PC Sales Chip Away at Intel: Bloomberg West (07/17)

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July 17 (Bloomberg) -- On today's "Bloomberg West" the focus is on innovation, technology, media and the future of business. Hosted by Emily Chang with Editor-at-Large Cory Johnson and Senior Correspondent Jon Erlichman from Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

? live from pier 3 in san francisco, welcome to the late 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 on innovation, technology, and the future of business.

Let's get straight to the rundown.

Intel revenue dropped for the fourth straight quarter as the pc market keeps shrinking.

We discuss their push into mobile with the chief financial officer.

Google dominates search.

Now they wanted to go over your living room.

There is a battle for television.

And an animated feature "turbo" opens today.

Will it be they hit that dreamworks is hoping for?

We take an inside look.

But first, to the lead.

Intel's new ceo has a tough job ahead in rebooting the historic chip maker.

Rough-and-tumble when nine percent while revenue slumped 5% for the fourth straight quarter.

He has been dealt a tough hand inheriting a company that is dealing with a long-term -- playing catchup and mobile.

The company needs to be quicker.

He writes, "we will leave no computing opportunity untapped.

I have made it intel's highest priority to great that estes products for the mobile market." intel shares are down in after- hours trading.

For more on the numbers, i'm joined by our editor at large, cory johnson.

They have not lived up to their own expectations.

What is your take?

Intel has been through some big transitions.

In some ways they are facing a big one right now.

They are shifting to mobile computing.

The server side, have done well.

The pc sales have slowed.

They are dependent on that.

We have seen four quarters in a row, year-over-year decline.

It shows no growth.

That is not a great thing.

He has got a tough task as he takes over as ceo.

He had a lot to say about what their plans were and where they are going.

They are not there yet.

That game through clearly on the conference call.

-- came through clearly on the conference call.

Was stood out to you the most?

The gross margin will continue to be important.

-- growth margin will continue to be important.

And you see this sort of slide from 63% to 58% to the d six percent -- to 56% -- it is still a little bit of a slide.

Let me show you this.

If you look at the changes in gross margin, that is where you can really see the difference on a year-over-year basis.

It has yes -- yet to arrest itself.

He says they need to move faster, especially in mobile.

How will that happen?

Especially given that intel is such a behemoth.

It is not a company that can change fast.

It takes a long time for them to make these changes and open new facilities.

A lot of questions about building new products.

It is fundamentally still a pc company.

When you look at these guys in the pc business, again, you have got five quarters were they are slow.

The pc is so important to these guys.

Huge percentage is part of that.

That is a problem.

Cory johnson, thank you for breaking it down for us.

For more on and tell earnings, -- on intel, my guest.

Obviously this is his first time on the call.

He set a realistic tone.

What did you think?

I think you might be too optimistic.

There talking about a flat, your over your revenue model.

-- year over year revenue model.

We still do not think they have fixed what is wrong with their business model.

How do they find an answer?

It will lead to change the way they are pricing their products first and foremost.

By now i think they are protecting their cash cow in the core products of family.

It needs to do that.

Structurally, the ecosystem is a lot more affordable and affordability is paramount.

Would you say this is the intel that -- are any of these numbers his numbers?

Absolutely he inherited this problem.

One of the questions around it can fix this is that he has been a three decade veteran of the company himself.

He is a parcel of the problem he is facing now.

We will see.

Where there is fresh leadership, there is a fresh chart to look at.

The question is -- can they get results?

They have been overpromising and under the limiting -- and under delivering for quite some time.

The pc market does not look like it is coming back anytime soon.

How much of a blame falls on windows 8? what can intel do about that?

Emily, that is a great point.

In many ways intel is not a master of its own debt.

It is dependent on so much of what microsoft does.

It looks like it is embracing that community as well.

We will see a number of windows platforms coming in the second half of this year.

The fight is on.

Intel has only so much it can do and that has to hope on its partner to get it right.

What about the tv thing they seem to be dabbling in with a set top box they are supposed to have out before the end of the year?

Apple and google are trying to get into this market as well.

Will this be a big business for intel?

They could do this very well . in many ways they can do it better than many other hopefuls in the space.

The problem is hollywood does not necessarily want it to be like that.

They want to protect their cash cow.

We are not close to cracking that right now.

While hollywood decides what that's it wants to make on which players come intel is having great technology and having nowhere to go with it.

The way they can be a neutral third-party and attacked i.t. , that would be fantastic for the consumer.

They have a great business model.

The trouble is that hollywood wants to make as much money as it can.

According to our industry , hollywood is still on a wait- and-see mode.

I do not know what will break this market open.

It remains to be determined whether it will be intel or google or whether it will be apple.

All are very capable and will resource players.

And intel's long-time cto recently left.

What does that mean?

I do not know if that means a lot to the story right now.

Intel is a deep and rich organization in terms of talent.

I think it still has the engineering firepower to get and stun.

The question is whether he can put in place the business model and organizational changes that really make it move faster.

You called it a behemoth in the space.

In needs to be noble and imaginative.

All right.

Always great to have you here.

Thank you.

Apple and google may be taking their rivalries to your living room.

We explained next.

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

? i'm emily chang.

This is "bloomberg west" streaming on your phone, your tablet, and on bloomberg.com.

Ibm reported a drop in sales and 17% drop in profits.

Cutting hundreds of jobs.

The forecast is helping boost shares in after-hours trading.

An online auction site, ebay, also reported earnings.

Revenue is up 14%. but profits fell 8%. ebay says the weak economy will restrict the international growth.

Ebay shares are falling in after-hours.

The battle for your living room is heating up.

Apple and google are in the middle of it.

Apple is developing ad skipping technology that would allow owners of apple tv products to watch shows without commercials.

Google has been holding preliminary talks with tv companies to start is on -- its own online tv service.

Jon erlichman is based in los angeles.

Let's begin with apple.

Let's talk about its approach to skipping commercials.

That should make viewers happy.

Yeah.

Remember last week we were reporting from sun valley, idaho at the big media conference.

We reported that a key content type for apple was there right alongside the ceo, tim cook.

Why is eddie here?

The most up orton story for apple is about economics.

-- the most important story for apple is about economics.

Some new grand vision for television.

Hitting the relationship right with the entertainment players is important.

To your point, consumers and apple loves giving them a great consumer experience, would love to skip ads.

But apple needs access to those great contents.

What could they do?

One idea would be you would reimburse the content players for that possibility of ads being skipped.

This is such an important next chapter for apple when you talk about so many people paying hundreds of dollars per month and millions who are part of the cable business . where will the money come from if you make the switch to more internet connected television?

Google is taking a different approach.

Explain how there are two ways of doing this potentially.

I think it is fair to say that apple continues to approach this from the hardware perspective.

Let's put out a great hardware product and profit in a big way from everything that happens inside and around that hardware.

The google approach seems more like a services driven approach.

It is a bold approach.

Google has made old moves.

Google fiber is probably the most obvious.

It will sneak up on people.

You will start in kansas city and then more people are using their service.

It benefits google because more high-speed internet means more searching through google and more videos consumed through google.

Maybe the next logical step is to offer a cable service.

That is more on the google side of things.

Are bloomberg folks say that the noble vision sounds a lot like netflix.

Jon erlichman in los angeles, thank you.

Is silicon valley trying to reinvent television?

Our next guest think so.

We have nick thompson.

He joins us from new york.

Apple and google are battling it out on every front possible.

Bloomberg industry folks think that apple has a better chance in the tv arena.

What do you think?

It is funny that these new stores broke for these two companies at the same time.

Clearly apple has a better track record and google db hasn't taken off.

-- google tv hasn't taken off.

They have guy you two going on right now and the google play store -- they have youtube going on right now and the google play store.

The apple thing of skipping commercials doesn't really solve that big of a problem.

Most people who want to skip commercials can do that with ddr.

There are tons of structural reasons and historical reasons and corporate reasons why apple will get the better of google.

Look at the two ideas.

We do not know whether the ideas really represent what percentage of the -- when you look at these two little bits of news, the google one might he added.

-- might be better.

The details are trickling out.

They are not as far along as we thought, especially apple.

Some analysts say they have seen apple tv sets but it does not seem like that.

It seems like everyone should be watching on apple tv's right now.

It is hard to see where we are used on the number of leaks.

If apple is far along, we will get some kind of apple tv, we do not know whether apple is improving their apple tv sandbox or whether they are building a large, the tv that will compete with all the ones out there from lg for example.

We do not know what apple is doing.

Either they are good at secrecy or maybe they are slow at it.

It is a landscape that is changing quickly.

Hulu is officially off the auction block.

Netflix, their original shows are getting emmy nominations.

How does a the landscape being different, even a year from now?

And shows the power of the content creators.

We can do this on our own.

We do not have to sell out.

It shows that there is still a lot of leverage in the content creators and not just that technology distributors are the hardware makers.

It is a complicated landscape.

Many people fight against each other.

This looked like it was on death's doorstep not that long ago.

It is doing better and better.

There's a wild flocks in unknowns here.

It is an extremely exciting area to watch.

Long live the kings.

What about intel?

He things into has a lot of potential, but hollywood is not ready.

A, hollywood is not ready and b, intel does not have a lot of experience.

It is a hard business to get into.

They are nervous about this.

It is a large personality challenge for intel.

It is a question of how they can work with their partners.

They work with companies that they will be competing against.

We thought we would get something from intel.

We thought intel would be much further along than they are.

Right.

Same story, but different company.

It shows how hard this is.

It is.

Bloomberg contributor and editor, nick thompson.

How can a sale compete in the indy 500? we take a look at the technology that made it happen.

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

? welcome back.

I'm emily chang.

This is "bloomberg west" streaming on your phone, tablet, and on bloomberg.com.

Shark nato, the sci-fi movie is now going to have a sequel after fans clamored for it online.

They will have more details soon.

There is also a twitter contest for fans to name the subtitle of the film.

Wow.

And today's new hollywood, dreamworks "turbo" hits theaters.

The main character's name is small, but the budget is big.

It is a chance to start a new franchise with a feature on netflix.

Jon erlichman went to dreamworks for a closer look.

Is "turbo" going to be as popular as shark nato?

I'm telling you snails and sharks, what a week.

[laughter] and because that much more crucial for how the film will do this weekend.

This is not just a week and played for the folks at dreamworks.

It is a long-term play tied its relationship with netflix.

Here is more on that story.

My name is turbo.

I just want to go a little faster.

Dreamworks "turbo" tells the tale of a snail that dreams big -- really big.

He does racing in the garage and fantasizes about one day competing in the indy 500. it started 10 years ago.

10 years ago?

10 years ago.

Dreamworks competitions where where staff could pitch stories.

The snail pitch was a hit.

It was not until two .5 years ago he finally got to finish the movie.

So far, the hottest animation films have been based on improving characters.

Pixar's "monsters university" and universal's "despicable me 2." "turbo" will appeal to them faster car crowd.

That experience of what that is like this really.

-- viscerally.

They will set of a tv show coming to netflix in september.

There is a plan to boost a tv production revenue.

Netflix has become such a popular way to watch television.

I know my kids spend the bulk of their time watching netflix.

Kids will spend time at the theaters taking in "turbo." a snail cannot race in a competition meant for cars.

Wow.

Aren't you just a little ray of sunshine?

And dreamworks will be producing hundreds of hours of original content for the folks at netflix.

Back to you.

Jon erlichman in los angeles, thank you.

Coming up, intel cfo will be talking about the pc slump and what they will do to try to stay on top.

? this is "bloomberg west," where our focus is on technology and the future of business.

I'm emily chang with your bloomberg top headlines.

The ncaa says it will not renew its contract with the electronic arts for college football videogames.

This comes at as a licensing firm faces lawsuits with the use of college football players names and likenesses.

There are cost of litigation of renewing the deal.

Yahoo has provided us with a glimpse into the business of the ali baba group.

In its earnings call, alibaba it's -- profits have tripled.

Alibaba has been gearing up for an ipo that should come by the end of the year.

And the silverlake buyout.

Major holders are opposing a deal.

The boat on the@ -- vote on the $24.4 billion bid -- intel has been hit hard with the slowing sales of pcs.

They have put effort into mentioning the future.

Cory johnson has a look at the products coming out of intel's futurist lab.

Tell us what intel is working on that is so far out?

They're working on imagining the future.

I will use a hockey puck analogy.

He is skating to where the puck is going to be.

That is the same with intel spending millions of dollars . they have to understand where technology is going to be years before it is there.

The company spends time predicting the future.

We got a special glimpse.

Inside the intercontinental hotel in san francisco, you can see inside the future.

At least come inside intel's version of it.

They think sensors will be the future of technology.

Id badges with personalized digital information.

Chips that can warn you away from foods you are allergic to.

We are looking at the way that people would interact with technology and trying to understand what components would need to be built to realize those different experiences.

Intel technology evangelists ,sean, put this event together.

Pollen detecting chips for the park.

And where the magic happens.

The bedroom.

It shows a vision and it shows that we can make progress towards those visions.

We are showing fundamental technology that really proves these things are possible.

This is not just about gadgets and fuster at six -- and futuristic jump.

These are billions of dollars of chips being sold by intel.

They hope in the future this is about casting a wide net to find that future.

We are at this interesting point in time where our technology has progressed to a point where we can build anything.

The only thing stopping us is our imagination.

Interesting stuff there from intel.

They are really spending money and codifying this process to look into what things might be down the road.

Is certainly looks like they are working on a lot of interesting stuff.

When might we see some of these things become a reality?

I know you will mock me for doing that shot of -- i wanted to, but i figured we could do that off camera.

What is interesting about this is that they have set up shop in san francisco and a by a lot of people to come to the area and see what is possible.

What might you do with this invention?

They're trying to seed the idea for future inventions by any number of inventions they hope to benefit from.

Ok.

cory johnson, our editor at large.

We will be back with more on "bloomberg west." ? welcome back.

I'm emily chang.

This is "bloomberg west" streaming on your phone, tablet, and on bloomberg.com.

At&t and sirius xm radio are teaming up to provide more wireless features inside cars.

With the help of at&t networks, sirius xm radio will have roadside assistance and more.

The company did not say when the enhanced services will be available.

In the meantime, automakers race too great a fully connected car.

They are trying to make driving safer.

We look at the high- tech solutions.

There are two trends happening right now in the automotive world.

I have a term for both of them -- mutually assured distraction.

On the one hand, many divers want as many apps and services as they find on this to be available inside the wheel.

And the auto industries have to oblige.

You can have and/or on your ford.

-- o pandora on your ford.

The problem is, doing a lot of this it means you're not doing a lot of this.

The auto industry has a solution.

Advanced safety systems that take over certain driving task s. take a modern mercedes-benz.

It will keep you out of the way of a car coming up beside you.

It will nudge you back into place if you find yourself drifting out of your lane.

You have more things to distract you while driving, but we also have new technologies and help keep a safe we are being distracted.

Since the genie is out of the bottle and we do not want to lose toys, the solution is what is to come?

Once cars can drive themselves, we can do whatever we want behind the steering wheel.

Dallas sam grobart sam grobart from bloomberg businessweek.

He joins us now.

-- that was sam grobart from bloomberg businessweek.

He joins us now.

You were driving a pretty sweet car.

[laughter] it is a struggle.

Absolutely.

Let's talk about how these companies are struggling safety and technology and what drivers want?

It reminds me if you were to tell somebody you could eat more cheeseburgers if you take more lipitor and the two could kind of keep ratcheting up, but if you do not eat the cheeseburgers, you would need all of the lipitor.

We have all of these new in car technologies that are amazing, but it does take away from the task of driving.

It leads automakers to use other technologies to keep us safer and protect us from our own bad habits.

It sounds amazing.

We have talked a lot about why cars are taking so long to catch up with technology.

Cars have a much longer life cycle than a smart phone.

When will these technologies become the reality rather than just -- what you are seeing from automakers is that they want to get out of the in car technology business.

You take a company like ford.

They want to provide the plumbing.

They want you to have a place to dock your smart phone and charge and link it up to display on your -- and basically run things from the smartphone onto the -- -- onto your dash and basically run things from the smartphone onto the dash.

We know the car company, i was talking to someone from onstar, car companies are working on it.

Apple is also working on this.

Google is working on this.

Who wins?

It looks as if apple is positioning itself to become a major player on the dashboard of cars.

They'll have iowa is in the car -- ios in the car.

It is basically a series button -- siri button on your steering wheel.

It would be a driver friendly interface.

Google has been working on autonomous driving.

And analyst of silicon valley was talking about how this could be a $200 billion business for google if they're driving technology could take hold by the end of the decade.

And you have elon musk talking about this hyperlink -- hpyper look.

I want to know when i can buy one, this special car.

The driverless cars would be by the end of the decade.

By 2020, we might be having cars that take care of all the driving for us.

We can sit there and look stuff up or talk on the phone and it won't matter.

We will be driving.

It will be an interesting 10 years.

Sam grobart a bloomberg businessweek, thank you for joining us.

Thank you.

Keith olbermann is back and this time with his own show on espn.

What offered the network?

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

? welcome back.

I'm emily chang.

Imagine logging into your paypal account and find yourself 92 quadrillion dollars richer.

Paypal corrected the error and apologized to the user.

As we mentioned earlier, the ncaa will not be renewing its contract with electronic arts.

There is a concern with using that likenesses of college layers names and likeness -- plahe yers'names and likenesses.

How important is this to ea?

They.

Basketball in 2010. -- they dropped basketball in 2010. good madden be affected at all?

No.

this comes from rules from on the go that makes ss is you cannot make money off of their likenesses.

Tell us about this particular lawsuit.

When players go to school and they could get athletics collar shirts and that kind of thing, but you cannot give them cars and that kind of stuff to be there.

Part of the rule is that you have to sign away your likenesses as well.

Ea has been using their likenesses in their games and they have managed to get -- the sort of do this after they graduate in their old uniform.

Some people are arguing that i am out of school and i should be getting paid like everybody else for my likeness.

What will ea do?

They have said, ok.

It is fine if ncaa drops us.

We will work with a company that works with colleges that licenses in the same way.

They have a pretty good workaround.

Any update on ea?

We know john went over to zynga.

What is happening there?

From what we're hearing, there are some internal candidates.

There are also some external candidates that we will continue to look out -- at.

They're looking for the right person to fit that role.

Thank you for bringing us that update.

Should a prisoner of war contribute to the chips in your iphone?

They'll have to disclose the quantities and arnold's -- dollars spent.

What impact will this have?

The names of various minerals on the show -- you have got that right.

That is the stuff that makes some of the technology work in our iphones and computers.

The companies may not be ready.

Bobby recently offered a survey on how companies are prepared are not preparing for the new rules.

What are the kind of compex were talking about?

Well, there have been conflicts going on in that part of the world for the better part of 15 years.

The basis behind this rule was that some of the mining related at invidious in the democratic and republic of congo and surrounding countries, some of it has been known to arm some of that conflict and human rights violations.

The principle behind the law is to urge -- urge companies to be responsible with these minerals.

What do we know about finding out those answers and finding out where the raw metals are coming from?

Do they have an expectation of how much it will cost to figure that out?

We can go in a lot of directions.

The overriding results of the survey we have done finds surprisingly that companies have -- almost a third of the companies that responded to the survey say they still have not determined impact on the company even though largely the impact across many industries is quite wide.

We are encouraging companies to start.

We are halfway through the plants.

It can be quite a daunting task for companies to get started.

In terms of costs -- i saw in the study you talked about the i.t. costs and how monies are guessing -- and how companies are guessing.

They should be gathered and a stuff are ready.

Are six months into the year.

Yeah.

-- they should have gathered this stuff already.

We are six must into the year.

Yeah.

They said they were not sure yet.

In terms of companies that do know, they think the effort should cost them something less than half $1 million per year.

Which should be good news.

In terms of i.t., companies haven't quite figured out the impact yet.

It is all about getting started.

Real quick, what if companies do not comply?

This is a sec filing requirement.

In his public disclosure, -- it is public disclosure.

It will remain to see how the public opinion we ask if companies do not file information.

Bobby kipp, thank you for your time.

Thank you.

Espn is bringing back keith olbermann.

He will have his own show on espn 2 starting august 26. he left the sports channel in 1997 and has worked at msnbc and fox.

Jon erlichman is in los angeles with more on this story.

How do we know this will not end up like his other jobs?

I'm sure he is hoping you will tune in and that will help the early ratings.

I had a quick exchange with the president of espn last week.

With the launch of fox sports 1, any surprises coming?

He said they have got great -- great programming for august and september.

What timing.

Key government will be popping up on one of the espn channels -- keith olbermann will be popping up on one of the espn channels.

It's been has a mountain of fees it generates from cable companies i say him your subscribers want espn.

We want to get a lot of money from you.

Plays into all of that for sure.

Espn -- espn is hosting the sp's tonight -- espys.

That's right.

Abc has the oscars.

Espn has the espys.

It helps build the brand and gives a platform for a lot of the athletes.

Espn is a place where a lot of ex-athletes go in their second career.

There will be a lot of talk of where will the best ways to be on and off the court.

Esp ys is a great chance for espn to show that off.

Thank you.

Coming up, the bwest byte, where we focus on one number that tells a whole lot.

What have you got for us?

A $.1 billion -- $8.1 billion in the pc market for intel.

For those who tell you that the pc market is dead, it is far from that.

I wonder what they will do in mobile.

He said intel cannot be afraid to cannibalize itself.

Yeah.

The story of ibm was an encouraging forecast.

It is a reminder you can be a little distant from traditional pcs.

Mobile helps.

Thank you for watching this edition of "bloomberg west." we will see you back here tomorrow.

?

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

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