Nasdaq Trading Halt: Bloomberg West (08/22)

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Aug. 22 (Bloomberg) -- Full epsiode of "Bloomberg West." Guests: Khosla Ventures' Keith Rabois, Bloomberg's Cory Johnson, Jon Erlichman and Doug MacMillan. (Source: Bloomberg)

Live from pier 3 from san francisco, welcome to "bloomberg west." we cover the global media and technology companies that are reshaping our world.

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

Let's get straight to the rundown.i'm emily chang.

Chalk one up for marissa mayer.

The site has more traffic than google in the month of july.

A fluke, or are things starting to turn around for the company?

Pandora faces increasing competition from spotty file -- spotify.

Another market, your car stereo.

We sit down with coastal ventures to find out where he sees opportunity for investment.

First, to the lead.

A major sign that marissa mayer's efforts to turn yahoo around are starting to work.

Yahoo sites were number one in unique u.s. visitors in july, beating out google sites for the first time in two years.

The survey says that more than 196 million web users spent time on yahoo in july, an increase of 21%. 192 million spent time on google, less up than 1%. this does not include figures from tumbler -- tu mblr or mobile users.

Mayer has revamped the homepage in that time, e-mail apps, and more.

She has made about 20 different acquisitions.

The news is sending yahoo to their biggest ailey shares gain in a month -- daily shares gain in a month.

Is this a big deal?

Marissa is doing something right.

It is a good sign for yahoo.

The company has relied on having a massive amount of traffic.

It has been one of the top leaders in terms of having the most eyeballs.

The fact that they are getting that number one spot again is symbolic.

The fact that mobile is not included, how significant is that?

It is a good sign.

Yahoo has been focusing on mobile.

They have had a lot of growth in mobile.

They grew from 200 million mobile unique users in the end of last year to over 300 million now.

They have focused a lot of efforts on mobile.

This gain and this kind of milestone coming without even that mobile edition is a good sign.

You have tumblr as well, and even bigger swath of eyeballs.

What yahoo is getting back to is that mass play.

If you're an advertiser, you can come to yahoo and find out what audience you want to serve and target them.

They have a huge inventory of sites.

Now they have to figure out how to sell those two advertisers.

How much do these numbers fluctuate?

Google had the lead for long time.

The fact that yahoo has has inched back above google is significant.

The fact that both of these companies, and facebook and others, are focused on mobile development will lessen the significance of these numbers.

You will see the survey start to develop more metrics around mobile.

It's a horse race.

You will probably see google retainage in a few months.

Google has the lead in web advertising.

How encouraging will this be?

Part of marissa's turnaround is what she calls a chain reaction.

I want to hire the best people, and get people excited about working at yahoo.

Those people will build great products.

Those products will drive user and traffic growth.

The final step is convincing advertisers.

I have talked to a lot of advertisers about yahoo.

I don't think they are quite sold yet.

This kind of news and this milestone is some ammo in yahoo sales people's posture free quiver -- peoples' quiver.

They are beating something.

This could start to get back some of that revenue growth.

Thank you.

Sticking with yahoo and marissa mayer's efforts to turn the company around, yesterday i spoke to maynard webb, newly appointed chairman of yahoo's board.

I asked how he and morris a meyer balance each other out -- marissa meyer balance each other out.

She is fabulous.

It is our job to take care of shareholders.

I'm going to be supportive of the company.

Another board member talked about the acquisition strategy.

He said yahoo looks at a lot, many come in many companies, and we decide to acquire a small number.

There has been criticism that some of the companies that yahoo has been buying really struggle, or failed.

How do you respond to that criticism?

How would you describe the acquisition strategy?

I will not describe yahoo's acquisition strategy, or talk about any of the acquisitions.

I will talk in general, as someone who has seen a ton of acquisitions and lots of different companies.

They don't all work.

There are many that do.

When we bought paypal at ebay, the board was very worried about that.

We followed a bet the company decision.

What was aboard worried about?

It had a different culture.

Many of the top execes were not going to stay -- execs were not going to stay.

Buying a company, and integrating it.

How do you make sure that more people stay rather than go?

I think it's all about the culture and environment and clarity you have while you are doing the deal about what makes sense, and building trust.

That was yahoo chairman maynard webb.

Turning to the troubles of hewlett-packard, the pc maker reported a 8% drop in quarterly sales yesterday.

The global pc slump takes its toll.

Ceo meg whitman said, we can't enterprise spending is happening in this environment -- weakened enterprise spending is happening in this environment.

Joining me is cory johnson.

Meg whitman not holding back on the call.

She really sounded disappointed.

I don't think she could have framed it any other way.

Big failure.

Maybe not as big a failure as the nasdaq at the moment.

The stock is actually up over the course of her tenure.

All the metrics for this company are down.

Those free clash -- cash flows numbers got better.

Sales continue to decline for this company that once led silicon valley.

We have seen years of quarterly sales decline.

Indeed, worsening sales decline.

Things are bad, a getting worse and hewlett-packard.

They have doubled down in the pc business when they acquired compaq computer.

You can see business really tanking for them and everybody else, with the exception of lenovo.

It is coming on the heels of a 20% year-over-year decline.

Talk to us about the enterprise group, what that is and why that business is significant to hp.

It's a big deal for hewlett- packard.

It is another thing where things are getting worse for hewlett- packard.

The 13% year-over-year decline for this business,. this is a division that sells servers and networking equipment and storage.

It should be a big part of their business.

It is a substantial part of their profits in the last quarter.

Even though it was about 42% of their operating costs last quarter, that business shrinkage is a bad thing for hewlett- packard.

What about software?

Over $10 billion in the last year spent on software acquisitions.

How is software doing?

Spending all that money to acquire those companies.

While the margins are better in software, that is not a great operating margin.

It is growing at 1% last quarter . that's a bad thing for hewlett- packard.

They don't seem to have that market leadership, and don't seem to be going after the biggest opportunities in the world of software.

Cory johnson, our editor at large, thank you.

We are continuing to follow breaking news out of the nasdaq.

Trading has been halted due to technical issues.

The nasdaq has said customers who wish to cancel their orders may do so.

We will have much more on it after this quick break.

? welcome back to "bloomberg west." i'm emily chang.

All trading on the nasdaq has been halted due to an unexplained typical problem.

Mastec has had problems getting quotes out, telling people what the prices -- nasdaq has had problems getting quotes out, telling people what the prices are.

This affects lots of other markets.

The options markets rely on nasdaq quotes.

It's another technological glitch on a market that prides itself on technological expertise.

It's an example of a potential overreliance on technology?

We have seen companies go from the nasdaq to the new york stock exchange.

The nyse likes to trumpet their ability to do things such as stopping trading.

Because they have more humans involved.

When they figured out quotes were wrong on the nasdaq, they pulled the plug.

I do think it shows that the nasdaq system is not a perfect one.

The high-frequency trading, the massive volume of computerized trading going on at a level never seen before and the way that is rocketing every single week is showing the strength input of the market.

This should be a slow week for the nasdaq.

It sure is a slow week right now, with no trading taking place.

The sec will investigate what happened here.

It has been a rough year plus for the nasdaq amah following the facebook ipo.

-- nasdaq, following the facebook ipo.

Back to the crash in 1987, the early 1990's, and a squirrel chewing through the cable.

Famous stories about problems at the nasdaq.

As you talk to the people involved, this thing that is going on with high-frequency trading, when trading volumes are being jammed up with this high-frequency trading.

It is the biggest thing affecting the market.

Some people look at the run of the market this year as the opportunity for investors to differentiate themselves is gone.

The market has been off to the races because there is so much heavy trading around small numbers.

It is hard for retail traders to find something they want to do and make an investment and benefit from it.

The market is roaring with the tide of this high-frequency trading.

We don't know how long trading will be how the.

How big a deal is it in terms of an economic hit?

How serious is this problem?

Finance and trading stocks is a big part of the u.s. economy.

The move to be more technological, this will add a lot of fuel to the place -- not just at the sec, but the impact of higher frequency trading.

For those people arguing against that, this will give them more ammunition.

Thank you.

We're going to continue to keep following this story, trading on the nasdaq has been halted due to a technical issue.

Turning to the nsa.

The nsa scooped up tens of thousands of e-mails sent by american citizens.

No link to terrorism.

A secret court ruled that was unconstitutional.

Chief washington correspondent peter cook joins us with more from d.c. what does this information tell us?

It tells us that the government had more access to e- mails and internet communications of average americans than we thought very it raises more questions about the president's assurances that the average american has not been affected.

I chose that the government has, at times, been willing to push back here.

We know this because of the classified documents.

They include an 85 page, 2011 ruling from the foreign intelligence surveillance court which includes details on the government's questions about communications sent by tens of thousands of americans sent back in 2008. the court found that they were not justified in collecting the data and demanded changes to the program.

Chief judge john bates for the road, the court is troubled that the government's revelations marks the third instance in less than three years.

The collection of innocent americans' records happened by mistake.

The government did make changes that ultimately won the approval . the length of time the data is held also reduced, according to a government official.

This revelation raising new questions about the program overall.

Thanks for bringing that story to us today from d.c. pandora is pushing into new territory.

The streaming radio service making a name for itself in cars.

That story is next.

Watch a streaming on your phone, tablet, and

? this is the early edition of "bloomberg west.

I'm emily chang.

Pandora reports earnings after the bell.

Stock has surged this year.

The company posts big gains in active listener's and listener hours.

Jon erlichman is nla -- in l.a. it's all about the advertisers.

It is no doubt that pandora adoption is climbing.

When there is a new listener, pandora is paying big money for the royalty fees.

There is a question of how much money can we be generating for each new user through the advertising we bring in.

We know pandora is trying to boost usage by being available on all sorts of platforms, not the least of which is cars.

We have talked about the battlefield that is your smart phone and the battlefield that is the tablet.

It feels like now the battlefield is the dashboard.

We hit the streets of l.a. to look at that store in more detail.

Welcome to rush hour in los angeles.

Millions on the move, sometimes slower than they would like.

For drivers, it is a headache.

For pandora, it is an opportunity.

Pandora has an early lead as one of the top apps used in a car right now.

After fighting for a dominant spot on your smart phone and tablet, the new battlefield is the car.

Pandora now comes preloaded in more than 100 vehicles from 23 different car brands.

That translates into more than 2.5 million people.

The combined civics and accords sold each much -- month come with pandora.

They want to keep that connectivity going once they get into the vehicle.

Pandora is not alone in its ambitions.

Apple has been cozying up to carmakers, too.

They want to push the brand, get inside the cabin of the car and become a standard fixture.

Pandora's headstart means a third of all new cars sold in the u.s. will have its service.

One reason why it is the number one radio station in l.a. as for those of you stuck in l.a. traffic jams, our condolences.

If you are guessing, pandora is interested in making its service available for more cars.

Jon erlichman, thank you.

It's time for on the markets.

Matt miller joins us now from new york.

Hey, emily.

Let's take a look at how this nasdaq trading halt has not just options, completely halted.

That is the intraday.

Just about 12:00, no action there.

No action going through on nasdaq stocks from other exchanges either.

You see a few interesting moves in options.

S&p futures dropping.

Fix -- vix shooting up.

You have not seen those losses come over to the dow jones industrial average cash trade.

We are still seeing gains there.

9/10 of a percent gain on the nasdaq is not really count as long as that is halted.

There were computer glitches that you guys have talked about . more news as we come back.

? welcome back to "bloomberg west." i'm emily chang.

For your bloomberg top headlines , we are following breaking news out of the nasdaq.

It has halted all trading due to a technical glitch involving the fee that gives stock quotes.

The nasdaq is home to many of the top tech companies, including apple, google, and facebook.

President obama is unveiling a new plan to tie college financial aid to a government rating of schools.

Speaking of the university -- at the university of buffalo, he says the ratings will show the best value.

Former egyptian president hosni mubarak has been released from prison.

He was taken by helicopter to a military hospital in cairo a day after a court ordered his release.

He was overthrown in 2011. there are concerns his release could stir the recent violence in the country.

From paypal to linkedin to square, he has played a big role.

Now he is trying to find the next big thing.

Though he started at the firm six months ago, he has made a number of big bets on everything from medical tech to digital tools.

What is shaping his strategy?

He is with me here on set.

How many investments have you made in six months?

12. how do you make investments so quickly?

The key is to have a strong network of interesting opt her burners -- entrepreneurs.

They're doing pretty revolutionary things all across user driven health care, using science to revolutionize new industries.

Reinventing databases, robotics, agriculture.

We are looking for the most interesting applications of math and science breakthroughs.

We see them every day.

What is the hottest trend you are watching right now?

The application of data to industries who have used intuition.

The practice of medicine -- medical science doesn't really exist in the u.s. conventional studies are equally likely to be wrong, the ones published in medical journeys -- journals.

You can take all the patient outcomes that are stored digitally and apply silicon valley statistics to find what drives what, and find better treatments, better ways of addressing those symptoms.

We are investing in 17, 20 companies that do that in different ways.

There's new applications based on capturing new data.

This is just an example of the type of company allowing the capture of new data that has never been used before.

Physicians can inform what a healthy patient looks like, and predict what will go wrong with you before you suffer symptoms.

What you think about this race?

Samsung is coming out with something in a few weeks.

Apple is supposed to be working on something.

Is apple way behind?

I don't think any of these have been adopted by 100 million americans yet.

Apple has a lot of marketing and other assets to make americans aware of new products.

The basic trend is, is there going to be a glass type of device the one uses to compute in the future, or will there be a glass device, or is there going to be something you where?

I had lasik 10 years ago.

I don't look forward to wearing something new on my eyes.

I would prefer something on my wrist.

There's a big debate about that.

What do you think the chances are of google glasses going mainstream?


You don't hold back.

[laughter] lasik is a very popular and expensive procedure.

Millions of americans go through it every year intentionally so they don't have to wear glasses.

The idea that people are going to voluntarily wear glasses makes no sense.

There are industrial applications.

You can imagine surgeons and mechanics working on a car or an aircraft, police officers or border patrol agents.

There are big industries that you can innovate in.

You think wristwatches will go mainstream?

I think so.

Until the iphone came out, most americans wore wristwatches.

Now it's more common to see people consulting their phone for the time.

It feels natural, it looks normal and feels normal.

Apple is probably going in the right direction.

I'm sure there will be upgraded versions of the new product.

I don't know if you can provide the same computing power, but if someone can figure it out, apple is a good bet to do it.

You bring your experience as an operator.

How hands on are you with your company?

It varies, and it's up to the entrepreneur and ceo.

The more the entrepreneur once, the more you provide value.

There's a difference between being an advisor and being an executive, leader, operator.

My job now is being achieved psychologist, asking a lot of questions.

Helping the entrepreneur find his or her own solutions, just through the questioning process.

Square is trying to challenge huge incumbents like paypal, google wallet.

What are the chances that square has of coming out on top?

There are is so many companies competing in this market.

Payments are one of the few things that almost everybody does almost every day.

It's a massive market.

There are an incredible number of transactions and money that people make by processing transactions better, faster, safer.

Square is doing extremely well.

It's hard to take a company from scratch three years ago and literally transform an industry.

Elon has done that in the automotive industry, setting the bar for automobiles.

Winning is another thing.

Can square win this market?

Square can dominate a large fraction of payments, financial services, and commerce.

Can it process every payment in the world?

That's a challenge.

You don't have to accomplish that next year.

You just have to make leaps everyone year, every two years that gets you closer to that objective.

What about the fact that vcs are shying away from this market -- vc's are shying away from this market, and they are offering 0%? it's amusing.

Three years ago, payment was a driving industry.

Half of my intelligent friends thought i was crazy.

And now payments is the cool area that everybody wants to invest in.

Payments are clearly a business of scale.

You have to move billions of transactions around.

Billions of dollars of transactions are usually hidden under rocks.

Unless you can cut through the clutter and take an incredible fraction of transactions from somebody else or empower a new set of transactions at massive scale, you have no shot.

That is one of the reasons why you see investors becoming more conservative.

The macro trend with the phone became the personal computing choice.

The tablet became the personal computing choice for most americans, and allowed for disruption.

Merchants and computers were connected simultaneously, and that allowed for changes.

Unless your company already has a lot of traction and progress, it's going to be very difficult to write that way.

Now that you are on the outside, i can ask you this question.

When is square going public?

I don't know.

When should they go public?

I don't have any specific opinion.

I happen to be -- being a public company is a good thing.

I served on two public company boards.

I think the transparency speaks a lot to consumers.

Linkedin was able to really take advantage of its public offering and turn it into a marketing campaign, where more hr departments adopted recruiting solutions.

Going public can be a very strong advantage for a company.

All right.

Former ceo of square, thank you for joining us -- coo of square, thank you for joining us.

? the nasdaq has halted all trading due to malfunctioning software, some sort of data feed malfunction.

The nasdaq is home to many of the top tech companies we cover right here on "bloomberg west." my partner and editor-at-large, cory johnson, is back here.

The story has been developing over the last hour.

They are trying to find a time to reopen the nasdaq.

The biggest companies out there, you name it.

What do you imagine they are doing behind the scenes?

It depends on where the problem lies.

The volumes of information , the orders of different size -- a lot of those quotes will have to be pulled.

People didn't know how arctic -- active the system would be when they put in the trades.

Restarting is not a simple process.

It's a fairly chaotic situation with all those trades coming in.

What a smart trader would probably do is sit back and wait and see what quotes were up, if the quotes for right.

There have been glitches in the nasdaq, whether they were the fast finger problems of 2010 -- which was high-frequency trading gone amok -- going back to 1987, when a squirrel chewed through a line in connecticut.

That cause the whole nasdaq to shut down.

There have been some big problems with the nasdaq.

This is one of the biggest they have faced.

Oracle recently moved to the new york stock exchange.

Facebook had huge problems with the it went public over a year ago.

Does this add more ammunition to the nyse's case, come to this?

They are probably sitting at twitter, somebody from the nyse is going to call up and say, you see what is happening right now?

Why have tech companies historically gone to the nasdaq?

It's a great question.

I have covered this for a long time and never gotten a straight answer.

The nasdaq insists they have been a home to tech companies.

They use the money from listing fees to help promote those companies.

Does the fact that they use technology or are more reliant on technology have anything to do with it?

The nyse makes a case that there is an enormous amount of technology there.

I spent a lot of time on the floor of the nyse over the last 20 years.

I was really shocked when i was in new york and went down on the floor and saw how little goes on there now.

It used to be a place where people were elbow to elbow all day.

Now it is like a big tv set.

The ability of specialists to step into the trading of a stock, to commit their own capital, make decisions about how fair and orderly market trades, has lessened somewhat.

This is the case for the nasdaq doing the right thing.

Cory johnson, our editor-at- large, continuing to cover this breaking news out of the nasdaq.

Coming up, taking aim at warner cable.

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

The battle with time warner cable drags on.

In a memo to employees, moonves writes, you should know the same deal has been offered to which verizon has agreed.

He says cbs and time warner cable will keep talking.

The blackout is nearly three weeks old.

Yesterday we reported that google may be gearing up for a big push into the world of sports.

There is buzz that google could bid for future rights to the nfl's sunday ticket.

Jon erlichman is following the stories from l.a. we know that sports are not a part of google's dna.

They represent a massive opportunity for this company, which is already thinking about the future of the living room and pushing a lot of products and services tied to that, from comcast -- chrome cast to global fiber -- google fiber.

In the cable world, one of the primary reasons people are willing to pay for cable when there are lots of new choices out there is because of all that sports programming available.

What if you are in a position -- as google, if you are pushing into new products and services -- to have those rights the could power those new products you have got?

This is more about youtube, which is pushing the subscription model the same way that spotify and the complex -- netflix have had success.

Let's think big.

And they do.

There are two parts to that.

Would they be interested in buying a paid tv operator?

The answer is that google likes the context, not so much the distribution aspect.

Would they go out and buy a more traditional media company, let's say?

Could there be a cultural impact by doing a deal like that?

They did by motorola.

In the case of that deal, there was a strategic imperative to get their hands on patents.

Those are two big issues they will have.

Maybe the answers to those questions are why just getting the sports rights would be an interesting proposition for google.


All right.

We will keep watching.

Thank you.

? coming up on the late edition at 3:00 p.m., how has youtube changed since the site started and what lies ahead?

We will ask the cofounder at 3:00 p.m. pacific, 6:00 p.m. eastern.

Bloomberg television is on the market.

I'm going to get straight to matt miller in new york.

What is the latest on the nasdaq situation?

I'm here with julie hyman.

We have been watching this for a little over an hour now.

We are talking about more than $5 trillion in securities, over 2000 names.

There is a ripple effect.

A trader earlier said, volume has ground -- not to a halt, but much slower than usual.

Also, even on non-nasdaq listed securities.

Liquidity has dried up.

High-frequency traders have pulled back from the market, even in nyse-listed securities.

He says trades typically take five to ten minutes to execute, are now sitting there for hours.

People are worried.

They don't know if there will be another glitch, something else happening in the markets.

He is the co-author of "broken markets." this is certainly another great example today.

I agree.

The one good thing about today, you are seeing exchanges cooperate with each other.

Nasdaq called it all of their securities -- halted all of their securities.

You saw nyse honor that same halt.

What happens when exchanges don't all play nice in the sandbox and one is slower than the other, you get things like the flash crash.

I was talking with nyse earlier.

Everyone knows that duncan has a kind of character.

There are still issues.

You mentioned that ibm was not halted.

It's not really trading, because so much trading is correlation based.

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


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