Microsoft CEO Search: Bloomberg West (11/19)

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Nov. 19 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Barbara Coffey, equity analyst at S&P Capital IQ; Chris Caso, senior research analyst at Susquehanna Financial Group; Rajeev Raman, CEO at 1 Mainstream and Bloomberg's Angela Greiling Keane. (Source: Bloomberg)

? live from pier three in san francisco, welcome to the early edition of "bloomberg west" where we cover the media and technology company shaping our world.

Our focus, innovation, technology, and the future of business.

Salesforce sees sales jump 36% but how much are acquisitions fueling that growth?

We will look at that as the company hosted big dream force conference.

After the release of the iphone 5 s, already there is rampant speculation about the next one.

One analyst says he knows the secrets behind the iphone six.

Mark zuckerberg is pushing for change to his lobbying group.

We will sit down with the group 's founder and talk about a new approach this lobbying group is kicking off this week.

The ever colorful and always interesting salesforce.com ceo is in the midst of his keynote address.

Yes taken the stage for his companies gigantic dream force conference but it is a critical time for salesforce.

They get a lot of attention for their leader as software and service and their customer relationship but they have been forced to look outside for growth.

They spent $2.6 billion in acquisitions is sheer.

Yesterday's earnings report shows the jury is still out on whether these will pay off.

Revenue did improve 36%. they had a smaller loss than a year ago but they did lose $124 million in the quarter.

One of the people that has concerns is barbara coffee.

She has a strong sell rating on the stock.

Talk to me about the rating on the stock, first of all.

A strong cell is a strong cell.

By all means.

Salesforce.com has been incredibly innovative in the market, shifting the way that people think about and by software and computing.

The recent stock price run and the valuation is concerning me.

In fiscal year 12, they lost two cents.

Then, they lost $.48. i want to see a focus on delivering back to the shareholders.

Some of the concerning pieces are stock-based compensation.

The notion that they pay their people a stock, share in the rewards of the company is maybe a good thing.

They are sharing a lot these days.

They are sharing more than in the past.

Last year, they shared 65% growth in stock-based comp and we saw about a 35% growth in revenue.

I am all about having the employees share the benefits when things work.

That feels like a lot to me.

This year, we will have about a 35% growth with about a 33% growth in revenue.

We need to have the shareholder be part of this notion.

The payment to employees is growing at twice the rate as the revenues are growing.

You have a ceo who is selling a lot of stock on a regular basis.

I wonder about the acquisition strategy and how you look at that.

I wonder if you can see the things they are acquiring.

Does it make sense?

Is it the stuff that will grow this business or is it ancillary?

The shift is becoming more than just taking care of salesforce automation.

We have seen almost every company in the cloud computing market make tons of acquisitions.

There are two pieces that are happening when we see some acquisitions going on.

Increasingly, marketing is going online.

If i buy it, someone else can't and they cannot exploit a potentially growing market.

I think that that is one of the reason why the prices are so high and why these small service companies are getting snapped up so quickly.

Interesting stuff.

This is a company certainly worth watching.

Even at this moment, mark benioff is on the stage.

The crowd gathered for this event is extraordinary.

Let's us into what he has to say.

One of our customers is here, the chairman of canon.

He is built this amazing new camera.

I love this camera.

I just took it to europe.

One of the cool things is that there is a button right on it.

When you hit this button, you get connected.

You get connected to your phone which connects you to canon.

I can take pictures with this camera right from iphone.

I have the ability ability to get service and received promotions, and marketing for new capabilities.

This is a connected camera.

Before, all of them were stand- alone.

I would take my pictures and i would take my card out and plug into my computer.

I want to connect with other photographers.

I want to have this incredible evolution, this incredible change in all of the products that i use.

Ice first learned about this at the consumer electronics show this january.

This was the first connected camera ipod.

Now, i cannot imagine a camera that is not connected.

It is an incredible new world.

Most companies do not know their customers.

Most companies do not know their customers.

66% of companies lack an understanding of their customers.

Here is something amazing, two thirds of companies feel unprepared for this new social and mobile world.

They are not ready.

They don't know what to do.

Yes, they want to go mobile, but they don't know how to build and apply those mobile apps.

That is why this conference is sold out, that is why we are in this room.

How do we make that change?

How do we make that evolution?

We need a new platform.

A new platform that is powerful for developers.

We need a new platform that is powerful.

We need a new platform that is powerful for administrative's. it is not about a simple app on your phone.

I wish it was.

It is not.

It is about a robust platform that is able to bring all of the sophistication that we have had since starting in 1999. the data, the metadata, the models, the depth, the sophistication, the deep matrix that they offer.

It is awesome.

The paradigm has changed.

The world has changed.

We have phones, tablets, social networks, user behavior that is different than ever before.

How do we change, how do we transform?

How do we go, yes, thank you, he we lewis.

How do we go back in time?

How do we go back to the future?

So that we can bring all of your investments, all of your code, all of your visual force, everything you have done with us.

This is it that we can all become a new kind of company.

How do we become a customer company?

[lightning striking] please welcome my cofounder.

[applause] parking is really difficult in san francisco, if you cannot tell.

That is the excitement of mark benioff on stage now at his company's massive conference.

You have 120,000 people attending.

Tonight, they will not just get battling ceos, they will also get a concert featuring blondie and green day.

What do salesforce get out of this show and why do the geeks come every year to see it?

For over 13 years, i have been pounding stages like this all over the world with one message, the cloud is coming.

Salesforce.com might be all about the cloud but this year they will be down to earth, turning the streets san francisco into a rock 'n roll land.

A tech mecca for an army of tech loving geeks.

When we have a big show like this, it gets everyone excited, it gives everyone a chance to have a good time.

A listers like marissa mayer and sheryl sandberg speak at the annual event while the spiritual guru deepak chopra and punk rockers green day will entertain the faithful.

Why would salesforce spent upwards of $100 million on this?

Because it drives business.

And big crowds.

It has grown to 120 thousand this year.

We have new aspects to come.

You get your existing customers to buy more stuff.

They are one of several conferences to pop up in silicon valley like oracle world, apple's developable conference, -- developer conference, and the trump conference.

The loudest voice of all might be marc benioff.

Our customers love to hear from the leader of the company because they want to know where we are heading, where we are taking the industry.

The yahoo!

Ceo marissa mayer delivers her keynote tonight at 5:00 pacific.

Then, blondie and green day will play at at&t park.

Will the next iphone be faster, larger?

Our next guest says he knows all of the answers.

You can find a streaming on your tablet, phone, and at bloomberg.com.

? this is "bloomberg west" on bloomberg television, streaming on your tablet and phone.

Apple launched the iphone five - -iphone 5s a couple of months ago, but our next guest says he has the details on the next iphone.

He joins us from new york.

Tell us what you know about this new phone.

We are expecting a number of new things with this phone.

The most important feature is a larger screen.

Apple is so far behind some of the android phones that you have out there.

I'd do think they leave some market share on the table.

There are some other things as well.

They're expecting faster processor, a faster wi-fi.

Even a faster cellular modem, a modem that hits the cellular networks that can move to a feature called lte advanced which provides faster download speeds and more efficient use of the networks from the carrier.

Talk to me about your sourcing of this.

We talked to a number of folks in the apple supply chain.

Obviously, there are a lot of rumors around apple and a lot of products.

With the iphone, this is something that gets developed rudy's far and advance.

Apple always manages to throw something in and surprise everyone.

I feel like the company has this really great burden of the legacy of steve jobs and the decision that he made about a lot of things not the least of which is the simplicity of the product line.

Will they have lots of different form factors or to form factors or will they draw the famous for blocks of apple products?

How do you imagine they think of those things?

You have some hints on the strategy with what they have done with the ipad.

When the new ipad came out, they actually brought that out on a higher price point because of the display is a better display than the existing ipad mini.

What you're seeing is them being able to cover the lower price points.

Having a higher end product can cater to those willing to pay more.

When the iphone 5sc came out, it was in the mid range area.

They have the ability to push them higher as well because the market is a premium product.

What is their plan with gross margins?

They have such fantastic gross margins about a year ago or so.

Last quarter, over 37%. i wonder what the philosophy is when it comes to new products?

This is one of the issues they had when the iphone 5 came out.

With the new phone, you add features and you add costs and the gross margins drop.

The margins held in much better because of the materials were about the same.

We will add features to it, it will add cost.

One of the options is to raise the price point at least on a larger screen size.

You can keep the margins where they are.

What they did is perhaps a hint to what the forward strategy is.

Will we see an apple tv this year?

Have not seen it in my own checks.

Apple photo types a lot of things.

If they did it, they probably did a real good job at it thank you for the interesting stuff.

We cannot wait for the new thing.

Sony is looking to save $100 million by making some deep cuts.

We will find out when they might find some savings.

You can watch us streaming on your tablet, your phone, and at bloomberg.com.

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

Sony has hired a company to find out where they can save $100 million.

They are set to meet with investors later this week.

Jon erlichman joins us with more.

Crocs we know that this company -- we know this company has been doing the pressure from shareholders.

Dan loeb compared the profit picture to some of the rivals.

If you have a big investor event coming, and they have one this week, similar to what we recently saw from fox.

They generated 1.8 million in revenue but were operating with a loss.

The goal here seems to be to change that financial story, specifically on the entertainment side.

In terms of those cuts, what kind of places are available to make cuts.

To think about the tv arm of sony which does everything from syndicating seinfeld to doing the "breaking bad" program.

They have the music business, the music publishing business which has been a pretty good one.

So, some would say maybe it is towards the movie side of the business but that is still a big business.

You have big arms of the movie business like columbia.

You have smaller parts.

The math would suggest that if you were to say to stop buying some smaller films and the people that support that whole production of getting that on the screens, maybe that is where the cost savings would come from.

Really bad news for all of those fancy restaurants down in los angeles.

Jon erlichman, thank you.

Time for "on the markets" for a at what is moving on the markets -- for a look at what is moving the markets.

I want to talk about some comments we are getting out from janet yellen.

She is commenting in letters to various senators who asked her questions.

The quantitative easing supported a quote stronger economic recovery -- supported an "schlanger economic recovery ." in the wake of those comments, let's take a look at the markets.

Ben bernanke, who was still the chairman, will be speaking tonight at seven p.m., new york time.

Some investors waiting for that.

We have seen a markets take it lower.

The nasdaq is down a quarter of a percent.

The nasdaq is down four/10 of one percent.

Solar city shares taking a hit after jack sessions, a ranking member of the senate budget committee question the tax credits.

We are looking at vail resorts.

The ski season is setting up for strong demand in international and high-end customers.

Those shares are getting a boost on that.

We will get you back on the markets in 30 minutes.

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

You can catch us at our later time, 6:00 p.m. eastern, 3 p.m., west coast.

Explosions in beirut have killed 23 people and wounded dozens more.

This is the third attack since has blood joined the war in syria.

-- since hezbollah joined the war in syria.

Kennedy has been named the ambassador of japan.

She headed to the imperial alice to give her den chills to -- her credentials to the emperor of japan.

The new location will allow the office to expand its staff and save the hassle of having to fly to washington to fight patent issues.

After years of delay, new offices are expected to open by the end of next year.

The sony playstation is off to a strong start.

They sold more than one million playstation for consoles in north america.

Many early buyers are hard-core gamers.

This can be used to stream recent tv shows.

We have more on what the new waystation can do.

The traditional cable box has lots of competitors.

We are joined by the ceo of one mainstream.

Their devices used to stream video in new ways including through tablets and game consoles.

We have talked about the gaming story but for some people, is this the new cable box?

Yes, i think that is true.

When you sell a million units of something on opening day, not everyone will be using it for gaming.

When you look at the stats from big video services like netflix or hulu, you consistently see these gaming devices on the top of their list of devices.

That is where they're consuming video.

There is a lot of expectations in terms of the playstation and the xbox launch.

In terms of which devices are more geared towards streaming movies, are we seeing a different with each company?

I don't know if there's much of a difference.

I think both companies have taken a game first approach to the device.

Given that the demographic of the user . we see comparable viewing staticss on the viewing devices.

We reference the ipad and how much of a game changer it has been.

Here's a taste of what he had to to say to us recently.

When you sit at a meeting and you look around the table and there are 20 people there and everyone has an ipad and it has only been a few years since it was launched, that says a lot.

I wanted to show that interview because everyone is wondering if apple is ultimately going to come out with a full-scale television.

If they were to do something like that, could that be a game changer in the way the ipad has been?

I would answer that question by saying that you name the one device that apple has launched in the last three or four years and has not been a game changer.

I would almost say that if they were to do something in that area, the bar is set so high already with the ipad, the iphone, the macbook and so many other products that have preceded that that i was certainly expect that to be very high and for it to be a game changer.

As you just highlighted, we have the new playstation, the new xbox, there are a lot of different options for consumers out there.

Could that be different when it comes to changing television versus changing the world smartphones?

Yes, i do think there is a fair point here which is that there are a lot of her friend kinds of devices.

There is a lot of fragmentation as the industry likes to call them in this area.

-- there is a lot of different kinds of devices.

There are about 50 million units being world used wide.

Sony announced they have 85 million, roque who has close to 10 million, apple tv is close to 18 million.

-- roku has close to 10 million.

This will not unify around one device anytime soon.

These devices will continue to proliferate and people will buy different kinds based on what their needs are.

Your company's software powers the sky news app available through apple tv.

Just to give people a sense of how much television viewing is taking place through these less traditional platforms, is there anything you can share on how much activity, how much streaming is happening, for example?

It is both roque who at -- it is both roku and apple tv.

This is one of the things that my company offers, to make it very easy, quick, efficient for them to get out on these new devices.

When you look at a service like sky news, what is remarkable to me as we watched this is that it has exceeded all of the expectations in terms of how well it has done in the u.s. market and other countries.

What is remarkable about it to me is that it is now offering consumers sort of a second choice on world events from a trusted news source, a broadcast organization.

It is really rock able to see them do as well as it is doing.

We are talking about hundreds of thousands if not millions of viewers who are tuning into watch this service and consume it in quantities that certainly compare to traditional tv viewing for news channels.

Ok, we appreciate the insight.

Vacuum studio.

Thank you.

It is thing called the most tech savvy medium in america and is the new home of the 49ers.

Bloomberg west has an inside look at this cool new stadium coming up.

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

Tesla has been on a bumpy ride of late.

Three tesla model s's has been engulfed in fire.

The probe involves more than 13,000 model s is's. we are joined now from washington.

Talk to me about this investigation.

Tesla say they asked for this investigation.

Did they?

Works well, there is some he said, she said.

I spoke with the administrator and he said, no, tesla did not ask for this investigation, it would be highly unusual for an automated or to make such a request.

They said that they told tesla that they were going to open an investigation and today is the day that they made that announcement.

So, so, elon musk has been saying that they asked that tesla asked for the investigation and the national traffic safety minister says that is not true.

Exactly.

This is something still to be sorted out.

We are hearing things different from each side.

There is an investigation was could be a precursor to a recall.

We will look into what have might have caused the fires.

You think a recall is on the table?

They already are investigating the first fire and found no problems with the design of the car.

Do you think a recall is a possibility?

It is certainly a possibility.

The first of these two fires that happened were on october 1 and that was the first day that the u.s. government was shut down.

So, they were not able to send a team right away.

They talked with the a safety officials but they did not do what would be considered their normal course of action for sending a team to the scene to look at the burned vehicle.

The second fire in tennessee, they did send a team.

They were able to see the remains of the car, get a first- hand look at what might have happened.

That is something that they do routinely for serious or unusual accidents.

What they're doing now is part of the regulatory process.

They're pretty much never is a recall unless there is an investigation.

This is what is sometimes a first step to a recall.

Elon musk has made the point that gasoline engines, when they catch fire, it can be quite damaging.

There is an interesting analysts, he put together some numbers based on the likelihood of car fires for every mile driven.

Of all cars on the road,, it is every four-6 million miles.

Tesla looks like it is every 38 million miles.

Is there a notion here that some caught fire but it can be just as big of a problem with gasoline powered car or is the frequency?

Cars catch fire every day, unfortunately.

What is different is that these cars have caught fire after running over road debris and that is not what you normally see with a gasoline powered car.

Cars can't catch fire for a lot of reasons, mechanical or after an accident.

The driver said he ran over a trailer hitch.

That is not something that you want to run over but it is not something that should be a cause for concern that your car will catch on fire.

Of course, lithium ion batteries burned differently.

The drivers have been able to get out safely.

The fire did not start immediately and the cars were safe.

The drivers were fine.

It is something that the regulator thinks is unusual enough to warrant probing it deeply.

I read that report.

They did not know what they were dealing with.

Scary stuff.

Is a new frontier.

Indeed it is.

Now, the search for microsoft's next ceo.

Bill gates have met with a lot of ceo candidates to replace steve ballmer.

Gates will not give a timeline for the decision.

He made his comments at the annual meeting to the shareholders which was kind of surprising.

They both appeared at this meeting.

The board meeting was yesterday.

There was this sense from investors that we need some sort of update about what you discussed yesterday without getting into too many details.

Bill was in tears at this thing.

I was surprised.

These guys are friends going back to their college days.

Ballmer is basically a cofounder of the company.

He has been the guy that has built this thing up into $100 billion company that it is.

There was one of the things on the docket which was a battle by john thompson and the leading the director.

Lewis was concerned that he was not independent enough for microsoft.

Thompson is the ceo of a startup called virtual issue is that had received some money and for microsoft.

Because of that, there was a conflict between his role on the microsoft board and his role as a ceo from another company.

Interesting stuff, re: leavy.

-- ari leavy.

? welcome back.

I am cory johnson.

The san francisco 49ers are moving.

They have a new high-tech stadium.

There will be absent, hot dogs, all delivered to your seats.

This is decked out for and by the tech elite.

69,000 fans.

I get crazy excited about it.

170 luxury suites.

One point $3 billion.

We are talking about a world class stadium.

The san francisco 49ers are getting ready to move to what is being billed as the most tech savvy stadium in the country.

Free wi-fi, check.

Game day apps, chap.

Fantasy football lounge is, check.

This is the largest outdoor hd video board.

No doubt, the players will run down the field and they will see who is chasing them.

The 49ers might have lost the last super bowl but their new home has already won the day to host the super bowl in 2016. we will have the world's a good stage.

We are like a sports a media entertainment center.

Alexi should know, he has worked at youtube, yahoo!, facebook.

This is small bands of people that can change the world.

Most stadiums cannot compete with the high definition experience that fans get watching football at home.

The new stadium is in santa clara.

This means it has to woo the smartphones that come a special game day apps.

This is concessions write-in or pocket.

Can we deliver food, beverage, merchandise to every one of the people in the stadium.

We are working on it.

Imagine, a ticketless experience we don't have to bring your wallet.

There are dozens of software systems.

Your fans inventory system, all of the systems, they don't talk to each other.

You cannot get a photo or your instagram or maybe in some cases, maybe not even a phone call the bandwidth is not there.

We will solve that.

Fans will be able to update their statuses and photos and tweet with ease.

Nobody is more pumped.

I just cannot wait.

I have dreams about the stadium.

Even when she is not here, emily chang is here.

Coming up tomorrow, apple gets it with the nba.

They improve their performance.

Catch us tomorrow and every game this week.

Coming up on the late addition, we will looking at gaming on google glass.

One publicly traded developer is developing for the chemical specs.

56 past the hour and it is time for "on the markets." it is a down day for the markets.

We are looking at the s&p off by about five points.

Overall, you are looking at some profit-taking.

You did have some macro concerns.

The oecd cutting the forecast for this year.

Some are cleaning up some of their long positions.

All of that is weighing on the stock market.

One we are watching is jpmorgan.

The new york attorney general comment at a news conference today.

This was regarding jpmorgan's proposed settlement with the government.

If this proves to be $13 billion it would settle all of the civil charges against jpmorgan although the criminal charges would be outstanding.

We are watching shares of groupon which are falling on news of insider selling.

The ceo dumped more than 450,000 shares last week.

Best buy, they said this morning that they expect price wars to take a bite out of margins.

Julie hyman joins me now.

Was this a surprise?

Of course everyone cuts their prices.

They're going to see their margins come under pressure because of this competition.

Best buy just said that we expect that if our competitors cut prices, we are going to cut prices as well and come in as low as we can.

Best buy has said that we are going to match prices.

This is not a new policy, it is a reminder to investors.

This is very familiar.

They are opting for unit sales over profit margins.

They want to continue to take market share.

The shares were up 270%

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

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