Twitter Frenzy: Surveillance (11/05)

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Nov. 05 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: William Cohan, David Kirkpatrick, Richard Heitzmann, Arthur Levitt, Timothy Armstrong, and Niraj Shah. (Source: Bloomberg)

This is bloomberg "surveillance." sac capital dope he is charged.

Stephen cohen will have more time to watch basketball.

-- guilty as charged.

Twitter attempts to contain it.

A facebook frenzy.

Daniel loeb guilty of tax evasion.

Dan loeb is a bad person.

Good morning.

This is bloomberg "surveillance." i am tom keene live from bloomberg world headquarters in new york.

Tuesday, first tuesday of november.

He is election day nationwide.

Joining me is sara eisen and scarlet fu.

I suggest you vote early.

Lex now i can vote in new york.

-- now i can vote in new york.

Time for overnight news.

In europe, european growth forecasts were lower.

Unemployment set a record high.

The prediction is one point one percent growth across the eurozone in 2014. here in the united states, 10:00 eastern time, the isam non-- manufacturing index.

Cds, directv, aol, speaking with the ceo in the next hour.

After the bell 21st century fox, tesla, opentable.

The virginia governor's race is one that is closely watched.

New jersey governor's. boston, detroit, miami, among other cities.

The first test for the political parties post-government shutdown.

More than 300 cities in this country will be voting for new mayors.

A data check.

Let's look at the markets.

Futures negative five.

The vix stunning.

Euro 135 point -- 1.3 502. oil stuck at 94.37. the vix tells at all.

The equity markets moved higher.

A low word vix, more complacency.

Under 13 is a big deal.

12 point 93. stronger yen, 98 .26. a stronger yen versus the euro.

Brent crude, even brent crude 109 down to 106 .46. -- 106.46. we have been told to throw away the jobs report, it will be the impact of the government shutdown.

Time to scour the front pages for the most important story.

All over the front pages sac capital.

After a decade-long investigation sac capital decides to plead guilty.

What happened here is sac will pay a record total of $1.8 billion, and will shut down the investment advisory business.

They will not manage other people's money anymore.

They will manage their own money.

They are still doing business with wall street.

Bank of america, goldman sachs still doing business.

Regulators have encouraged to do business.

Why is that?

To make sure there is enough liquidity.

That is one reason.

Also, this is the first large wall street firm in a generation to confess to wrongdoing.

We have the big moment yesterday with the district attorney.

We shift to the sec.

When is it front and center?

Days and weeks?

Not clear yet.

Something we will keep an eye on.

The second front page story is twitter.

Probably feeling a little more optimistic about investor appetite in the run-up to the ipo.

The company raised the offering price range for 25%. $23-$25 per share.

If you look at it on a fully diluted basis, more than $17 billion.

"the times" twitter and blackberry.

That was the spin yesterday.

At tech giant rising.

-- a tech giant rising.

They were supposed to be so conservative.

They have been.

Slightly more but it is more.

Do we know if they will increase the number of shares yet?

Not yet.

Facebook did that and increase the price range.

Cory johnson wrote a nice piece.

As one tech giant rises, the other one falling is blackberry, because we know that it had been looking to be sold to another company and the plan crumbled.

Fairfax financial holdings did not make good on the $4.7 billion bid.

Instead, blackberry will raise $1 billion in convertible debt.

The ceo will step down.

He will be placed on an interim basis by john chen and the failed investment by fairfax is raising speculation they will soon run out of cash.

There was speculation it is not if, but when.

Breaking news.

This is oil in canada.

That is a wow statistics to cut 20% of jobs.

That is coming out on the challenges of oil in canada.

Our guest host this hours william: cohan, bloomberg contributing editor.

The twitter affect is treatment right now.

Were you surprised at the frenzy?

I am.

I am surprised that the frenzied . i think it is maybe a little overdone hammock considering the actual potential of the company, which does not really have a business yet where i can say here is what twitter's business is.

What does it say about the world?

We have a responsible midwestern ipo, goldman sachs plays by the book, and we are still where we were with facebook?

It is amazing.

Look at the container store.

People did not talk about that.

People love to talk about twitter.

-- people do not talk about that.

It is still not a profitable company.

That is an interesting switch year.

Amazon is not profitable either.

This is a big change that a non-profitable company is going public.

I think twitter has potential to become a giant company.

This is the typical wall street pattern i am afraid to say so early in the morning.

Wall street loves to hype a stock.

Two years ago it was facebook.

This year it is twitter.

Eventually facebook did trade up through the ipo price, but a lot of traders got burned through the way.

Same thing will happen again.

I do not know why people do not learn to be more cautious.

Oh stop.

The stock exchange will not screw up one day.

That was a huge problem for facebook.

I am not sure i agree.

Forgetting that technical failure of facebook, this is the pattern of supply and demand on wall street ipo.

Is is important.

Yesterday it across the bloomberg and the headlines go buy all day, one single headline that caught my attention, i believe suntrust will hire 60 investment bankers.

This is the cyclical nature of our business.

First you have twitter and all the others.

This is signaled that wall street is normal and nothing has changed from 1990 nine or 2005 the?

I was thinking about that along the way over this morning.

-- does it signal nothing has changed from 1999 and 2005? there are fewer players on wall street.

Other years.

That is why you get a situation where twitter is about to be an overhyped ipo in my opinion.

This is not about wall street.

This is about silicon valley.

It is about wall street.

Twitter is not overhyping it self.

To some degree, it is.

You cannot turn around and not see another article about jack dorsey.

This is how the market works.

Don't you blame the media?

Everyone in the media uses facebook and twitter.

They are hyping it and away they are not hyping the container store to david's point.

Here we are focused on this and hyping.

It does legitimately embolize the era we live in.

The media uses it.

A lot to talk about all through bloomberg "surveillance." we will look at the frenzy of twitter.

Tuesday election day.

Company news.

Bmw posted a third-quarter profit drop.

2.6 billion dollars.

Revenue declined slightly.

They were hit by start up cost for the battery-powered model and hybrid sports cars.

Both vehicles are part of an effort to have a line of ego- friendly vehicles.

Sales in uniqlo dropped.

The largest year-over-year profit since september 2010 when sales tumbled 18 point five percent.

A shop us on over at kmart.

The department store retailers opening doors at 6:00 on thanksgiving day.

-- shop-a-thon.l a total of 41 hours straight.

Last year they covered --) couple of hours but not happening this year.

That is what you do, leave thanksgiving dinner and go to kmart?

Did you guys get this?

For the one hours straight.

Likes love to shop.

That is why the container store did well.

They love a deal.

It is becoming the american way.

(march at 6:00 on thanksgiving morning?

Nothing is sacred.

-- opening kmart at six :00 on thanksgiving morning.

Coming up, we will talk about sac capital agreeing to plead guilty, paying a record fine for insider trading.

How that major decision is fervor breeding across wall street.

This is bloomberg "surveillance." -- how that major decision is reverberating across wall street.

? good morning, everyone.

Bloomberg "surveillance." john leger, t-mobile president really shaking up how to do business in the mobile space.

-- john legere.

"street smart" at 3:00 this afternoon.

Stephen cohen's sac capital agreeing to plead guilty in the insider trading case.

Scarlett has been looking at the details for what this means.

No question this goes down in the history books.

Absolutely.

Making the announcement the advisers will lead guilty to security and wire fraud.

Lex all of the charged sac companies have agreed to plead guilty.

-- all of the charged sac companies have agreed to plead guilty.

All have agreed to pay adoptees in the record amount of 1.8 alien dollars.

Not totally a done deal because the judges still need to approve the argument.

-- all have agreed to pay fees in the record amount of $1.8 billion.

A landmark moment or the government.

Bloomberg "surveillance."ill cohan with us.

A lot of perspective.

What does this mean?

It would be like one of the guys who says paul mccartney was in the band before wings.

I do not feel like this has the same import and the same sizzling wake-up call to wall street that it was a generation ago.

Lex why is that?

-- why is why is that?

Does not seem as shocking.

-- does not seem as shocking.

The covalent bond and the notion of trust was broken five years ago.

It is an interesting point.

Is it because i wonder because steve cohen himself was not charged?

He is not charged.

The fact that the firm is in the center of this and not the person.

Obviously milken was in the center of it 25 years ago.

We have bags of cash being delivered in connecticut 25 years ago to marty siegel.

That was really shocking.

This, after raj -- yes, it is shocking and has the power to shock, but not the same as the trust being totally shattered 25 years ago.

Is it also because sac capital advisors is still operating and regulators of the government have encouraged banks to continue doing business with its?

That is frankly the his store part.

With raj going out of business -- galleon -- we know he can manage his own money and has plenty left.

And he will.

Everyone is talking about the possibility that regulators want to ban stephen cohen from doing any kind of business in the regulation industry.

How do you respond to the headline that says we are still in business?

That is not what i will jump in to talk about.

Could the reason it seems so on shocking -- unshocking is because basically the hedge fund industry does not have the same reputation of trust and reliability that wall street had?

If you want to host the show, you have to wear a bowtie.

Do not ask any questions about how wall street works.

From an external business point of view, i do not think that is shocking because i did not expect these people to be terribly reliable.

That in itself is a sad indictment of how we have it evil.

The whole wall street industry, the capital markets depend upon trust.

-- that in itself is a sad indictment of how we have evolved.

Unfortunately you may be right we did not expect roger on geronimo orct raj rajaratnam or stephen cohen to be honest.

The headline is this is far from over?

It appears there are still criminal charges pending.

Bill cohan with us.

Twitter question of the day, after twitter, what is the next tech company that should ipo?

And the next hour we will speak to an early investor.

We will speak to the ceo of wayfarer, also bracing for an ipo.

Tweet us @bsurveillance.

? this is bloomberg "surveillance." i am sara here with tom keene and scarlet fu.

The european union trimming the forecast for growth.

-- i am sara eisen.

Gdp to rise up one point one percent.

Unemployment now forecast to be 12.2% next year, and that is up as well.

The forecast coming as the region's debt crisis goes into the fourth year.

Two out of the 44 economist we surveyed believed the banks will hit the goal of 1.9% inflation by 2015. the results of the survey underscore the case for stronger results of the japan economy.

The green bay packers lost the game, and possibly the star quarterback.

Aaron rodgers suffering a shoulder injury early on in the game.

Scheduled to undergo more tests today.

The chicago bears went on to win 27-20. those are the top news headlines.

That is a good news.

And all the years we have done with -- we have done this, i have never seen a headline like this.

In canada, encana, continuing with the bold equity -- bold action underway.

I have never seen this.

They announce vision and strategy am a bold action underway.

It plans to cut 20% of the jobs, reduce the dividend and landing at clearwater ipo.

If someone in david kirkpatrick's world did that they would have their head.

Yes, you could.

Like getting to morning must read.

I have something on twitter.

This was pretty timely.

A senior editor.

He talks about what the ipo means.

He says people will call it a bubble but generally talking about finance.

What i see is a social bubble.

The collective delusion that twitter's ipo is a celebratory -- celebratory event, even if you're not holding a stake in the company.

Lex hearing more and more bubble talk.

-- hearing more and more bubble talk.

Does that worry you?

No, not in the case of twitter.

I think perception will probably defined reality.

They will raise so much money.

They have plans for a lot of acquisitions.

They have done a lot of smart acquisitions.

Look at vine, which they bought.

I think they will continue to do that.

Even though i cannot define the business right now, i believe they are in a beautiful position to build a business.

Unfortunately come a i could not tell you what it is.

I would not buy the stock, but i would not buy ash predict people will lose money either.

It is priced wednesday.

Begins trading thursday.

Another hot stock lately is netflix.

On 10th is king.

The head of netflix next.

-- conetent is king.

? this is bloomberg "surveillance." i'm sara eisen, here with tom keene and scarlet fu.

We need a data check.

Full coverage of jobs friday.

Your row under 1.35. oil below thereal economy.

--k--- euro under 1.35. one stock on a tear, netflix.

They have created hit shows that have received awards, emmys.

Our senior west coast correspondent, jon erlichman, asked about it in an exclusive conversation with the chief content officer.

We hope that it will be net positive for sure.

You look at it and you think it is very difficult to imagine a lot of people will join netflix to watch a show they have never heard of.

Now we have a lot of people watching with a few shows they have heard of.

Bloomberg contributing editor.

Not just netflix.

Netflix and amazon using big data and experiment tation.

It is an industry into molds increasingly.

-- ion tn tumolt.

Neither one is burdened by the traditional mindset.

They can do things in new ways.

They can use measurement to determine what to produce.

That is what amazon is doing.

That flick said to be taking more of a traditional approach and what it chooses to produce.

It knows who the customers are in a way that tv networks never could.

Apparently netflix uses that big day that two cast their shows.

The question is, how much do they spend on building the original shows and how much do they spend on gaining other shows from amc and others?

How do they strike the balance cap go they are spending billions.

This is a company we should talk about mixed to twitter the coast -- because it has a monumental market cap.

Not a clear long-term strategy.

One of their strategy is they are experimenting with a high resolution hd format.

Reed hastings talk about how to netflix was to be a big supplier of content.

They will be one of the pioneers of the new altra high definition.

I think it will model -- matter to some people in cement the reputation as being the lead in the industry.

What is the response to the rest of media?

I think they are were read they do not know how to respond.

Macs come on, they can go to l.a.. -- come on, they can go to l.a.. they have unbelievable technology savvy and data savvy, that for better or worse, the industry has not developed and cannot develop.

I think they are a very interesting company.

I wrote an article about them a couple of years ago.

I interviewed ted.

Right when they were developing "house of cards" i read the script and was impressed.

I was writing about them when their whole business model fell apart.

Shifting from dvd.

It is one of the more interesting business stories about how they have totally lost it.

Investors lost total confidence.

Carl icon sold out at 350. one of the more brilliant investing plays.

To have faith in that company when all about them were losing their heads.

Reed hastings one of the great minds in the industry.

He has proven himself to be that great leader.

A couple of years ago everyone was questioning him.

Good for him turning it around.

What they have done with the model is interesting.

It is a new dynamic between reed hastings and jeff a's those -- jeff bezos at amazon.

Amazon actually owns the content, netflix licenses it.

Amazon has the right to show advertisements, netflix does not.

That could be a long-term differentiator.

Bring up the chart again.

You can talk about the crash talking about dvd.

Here is the surge back.

Netflix, do i have to own it it f i am an institutional shareholder?

If you want to have the right cocktail party chat saturday night, you have to own them.

From a business point of view, another matter.

I think they are both highly valued, considering the long- term potential.

Also, the other companies who see the long-term potential are the cable operators.

This owns like comcast and other operators are negotiating from a position of weakness, but they feel they have to.

That is right.

They have to figure out how to get into this whole new way of distributing contact -- content.

Netflix is in the lead technologically.

Who was working the best of the old order television content with netflix you go i have a lot of admiration for comcast.

A new model certainly.

"orange is the new black" is the new one.

" aalpha house" is the new one.

Don't you want to see a show that terri trudell wrote and john goodman stars in?

They are outbidding hollywood.

They have a whole set of freedom accretive -- creative freedom that other companies lacked.

The first feature is the square.

A documentary about career square.

Who would expect they would go so high end?

-- tahirir square?

All you need is a computer and then a little longer and -- login.

Really?

They built a big ice scraper.

I had to turn the rabbit ears a little bit.

The big skyscraper in midtown.

I looked at it.

Ackman is like seven floors below.

Maybe it is time you start watching streaming video.

An ongoing conversation.

Coming up in the next hour, we will speak to arthur levitt.

You want to hear from this man after the record fine and admission of guilt at sac capital for insider trading.

That is coming bloomberg "surveillance." up in the next hour of bloomberg "surveillance." on bloomberg television, radio, and streaming at bloomberg.com.

? this is bloomberg "surveillance." i'm sara eisen.

Top headlines for you this morning.

India launching its first mission to mars.

Scientists and to put the satellite into orbit around the red planet.

Their journey will take almost a year, and if successful it would follow the united states, and russia in orbiting mars.

A surprising strong u.k. report.

A decline in the gauge that track services was predicted.

The report is the latest economic indicators showing continued strength in the british economy.

The treasury department top international official likely to be nominated to the federal reserve board.

She is stepping down from the treasury department post this friday.

They worked as -- her and janet yellen work under bill clinton.

Those are your top news headlines.

-- she and janet yellen work under bill clinton.

A washington insider.

A lot of policies cap.

The point person at the treasury for big economic issues.

There are a few fed spots to fill.

Time for single best chart.

Not an election day single best chart.

Looking at whether the rising stock market is a bubble.

John mauldin has a lot of warning signs.

He has his own blog, and he peters this in the latest note.

Inflation-adjusted margin debt in yellow.

Three distinct spikes.

The housing bubble this year.

If we draw horizontal line, the level are basically at the same level.

You could make an argument we are in a bubble.

Bill cohan with us.

Are we frothy?

Yes, we are frothy in the bond market.

Unfortunately when investors do not get rewarded in the bond market for the risk they are taking them as they have no choice but to go to the stock market.

The architecture of this is all by design.

We have the central bank, ben bernanke to think and janet yellen will probably continue the same policy.

The good news is corporate profits are high because unemployment is high and wages have not kept pace.

There are profits to back this up, but where else will you put your money these days at?

If you look at the growth of the pe.

Grows on average two percent a year since 1990. increasing by 18% in 2000 13. -- in 201233,. . i have trouble with pe analysis because it is to moving parts.

-- two moving parts.

Mauldin is gloomy.

Many walls of worry.

We need something uplifting.

First-look photographs.

The fifth of november today.

That means across the u k, bonfire celebration takes place.

This is in remembrance of the gun powder plot.

Represented in the large hat.

Remember, remember, the fifth of november.

The attempt to blow up the city of parliament.

Now they like to on fires to celebrate the survival of king james the first.

We will have to call guy johnson.

A celebration of a different kind, the aerobatic unit of the italian air force could not help but be the center of the attention.

The red, white, and green of the italian flag.

Sort of like the opening of david kirkpatrick's conference.

A 5.5 by?

Of course we do.

Let's also go to washington where the president was in celebration of his hometown hockey team.

They continue to congratulate them on the 2013 stanley cup win.

Hockey players in suits, and onn odd look.

The president has a general interest in sports and all things chicago, how about that?

No fanlike tom and scarlet.

How about the rangers last night?

I do not want to talk about that right now.

Going back to the red sox at all?

That is last week.

I walked in with them.

Rangers, giants.

Are you guys done that?

Coming up, the hedge fund manager newly dubbed kanye west of wall street.

That article coming up next on bloomberg "surveillance." ? ? this is bloomberg "surveillance." i am scarlet fu joined by tom keene and sara eisen.

Company news from the files of bloomberg west.

Hp forecasting sales below company -- below estimates.

The shortfall comes as htc's iphones fails to catch on.

-- htc forecasting sales below estimates.

Twitter is a market cap valuation of 13.5 billion dollars, even more if you consider the fully diluted value.

That is a big concern for a lot of investors.

Library tries yet another strategy.

The struggling company will raise $1 billion in convertible bonds, and look for a new ceo after a buyout fail -- fell apart.

Financial abandoned the takeover bid after failing to line up financing.

Blackberry announced the ceo will step down.

John chen stepping up on a temporary basis.

David kirkpatrick with us.

John chen a veteran not taking over the reins.

The worst job in the world?

He is excited.

I know him quite well, and i think he is a good choice for the job.

People had little faith in a company intern did around into a mobile technology w company.

Isn't it too late for the strategic vision?

You have to have a strategic vision to position.

I do not think it is a likelihood he will sell it.

Likes his strength is an enterprise.

Lack there he did rely on consumers that lost its way.

-- his strength is in enterprise.

It is a software company with a device front end, but he will have to emphasize the software piece in order to salvage it at this point.

A huge job to comfort the canadian company and canadian people e that is a very interesting theory, which did not occur to me but think it is an excellent question.

One of the national treasures.

They must be devastated.

Lenovo looking at it but a lot of pushback about national security from the canadian government.

If you want to sell to a chinese company, john chen to be running it is excellent.

Excellent relations with china.

No deadlines right now.

We know that lenovo reportedly signed a nondisclosure to book into it.

They never commented on that.

From the fate of black hairy to activist investors am a they have been shaking up companies as never before, and none aggressively as dan loeb.

A verbal brawl with actor george clooney.

Shows few signs of slowing down.

Certainly an interesting character or to look at.

Bill cohan, the author of three books.

He writes for "vanity fair." boy is this a topic.

So there be says the accusations are incendiary and paste lists.

Isn't that his job to violent sleepy management?

Of course that is his job.

That is what he gets paid to do.

He is frankly very good at doing it.

You have to give him great credit as an investor.

If you look at the yahoo!

Deal, there is a company that i am still not sure what it does and what it is supposed to do for users, but look at the amount of money -- dan loeb probably made close to $1 million shaking it up.

That is tough language.

I am telling the story of dan loeb about the way he behaves, history as an activist investor.

The relationship with people, the way he can somehow chew up -- you have a guy who is very close friends with him and the hedge fund investor on the west coast who is well known to people.

He and l ackerman -- ackman do not get along.

Basically -- unfortunately he choose through the relationship and has people willing to come forward on the record and speak your mind about them both -- dan loeb and a very honest way.

You can say i have been up on him.

He would not talk to me, would not let his friends talk to me.

When you do that you end up getting all who will talk and probably not saying nice things.

I did talk to his mother, and she said nice things.

Claire spark, a very interesting woman.

Phd in melville.

It is on the west coast in l.a. former radio personality.

He has a lot of interesting ancestors.

Also i'm related to the founders of mattel.

Lex probably this guy at jefferies.

Of all the things in this article, and there were a lot of juicy tidbit, the human trust had to be the biggest.

This is still a bit of a mystery.

Dan and some of his friends went to cuba in 2002 planning on a weekend romp, and dan ended up getting himself into a car accident with or without someone in the front seat of the chart -- in the car.

Unclear whether the child lived or died.

It ended up it is not gossip, it is not gossip.

It is fact.

Why did you include that?

Look, does anything in our character have anything to do with -- the fact of the matter is this is a blip in his resume he would rather not speak about.

He was kept in cuba for seven weeks against his will.

That is the headlines.

Last time i checked americans were not technically supposed to be traveling in cuba in 2002. george clooney fought back.

I thought it was interesting dan loeb act off after he made comments?

He said he backed off because he wanted to be invited to hollywood parties.

If he is picking on sony in george clooney, he will not be invited.

You did reach out to loeb?

Many, many times.

He spoke to me about the piece i wrote for vanity fair.

His strategy this time was to not speak to me at all.

Maybe it is the gwyneth paltrow playbook.

He is friends with her, by the way.

Interesting story.

Also, thank you to david kirkpatrick on twitter and all things technology.

For ex report to round out our.

Weakness for the euro dropping below 1.35. ec be meeting thursday.

Talking more about tech in the next hour.

? this is "bloomberg surveillance." no promise of immunity for leader stephen cohen.

The sec has accused him of turning a blind eye.

Twitter attempts to contain a facebook frenzy.

Aol is a dog, tim armstrong is a total failure and aol is up 200% the last two years.

The conversation this morning with ceo tim armstrong.

Good morning, everyone it "bloomberg surveillance." is i'm tom keene.

It is tuesday, november 5 for joining me as always is sara eisen and scarlet fu.

Our guest host is our, tom heisman.

Good morning.

Election day.

How about a morning break before we get to that?

The eu has officially lowered european growth forecasts.

Remember, unemployment is at a record high.

Here in the u.s., the only big economic report to watch will be at 10 a.m. eastern time.

The nonmanufacturing index.

But plenty of corporate earnings to digest.

Cbs -- cvs, directv, aol, t- mobile, the virginia governor's race is one that is closely watched at the national level.

Also, new jersey governor, miami, seattle.

Elections are the first test for the political parties.

The main focus is on virginia.

That is a national proxy with the democratic candidate campaigning with president obama.

Voters in 312 u.s. cities will go to select the mayor.

Just wanted to highlight, you mentioned aol.

The earnings came out.

Two cents per share for the third quarter.

Revenue of $561 million topping the estimate of $549 million.

That recorder eps does include -- apple is ramping up this years production.

The company will open up a plant in mesa arizona.

-- in mesa, arizona.

The company is scheduled to release a new mac pro that is being assembled in america.

This just poke in past hour.

A restructuring at in china.

-- at encana.

And dividend will be cut from $.20 to seven cents a share.

S a c capital advisors agreed to plead guilty.

As ac will pay a record penalty of 1.8 alien dollars in total.

They were shut down its advisory business under the plea agreement.

Cor the guilty plea by the firm and the record fine.

Joining us as a former sec chairman arthur levitt.

It is good to have you here on this day, arthur.

Describe the significance of this record in muncie and the guilty plea by s a c capital.

-- this is theater.

Her tenacity, her toughness has delivered what a great sec chairman should deliver.

It is an admission of guilt at long last that she has brought to the sec and it hasn't had that for 30 years.

Highly visible, stevie cohen who has done everything he possibly could to go interface.

Has he been found to do anything wrong?

He has admitted to a fraud charge.

The firm is distance itself from a set of people.

Does that ring true to?

I think it rings true to this extent.

The curtain hasn't fallen yet on stevie cohen.

The whole notion of failure to supervise the something that is part of the fiber of the securities business . it is inconceivable that cohen was not aware of some of the goings-on and didn't build the culture of insider trading that permeated the company.

This is not the last acts, but it is a very important intermission, let's say.

Is not the last actor we know that there are firms like jpmorgan and goldman sachs that are still doing business with sec advisors.

As a former regulator, should they be doing business with it?

I think they should continue to do business, i understand that some firms of not left cohen yet and they can't leave him in the wilderness.

The real question is him and i think that should be posed, will they take stevie cohen as a customer tomorrow if they wanting business with him?

If i were running the firm i would say no way.

Your very complimentary of mary jo white of the sec.

Image to the public is going to have in my judgment is mary jo.

She has become almost a rock star by virtue of her personality, her size, the way she is handling yourself.

Nicholas lehmann writes her up in the "new yorker" magazine.

He cost of the good cop.

You talked then about accounting.

What is a numbers game for your sec as they move forward?

Do you need a bigger budget to go get more steve: zach go they do need a bigger budget.

It is how the use of budget.

Mary jo has shown all her predecessors just by one act that we are no longer going to accept -- neither accept nor deny, we are going after them.

That message resounds throughout the halls of government.

Do you expect it to be more?

How pervasive is this issue of insider trading?

Is very pervasive.

It is not unique and i believe we will see more of this under the present leadership of the commission and the u.s. attorney.

Let's go to an investor rick heitzmann.

This is -- we're finally here from 2006 2007, or you're going to do your yesterday come for anybody, even the most jaded was momentous.

What did yesterday mean for you as an investor.

? twitter has been the anti- facebook in the ipo round.

I think this means a lot in terms of the path they're going to take.

We saw was steve:, it was an error moving on.

Do we go as we get done with mr.

Cohen and others back or does i can refer your ground for the capitalism you take part in?

I don't think so.

It puts out set rules.

I think everybody who is always looking around saying who is following the rules and who is not following the rules.

As long as there settles a people are following that everyone feels better about doing the right thing.

I know you're watching the twitter ipo closely not because you're involved in technology but because you are an investor in interest or could this be the next one?

It may be.

We're big financing round and we were able to get a lot of runway.

I think the key thing to be able to go public is you control your destiny.

Picking a spot to go public has a lot to do with when you go and finding the right market at the right time here at there is criticism that facebook waited too long.

Some people question whether twitter should be waiting longer since it is not making money right now.

People think now for going out of a smaller market cap with a smaller offering leave summary of the table for the ipo investors.

There's a video of you the day of the crash in 1987. has wall street changed from 1985, 1995, rick heitzmann, booming in 2005. is it just business as usual?

I don't think it is.

I think obviously technology has changed wall street in ominously.

There's more information out there and more sources of how to understand what is going on in new and more compex ways.

Guys looking for head chef to struggle harder to find the edge.

I think the edges still very much there.

The whole motion of twitter, if you back to that.

Of time where the technology available then, i don't think twitter could have occurred.

What have you learned tweeting out on twitter?

I learned that there is a lot of smart people out there and a lot of dangers in the marketplace.

A think twitter is a great tool, but it is dangerous.

If you're careful you are fine.

But if you're not, you can really be skewered.

Arthur levitt, follow him.

He has twisted links that he links to.

200 new followers.

Thank you.

200 new followers.

We will follow him.

Rick heitzmann, more with you.

It is a trick question of the day.

Speaking of twitter.

Was the next tech company that should ipo?

Is it rick heitzmann's pensioners?

We will talk to the ceo of wayfarer.com.

"bloomberg surveillance" on television and radio.

"bloomberg surveillance." this is i am tom keene.

Rick heitzmann acquires interest early and offten in tech offerings.

Everyone is starting to talk about the froth, the bubble.

To me it is radically different than 99. in what ways is it different than what we saw?

I was an investor back then as well.

People were indiscriminate about the companies that were going up and down.

All companies are going up regardless of the quality of the company.

What we're seeing today is so different.

There are a few companies whose valuations are increasing, but there's not an indiscriminate flood of money into companies.

There's not an indiscriminate flood of venture capital firms.

What is a beck practices of guys like you looking at deals?

That seems to be the adults in the room point.

What do do do today different that makes for a more sane process?

I think if you think differently about companies and you're looking for something that is incredibly unique.

There's not a whole lot of me to companies out there.

You want to be their fourth player in selling dog food online.

You want to be something different, something unique with an excellent entrepreneur.

Selected dog food angle.

It would be a good ipo.

The ipo seem to be done more responsibly.

We seem to be more discerning.

What are we discerning about?

I think we are discerning about uniqueness.

Whether it is on the technology side of the new set of memory guides or even on the consumer side.

You're not seeing 10 social media ipos this year.

What does twitter signal to you?

Droste he says it has been worse.

All of a sudden demand frenzy.

What is the signal?

It signals a people are looking to technology.

They have to own it.

They have to own it and as a market has gone up, technology has written -- technology has risen with that type.

They're setting up 12% of the shares or something that order.

Are they being irresponsible and should did the issuing much more in the eye io, 30 or 40% of this company?

A think you're being responsible.

I think facebook aired on the irresponsible side by setting out to much of the ipo or there's too much insider selling the crew to begin offering.

It just wasn't meant to bolster it at this point.

We will see in a couple days whether the initial pop because he didn't let out enough supply.

I think your brother air on that side.

-- i think you would rather err on that side.

Timothy armstrong is a ceo.

A conversation with eddie lou.

Is coming up next on "bloomberg surveillance." good morning.

? "bloomberg surveillance." this is "bloomberg surveillance." top headlines this morning, india launches its first mission to mars.

The rocket is carrying a satellite that scientists plan to put into orbit around the red sun.

If it is successful, and it would follow the united states, europe and russia in orbiting mars.

The european union trims its forecast for growth next year.

The gdp to rise 1.1% in 2014. that is down from every initial estimate of 1.2%. up slightly from an earlier projection.

The green bay packers lost the game and possibly their star quarterback eric aaron rodgers suffering a shoulder injury early in the game on this play.

He is scheduled to undergo more tests today.

After the game, chicago bears went on to win 27-20. those are your top headlines.

It was his non-throwing shoulder.

That is some good news if you're a fan.

I'm not up to speed on this.

Most of the teams have used over to quarterbacks this year.

Rick heitzmann, surveillance nfl expert.

The failing one we're talking about is blackberry.

With some news, scarlet that blackberry has lost the deal with fairfax financial.

It is no longer for sale.

It will continue on as a public traded company did get $1 billion in financing from fairfax financial, its biggest shareholder, but that question is, what is it going to do now.

This is a hastily rearranged restructuring here for the company without a ceo.

John chen, the former -- is stepping in as a interim ceo.

They need to figure out a strategy.

The old owners were pushed out.

Cerberus didn't have enough time to put something more qualitative.

They were rushing over the last week.

I wonder if someone us should step in and buy this?

What about lenovo?

Lenovo is it possibility.

They signed a nondisclosure agreement with black area.

Timid kirkpatrick was just telling us on bloomberg surveillance that perhaps john chen, the ceo of sybase or did a good person to bridge a gap between a chinese company.

Rick heitzmann with decades of experience.

Give us your take on the gossiper blackberry.

I think there is no strategy and there is no natural home for black area.

It was kind of a stalking horse bid that they had at the time, looking to generate interest.

It from private equity firms or asian firms that want to participate in this market and just tying to generate some interest.

There is no interest third the declining user base, the fundamental headwinds in the face, bring your own device is a headwind interface.

So a seven-year convertible bond, they're not looking to go seven years, they're just buying time to get -- to cash out at some point.

I think it is 18 months.

The rumors 18 months.

Can they strike a deal with lenovo which might fundamentally change our cost basis.

Can his other patents e kennedy something to offload some assets to buy summertime?

This is different than what you saw aol and yahoo were they were able to offload non-core assets and focus on the core business, there's no real core business here.

You and if they bought a little time with this loan yesterday, clearly the company may not want to sell itself, but it has to be attention to what the market is saying eventually, doesn't? it has to.

Maybe the new ceo can come in and forced the board to look at the reality of the situation.

There's obviously a nationalistic element here.

The canadian government is a huge supporter blackberry heard by running a longer process you can go back to the board and the government and say there are no buyers here.

Is any company, newer older visit good fit to buy blackberry now?

I think lenovo is a likely buyer.

They're taking a legacy businesses not making money, change a cost and provider second act third inner world is ok to fail, right?

-- in your world it is ok to fail, right?

Yes.

As long as you admitted.

But if you go on and on and on.

Nobody wants it including the canadian government.

Own up to your mistake and move on.

Well we will continue to watch the fate of blackberry is the cash burn continues.

Do remember that new biography about jeff bezos, the amazon founder.

Is available for sale on amazon.

It also got a scathing review on amazon from bezos' wife.

She wrote everywhere i can fact check -- the title of her review is i wanted to like this book.

Do you know anything about this book?

I don't, but that makes me want to read it more.

She wrote a thriller as well.

She is an author herself.

Her book got an average four stars out of five.

I would look to third-party in the new york times.

There's a big reveal in the jeff bezos biography.

Am i going to blush?

Should we disclose it or should we wait for brad to talk about ajacco give us a hint.

Jeff is is was adopted.

It is a really interesting -- didn't know that his father was a fake mucky muck.

Coming up, the e-commerce site was 7 million products and 60 million monthly visitors that you might not have heard of.

? first, bloomberg.

A well earnings are just out heard the company continues to reinvent itself with it original video content.

Good morning, betty.

Good morning, sarah.

A lot is came out with their at sales numbers.

The company bought back about 2.5 million shares.

There was a restructuring charge for the quarter.

Tim armstrong is joining me now.

The chairman and ceo of aol.

Tim, great to see her again.

Petty, great seal -- betty, great to see you.

It raises a question, tim.

For people who cover your company, where are you headed in terms of ad revenue?

Are you looking more towards programmatic ad buying?

Is that would've focus is or, as you have said before, rhenium ads, original content.

That is where you want aol properties to go.

Where are you going here?

Really, betty.

We want to be in both places.

We have a barbell strategy.

The same thing that is happening on wall street is happening on madison avenue.

We are big players.

Under the side we have brands like huffington post and techcrunch which are growing globally and are non- commodified.

The strength that aol is that we do both.

Both are growth markets.

The content has double digits revenue.

The programmatic are double digits revenue.

We feel very well-positioned for the future of media and we are trying to sit right at the center of the disruption in technology and media.

I think our results today show the positive effects of doing that.

Tim, when you say both, eventually does one after were not?

I don't think so because brand customers sit in two different places.

This at the top of the funnel, which is how to improve my brand overall and they sit at the bottom of the funnel, the how do i essentially get the giant network effect of my advertising and better results which tends to be more programmatic in nature.

I think over time if you look at the large brand customers in the world, they want both, they need both and they're doing both.

I was with sarah jessop the parker last night and our video team in a lunch at the city ballet, which is it extreme branch side of aol.

He spent time with major holding companies on the programmatic side heard the agencies and the programmatic side, that is what we expect for all of our customers in the future.

You raise a good point.

I know you had many personalities like sarah jessica parker, jonathan adler, gwyneth paltrow.

Everyone is doing that, right?

How does that affect ad buying, though?

Advertisers?

How do you get premium ad rates when everybody is going into original content?

Is a few different things.

When you have to have the size and scale of distribution which aol has.

Number two, you have to have a clear strategy for the monetization of that type of content areas see different models producing the netflix model, the amazon model.

Aol has probably been the largest ad supported free content in the video space.

I think from partnerships that we have been doing with those type of celebrities him it is enough commodity ties to area.

With the distribution scale that would bring for an advertiser, they'll are willing to spend higher pricing and longer contracts with us to basically be associated with the content.

That is why it is a very good business for us.

Tim in the tech area, have to ask you about twitter and the ipo.

Everybody is talking about twitter right now.

Is there too much hype around this ipo and the impact it could have on startups, venture capital, on public listings?

I don't think so.

That's look first of all at the twitter team.

I think the costa lows company -- i think they have an exceptional team.

Look at it from our company's perspective.

We are doing a lot of major part is absurd twitter because we see the ability to take our content and ads and get it to consumers faster.

There it are a couple megatrends in the world.

One is 700 million smartphones boeing multibillion with twitter playing into that.

The other is adding information faster which twitter does great at.

I do know about the rest of the tech we like their strategy.

What you think is their biggest risk and challenge?

I would like deck and his team -- i would letdick costolo and his team figure that out.

I'm sure he has his eyes on his risk as well.

Always looking over your shoulder making sure that everything covered.

Tim, thank you so much for joining me.

Tim armstrong, the chairman and ceo of aol.

Sarah?

Betty liu, thanks for bringing us that interview with tim armstrong.

They are trading higher in the premarket after that report.

Scarlett, going against the broader trend.

Futures are down right now.

Suggesting a lower open for u.s. stocks.

That is in line with declines in europe as well.

One quick mention, another company reported earnings.

Directv higher.

Good morning, everyone.

"bloomberg surveillance." all of our interviews out on bloomberg tv plus.

Bloomberg radio plus on itunes.

I am tom keene.

Sara eisen is with me and scarlet fu.

Our guest host this hour is rick heitzmann, managing partner and cofounder of first market capital.

It is a new digital economy, tom.

Go to simply.

Banks.com or just fan the tease.com.

Is it just a few of that over 200 online shopping sites you could visit.

Doubt is all under one brand, the wayfarer brand.

The company says it is on track to post $1 billion in sales this year.

Zach at your tension?

Unlike twitter they actually make a profit.

Ceo and founder of wafer.com.

First, describe your business.

How are you different than amazon.com?

First, thank you sarah for having me.

We're the largest online retailer of home goods.

All we forcus on his home decor.

Then once you on different items.

The wanted on the same pillows as each other.

We have a huge selection of these items.

And the decision to go from separate websites all into one roof, what was that about?

Is really about customers getting to know that we have the ultimate home start being able to remember who we are.

It is brand recognition.

Right now not let people know about wayfarer.com.

You enjoy certain amount of anonymity.

How does a beneficial to compare right now.

Anonymity is not beneficial.

We started running a lot of television advertisement that we're spending a lot of money to get word out about wayfarer.

Are you doing that to ipo?

We're doing over billion dollars in sales.

I think it makes sense.

I think at this point it would be unlikely to do it before the twitter offering.

[applause] would it take to get the ipo process going.

? was a different thing -- what is the differentiating i idea that gets you out there?

We are 11 years old and we think there is an opportunity to build a huge business.

The way we think about an idealist is just another event, another financing event on the road.

Is all about helping build awareness.

Rick heitzmann, you come from a different view as investor in his kind of idea.

Do you agree with that treatment?

I completely agree.

It is just another financing activity when you get the point where you want to diversify your shareholder base and need a lot more capital.

Also, someone like wafer could use an ipo is a branding event to show up on the front page in the paper.

One thing you point out is that wayfarer is profit appeared you don't worry about inventory.

You are a middle man who has relationships with suppliers.

That is replicable.

Someone else could come in and do that, too.

They could certainly try.

Working with thousands of suppliers, being able to know what is in stock, and how to deliver to people's homes of the damage and delays.

That is pretty complicated.

On top of that you need to help the customer find the right item.

A website with a lot of items is necessarily easy to build or manage, so there are a lot of pieces.

Don't people like to sit on couches and check out the furniture before they buy ajacco absolutely, there's a big piece of that.

Catalogs existed for a long time and now with the internet, it is changing.

I think it is changing.

Is aspirational.

I look at wayfarer and you have all these different people you're teaming with.

They're selling high-end product.

You're going to someone that says i want the place to look like that.

How did you come up with that idea?

The big opportunity in her mind, we have a series of brands, some focus higher.

The way fair focus is after the mass audience.

We have great rants that are in specific spots in the market.

For way far it is really about the consumer that hasn't had access to that selection, bringing them huge selection of prices they can afford.

Are you are the new sears roebuck catalog.

I may be assigned as a look, i don't know but i remember.

I would be in the living room floor going where are the electric guitars, where are they?

It is the same thing.

His the next above that, if you will.

Fascinating.

The company to watch, wayfarer.com.

He is the ceo.

Coming up, tesla's earnings are coming out tonight.

Will it be enough to support the lofty share price?

It has been to the moon.

Bloomberg surveillance on your phone and at bloomberg.com.

? hyatt hotels, well it is more than hyatt hotels.

Jimmy pritzker, chicago.

The pritzker group venture capital founder jimmy pritzker at 9 a.m. this morning.

I believe one of the relations is secretary of commerce of united states of america.

The president from chicago.

Good morning, penny pritzker.

Good morning, madame secretary.

It will press on wednesday.

Start trading on the new york stock exchange on thursday.

It is probably a good time to look at the players are going to make a lot of money and what has been different about twitter versus facebook and some others is that they are going to cash out right away.

This is good to be different from facebook's ipo.

Twitter raise the price range of its share offering to 23-20 five dollars from a previous range of 17-20. here's a list of the major shareholders.

The price range of its share offering $23-20 five dollars.

They would certainly get a boost from this ipo.

There is only one billionaire among that group.

Are you sure you don't want to take that wayfarer public?

Is probably a good time for that.

It seems that today is a pretty good day, too.

I think twitter is going to be a good offering and the internet has a lot of momentum in terms of these companies.

Rick heitzmann, is that a lot of money?

For anybody it is a lot of money.

Is that the whole holding in the company?

Is that what they're going to be worth?

I think that is what they are worth.

That is since 1999. i think that is what the equity is worth or they want to assume he doesn't trade up.

They're expecting it to trade up, 20 to 30% at least.

I think that is the mood point.

In your retail express online, how to use twitter to help your business and make sales?

Twitter becomes a platform that is used for bunch of things.

We pass information out, it is a great communication medium.

A lot of folks are getting the news and information that way.

We have a lot of passionate consumers.

Contessa to facebook right now.

Think facebook is much more of a platform or people can indicate with the friends.

So for wayfarer and furniture, twitter is more important?

I think we do more on twitter and interest them we do on facebook in terms of -- shameless plug of interest.

That was just outrageous.

Twitter is doing better on the media sites.

Images are important on the commerce site.

Certainly for selling furniture and other home goods.

Totally a visual category, right?

New technology, tom.

I have not gotten into contrast, you?

I tried it and i walked away until it gets more guy-ey.

? coming up tomorrow, apple ceo john scully here to talk about sagging sales of blackberry, frenzy at twitter, john scully at apple, maybe we will find out if he has a new -- on the ipad era.

We get a lot of mixed male when he is on.

Scully yes, scully know.

We like that.

This "bloomberg surveillance." is "bloomberg surveillance." i am scarlet fu with sara eisen and tom keene.

We've got some company news for you now from the files of "bloomberg west." that call coming from iran's culture minister.

He says access to facebook and other social networks should not be illegal.

Iran currently blocks those sites that it considers politically sensitive.

Millions of iranians have used virtual private networks to get around that ban.

But there tries yet another strategy.

The struggling company will raise billion dollars in convertible bonds and also look for a permit ceo after a possible buyout fell apart.

Fairfax financial's biggest shareholder abandoned its $7 billion takeover bid after failing to line up financing.

Blackberry announcing its ceo will step down.

He reached to see forecast fourth-quarter sales below estimates.

The taiwanese smartphone maker said it did 1.4 billion dollars in revenue for the.

. period.

Scarlet, thanks so much.

Friday, the job support in the united states of america.

It is a huge deal.

All night or wednesday night as we get ready for the ecb that will announce their rate decision on thursday.

Economic and monetary advisor commissioner olie rehn will get us to thursday.

Francine enjoys this from london.

-- francine joins us from london.

What is different about west mr.

Rehn of finland said about what mr.

Drawdy will do on thursday?

Tom, i try to press them and i try to press him so hard on what mr.

Drawdy should do.

The problem is this in europe.

You have a flow of economic growth little bit slower than what we were expecting a month and a half ago.

The real problem is possible deflation.

We had that terrific number in terms of inflation last week.

Sue .7% heard that is printed a lot of bankers to say look am a why didn't mario draghi go from interest rate cut to thursday?

Ollie rehn says he's confident.

It is not just economic growth problem, the euro has been tremendously strong up in the 130 62 138 region.

Tha

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

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