. . live from pier 3 in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world.
I'm emily chang.
Our focus is innovation, technology, and the future of business.
Let's get straight to the rundown.
It is d-day for dell as shareholders approve michael dell and silver lake's land to take the struggling computer maker private grade but this is only the beginning of the turnaround fight area pandora appoints a new ceo effective immediately and investors are cheering the decision.
But who is brian mcandrews and how does he plan to compete with everyone from spotify to itunes radio?
Ceo mark zuckerberg says the government blew it in its attempt to collect user data.
We will hear from zuckerberg and marissa mayer about how they feel about the nsa buying.
First to the lead -- this is the day michael dell had been waiting for.
After a seven-month standoff, dell and private equity firm silver lake can move ahead with their plan to take the company private area in a vote this morning at dell headquarters, shareholders approve their final buyout offer of $25 billion, but the process was in good for anyone involved.
Carl icahn said he would not seek to challenge the final offer.
Our deals reporter, cristina alesci, is outside dell headquarters in round rock texas.
You are listening to the conference call.
What did you hear?
A lot of what we have heard over the last couple of months, the executives were not anymore forthright than they had been along the way.
Michael dell was confirmed as going to own 75% of this company and what's interesting is who was not on the call -- silver lake, the partner in this deal.
It's very unusual a private equity firm goes ahead and make this kind of commitment without actually controlling the assets.
There's a major risk therefore silver lake and reputational he, silver lake went ahead and okayed the price increases even after saying it was their best and final offer.
1375 turned into that plus the $.13 dividend.
We have seen silver lake take some big risks here but what kind of return are they going to take on this deal?
Ask what is the next step?
Although they will be popping champagne tonight at michael dell's ranch, he's throwing an and formal barbecue for the advisors here.
There are some challenges ahead.
Pc sales keep declining, particularly revenue from pc sales is declining more than analysts originally expected.
Networking and software sides, is it enough to make up for that decline in revenue?
There was a major focus on the call on the fact the company still had a flexible capital structure.
A lot of people had questions on the ability to execute such a complicated turnaround plan and at the same time deal with the new debt being put on the company.
There was a lot of focus on that.
They would continue to make acquisitions and service new debt on the company.
The s&p did put out a note on this new debt yesterday basically saying they have to reduce costs.
That's a major focus for the employees of delta.
Cristina alesci, thank you for your reporting on this over the last seven months.
So what does the future of dell look like?
The managing director at lucerne worked as a senior manager at dell and joins me now in the studio.
What should be number one on the priority list?
I think they need to rethink their strategy.
I don't think they will but i think they should.
Why don't you think they will?
Their focus is what are the better elements of their current business?
Getting more creative and innovative, potentially pursuing open-source, which is a wave we will see over the next 10 years, is something that would have less near-term returns but would position them better for the long-term.
Selling it to someone and getting a good return in the next few years great what should they be focusing on?
They are focusing on things like networking, storage, servers, security software, trying to become an i.t. in the box provider.
If they were there now, those would be the best areas to be in.
By the time they get there, it's too little, too late.
What kind of choices do you think they might make?
Ask i think they will make a lot of headcount cuts.
I haven't even begun to speculate but i think it will be significant.
More significant perhaps then if they had not gone private.
It could change the dynamics not only for dell but hewlett- packard and lenovo as they get more aggressive.
One challenge they are going to have, and their debt just got downgraded to junk status, is the balance between the need to generate cash flow and do basically drive share gains, which they have been trying to do.
We are hearing that carl icahn's stake remains at almost nine percent.
What does that mean?
I think he's going to get taken out with everybody else and i can't say what he's going to do in terms of an attempt to get an appraisal.
But he has probably made a reasonable return for his investment this year.
A guy named dave johnson recently left dell to go work at blackstone.
Blackstone took a look at l and past.
What does lack stone no?
To my understanding, they took a very close look and if i call correctly, dell covered about $25 million in blackstone's expenses for them to take a look.
My question is what does dave johnson though?
He its enterprise i.t. which dell is trying to focus on, he gets services from software which dell is trying to move into in a big way.
He was head of dell strategy and he more than anybody has perhaps a less biased view than michael.
This is michael's a.b.. dave is able to be more detached and -- this is michael's baby.
Dave is able to be more detached.
Everything i've heard is that the extra payment offered last month to help get this deal closed came from michael, not from silver lake.
Blackstone took a look and he gets what the opportunities and challenges are and that's probably why blackstone took a pass.
What do you think the timeline is for the next two years?
How long will it stay private?
One thing that's interesting is that the relations representatives have told me they will continue to have an investor relations staff.
It certainly says they are not trying to stay private.
They could get bought by microsoft or someone else as well.
We are starting to see different hardware elements, network computing and storage coming together and the software optimizes all of that great microsoft, particularly with its nokia cell phone acquisition is paying more attention to hardware and putting more money up for the loan for the deal.
Thank you for joining us.
The yahoo ceo revealed a big secret yesterday, one that might worry her own corporate i.t. department.
We will have those details next.
You can watch us streaming on your tablet and at bloomberg.com . ? fax welcome back.
Tina brown, the editor-in-chief of the daily beast is stepping down to start tina brown life media.
Her new venture will build on her pre-existing women in the world conference to host summits and debates.
She started daily beast with barry diller who combined it with newsweek in 2010. her departure comes after diller decided to sell newsweek last month.
Bloomberg has learned that iac may be considering selling the daily beast after brown's exit.
Pandora stock hit a three-month high today after the news the digital advertising the current brian mccann trees is taking over as ceo.
He's a former microsoft vice president and a partner at the trona venture group.
Tell us more about him.
We should point out -- our understanding is when pandora went to look or their new ceo, it looked everywhere.
It was not looking at one specific industry.
It came back with a handful of names that appealed and brian was at the top of the list.
You have to understand what comes to the stock story with pandora, over the last few months is what has been fueling it is the financial performance.
The company is finding more effective ways of implementing more advertising into the music experience without disrupting the user experience.
It's a really important thing.
It seems like a small thing but it's important.
Here is somebody for the last decade has been navigating digital marketing waters and can write off the bat add to that and add some perspective as being someone who worked in traditional media and was on the board of the "new york times." at one point, our understanding is pandora reached out to him for a possible board position.
This is a long-term bet for an aura.
If you think about pandora as a platform if you think of something like netflix as a platform, we don't yet know how the story is going to lay out -- to play out.
Maybe pandora has more opportunities outside of what it's doing right now, even though it seems to be focused on taking business away from traditional radio.
Here is somebody who's thought a long time about how business models can be changed and scrapped very quickly and made his name with the sale of quantity microsoft for roughly $6 billion.
One of the biggest issues for pandora is how much it pays out in royalties and pandora is during up to make its case in washington on this issue.
Why not negate ceo that specializes in something like this?
You are right here there's no bigger cost than that or that meant their concern over the years has been there are some that don't have the same kind of royalty rate that pandora has to pay.
Our understanding is while these issues are front and center, there's a legal team focused on it and it was important for brian to know what's going on there.
They view it as part of the story but not the long-term story and they were not looking for a legal expert to lead the company forward.
Jon erlichman, thank you.
Marissa mayer made her name at google is one of its first employees.
Now at home of yahoo, she says she's just as happy if not happier.
We will hear from her, next.
? this is the early edition of "bloomberg west." you can catch us at 3 p.m. pacific, six a.m. eastern.
Marissa mayer has been a pet of yahoo for more than a year now.
She's acquired i.t. companies, revamped the homepage and redesign the logo.
She took the stage at the tech crunch disrupt conference yesterday where bloomberg west reported life.
Michael arrington sat down with her and asked her about the move from google to yahoo and how she felt going from the darling of silicon valley to a company that is fighting to stay relevant.
I like hard work and i would say i love google.
I was there for 13 years.
If you told me i would be as happy anywhere else, i would doubt it.
It's been a phenomenal experience.
I love hard work in big challenges.
I got a group of people that were assembled that were ready and have been rising to the challenge.
Do you think this crowd is a crowd you can get back to your product?
Whether fantasy football or anything, how many people have been to yahoo in the past month?
About half or more than half.
We haven't lost those users, we just want more of their time and attention.
We think we can give great tools that can help.
The core has always been about organizing the web and helping people figure out how to spend their time.
Our news stream that organizes all the news stories on our homepage, we have one on a sophisticated algorithm and i'm proud of what the team has done there and i think they are just getting started.
Yahoo is obviously an advertising-driven company and we are about organizing the right content and advertising for each of our users.
There's a lot we can do for our users that happen on the site once a month or once a week in terms of giving them a reason to come back, spending more time on the site.
Do you use yahoo mail?
I assume you were not using it much when you are at google, but did you find this is awful and we had to change some things or did you find it was actually pretty good?
I think there are a few key features i miss but i think it's a really strong product.
I like the fact that one of the things i used for fast e-mail processing is fine.
For me, i like really basic e- mail.
I like it to be fast, efficient and simple and minimalist.
That is what pine is.
It's a command terminal program.
I use that great what i really love about yahoo mail is it loads fast, faster than gmail.
We've seen a lot of efficiency and speed approved -- speed improvement.
It's just e-mail.
It doesn't have video chat and these other things which we may experiment with but i think can ultimately get in the way in terms of using mail every single day and wanting to be fast and efficient with it.
What are the biggest problems you are trying to fix right now?
The things that make you the maddest right now that you want to change?
There are lots of small things.
There's lots of different hugs to squash as they come up.
In terms of the broad need, the big piece i am focused on is mobile.
We have grown our mobile team by almost a factor of 10 since i arrived.
We have a great sbp at mobile leading a tremendous team working on the design and products engineering.
Mobile has been growing just tremendously.
Looking at what do users need to do and what our daily habits on the phone, there's a huge opportunity therefore yahoo.
When you look at where yahoo has always been strong -- mail, news, finance, stock quotes, games, that is what people do on their phone.
So does a great opportunity for us to take the content and functionality we've always had on the web and bring it to the phone.
Taking in and making sure it meets not only the same cases we've had on the pc but the new use cases and new use expectations are the key things i am focused on.
A random question -- you seem to like -- you are at the apple event yesterday and you seem to like the fingerprint scanner on the phone.
Why would you be in favor of anything like that that could gather more information?
I did not realize -- i didn't know it had gotten picked up that what i like about it -- you mock me backstage at tech crunch because i don't have a pass code on my phone.
I said i just can't do the pass code things 15 times a day.
With the fingerprint and, now i don't have to.
She also addressed the nsa data request and said yahoo scrutinizes every request from the government but could not say more because the information is classified.
We will hear from mark zuckerberg about the nsa later on "bloomberg west.
A time now for on the markets -- a look at what's moving on the market every hour.
Julie hyman is in new york.
Let take a look at where stocks stand right now.
We have seen up but look at that -- the nasdaq is turning around.
That has happened in just the past few minutes or so.
If you look at where stocks stand, we see a little bit of a recovery from the lows of the session.
Individually, to stocks we want to look at include retailers -- the first is men's wearhouse.
They can't they -- they cut their full-year forecast . the company ousted its ceo and founder in june and said customer traffic fell in the second quarter.
Lulu lemon is also down, cutting its forecast.
The clothing retailer says they had to delay the rollout of new merchandise.
Remember this goes back to the recall of its popular yoga pants in march because they were too sheer.
There was a delay in getting the remanufactured pants act on the shelves.
Customers wanted them and they were not there.
We will be back on the market again in 30 minutes.
? this is the early edition of "bloomberg last." i'm emily chang.
Drop rocks has become one of the leading file host thing services.
It has more than 200 million users saving a billion files a day to its cloud.
While it began as a consumer driven company, it's making a bigger push into the enterprise.
A number of tools i.t. managers need.
They are also working to turn its platform into something third party app polymers can tie into.
Joining me to discuss this is the head of product for business and mobile at dropbox grade that is an important and difficult job.
Where are you on the path to a billion users?
We are doing pretty well.
We crossed 200 million users and it's been great area they are loving the product and it continues to work.
Getting to something like 2 million businesses, it's incredible for us.
A lot of our growth is coming from mobile.
We have a great partnership with samsung.
That's giving us a lot of traction and growth.
We are excited about being mobile what those users.
You are playing catch-up in business.
How far along are you?
We are being used in over 2 million visitors and 95% of fortune 500s. we are being -- we are building the tools they need to manage the product inside the organization.
There are a stab list competitors out there -- there are established competitors out there.
What are the advantages of using dropbox?
We are always focused on making it easier to use.
It's the end user who loves us and the fact they are bringing us to work, telling their i.t. manager that i want to use dropbox.
What are the biggest challenges you faced with businesses?
I assume you face a different set of challenges than you do with consumers?
We have a new customer who is the i.t. manager.
They want to be able to control and manage the deployment of dropbox inside the company.
We have to build an additional layer around the core product that is in the ability to manage dropbox and that's what we're doing.
We will be executing on it over the next seven months two-year.
What about security?
This is something companies are more and more concerned about, as they should be.
It's becoming more and more common to have data compromised.
How do you ensure security and what sort of features are you adding in that department?
People trust us and we take security extremely seriously.
We've added things like authentication trade we tell you when you are logged in from a weird country.
We give you the ability to monitor the activity of your users and employees great we are piling on a lot of security features and doing compliance work over the coming months so we will be certified or a lot of these things.
There has been a lot of discussion over the last several months about the nsa and the government potentially working with technology companies.
Dropbox has come up with --, as a company that the government would think is interesting.
How do you insure them their data is safe with you?
We have not been part of any government program.
We take this extremely seriously as well terry our customers should know we want them to own their data.
Let's talk about the bring your own device thing.
This is a huge trend these days.
What sort of features are you providing to people who want more flexibility.
We have watched devices coming out and that's what's been driving all these changes.
Whether it's enterprise or consumer, the device allows them to get to the apps they want to use . this is exciting for us because of these apps and devices, we cannot -- we can create amazing devices for the end-user.
It means they have the freedom of choice.
They can go into the store and say i want this watch and it's going to work with their data.
We've been talking a lot about smart watches and google glass.
Our job is to keep up with these technologies and build clients on all of these forms and expose the data to the end user.
Expose dropbox and the data and the functionality without having to do the hard work we have done.
That's what our platform is all about.
You lead the acquisition of mailbox, which helps make your inbox simpler, which i think we all want and need.
What is your strategy with m&a? we are looking for a lot of things at all times.
There are some great companies out there in their series a or series b and want to get to the scale we have.
When they come in, they get access to this 200 million user base.
Ultimately it is really good people, great products and things that are going to make dropbox better for our users.
When you talk about potential ipos, could you give any sense of a timeline or how you are approaching that process?
Our last round has been really great for us.
We have no immediate lands to [inaudible] thank you for joining us.
Would require users to grant facebook a mission to use their information for advertising.
The fec is looking into whether this violates an agreement with regulators.
Under that agreement, facebook is required to get explicit consent from its users before exposing private information to new audiences.
Despite the ftc inquiry, the facebook shares are trading at a record high.
Mark zuckerberg smoke -- spoke to mark arrington about their turbulent time yesterday.
He asked zuckerberg what advice he might have for companies like twitter contemplating and offering as well.
It's funny on its surface because i'm the person you want to ask last how to make a smooth ipo.
[laughter] but seriously, it's a valuable process.
Having gone through what i think most people characterize as an extremely turbulent first year as a public company, i can tell you i don't get that bad.
I was heartened by the fact that -- i was worried people would leave the company and people would get really demoralized when the stock price went down but people are focused on the mission and really believe in the products they're working on.
We haven't seen a lot of that area i think it's made our company a lot stronger because the process leading up to going public, you have to know everything about your company inside and out.
I always thought we were a very data-driven company.
The work getting ready to make us public to get to the next level three and we run our company a lot better now.
I was too afraid of going public and i've been very outspoken about staying private for as long as possible.
You have to stay focused on doing the right stuff and sometimes it might take the market a little while to catch up and see the results of what you're doing.
I was laying out what we were planning on doing on mobile and everybody thought it was a disastrous thing for facebook.
Last year, second quarter, we had no revenue on mobile.
In our last quarter, year later, more than 40% of our revenue was mobile.
People think is more competition and more great apps.
People spend on their desktop between one and seven minutes on facebook.
On mobile, it's one minute in five area -- one in five.
We are growing and connecting more folks and people are sharing more content.
All the stuff we get excited about everyday, twitter and all of these private companies thinking about when they want to go private, i think it's wonderful.
We know what facebook has done over the last several months to try to help increase transparency.
We have seen the lawsuit and we have seen as efforts.
I don't need you to complete them but what i want to know is how mark zuckerberg thinks about these issues in our right to privacy versus the government.
We take our role very seriously.
I think it's my job and our job to protect everyone who uses facebook and all the information they share with us.
It is our government's job to protect all of us and to protect our freedoms and protect the economy and companies.
I think they did a bad job of alan sing those things here.
Frankly, i think the government blewett.
But i think they blew it on communicating the balance of what they were going for.
The morning after this started breaking, a bunch of people asked what we thought trade -- what they thought.
The government said don't worry, we're basically not spying on any americans.
That's really helped the two countries signed frat -- companies trying to serve people around the world and inspire confidence in internet companies.
Tanks for going out there and being clear about what you are doing.
I think that was really bad.
We've been pushing just to get more transparency on this and i think we have made a big difference.
The big question you get from all the coverage is what is the volume of the total number of requests going on?
Is it closer to a thousand requests the government is making or is it closer to 100 million?
From the government -- from the coverage and what the government has said, you wouldn't know the difference.
We work really hard with the government behind the scenes to get it to the point where we could release the aggregate number of requests.
It was around 9000 in the last half a year.
Does that number tell us everything we want?
that's why when the conversation got to the point when we were not going to make further progress, we decided to sue them so we could reveal if it's 1000 , 2000, or 8000 of the 9000 requests.
But the reality is because of the transparency we pushed for, people know and to serve you know that the number of requests the government is making is closer to 1000 -- 9000 or less in the last six months, and not 100 million.
Zuckerberg also spoke about microsoft's ceo and said bill gates was one of his heroes growing up great it has been a high stakes and high drama of events at the everett got's cup event happening right behind me on san francisco bay.
But getting people to watch the races from home on television hasn't been easy.
We go behind the scenes, next.
? this here's americas cup features high-tech catamarans pushing the boundary of safety and design.
In just a few hours, the seventh of 17 races will begin right behind me in san francisco bay area covering this event on television has proven a challenge.
A look at what it takes to not only produce this coverage but how to make it interesting enough to make people watch.
Watching it on television has been described as watching white canvas on a blue background.
But this year's americas cup coverage is anything but that.
The america's cup is returning to network television in the u.s. for the first time in more than 20 years.
It is the super bowl of sailing, but unlike the super bowl where networks aggressively compete for the rights to broadcast the game, the america cup race organizers had to pay nbc to air the event.
It's interesting because sailing isn't often broadcast in the united states.
How do you make it understandable but also entertaining?
The viewer has to be able to understand what's going on and understand the story of the race.
That was the evolution of the graphics.
We had to find a way the viewer could look and see who was ahead and do was behind.
We also wanted to humanize it a of the onboard cameras and audio get you on board the boat trade you are actually inside the field of late.
And they could not have done it without the creator of the light line graphics.
The major thing that's new this year is the use of augmented reality or graphics inserted into the real world.
You can look at the real video and see the real wind on the water and see the graphics inserted into that video and see the boundaries of the course, see the lines to indicate who is ahead.
See the lay lines through the indication of the marks.
Is a professional sailor himself and not only revolutionized the graphics but invented the virtual first down line for the nfl and the strike zone tracker for the mlb.
And now sailing?
Sailing was by far the toughest.
The cameras are tripod mounted, so you can survey the location.
But in sailing, the helicopter carries a camera and helicopters moving all around at the lobby and weaving and it's far away from the field of play.
Larry ellison wants to turn sailing into a spectator sport.
Do you think it can be a more mainstream sport?
I think it is possible.
If it can be made to be a sustainable commercial media sport, this is the way you have to do it.
Be sure to turn into our special high stakes high tech america's cup airing tonight at 9:00 eastern.
We have more "bloomberg west" after the break.
? welcome back.
I'm emily chang.
Disney has just announced a big stock buyback, planning to buyback $8 billion of its shares before next year.
They plan to use the capital for mergers and acquisitions another internal initiatives.
The company will borrow some capital to fund the buyback.
Shares are up about 3% after the announcement.
Coming up on the late addition of "bloomberg west" -- apple just launched its itunes radio service and pandora has just named a new ceo.
As the two companies go head to head and music streaming, who will come out on top?
And it is 56 minutes past the hour, which means bloomberg television is on the markets.
Julie hyman has more.
Let's get you caught up on where stocks stand.
We had a lot of fluctuations great the nasdaq was higher and now the dow jones is flirting with the unchanged or even positive levels.
Not a lot of conviction today in terms of going up or down.
There is more conviction when you look at individual movers.
First of all, looking at walgreens today, that stock has been trading higher after the company got an upgrade over goldman sachs to a conviction by from a buy.
One of the other stocks we are looking at is cliff natural resources.
The night -- the mining and natural resources committee was upgraded to an outperform.
Dominion resources, the third largest utilities in the u.s. is one of the biggest gainers on the s&p today.
They're planning to form a summit partnership that could generate as much as $2 billion in annual earnings.
We are also watching the metals complex today.
A big selloff on speculation the fed will start to taper next week or at least announce it on reduced expectations or a military strike in syria.
I want to bring in the chief investment officer at sag alternatives for more on what in store for the metals trade -- what's in store for the metals.
Is that driving the declines we are seeing in gold?
Gold is a perfect example of a market over and by nothing but momentum.
This text has been automatically generated. It may not be 100% accurate.