Twitter’s Debut: Surveillance (11/07)

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Nov. 07 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Sir Martin Sorrell, Paul Kedrosky, Brian Wieser, James Metcalf, and David Soloff. (Source: Bloomberg)

This is bloomberg "surveillance." twitter comes out with a bang.

Does it deserve a higher valuation than facebook?

To advertising giants become one.

Sir martin sorrell will join us.

Mickey dresslar -- drexler does london.

Good morning.

I am sara eisen.

Thursday, november sort -- thursday, november 7. turning me today is scarlet fu.

In for tom keene is emily chang.

Good to see you.

I do not know how many twitter founders they are -- there are.

A controversy all question.

There are four that we know of.

It will tell you about the forgotten cofounder later.

I will speak to the ceo of twitter at the new york stock exchange.

The guy leading the charge and the one that has driven the revenue.

He came in three years ago and was promoted to ceo.

Now investors are looking to him to change.

We are lucky to have you here . the first thing we need is a morning brief.

Aside from twitter, what else going on.

At 8:30 initial jobless claims.

We also got a report from adp.

Just after the market opens, a weekly read on consumer confidence.

The bloomberg consumer comfort index due out.

In terms of earnings on the calendar, wendy's and amt -- amc network.

After the bell disney, priceline, and groupon.

Twitter will be trading also.

A couple of overseas events, at 7:00 the bank of england comes out with the rate decision.

No change expected there.

45 minutes after that, the european central bank will announce its decision.

Three out of seven economists looking for a rate cut.

Not a done deal but there is moved and talk in that direction.

The news conference will be really important.

Data check ahead of what will be a busy day.

Futures pointing to a lower start on wall street.

The dow hitting another record high.

The nasdaq and focus.

-- in focus.

Near 13-year high.

Near that level in october.

We will see if the twitter ipo makes a difference.

Tech shares are what is in focus today.

The british pound in honor of mark carney in the bank of england meeting as well.

Time for the front page for the most important stories.

I wonder what is on top?

Twitter.

Ipo priced at 20 six dollars per share on the new york stock exchange.

1.28 billion dollar ipo is almost as much as 1.9 that google raised.

Certainly small compared to facebook last may.

When you look at the valuation, twitter will now trade at about 12 point four times estimated sales.

That makes it more it starts it than facebook or linkedin.

They did end up pricing one dollar above the raised price range.

Some of us were expecting higher . one of our guests said i think it will be $30. they ended up doing $26. we will have to see.

Cristina alesci said they priced it for a bomb.

We will see if they get it.

Conservative seems to be the past four twitter.

It filed confidentially.

Went with the nyse.

They have been more low key generally as they have been on the road.

They definitely want to avoid the facebook-based plant.

In the meantime, let's bring up all could oscar he -- paul could oscarkodowski.

Nothing will be cheap and technology.

If you are looking in the wrong place.

Having said that, if you look for work, 2014 revenues starting to look expensive.

I think it is a mistake to get stock -- looking at trailing revenue is a mistake.

Forget the numbers for a moment.

This is a company that lives and dies by advertising dollars.

We have a guest host, sir martin sorrell.

The world second largest advertising firm.

We will be when this deal closes.

Holding onto the number one spot.

When you are number one, there is only one way to go.

Perhaps you can get bigger.

First on twitter, how optimistic are you?

There is a euphoria.

The latest talk about twitter.

It is extraordinary.

Another successful ipo.

The fact that you use it is one thing.

The question is whether advertisers will use it or not.

I think the answer is we do not know.

There is a lot of leave of eighth.

Despite comments to the effect that tech valuations are always going to be extremely high.

I think we just have to wait and see.

Twitter adds to the armory.

Our relationship with twitter is not a relationship where some of our competitors -- we do not believe it is right to guarantee clients money to an unproven medium willy-nilly.

We do not think it is right to guarantee.

What we think right -- right thing to do is work on the data peace.

We have entered into an agreement with twitter and now u.k. and spain, using the engagement data to demonstrate interest in free to air television.

It may be more powerful for live events than we thought.

The question is whether they going to use it?

It is very small.

Normal text spending of facebook around 400 million, i will not mention the figure because it is much more.

It is true that twitter revenue has doubled in this year, the year of flotation.

People are looking for very significant increases.

I think the jury is out.

You said tech stocks were going to rise.

If you look at the market in the past few days, for example in the media for her, they have been very fake.

Small companies with very good valuations.

Across the board.

Yes, across-the-board.

There was another speaker saying we're in the foothills of a bubble.

I do not know.

There is enthusiasm and technology.

The reality is, that is the way tech has been since 1983. the simple fact is we have not seen modernization yet.

Lex we said the same thing about google and facebook.

Google has five links.

What is our relationship with google?

Do you know how much it is?

How big is our relationship?

I will not decide your relationship.

With twitter, you cannot even count it.

Just to your point, five things.

They are in display, search, video, social and mobile.

Facebook is the way to go.

Does not mean it will not be successful, but it means what i think we have to do is wait and see.

There is a triumph of hope year.

I think that is true.

That is thinking about it as an observer and user.

As an investor, the exact opposite perspective.

If you wait until it is proven out, what will happen, you will say i missed it.

We will not be sitting here at 6:00 in the morning if we successfully anticipated all the things you talked about.

Thanks just getting started.

In the meantime, have to get to other company news.

Betting on a recovery.

Europe's largest engineering company buying as much as $5.4 billion in stock.

The ceo said he is aiming to raise the profit margin to about 10% of sales come up from 7.6% this year.

The buyback and profit margin used him after siemens posted better-than-expected earnings.

Bank of america looks to settle a credit card investigation.

The bank has been negotiating with regulators.

This is according to people briefed on the talks.

The negotiations are with the consumer financial protection bureau that has been investigating similar practices.

Sac capital gets final approval for part of the landmark settlement.

One judge signed off on the agreement to end the civil money-laundering suit against steve cohen's hedge fund.

That is today's company news.

Coming up, our twitter question of the day, where will twitter share price closed today?

How about in one year.

Take your guests.

Coming up, we will see if twitter's ipo will unleash a new wave of technology ipos.

That is next on bloomberg "surveillance." ? coming up later on bloomberg television, do not mix -- miss our conversation with dick cost olo, ceo of twitter.

Emily chang joins us here.

I am sara eisen joined by scarlet fu.

Tom keene is out today.

We do need to talk about twitter.

You have been digging into this ipo.

Host anticipated -- has been anticipated.

The ipo market has been red- hot.

October was a very fruitful month for the initial public offerings.

Consumer internet ipos were almost nonexistent after the facebook boggle last year.

Only three consumer web companies went public.

Everyone else held back and wanted to see how this whole thing would play out.

There is a report that jack odorsey's square, they are broke portably looking at an ipo . that would be pretty fast.

Lex how many companies are looking at the ipo and crossing their fingers and saying if they can avoid the facebook mess, they will go next?

I think they all are.

Twitter is an example for many companies out there, that twitter is an elite of its own.

In the league with facebook and google.

The other companies are just not in that league.

They will be watching but that's not necessarily matter.

What do you think, paul de kedrowky?

I do not think the average company looks at it and says i wish that was me.

The reality is most are smaller.

The only thing this does is it makes people look and say ipos are back.

One problem we have had with venture investors is we end up selling too many companies in the private market, which hurts our returns.

Mike would you say there is still a facebook hangover and people are nervous?

It comes up right away.

Maybe we should do so in the private market.

We are ready know there are consumer internet ipos.

The big one everyone is looking at is alibaba.

Who's going to be huge.

-- it is going to be huge.

Chinese mobile's him a which i think will be much more revolutionary than you think.

The transactions platform, logistics that form.

This is the beginnings of it.

Going into the banking business.

He will get a banking license probably in china.

He, maybe with robin lee of baidu will be in the banking business.

Really interesting what they are doing.

This matters to everyone looking at the u.s. ipos.

You cannot compare alibaba to the companies you just mentioned.

Totally different things.

50 billion.

These are companies that do rank with facebook.

Baidu the fifth most visited website in the world.

It is not a google or amazon, it is both.

We tend to be segmented, google, amazon, twitter, facebook and the single verticals.

What the chinese are doing, building a much more complex series of platforms.

What is very interesting is they have been very active.

Activision and the music business.

They are and social networking.

I hear a lot of pinterest, too.

What about the valuation of $4 billion?

Is pinterest about let advertising platform ? not yet.

These are valid user platforms.

The question is whether they will be monitored -- whether they will be used as such.

In terms of scale, no.

The big scale platforms, the ones we were talking about before like google, facebook -- mobile still in its infancy.

We have to see which way it goes.

The issue is whether it can modernize -- monetize this.

We know that you and i and others spend a third of our time on mobile.

We know our clients and ourselves are spending about 20%. there is a natural increase.

We know we are investing probably too much in newspapers and magazines as opposed to consumer usage of about 10. that is the key point him overtime advertising dollars follow how people spend their time.

Now there is a lag happening.

The question is, how do people communicate?

Are they having social interactions, or are you searching for a particular product?

That brings back the facebook problem.

One of the fundamental problems they had is as you ratchet revenue that comes up the expense of the user experience.

They are going to have to walk that line.

On search, a specific thing in mind.

Contextually, totally different.

That is a social experience.

And in advertising experience.

It is important.

Spoken like a true madman.

Sir martin sorrell will be with us for the hour.

Also, the cover of the new business week.

Be sure to pick it up.

The surprising sophistication of twitter.

A look at how twitter started simple and became the network onto itself.

Download it on your tablet today.

On shelves tomorrow.

? this is bloomberg "surveillance." i am sara eisen.

Tom keene out today.

Emily chang joins us instead.

The cia paying at&t $10 million per year for data on phone calls of suspected terrorists.

Under the agreement the cia supplies at&t with phone numbers of suspected terrorists.

They search the database for record of the calls.

It is voluntary and not under a subpoena or court order.

Talks resume in geneva today.

Representatives of the united states and other world powers will meet with the iranian leader.

And jet man is back.

Took his suit out for a spin around mount fuji.

He can fly as fast as 185 miles per hour.

It was his first flight in asia.

He described the experience as spiritual and immense.

He hopes to motivate other forward thinkers to do something different.

That video makes me laugh.

He was on to talk about how he does not have insurance.

He is doing a good job advertising.

He would be a good ipo.

The morning must-read is not.

-- next.

A wonderful read.

I read it on the plane on the way out here.

So many great lines in it.

He talks about twitter.

He quotes mark zuckerberg.

Describes it also -- as a clown car that fell into a goldmine.

A line that zuckerberg gave to friends privately.

He quotes them in the book.

It was recently.

He was talking about in the context of a couple of acquisitions that did not pan out.

It is astonishing.

In the context of why will they not taken acquisition offer?

It makes me wonder, how years is the competition between twitter and facebook for your advertisement dollars?

It is very intense.

You have one big company.

You have a smaller company, facebook in the middle.

Others at the bottom end.

It is fierce.

Come back to the contextual part, and if you just about twitter and another arrow or weapon we had to use, you have to look at it differently.

We will talk more about twitter.

Twitter begins trading today.

Did not miss our special coverage all day long on bloomberg television.

Another special bloomberg west sara eisen as always joined by scarlet fu.

Tom keene is out today, which is why we have emily chang.

We have gainers and losers.

I am sure it will be a big gainer tomorrow.

One of the big losers yesterday was tesla down almost 15%. this is the billion or eli must carmaker.

Deliveries came and lighter than it dissipated.

Abercrombie & fitch a big decline are as well.

This appointing results.

Teens are no longer wearing abercrombie and which.

That is the gainers and losers from yesterday's trading.

We will survey the advertising world right now.

Sir martin sorrell with us.

Is the world's largest marketing firm soon not to be?

That is because of a giant deal.

Bring us up to date.

Late july when the number two and number three in the advertising world would team up to make the number one player.

They still need regulatory approval and more than 45 markets.

U.s. regulators have given their ok along with canada, india, turkey.

It will have a market cap of around $35 billion.

How important a scale in the advertising business?

One area is in media buying.

There is a lot of discussion about this over the years.

Created businesses from bloomberg.

If you are doubled in size, probably three times more difficult to manage.

There is an issue about the economy.

In terms of media buying, there are leverage.

In the u.s. quite difficult to get economies of scale.

In the rest of the world like result, russia, china, the next 11, there is leverage.

Pog is between you -- turn you call it.

Lex what does this mean for twitter, google?

One of the argument has been low-key on what the benefits are to clients or people inside the business.

One thing they have talked about is getting greater leverage with new media.

I think that is masking the real issue, which is it is the legacy media where the pressure will be felt.

In looking at the cvs results this morning, quite extraordinarily good.

The free to air in traditional media companies are doing well at this particular stage at the moment.

How long cannot that hold up?

If you look at next year, nominal gdp, and we are very sensitive to nominal gdp, probably going to be up next year.

If you look at the forecast, goldman sachs, looking at six point five percent including inflation.

I think deutsche bank is still there percent real inflation.

Seeing projections of more inflation.

On that basis and the fact that we have world cup -- the should all make advertising in theory better than this year.

Worldwide gdp does not match.

Worldwide gdp is growing by 6.5% come at you have to take 150 basis point haircut.

We have the strongest asian business but not a strong is worldwide gdp.

I would expect advertising to be up at least 4-4.5% on the assumption that advertising stays the same.

Broadly what you gain on the market swing because advertisement is great, you lose on the mature market.

Who do you think this benefit of the websites we're talking about?

I actually think at tech ipos -- ad tech ipo's. you look at yumi and others.

Aol just bought -- what is interesting is driven by these changes, there is a recognition the tools need to change as well.

There are companies popping up growing rapidly and now popping up in public.

We're sitting here with the s&p, nasdaq at an all-time high.

So you look at it in historical context.

Also at a stage where interest rates at an all-time low.

Twitter's ipo is perfectly timed.

I cannot think of a better timing.

True.

There must be some bumping this up some point in time.

That is part of it.

Most of it trying to calculate what the shakeout is.

Analysts note's are wildly different when you look at revenue for 2015. 30% difference.

There is a lot of unknown.

Exactly.

With this deal, have you seen any high profile client defections?

There are patents emerging.

Clients are not going to say we're going to fire this.

Even if bloomberg brings them up.

There are decisions already being made that we have seen that indicate a change.

Clients are very sensitive about these.

It is their money, not our money.

If they are not fully informed were fully briefed on the decision they can sometimes take decisions, which i think we are starting to see.

Strongest 100 basis points, 200 points stronger than the competition.

You saw that as a result yesterday.

So there are changes starting to take waste.

Only one quarter and early.

They still need regulatory approval.

Giving a price target of $43 per share.

New overweight.

$32 rating it a new buy.

We will talk to brian wheezer in the next hour.

A price target in the 30s. pretty optimistic.

Coming up, j.crew expands to london.

We will hear from mickey drexler about the european strategy.

This is bloomberg "surveillance." ? this is bloomberg "surveillance." emily chang joins us.

And top headlines, mario draghi and the ecb will decide whether or not to cut policy rate.

Mario draghi has two quarter- point reductions left before reaching zero.

Only three economist think the ecb will cut rates today.

Hitting a record high.

Trading at 260 five dollars.

The recent run-up is a rebound for bitcoin.

The digital currency lost a third of its value after authorities shut down the website a month ago.

Souther be sold 200 90 million dollars of impressionist and modern art last night.

The highest art for the category . robust auction following disappointing nights selling.

Those are your top news headlines.

A good barometer in the art market?

A question of where you will get a return.

Part of it is to do with you cannot get returns.

You can put your money in fashion.

Talking j. crew going global.

Extended to asia in the past year.

Opening a flagship london store tomorrow.

Anna edwards was there to speak with mickey drexler who talked about european debut.

We have no master plan to rush out and own the world so to speak.

With the -- we really love what we do.

We love our craft.

If it works well, we will move the aren't. mickey drexler joining us from regent street.

Mickey drexler says he is in learning mode.

What could we possibly had to learn from the british about fashion?

I do not know.

I would not dream of telling you.

They feel it is a good place to start.

The language is a common language.

Most of the time the same language both sides on the pond.

A lot of u.s. brands come here.

If i look out the window i see ralph orin, abercrombie & fitch.

Not just from the store window i can see those brands.

That is some of the competition they will face here.

The u.k. has its own competitors as well.

I am told we will watch closely what j. crew is doing.

More expensive there than it is here?

Yes, it probably is.

That has gotten a lot of press headlines.

That is not uncommon.

That is why there are so many brits on the streets of new york looking for shopping bargains.

Typically when u.s. brands come to london, they charge more.

They had a big launch party here last night.

Tommy hilfiger was here.

Philip green.

I am sure some martin sorrell knows him pretty well.

Picking out some that i thought you might like.

These seem to fit the bill.

I am not sure if you can see them, but they have london buses on them.

He locked -- like the sox apparently.

He did by a torpedo -- a tuxedo.

Funny that you would hold up the sox.

Clearly that is for a u.k. market.

J. crew was already available to people in the u.k. through the website, wasn't it?

Exactly.

This company has had an international online presence before bricks and mortar.

I asked about the confluence of technology and retail.

It is something he knows a lot about.

He said these days we are all walking around with the store and our pockets because we all have smartphones.

Perhaps you can start to think the number bricks and mortar stores does not matter as much.

A very british looking store for j. crew.

Thank you for joining us.

What is a british looking store?

There is to lead.

Color.

Looks like a new york store to me.

How much is this a test market?

Depends on the category.

What is surprising as we were sitting here, j. crew has not gone into london before.

We were discussing that.

Few say they have gone into asia before.

In the past year really.

I have been a j. crew customer since high school.

From a technology perspective, i wonder why they are not doing more.

We have been talking a lot about retail analytics.

They do not remember what i have bought before.

I start from scratch ike anybody else.

I have been buying from them for more than a decade.

I mentioned the chinese.

You get a company like the largest retailer.

They are building a massive online presence.

The whole e-commerce area, the whole online, bricks and mortar stores -- take the banks.

Thinking showrooms.

There is no reason this cannot twice to many other categories.

You need showrooms to look at examples and merchandise.

Essentially the relationship will become a much more direct relationship.

Also, the old established retailers will be under pressure.

Sir martin sorrell on the branding of j. crew.

Microsoft's next ceo reports the shortlist is getting shorter.

Who should lead microsoft?

That is coming up next.

This is bloomberg "surveillance." i am scarlet fu joined by sara.

Tom keene is out today.

We have emily chang with us today.

Company news from the files of bloomberg 'west"west." lenovo posting a 37 -- 36% increase in net income.

They actually have the biggest gain in shipments among the world's top five pc vendors for the time.

That coming even as the industry posted a 7.6% drop in shipments.

Gains in the mobilephone business helping deutsche telekom.

Sales climbed six percent to $21 billion last period, the fastest pace in four years.

The carrier at -- t-mobile at a customers.

Blockbuster fading to black.

The retailer closing its remaining 300 stores.

The shutdown will cost 2800 jobs.

Dish network will keep the licensing rights to the brand and use it to sell other services.

That is today's company news from the files of bloomberg "west." i like the position, open for business.

Close to block poster.

-- blockbuster.

Lex that is sad.

Waiting for the new movies and new releases.

Painful.

I was talking to a short seller a year or so ago.

Finally it happened.

It is a classic example of people abandoned their habits much lower than you might expect.

But buster went on much longer than you would have expected given the other changes.

It was a strong brand.

Retailers being this intermediary.

I wonder how they will use the brand name now?

There is a whole generation of people who are no idea what blockbuster is.

Speaking of another uncertainty, microsoft ceo search is on.

Entering the final stages.

A former microsoft banker gave concrete declan -- details on the next ceo and what the strategy should be.

Paul kedrowksky.

Sir martin sorrell with us.

Alan mulally by december.

You do not buy that?

Rick has been closer to this.

So he is close to the story.

I just do not see it.

It does not make sense to me.

I think there are better choices.

Not that alan mulally is a bad choice.

Depends on what they want a premium for.

They want a premium for the stock.

Do they want a premium in the stock because it is now a growth stock?

If you want it to consider the growth stock, you do not want alan mulally.

Don't you think they need a technology named?

I know alan mulally is a star in his circle, but i feel like they need to shake it up.

I think that is the financial and stake, but microsoft is such a complex organization.

If you want someone to hit the ground running come up then it is mandela.

I should have some titles underneath me.

We are not as -- i think he has too much baggage.

Beginning of baggage, what about any role that bill eight -- bill gates could play?

There has been speculation he will come in in some form or another, at least to right the ship initially.

He seems blissfully happy with what he is doing at the gates foundation.

He is in the process of selling most of his shares.

He has rapidly moved on to a new part of his life.

Only it the company was in desperate straits.

Not just to drive a turnaround.

No obvious turnaround who is behind the scenes with a grand vision for the company.

Steve ballmer has said clouds will be the next big driver for the company.

Not pcs.

Why do you think internal versus external?

I think it is a complex organization.

You need someone who knows where the bodies are buried.

Do not hire someone who will have a series of studies.

In the meantime the rest of the marketplace moving on.

Lex i cannot comment at all.

Both are important clients.

In terms of the strategy, what do they need right now?

What do they need from the neck ceo?

I think they need someone who can rebuild a growth story.

If it is just a value stock, coming in here to say these are great assets, the price, i think a lot of investors are not holding it.

The argument is, what should they be using the cash for?

So far i have put it into the share buyback.

What should they be acquiring?

I would love to see them being much more acquisitions -- aggressive on the acquisition front.

Likes me as baffling that a dropbox still exist.

At some price they will sell and go public.

It is going to happen one level or another.

They have an patient investors who will want to nix it at some point.

A lot of companies out there that would be a natural acquisition.

Which it has not happened.

We will see.

Steve ballmer announced in august at it would be a year.

The shareholder meeting is this month.

They said they want to make a position before the end of the year.

Thank you.

I know you will be joining us.

We will talk a lot more about twitter.

Emily chang, bloomberg west.

What do you have on tap?

Going down to the new york stock exchange for this ceo -- for the opening for twitter.

Really exciting day.

We are happy that you woke up early.

Inky for having me.

Be sure to catch her interview later on bloomberg television.

Rounded out with the foreign exchange report.

In moments, a decision from the bank of england.

British pound is steady.

No change expected.

No change expected from the ecb.

Only three economists of the 70 we pulled looking for rate cuts.

Will he signal one is coming in december?

What will he say at the press conference?

Awaits market moving when mario draghi speaks.

More on twitter and prospects of the day of the ipo.

This is bloomberg "surveillance." ? twitter prices its ipo higher than expected, raising over $1.8 billion.

Does it deserve a higher valuation than facebook?

The president defends the health care law as democrats consider delaying it.

The company that makes the building blocks of the real estate recovery.

A warren buffett favorite.

Good morning.

This is "bloomberg surveillance." thursday, november 7. tom keene is out for the day.

Our guest host, sir martin sorrell.

And paul kedrosky.

The managing partner at venture capital.

We just got the bank of england interest-rate decision.

No change.

Also keeping its asset program unchanged.

Let's get to our morning brief in the meantime.

Outside of the u.k. we have a lot of data coming out on the calendar.

Jobless claims comes out.

Third-quarter gdp.

At 9:45, consumer confidence.

In terms of earnings, when these will be reporting and amc networks and apache.

Twitter will begin trading on the nyse at the opening bell.

We mentioned the bank of england not making any changes to its asset purchase program.

The ecb will come out with its decision at 7:45 a.m. some economists do expect a rate cut.

That is a shift over the last couple of days.

By and large, the consensus is no change from mario draghi.

Will he signal a change in the news conference?

A data check ahead of the ecb decision.

Some pressure on futures.

A lower start.

Nasdaq has been where the action is.

The 10 year treasury yield.

European flavored board for you.

The euro under a bit of pressure.

The european stock market has been roaring back.

It is at a five-year high.

Staying mum on the interest- rate front and policy front.

Company news.

Let's start with twitter.

It is set to start trading this morning on the nyse.

It is selling 70 million shares, $26 apiece.

The ipo is the largest offering by a u.s. tech company since facebook's debut in may of last year.

Bank of america is looking to settle.

This is according to people briefed on the top -- talks.

Sac capital gets final approval for part of its settlement.

One judge has signed off.

Tomorrow, a federal judge will decide to approve the guilty plea to securities and wire fraud charges.

Our top story of the morning, twitter begins trading.

We want to bring in the first analyst to get out ahead of the pack and announces twitter -- announce his twitter rating.

What do you expect to see?

I wouldn't be surprised to see a solid pop to the end of the day.

As we get close to our price target of $29, it feels close to a fair price.

It does limit the upside we would expect to see by the end of the day.

I wouldn't be surprised to see it over $30. are investors overlooking the supply on the market after the locked up.

-- period?

A lot of us lived through the facebook experience.

There undoubtedly will be a lot of shares that will come up, not just in the february lock up, but six months from now here it is long as the business continues to perform well.

There is no reason to believe that it will not hear it.

More revenue, we will see.

There is no reason to think they can't keep strong revenue growth which will in turn keep the stock going.

Sir martin sorrell, you have a question.

Good morning.

I got my usual torrent of information from you this morning.

I was looking at your notes.

They came out just recently.

Most of the notes are about the share count.

The most interesting thing on earnings and tack rate -- tax rates.

What i am more interested in is advertising revenues -- mobile or otherwise.

Can you go into a little bit more detail?

$1.2 billion next year, whatever it is, in terms of revenues.

What portion of that will be advertising?

Is this another facebook or even google, as we were discussing?

Is this a branding medium?

Is that a pr medium?

Isn't it advertising medium?

-- is it an advertising medium?

As you know, a lot of this gets influence.

It can be all of the above.

One of the more interesting things -- let's take it high- level here.

Radio is not dissimilar.

Twitter is to facebook as radio is to television.

They can both satisfy different communications planning objectives, depending on your vantage point.

We are still saying advertisers figure out how to use it.

It is in many ways a different medium.

That is evolving.

The average advertiser who was spending money with them right now is spending $100,000. the vast majority are in the tens or lower hundreds of thousands of dollars.

This is early.

The other thing we are missing is the date opportunity -- very significant.

Not just a new media, but traditional media.

I think that is where the gold mine is.

We have to leave it there.

Thank you for joining us, brian.

Also here is paul kedrosky.

He comes at this from a venture investor perspective.

You are very optimistic on what's prospects.

-- twitter's prospects.

It is early, it is risky, all of those things.

That is the nature of young technology.

It is coming to market earlier in its lifecycle than facebook did.

That is why the market is responding.

We are also lucky enough to have with us julianna goldman, who covers the white house for us at bloomberg television.

It is a good time to reflect on how twitter has changed everybody's lives, including everybody in washington.

Branding, marketing, strategizing.

Even just looking at the communication strategy from the white house, as a reporter it is frustrating that the white house will put out statements and news on twitter and go around the white house reporter.

It is a pr medium.

It is about context and segmentation.

Exactly what you say.

It will be the biggest source of news.

It is direct communication.

Charlie rose interviewing.

He said he got his information from twitter.

Who is the best tweeter in washington?

I like my twitter followers, so follow me.

That is a shameless plug.

It has to be good for 10,000 new followers right there.

It is everyone.

This gets to one of the things -- the cultural phenomenon.

It has an element of competition built into it.

I only have x many followers, you have y amany followers.

How do you monetize that?

Maybe it depends on who your client is.

Maybe some clients are good for facebook and some are better where it is more interactive.

With facebook, the initial flurry and than the collapse and now we have seen the resurgence.

It is a question of time.

These things will build over time.

Sir martin sorrell, paul kedrosky, julianna goldman.

Our twitter question of the day, where will twitter's price flow today?

I am sara eisen with scarlet fu.

It tom keene is out today.

We have paul kedrosky, we have sir martin sorrell.

And we have julianna goldman in from d.c., our white house correspondent.

To talk about politics right now.

Tuesday's elections may have given the president a bit of a break from the obamacare spotlight.

What is the white house message?

It seems like the problems are not over and he still continues to take a lot of heat, even from his own party.

I think both sides are reading the results from tuesday's elections in a way that seems beneficial to each side.

Republicans see the race in virginia and say, ok, kuchen alley -- ken cuccinelli only lost by a few percentage points.

Democrats are saying that if it had been a referendum on the president's, he would have won.

Has the world moved on to 2016 and hillary clinton?

The world in washington is still on the president's health care law.

One of the takeaways is whether or not it is going to stay.

How are republicans going to recalibrate their message?

Are they going to back away from the repeal?

Are they going to come forward with changes and fixes?

Democrats are starting to affect -- they face midterm elections.

A longer this obamacare issue drags on, it could take more of a toll on them.

The biggest problem for our times is uncertainty.

It is what will happen with the u.s. deficit in january or february.

That is the thing that is hindering investment.

Clients will mirror -- remain very conservative.

I think we have talked about this before.

One of the things we have seen out of washington is inability, bandwidth.

What they're doing with health care, they can't focus on too many issues at once.

The tragedy from the standpoint is a veteran investor is that we can't bring these people into the country.

It is harder than it should be.

Immigration reform sits there as this great unsolved problem.

You guys are took -- still talking immigration.

I know.

It is like we are trapped in 2012 still.

Kick the can down the road.

It continues to be a conversation.

Coming up, the u.s. pressuring germany for answers on the art this is bloomberg "surveillance." twitter comes out with a bang.

Does it deserve a higher valuation than facebook?

To advertising giants become one.

Sir martin sorrell will join us.

Mickey dresslar -- drexler does london.

Good morning.

I am sara eisen.

Thursday, november sort -- thursday, november 7. turning me today is scarlet fu.

In for tom keene is emily chang.

Good to see you.

I do not know how many twitter founders they are -- there are.

A controversy all question.

There are four that we know of.

It will tell you about the forgotten cofounder later.

I will speak to the ceo of twitter at the new york stock exchange.

The guy leading the charge and the one that has driven the revenue.

He came in three years ago and was promoted to ceo.

Now investors are looking to him to change.

We are lucky to have you here . the first thing we need is a morning brief.

Aside from twitter, what else going on.

At 8:30 initial jobless claims.

We also got a report from adp.

Just after the market opens, a weekly read on consumer confidence.

The bloomberg consumer comfort index due out.

In terms of earnings on the calendar, wendy's and amt -- amc network.

After the bell disney, priceline, and groupon.

Twitter will be trading also.

A couple of overseas events, at 7:00 the bank of england comes out with the rate decision.

No change expected there.

45 minutes after that, the european central bank will announce its decision.

Three out of seven economists looking for a rate cut.

Not a done deal but there is moved and talk in that direction.

The news conference will be really important.

Data check ahead of what will be a busy day.

Futures pointing to a lower start on wall street.

The dow hitting another record high.

The nasdaq and focus.

-- in focus.

Near 13-year high.

Near that level in october.

We will see if the twitter ipo makes a difference.

Tech shares are what is in focus today.

The british pound in honor of mark carney in the bank of england meeting as well.

Time for the front page for the most important stories.

I wonder what is on top?

Twitter.

Ipo priced at 20 six dollars per share on the new york stock exchange.

1.28 billion dollar ipo is almost as much as 1.9 that google raised.

Certainly small compared to facebook last may.

When you look at the valuation, twitter will now trade at about 12 point four times estimated sales.

That makes it more it starts it than facebook or linkedin.

They did end up pricing one dollar above the raised price range.

Some of us were expecting higher . one of our guests said i think it will be $30. they ended up doing $26. we will have to see.

Cristina alesci said they priced it for a bomb.

We will see if they get it.

Conservative seems to be the past four twitter.

It filed confidentially.

Went with the nyse.

They have been more low key generally as they have been on the road.

They definitely want to avoid the facebook-based plant.

In the meantime, let's bring up all could oscar he -- paul could oscarkodowski.

Nothing will be cheap and technology.

If you are looking in the wrong place.

Having said that, if you look for work, 2014 revenues starting to look expensive.

I think it is a mistake to get stock -- looking at trailing revenue is a mistake.

Forget the numbers for a moment.

This is a company that lives and dies by advertising dollars.

We have a guest host, sir martin sorrell.

The world second largest advertising firm.

We will be when this deal closes.

Holding onto the number one spot.

When you are number one, there is only one way to go.

Perhaps you can get bigger.

First on twitter, how optimistic are you?

There is a euphoria.

The latest talk about twitter.

It is extraordinary.

Another successful ipo.

The fact that you use it is one thing.

The question is whether advertisers will use it or not.

I think the answer is we do not know.

There is a lot of leave of eighth.

Despite comments to the effect that tech valuations are always going to be extremely high.

I think we just have to wait and see.

Twitter adds to the armory.

Our relationship with twitter is not a relationship where some of our competitors -- we do not believe it is right to guarantee clients money to an unproven medium willy-nilly.

We do not think it is right to guarantee.

What we think right -- right thing to do is work on the data peace.

We have entered into an agreement with twitter and now u.k. and spain, using the engagement data to demonstrate interest in free to air television.

It may be more powerful for live events than we thought.

The question is whether they going to use it?

It is very small.

Normal text spending of facebook around 400 million, i will not mention the figure because it is much more.

It is true that twitter revenue has doubled in this year, the year of flotation.

People are looking for very significant increases.

I think the jury is out.

You said tech stocks were going to rise.

If you look at the market in the past few days, for example in the media for her, they have been very fake.

Small companies with very good valuations.

Across the board.

Yes, across-the-board.

There was another speaker saying we're in the foothills of a bubble.

I do not know.

There is enthusiasm and technology.

The reality is, that is the way tech has been since 1983. the simple fact is we have not seen modernization yet.

Lex we said the same thing about google and facebook.

Google has five links.

What is our relationship with google?

Do you know how much it is?

How big is our relationship?

I will not decide your relationship.

With twitter, you cannot even count it.

Just to your point, five things.

They are in display, search, video, social and mobile.

Facebook is the way to go.

Does not mean it will not be successful, but it means what i think we have to do is wait and see.

There is a triumph of hope year.

I think that is true.

That is thinking about it as an observer and user.

As an investor, the exact opposite perspective.

If you wait until it is proven out, what will happen, you will say i missed it.

We will not be sitting here at 6:00 in the morning if we successfully anticipated all the things you talked about.

Thanks just getting started.

In the meantime, have to get to other company news.

Betting on a recovery.

Europe's largest engineering company buying as much as $5.4 billion in stock.

The ceo said he is aiming to raise the profit margin to about 10% of sales come up from 7.6% this year.

The buyback and profit margin used him after siemens posted better-than-expected earnings.

Bank of america looks to settle a credit card investigation.

The bank has been negotiating with regulators.

This is according to people briefed on the talks.

The negotiations are with the consumer financial protection bureau that has been investigating similar practices.

Sac capital gets final approval for part of the landmark settlement.

One judge signed off on the agreement to end the civil money-laundering suit against steve cohen's hedge fund.

That is today's company news.

Coming up, our twitter question of the day, where will twitter share price closed today?

How about in one year.

Take your guests.

Coming up, we will see if twitter's ipo will unleash a new wave of technology ipos.

That is next on bloomberg "surveillance." ? coming up later on bloomberg television, do not mix -- miss our conversation with dick cost olo, ceo of twitter.

Emily chang joins us here.

I am sara eisen joined by scarlet fu.

Tom keene is out today.

We do need to talk about twitter.

You have been digging into this ipo.

Host anticipated -- has been anticipated.

The ipo market has been red- hot.

October was a very fruitful month for the initial public offerings.

Consumer internet ipos were almost nonexistent after the facebook boggle last year.

Only three consumer web companies went public.

Everyone else held back and wanted to see how this whole thing would play out.

There is a report that jack odorsey's square, they are broke portably looking at an ipo . that would be pretty fast.

Lex how many companies are looking at the ipo and crossing their fingers and saying if they can avoid the facebook mess, they will go next?

I think they all are.

Twitter is an example for many companies out there, that twitter is an elite of its own.

In the league with facebook and google.

The other companies are just not in that league.

They will be watching but that's not necessarily matter.

What do you think, paul de kedrowky?

I do not think the average company looks at it and says i wish that was me.

The reality is most are smaller.

The only thing this does is it makes people look and say ipos are back.

One problem we have had with venture investors is we end up selling too many companies in the private market, which hurts our returns.

Mike would you say there is still a facebook hangover and people are nervous?

It comes up right away.

Maybe we should do so in the private market.

We are ready know there are consumer internet ipos.

The big one everyone is looking at is alibaba.

Who's going to be huge.

-- it is going to be huge.

Chinese mobile's him a which i think will be much more revolutionary than you think.

The transactions platform, logistics that form.

This is the beginnings of it.

Going into the banking business.

He will get a banking license probably in china.

He, maybe with robin lee of baidu will be in the banking business.

Really interesting what they are doing.

This matters to everyone looking at the u.s. ipos.

You cannot compare alibaba to the companies you just mentioned.

Totally different things.

50 billion.

These are companies that do rank with facebook.

Baidu the fifth most visited website in the world.

It is not a google or amazon, it is both.

We tend to be segmented, google, amazon, twitter, facebook and the single verticals.

What the chinese are doing, building a much more complex series of platforms.

What is very interesting is they have been very active.

Activision and the music business.

They are and social networking.

I hear a lot of pinterest, too.

What about the valuation of $4 billion?

Is pinterest about let advertising platform ? not yet.

These are valid user platforms.

The question is whether they will be monitored -- whether they will be used as such.

In terms of scale, no.

The big scale platforms, the ones we were talking about before like google, facebook -- mobile still in its infancy.

We have to see which way it goes.

The issue is whether it can modernize -- monetize this.

We know that you and i and others spend a third of our time on mobile.

We know our clients and ourselves are spending about 20%. there is a natural increase.

We know we are investing probably too much in newspapers and magazines as opposed to consumer usage of about 10. that is the key point him overtime advertising dollars follow how people spend their time.

Now there is a lag happening.

The question is, how do people communicate?

Are they having social interactions, or are you searching for a particular product?

That brings back the facebook problem.

One of the fundamental problems they had is as you ratchet revenue that comes up the expense of the user experience.

They are going to have to walk that line.

On search, a specific thing in mind.

Contextually, totally different.

That is a social experience.

And in advertising experience.

It is important.

Spoken like a true madman.

Sir martin sorrell will be with us for the hour.

Also, the cover of the new business week.

Be sure to pick it up.

The surprising sophistication of twitter.

A look at how twitter started simple and became the network onto itself.

Download it on your tablet today.

On shelves tomorrow.

? this is bloomberg "surveillance." i am sara eisen.

Tom keene out today.

Emily chang joins us instead.

The cia paying at&t $10 million per year for data on phone calls of suspected terrorists.

Under the agreement the cia supplies at&t with phone numbers of suspected terrorists.

They search the database for record of the calls.

It is voluntary and not under a subpoena or court order.

Talks resume in geneva today.

Representatives of the united states and other world powers will meet with the iranian leader.

And jet man is back.

Took his suit out for a spin around mount fuji.

He can fly as fast as 185 miles per hour.

It was his first flight in asia.

He described the experience as spiritual and immense.

He hopes to motivate other forward thinkers to do something different.

That video makes me laugh.

He was on to talk about how he does not have insurance.

He is doing a good job advertising.

He would be a good ipo.

The morning must-read is not.

-- next.

A wonderful read.

I read it on the plane on the way out here.

So many great lines in it.

He talks about twitter.

He quotes mark zuckerberg.

Describes it also -- as a clown car that fell into a goldmine.

A line that zuckerberg gave to friends privately.

He quotes them in the book.

It was recently.

He was talking about in the context of a couple of acquisitions that did not pan out.

It is astonishing.

In the context of why will they not taken acquisition offer?

It makes me wonder, how years is the competition between twitter and facebook for your advertisement dollars?

It is very intense.

You have one big company.

You have a smaller company, facebook in the middle.

Others at the bottom end.

It is fierce.

Come back to the contextual part, and if you just about twitter and another arrow or weapon we had to use, you have to look at it differently.

We will talk more about twitter.

Twitter begins trading today.

Did not miss our special coverage all day long on bloomberg television.

Another special bloomberg west sara eisen as always joined by scarlet fu.

Tom keene is out today, which is why we have emily chang.

We have gainers and losers.

I am sure it will be a big gainer tomorrow.

One of the big losers yesterday was tesla down almost 15%. this is the billion or eli must carmaker.

Deliveries came and lighter than it dissipated.

Abercrombie & fitch a big decline are as well.

This appointing results.

Teens are no longer wearing abercrombie and which.

That is the gainers and losers from yesterday's trading.

We will survey the advertising world right now.

Sir martin sorrell with us.

Is the world's largest marketing firm soon not to be?

That is because of a giant deal.

Bring us up to date.

Late july when the number two and number three in the advertising world would team up to make the number one player.

They still need regulatory approval and more than 45 markets.

U.s. regulators have given their ok along with canada, india, turkey.

It will have a market cap of around $35 billion.

How important a scale in the advertising business?

One area is in media buying.

There is a lot of discussion about this over the years.

Created businesses from bloomberg.

If you are doubled in size, probably three times more difficult to manage.

There is an issue about the economy.

In terms of media buying, there are leverage.

In the u.s. quite difficult to get economies of scale.

In the rest of the world like result, russia, china, the next 11, there is leverage.

Pog is between you -- turn you call it.

Lex what does this mean for twitter, google?

One of the argument has been low-key on what the benefits are to clients or people inside the business.

One thing they have talked about is getting greater leverage with new media.

I think that is masking the real issue, which is it is the legacy media where the pressure will be felt.

In looking at the cvs results this morning, quite extraordinarily good.

The free to air in traditional media companies are doing well at this particular stage at the moment.

How long cannot that hold up?

If you look at next year, nominal gdp, and we are very sensitive to nominal gdp, probably going to be up next year.

If you look at the forecast, goldman sachs, looking at six point five percent including inflation.

I think deutsche bank is still there percent real inflation.

Seeing projections of more inflation.

On that basis and the fact that we have world cup -- the should all make advertising in theory better than this year.

Worldwide gdp does not match.

Worldwide gdp is growing by 6.5% come at you have to take 150 basis point haircut.

We have the strongest asian business but not a strong is worldwide gdp.

I would expect advertising to be up at least 4-4.5% on the assumption that advertising stays the same.

Broadly what you gain on the market swing because advertisement is great, you lose on the mature market.

Who do you think this benefit of the websites we're talking about?

I actually think at tech ipos -- ad tech ipo's. you look at yumi and others.

Aol just bought -- what is interesting is driven by these changes, there is a recognition the tools need to change as well.

There are companies popping up growing rapidly and now popping up in public.

We're sitting here with the s&p, nasdaq at an all-time high.

So you look at it in historical context.

Also at a stage where interest rates at an all-time low.

Twitter's ipo is perfectly timed.

I cannot think of a better timing.

True.

There must be some bumping this up some point in time.

That is part of it.

Most of it trying to calculate what the shakeout is.

Analysts note's are wildly different when you look at revenue for 2015. 30% difference.

There is a lot of unknown.

Exactly.

With this deal, have you seen any high profile client defections?

There are patents emerging.

Clients are not going to say we're going to fire this.

Even if bloomberg brings them up.

There are decisions already being made that we have seen that indicate a change.

Clients are very sensitive about these.

It is their money, not our money.

If they are not fully informed were fully briefed on the decision they can sometimes take decisions, which i think we are starting to see.

Strongest 100 basis points, 200 points stronger than the competition.

You saw that as a result yesterday.

So there are changes starting to take waste.

Only one quarter and early.

They still need regulatory approval.

Giving a price target of $43 per share.

New overweight.

$32 rating it a new buy.

We will talk to brian wheezer in the next hour.

A price target in the 30s. pretty optimistic.

Coming up, j.crew expands to london.

We will hear from mickey drexler about the european strategy.

This is bloomberg "surveillance." ? this is bloomberg "surveillance." emily chang joins us.

And top headlines, mario draghi and the ecb will decide whether or not to cut policy rate.

Mario draghi has two quarter- point reductions left before reaching zero.

Only three economist think the ecb will cut rates today.

Hitting a record high.

Trading at 260 five dollars.

The recent run-up is a rebound for bitcoin.

The digital currency lost a third of its value after authorities shut down the website a month ago.

Souther be sold 200 90 million dollars of impressionist and modern art last night.

The highest art for the category . robust auction following disappointing nights selling.

Those are your top news headlines.

A good barometer in the art market?

A question of where you will get a return.

Part of it is to do with you cannot get returns.

You can put your money in fashion.

Talking j. crew going global.

Extended to asia in the past year.

Opening a flagship london store tomorrow.

Anna edwards was there to speak with mickey drexler who talked about european debut.

We have no master plan to rush out and own the world so to speak.

With the -- we really love what we do.

We love our craft.

If it works well, we will move the aren't. mickey drexler joining us from regent street.

Mickey drexler says he is in learning mode.

What could we possibly had to learn from the british about fashion?

I do not know.

I would not dream of telling you.

They feel it is a good place to start.

The language is a common language.

Most of the time the same language both sides on the pond.

A lot of u.s. brands come here.

If i look out the window i see ralph orin, abercrombie & fitch.

Not just from the store window i can see those brands.

That is some of the competition t

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

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