone meech -- niche.

On the surfboard, in slow motion, and then into a big barrel.

That is when revere life, ok, this is something different.

We are onto something really special.

But forget all of these surfers.

All of this tech proves that mother ocean is the real star.

She is always moving.

The ocean is always moving, and that is the big challenge, understanding the angles.

What sort of waves can hit the right spot.

This is just a wild movie to see.

The sound matches what you see.

It got a lot of prizes for technical achievement, including with 3-d documentaries at the awards.

And as was reported earlier, the deadline has arrived to enroll in the affordable care insurance, to get insurance by january 1, and the deadline has been pushed out a day, and the deadline also included president obama, who enrolled from hawaii.

The commander-in-chief decided that obamacare is good enough for obama?

Why not?

This is purely a symbolic move, like 80% of americans.

The president gets health insurance through his employer, so the u.s. military provides the president with his health care, and the white house says he will continue to have his health care provided by the u.s. military, but he wanted to show solidarity and sign up for obamacare.

The white house says he signed up for a bronze plan, and he is paying under $400 per month, and other than that, they are leaving the details very vague.

We do not know who the insurer is or how much he is spending per month.

Fundamentally, is this just a reflection of all of the problems that got all the attention earlier, or is there still difficulty signing up?

I think this is just a symbolic move for the president to show that people can go to the website.

They can sign up.

It sort of reminds me that the president went swimming in the gulf of mexico after the oil spill to show that the golf was open for business and that it was ok to get into water.

This is sending a message, ok, you can use the website.

It is user-friendly, and you can enroll for obamacare, and as you say, they have a next rudy to do it, because the white house has gone ahead and extended the deadline to midnight, december 24. come on in, the water is warm for health care.

That is right.

What the white house is pointing to is the fact that they had to extend this deadline for tomorrow that shows the interest is there because they saw a surge in people coming onto the website, so they needed to have that had time to allow that.

-- that pad time to allow that.

More "bloomberg west" after this break.

? ? welcome back.

I am cory johnson.

Coming up on the later addition of "bloomberg west," trim draper -- tim draper.

A quality idea, with a news conference.

He will talk about the new initiative to split california up into six different states.

Yes, he is pushing for this for several reasons, also to get the state properly represented in washington, and we will break down this idea for the late edition, 3:00 on the west, 6:00 at east, right here on bloomberg television.

All right, it is 56 past the hour, and that means we are on the markets, and olivia sterns has more.

That get you caught up, markets rising, the dow and s&p up, the nasdaq trading at its highest level since september 2000, and a couple of stocks we do want to highlight for you, think of america is cutting a memory chipmaker to underperform saying it is one of the least preferred stocks in the sector.

Also, they were citing an increase in the supply, pushing prices lower.

And selling television stations to meredith, stations expected to generate up to one hundred $50 million in annual revenue after the purchase is completed.

And if there is one deal that is not going through today, joseph a bank has rejected a takeover offer from men's wearhouse, calling it significantly undervalued.

They are two of the largest men's clothiers.

Right now, joseph a bank, or, i should say, men's wearhouse is pursuing.

Yes, that's because joseph a bank was first trying to acquire men's wearhouse, the larger competitor, and they let that deal expire, and when the ghost is following you -- exactly.

How did the tables get turned question my basically, joseph a bank is a smaller company.

It is more logical for men's wearhouse to make an offer for it.

Men's wearhouse also set at the time that joseph a bank was being opportunistic.

The well-known founder and one- time face of the company, he parted ways earlier this year.

The stock has fallen as a result, and it is said they were try to take advantage of a weak moment.

We should mention, this is not the end of the story, right?

Joseph a bank saying the price is too low.

The price has been trading above the $55 mark ever since the offer was made, so they believed the offer should be higher.

What are the analysts saying?

You they believe it is undervalued, joseph a bank?

Especially with the stock trading higher, it is not unreasonable for joseph a bank to come back and ask for more money, but joseph a bank said they would also like to look at

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