This is "bloomberg surveillance." twitter will offer shares to the public.
Roll one, avoid facebook's mistakes feared we will stick to howard lindzon and david kirkpatrick.
The 300,000 employed of the general electorate, they believe in global reach.
And henry paulson, hank paulson, on the brink, the next fed chairman.
He is critical to the future of finance.
Good morning, everyone.
This is "bloomberg surveillance." i am tom keene.
Live from our world headquarters.
It is friday the 13th.
Joining me as always the very lucky sara eisen and scarlet fu is off.
I don't even know why i put this on today.
It was a twitter bowtie.
Easy little -- you just a little birds on it.
The "new york post." you need a little birdie on your bowtie.
There is word that japan is considering cutting corporate taxes as part of a stimulus land to keep boosting its economy.
That is according to people familiar with the matter.
We did see japanese stocks like overnight.
In the u.s., 8:30 a.m., producer price index and retail sales will be a biggie here it good meals -- move the needle.
Last big data released before the big fed meeting.
24 hours, we are into that ok, now the fed meeting.
I feel it in the air.
This could be the big taper or the little taper that everyone is looking for.
Nine: 50 5 a.m., university of michigan consumer confidence is out.
10:00 a.m., business inventories.
Also secretary john kerry just ended a news conference in geneva, switzerland, wrapping up his meeting with his russian counterpart.
He did say that the u.s. and russia will meet at the united nations in new york and meanwhile, russian president vladimir putin will meet his iranian counterpart today at 12:00 p.m. eastern time.
Also on the calendar today, you can pre-order your new iphone 5c , the cheaper 1 -- you are get that -- no, i am waiting for the gold one.
5 s says it might be due to the -- if you want your gold champagne iphone 5 s, you will have to get in line and campout like everybody else.
Like i have a data check.
One start -- i have a data check.
When chartered where we are.
Let's look what equities, bonds, currencies, oddities, we will look at that in a moment.
Futures negative two.
10-year note yield, to 91. -- 2.91%. on to our next board, the big mover of the week without question -- gold, $1310, really getting back to a 1200 handling -- going further south.
Maybe the fed is not going to be in a rush to scale back some of its easy money.
Here is the gold chart right now.
Just a rollover into the weekend.
You can see the june/july angst there.
The michigan confident this morning.
Is time for frontpage.
We scour the papers and the web as we always do for the most important stories.
It is the twitter announcement on twitter -- of course.
Across all major newspapers, twitter announcing it is going public in a tweet, but we do not know how much and when.
This is all done through some confidential paperwork were aided not have to disclose very much about its financials.
We know that it makes less than $1 billion in revenue.
This is the most anticipated ipo since facebook went public last year.
Of course, that ipo was a bit of a flop.
Nudges for facebook, but for morgan stanley and nasdaq as well.
I would love to be the book on the wall listening at goldman sachs -- they reportedly are going to be leading the stock.
Did you see the poor guy this weekend?
I need a 45 days paper monday morning of what morgenthaler did -- morgan stanley did wrong.
They got a lot of heat over facebook.
What is interesting is the way in which they announce confidentially taking advantage of the jobs act, which allows companies to do this.
Probably not with the jobs act was intended to do.
The other front-page story is jpmorgan under legal pressure.
It is poking up on compliance.
Did you say 5000 -- i'm sorry?
And compliance risk control.
Also an additional $4 billion.
We know jpmorgan has paid up more than the other big banks to resolve these regulatory legal investigations, at least $1 billion more than bank of america, for instance.
Jpmorgan also expects to add $2.5 billion to litigation reserves.
The question is when does the star to make a dent because when you hear jpmorgan you hear jpmorgan you here record profit in here some analysts saying it is just a sideshow -- the bulls on jpmorgan will always say that the profits will be so much more outside than any of the fees they are paying.
Our last front-page story is how u.s. regulators have technical glitches at all the stock extent is.
Remember the three-hour blackout at the nasdaq last month?
Mary jo white is asking the head of the nasdaq to provide assessments on u.s. markets of the structure.
She is giving them a specific deadline.
This is for global wall street, this is where the sec steps in.
And she wanted to outline what they will do.
On a busy friday the 13th, our guest host this hour, john rice, vice chairman of the social media startup general electric, president and ceo of ge global growth.
Describes his importance.
Thrilled to have mr.
Rice with us this morning.
Out of the blue, he parachuted in.
Are you going to be with deirdre this afternoon?
You will save your good set for deirdre bolton this afternoon.
We are thrilled to have howard lindzon with us, the chief executive officer of stockwits, owner of twitter.
He by drinks last night.
1355 market street, san francisco.
What is different and the oxygen in their headquarters versus the oxygen at mineral park and facebook?
A lot of giddiness, i am sure.
They have been focused -- i am friends with dick.
I think a, what is amazing, pleasure to meet an amazing ge person, how twitter is just such a basic, simple product.
We think of the world global economy -- the lightbulb -- yeah, but they have got to manufacture it, package, deliver it.
You think about what i call social levers were you have a product, and you can update it overnight and the world sees it.
We're talking about two ends of the spectrum.
John rice, 300-5000 employees.
It is not -- 305,000. it is not twitter, but just your thoughts on this important points.
We use social media all the time internally and externally to connect with our constituents.
In fact, social media drives a lot of demand for infrastructure around the world because people are curious about what is going on in other places.
They hear about it, and then they look to their governments and say ok, i wanted.
Quite the you have a five-year strategic -- you have a five-year strategic plan, and then twitter comes along to break down consumer barriers.
That is that you believe that the going for you.
Yeah, and we change the way we do strategic plans and the way we think about our internal processes to take advantage of the availability of information in the speed which which -- speed with which you can move around.
You mentioned the ceo of twitter.
Why now you?
As we pull up the facebook chart again, facebook was still at 18, twitter would never go public, i think with facebook at 45, barring a market catastrophe, we will see put or public as fast as possible.
You see it in the acquisition, the advertising acquisition.
They are serious.
That one came out of nowhere.
The youtube acquisition came out of nowhere for google.
Right, you are the fancy guy, you play golf with your son, 72 hours we, you don't have a real job -- let me catch up, correct, correct, correct.
With an eye, howard, you are one of the early guys that the shares cheap.
Do you just apply that after ipo this will be an intelligent investment for our viewers?
That is a great question.
Are you allowed to answer it?
The answer is -- as an investor, as someone who runs a hedge fund, i sell when i can, not when i have to peer to that is just the basic lesson.
I have been telling twitter what i could.
God bless twitter for having been locked up or i would've sold at $1 billion.
That is the honest answer.
The company gets better as it goes.
Do i own some?
A little bit.
It's also too early?
What you just heard from howard lindzon is the most important thing all week.
His great fortune is that he could not sell all of his twitter.
It was locked up -- that is like a buy and hold kind of thing.
There's going to be a lot of speculation about this.
Do you have any idea or valuation guess about what it is worth?
My guess is always wrong.
But my guess would be -- everybody gets a thing they will learn something from facebook, but i find that as a baloney statement.
If it is golden or morgan stanley, this pressure to get a twitter as much at past as they can get, and the public has been craving for it, and all the things have made soap note -- so few ipo's, twitter is going to grab as much as they can.
I would not be surprised to see 20 billion dollars.
Howard lindzon with us, john rice of general electric, david kirkpatrick will join us later.
Company news -- pimco and blackrock more than a quarter of the debt offering according to the "wall street journal your coat them go bought about $8 billion in jet -- in debt while blackrock sold about $5 billion.
The buyout of the vodafone in verizon wireless.
What is by mike as much as $8 billion of its stock starting next year.
The media company will borrow to finance some of the repurchase according to its cvo.
-- its cfo.
And talk about a cheap ticket.
United airlines accidentally offered tickets for free before a $10 fee yesterday afternoon.
The tickets resulted from faulty data that was entered into the carrier's reservation system.
United would not say how many flights were booked.
The airline is still deciding whether to honor the tickets.
That is today's company news.
Is that how howard lindzon is with us?
I 3-d printed myself your.
I like that.
Free ticket on twitter.
It is our twitter question of the day, and that is --what is twitter worth?
This is a big mystery because of course they filed confidentially . we don't know exact valuation.
Tweet us @bsurveillance what you think twitter would be worth going public.
This is "bloomberg surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
? good morning, everyone.
"bloomberg surveillance." this is an important interview.
The guy i want to hear from.
"street smart," edward djereji an, the former ambassador to syria.
That is a three clock p.m. on bloomberg television.
Twitters ipo is the most highly anticipated since the facebook face plant that happened 16 months ago when it went public.
Twitter tweeted the news that it has filed a confidential plan to the securities and exchange commission.
Scarlet, we know you have been looking into the plan because what everyone wants to know is just what twitter is worth.
That is the big question mark because when a file the paperwork, it so confidentially.
What we can say is that there was reports that twitter received bids from a hedge fund anywhere from $26 to $28 a share, which would value twitter at $14 billion.
Last month, put her was valued at $10.5 billion, which is already up 5% from a may estimate.
That valuation is certainly rising.
We mentioned before but the bottle.
What lessons can they learn you go i find it interesting -- can they learn you?
I think it's interesting that you said, howard, that they will sell high.
Facebook certainly looms for a large or twitter and the company has been very careful to say they do not want to make the same mistake.
One thing that twitter is doing is perhaps moving quicker on its ipo than facebook would have.
Facebook delayed for so long that it was at a different phase of maturity, it was more of a richer company.
Titration had reached $100 billion by the time it went public that he made early investors very rich but perhaps it not leave anything on the table for those of him and later.
Howard lindzon with us, all of his experience as an angel investor, was the name of that?
John rice with us as well from general electric.
What is the best practice here you?
I know you are not on speaking terms with jeff, but what is your best practice for them?
So much money has been taken off the table.
These are different eras, just from 1999, so the best practices get the company the money it needs to do what he needs to do.
I think we have entered this era of massive paranoia.
You bet apple, disney, facebook, and so they are going to need offers full.
To protect this mode of attention.
Everybody is talking about it, but this is about how do we protect the attention that we have.
To be clear to us that are not sophisticated about this, these printable to not need the money.
Quite the principles -- the principles are billionaires.
John, multinational ge can talk to these executives, what would you say to mr.
Stone or mr.
Dorsey this morning?
And our company, we are always thinking about having the right people in the right places, having the right leadership team and processes to support what we want to do around the world.
Whether you are in social media or manufacturing or whatever you do, you have got to be thinking about that because as you get there, your processes can become more complicated, you don't end up with the right management team, and that is to be a focus for everyone.
The other stumble it facebook had was it had to confront the reality, the tectonic shift toward mobile.
It is over and done that, we have any stock recovered nicely.
What about twitter?
Twitter has been active on the mobile front because it is purchase a company, mopub, to branch into mobile advertising.
It is so successful at monetizing mobile, more than facebook.
Quite phlegmy does explain -- let me just ask plan what could meet.
It feeds into twitter.
We're looking at the start up with eight people, which twitter has 2000 people, we are looking at the world is a how do you monetize this stuff because we do not want to have 100, 200 people because we are not twitter.
With mopub , theoretically what you have a way for twitter to advertise internally its stock to us.
So we are for enemies -- frenemies now.
Question or electric has no enemies.
General electric, yeah, i like them.
Thank you to our staff, who just blew up the show last night.
They were e-mailing me.
"bloomberg was," they went wall-to-wall coverage.
"bloomberg west" this afternoon, more smart covered with emily, jon, cory on the west coast, 1:00 p.m. we will talk more about general electric business because john rice is with us and how they are going global.
What a motion -- what a multi national needs to talk about your that is all coming up on "bloomberg surveillance." this is "bloomberg surveillance." i'm sara eisen here is always with tom keene and garlic appeared no agreement was reached between u.s. and russia after a second day of talks in geneva.
Constructive , but the two sides fail to reach a deal on how to get syria to give up its chemical weapons.
Jeffrey -- will replace gene sperling as director of the national economic outlook.
He was the former acting chief of the office of management and buffet.
-- and budget.
After a 36 year journey, the voyager run has left the solar system.
It traveled 12 billion miles beyond the sun.
It crossed out of the solar system in late august according to nasa.
It is the first spacecraft to break into interstellar space.
It has enough power to operate apparently until 2025. those are your top news headlines.
Tom, you are interested in that.
More than interested in it.
I grew up with it.
Not voyager specifically, those are different contract then my family was involved in.
But the durability of these products, including john rice from ge, the durability of these products is incredible.
Your building stuff to last 20, 30, 40, 50 years.
Of the big thing with voyager was the antenna system which moved from indiana how to boulder, colorado, and they own that -- can they track it once it is beyond?
That is a good question.
How do they get the power going for another 12 years?
It is like bill nye.
Let's have bill nye the science guy, good morning, if you are watching.
I want to go back to what sara started off with, which is syria.
President putin of russia wrote an open letter, big deal, dana milbank, a column is that the "washington post," respond to the letter.
He said he largely agrees to with what newton pointed out, including that most americans are not support a military strike, but what he takes exception to is the idea of american exceptionalism.
He writes well part of it, i think secretary clinton pointing business along with the state department, john rice with us with general electric, american exceptionalism to you started at hamilton college, a small school, upstate new york, and you took that to your years in hong kong, now the global reach of ge.
Where is that now versus where it was when you came out of clinton, new york?
I think the united states is reverted everywhere around the world, i look at the reception we get as a u.s.-based company, we are quite global, but we are a u.s.-based company.
There is a lot of regard for the way we do business, or focus on ethics and integrity.
There is a lot of places we go where people want to do business with us.
With the exceptionalism we have a starts with education, you and jeff really pushed this, quickly here, do you see any lessening of our exceptionalism?
No, i think a lot of countries look to companies like ours, not just u.s. companies, but companies like ours to help with training and development.
Everywhere we go, there is an interesting capacity building.
Let's come back, john rice of general electric.
And we will talk about why he is going to myanmar and mongolia and what kind of issues he confronts there.
This is "bloomberg surveillance." i am sara eisen here is always with tom keene and scarlet fu.
Tom, we need a data check.
Not a lot of action, still, september shaping up to be a solid month.
Let's do that.
Equities, bonds, currencies, commodities, s&p -- i will call it flat, negative 2. 10-year yield cannot get to 3%. this is a huge deal, euro- dollar, axel merk telling me forget about it, the euro will not weaken.
Just one of many.
Nymex crude, $107.59. what we have, facebook?
Know, pandora, big winner after inamed v at executive, the microsoft veteran, brian mcandrews, as its new ceo.
The world another gainer up 7.5% after revenue gained -- see world another gainer.
Pandora, investors should just, whatever they hear on business, radio, tv, everything, just ignore it.
They were looking for a ceo for a while.
It seems to fit in pretty well with their strategy overall, integrating advertising more to beef up their mobile listenership.
Any other gainers and users?
One decline or -- cliffs natural resources, a big drop because the valuation concerns.
The price targets stays at $26. we will take another company, general electric, making headlines two years ago when it sold in bc universal to comcast.
Ge did not make the front pages, though, when it built a sea of wind farms and mongolia.
4g, this is the bigger story.
The conglomerate focused on developing market and industry spirit is changing the way ge works and to some extent the global economy as welker to absolutely.
-- as well.
Ge requires a long-term perspective.
John rice went to college in the shadow of ge's legendary lightbulb facility.
Schenectady is still there.
How many boys do so have?
Probably -- how many employees do you still have?
Probably 5000 your now your global, what is the difference in your processes global now versus when it was schenectady?
Your cap more people in more places.
We have a senior leadership team spread around the world.
Over the last 10 years, we have doubled the number of leaders that we have outside the united aids.
It -- the united states.
Any growth markets, it is up four times.
So part of this is making sure you have people in the right places to guide you with what you need to do to be successful in those countries.
Have you had to address your planned because of weak world growth?
You see nominal gdp come down, the imf's things about it, does that make you and jeffrey adjust?
In the short-term you just, you have to, but in the long run, our infrastructure businesses are focused on that, right?
Core is a structure need to run the world.
We do not see the need for that abating regardless of the macro gdp.
Specifically, john, i want to ask you about the developing world.
We have seen storm -- turmoil in indonesia, turkey, brazil, all of these markets getting hit pretty hard.
We can talk to economist all we want, but it is interesting to hear your perspective from the ground doing business there.
Do you ship the -- shift the strategy in these places?
A little but on the edges.
When you are building facilities, putting investment than countries, you cannot just be guided by exchange rates.
You cannot just be guided by labor rates because those change over time.
You have to have a long-term perspective on this.
We are building a manufacturing facility in india that looks like a good deal two years ago, and now with the exchange rates, is going to be a great deal.
Quite the richness of the the weakness of the rupee.
You see bumps in the road.
There is no question when you look at the developing or the growth markets for us, you see on sin the road.
But these end up being cycles, and currencies that go down tend to go back up.
So you have to play for the long run.
Sara highlighted emergei ing markets.
Mexico is an example.
Ge exported jobs there, but now it increasingly looking to export product there.
Talk about a transmission of mexico.
We are bullish on mexico.
We like what the new government is doing in terms of taking on some of the tough issues for reform.
We have got a lot of good people in mexico, and we see a symbiotic relationship between what we do in the united states and what we do in mexico.
Quite howard lindzon with us as well, thrilled to have him with us this morning.
Howard, the first international feedback i ever got on "bloomberg surveillance" is an e-mail from vietnam.
Maybe it was a tweet.
I honestly cannot remember.
Your world has got to be a terrific benefit to somebody managing 300,000 people.
Yeah, the people you can talk to in real time is unbelievable.
I can't fathom the leveraging of his projects into what you do.
It is a demand creator.
So people are seeing, they understand what is happening around the world.
They say why can't i have that?
And it starts with electricity, health care, the fundamental needs.
That is where -- and if you don't provide that, if governments do not provide that, then they get replaced.
Another issue for you, ge multinational, that goes into howard's world as well with all the tech companies he follows -- cash overseas.
Is it is still 80% of total cash?
We have a lot of cash overseas, but a lot of that is invested in lots of different things.
We need a new tax system in this country so you can bring about and create more jobs here in america?
We need a simpler tax code, a simpler tax system feared i think everybody that is involved in this issue says that.
It has to be simpler.
It is to come located.
Does a tax repatriation holiday move the needle at all ? i think it would.
I think it would encourage people to bring money back and invest in the project in the u.s., but tax code a simple petition has to be the ultimate goal.
You have $125 billion of cash in the balance sheet between that and sure -- and short-term investments?
Those are big numbers.
But ge is the global, you have made a recovery out of the crater of 2008. what did you learn as the stock went from 50 something down to the teens?
When you are faced with something like the world was faced with back then, you do learn a few things feared friendly, i look at the work that we did in our financial service business.
Precrisis we had a balance sheet of over $600 billion in today, it is less than $400 billion.
A very orderly reduction, which is what our investors want.
It has led us to the point where over the future, we think that industrial earnings will be about 60%, 70% of the company, and financial service earnings will be about 30%, 40%. we have seen just shift the business, is going into bigger ticket items like trains, aircraft, given that new framework within general electric, which country are you most excited about?
It is true.
Some take a little time to develop -- what about in terms of manufacturing e we manufacture -- manufacturing?
We manufacture in the middle east, asia -- let's continue this conversation.
Howard lindzon with us.
Think of montreal, raise their price target from facebook to $50. facebook has made a round- trip.
I wonder what that does to the twitter valuation at that heats up.
Coming up next hour, we will continue our corporate senior on "bloomberg surveillance." frank calderoni will be our guest host.
The chief financial officer of cisco.
That is coming up on "bloomberg surveillance." this is "bloomberg surveillance." i am sara eisen here is always with tom keene and scarlet fu.
Some news from the white house this morning.
Jeffrey zients, the former acting chief of e office of management and budget, will be named director of the national economic council.
Peter cook, our chief washington correspondent, on the phone to tell us more about this.
What stands out to me, jeff rey zients is a familiar name.
Here is obama going again for somebody he knows for a well to a point to an economic point.
Let's talk about it amongst ourselves for a moment.
This is an important job.
There is a fascinating distinction between gene sperli ng and jeffrey zients.
I know him because he helped bring baseball back to washington.
The washington nationals?
To come back.
This guy is not an economist.
Jason thurman is with the president -- he is the chairman of the council of economic advisers chair jason is very young, but he is widely considered to be a front right -- front rate macroeconomist.
Gene sperling was not an economist, but was extremely savvy on the economic wallace the.
With a history.
Let's bring in peter cook because we do have them on the line, our chief washington correspondent.
What we're talking about is the president going to his wheelhouse, somebody knows, mr.
Zients, two plays into this important job or placing genes purling.
This is a choice over familiarity over a fresh face.
Jeff zients it simple and the president knows well.
He with the chief performance officer when he first arrived at this white house straight from the private sector, no previous government sector experience.
One of his missions was to try and reorganize the government, proposals to streamline government operations.
Some of those proposals irked a few people who thought they might be losing a little bit of turf, but the president thought that jeff had done a good job.
He became eventually acting omb director.
He was the logical choice to replace jack lew, but there were some issues there.
Silvio burwell took that job.
They talk at always been that he would return in another capacity.
This is a logical position for him.
This is a policy., as tom said, not necessarily a straight economic job, although larry summers had this job previously.
This is again the president going back to some he knows well and someone he trusts.
That does what to what i'm thinking, tom, and that is that the president has a very important decision to make, who is going to be the next fed chairman, which he could make eminently.
Again with the scum of the speculation he will choose larry summers, somebody he knows very well and has been very loyal to.
This harkens back to me, peter cook, to the bush administration where you get sort of a smooth guy into run the council.
Help lower viewers.
What is the national economic council?
-- help our viewers.
Would have become at the policy-making shop for this white house.
It is the place where ideas, economic ideas get oiled down into actual policy, functioning policy that might actually be able to pass congress.
We don't have that happen very often these days, tom, but that is the goal of the national economic council.
The president of the economic goals in a policy way that can actually work.
That is what genes purling -- gene sperling, who is well-known in this town, he has been able to translate economic ideas into real main street, if you will, policy.
That has been the white house's goal.
His is larger has been talked about for a long time -- his departure has been talked about for a long time.
What is important here is the timing.
Justeff zients does not take over until january 1. peter cook, thank you for joining us last on this breaking story.
All reporting indicating that jeffrey zients will take over gene sperling's job at the white house.
Let's bring in john rice, vice chairman at general electric.
John, when you hear about these kind of employment within the obama white house, the insularity that sara was referring to, does that affect the way that you go about pitching ge to the administration?
Know, scarlet, it really does not hear it what we try to do in the u.s. and all the countries we operate in is try to figure out what the priorities of the government are, and how do we align our company to those priorities.
So what we're are doing in washington on a regular basis and what we do in capitals around the world is that.
So whoever is in these roles, we will work with.
I want to put you on the spot.
Is this a pro-business resident?
I think this president wants to create jobs in the united states, and we support that.
The need for the u.s. to have jobs, i mean, nobody in the world think that the global economy works better if the u.s. has a high unemployment rate.
So there has to be job creation -- is he doing enough?
Every president wants to create jobs.
I think in terms of creating jobs, you never do enough.
You do everything you can within the constraints that you have, and there are real constraints in the united states and other places.
I think we have made a lot of progress in the united states.
We have brought jobs into the united states from other places.
And i think there is no reason to think that will not continue.
All right, john rice, it's good to have you here from ge.
Also, we are talking about twitter, filing registration, confidentially, for an ideal, so what is twitter worth?
That is our twitter question of the day.
You can tweet us @bsurveillance.
We will be right back.
I am kind of like the person you would want to ask last how to make a smooth ipo.
[laughter] but, seriously, it is actually a valuable process.
Having gone through what i think most people would characterize as an extremely turbulent first year as a public company, i can tell you -- i actually don't think it is that bad.
All right, a clever answer from mark zuckerberg just this week when he was asked about twitter, a potential ipo, and what they could learn from facebook.
Now it is out.
Twitter's initial public offering, the most dissipated ipo since paste -- since fatal back in may 2012. the company did not say, but we have the right people here.
Howard lindzon is with us, ceo of stockwits, also an early investor in twitter.
Also john rice with us, our guest host from ge global.
Howard, mark zuckerberg made a pretty funny joke about the smoothness of an ipo.
Seriously, what is the number one lesson for twitter here in facebook's debacle last year?
The debacle -- time heals many debacles.
I think the greed and wall street, it all came to a forefront, i think.
It was not a lot of ipo's leading up to it, everybody had a piece -- the role lesson was before.
Facebook had so many private rounds.
He talked about institutions not owning a facebook.
That is a likert everybody on facebook by the time became public.
Nobody really owns twitter.
So there will be demand.
Very few people know what twitter is still.
Very few people do.
This is a real campaign to help people understand the brand of twitter.
You are as qualified as anyone to answer this question, the goldman sachs banker who took ran eighth grade, did all the right courses, he has got the block, block in ba -- blah, blah mba, can actually talk to mark zuckerberg?
Is there a loss in transition between the fingers and the guys like you?
There has to be, and i believe there is only because they do not use these products.
Out of 2008, the one thing that has not changed is finance.
Bloomberg pipes in twitter, but bloomberg users want to use twitter on twitter.
You cannot repackage something like twitter.
So the banks, sec, finra, the only thing that has not changed, the only industry with walls bigger than ever in the banking industry.
Greg howard lindzon has a lot of -- howard lindzon has a lot of components.
Here is a terrific comment last evening, my morning must-read.
Twitter is going public, who gets rich?
Twitter has raised millions from investors, scribbling to be part of the way the world hottest internet company spirit investors that packed the company early and receive a 10% of the comedy stand to make a killing.
This from upside trader.
Many, many little pieces on it.
This is like you.
This was not the long-ago.
2007, this city was not doing this stuff.
Fred wilson, he was the guy investing in deals.
Street.com , indeed, you're talking about an island from his blog, and you keep a blog, too.
Just six years later, the speed at which these countries are becoming global, and billion dollar companies -- march of 2006 and sxsw of 2000 seven, scarlet.
And changed everything.
Everybody keeps comparing twitter to facebook.
What about the way google went to its ipo?
I think they did things their way.
You may love them or hate them, and the taxes and a no taxes and the egos involved, but google has executed -- we are living in a time or google, samsung, apple, facebook, people are executed at this pace that is unbelievable.
We have to rip up the script.
You were out in front on everything with your great photographs on twitter.
The iphone fives, -- 5s, are you a believer, or are you going to get a tablet?
Tablets are dumb.
The thing is, i see in my house -- my kids still like iphone.
I think when you hold something like the iphone, you really have to take and appreciate all of the components that go into it any care and the design.
But there is such great competition right now, like i said, between samsung -- you have got to be in awe, and the consumer is winning.
We're gone from an air of financial leverage, which a ge said they reduced their balance sheet, to an era of social levers, which is really hard to grasp the value.
That is one view.
John rice, you all over the world.
Where are the -- where the samsung tablets are pretty big and pretty hot and it is not just an apple story.
The lesson here for us as it is about speed.
If you look at new product introduction, the way these companies are doing things and the way they win, it is the speed, and it is speed not determined by an internal clock, it is speed determined by market -- can you do that?
It is what we have to do.
They are building a dead -- a gigantic company like ge.
We have examined all of the prices these -- the processes by launching new products, we're taking them apart, putting them back together, we have used some of the people who have been in these startups to help us do that.
For us, that metric has to be determined by customers, competitors, and markets.
Which a single ge business you see that lightning quick response in?
All of the beard, aviation, manufacturing, digital or additive manufacturing, reduce the time to bring me things to market.
A thank you, howard lindzon, short notice, thank you so much.
John rice, thank you so much.
I have a john rice check before we close out the hour.
We will get currencies around the world.
What is moving right now?
The euro is a little bit weaker ahead of the fed meeting next week.
The eurodollar visas -- versus the indian rupee.
We're seeing a little relief for them in the emerging world.
John rice not changing his long- term strategy in india.
Coming up in the next hour, we will sit down with michelle colusa, a very high tech company potentially set to ipo.
We will ask her on "bloomberg surveillance." ? this is "bloomberg surveillance.
Twitter will go public -- rule one, avoid facebook's mistakes.
Cisco is into dividend growth.
After facebook and twitter ipo's maybe it is safe to go out, that for gilt group, widely anticipated.
I'm tom keene live from our world headquarters.
It is friday, september cert -- september 13. joining me, sara eisen and scarlet fu.
Our guest host, jeffrey mccracken from bloomberg news has been up all night on twitter, and also frank calderoni, chief financial officer and dividend grower at cisco.
Are you superstitious?
Friday the 13th?
I'm really not.
I guess i have a few things.
I will kick it off with a morning briefing.
Japan considering cutting corporate taxes to stimulate its economy, according to people familiar with discussions in the japanese government.
In the united states, a few key data points.
8:30 a.m., producer price index and retail sales.
That will be a key one at head of the big fed meeting.
9:55 , university of michigan consumer confidence read and 10:00 a.m., business inventories.
Secretary kerry, john kerry, secretary of state, just concluded a news conference in geneva.
He said the u.s. and russia will meet again at the united nations in new york.
And russian president vladimir cuban will meet -- vladimir putin will meet his iranian counterpart.
And you can pre-order your new i-4 -- iphone 5c, the new cheaper version.
The 5 iphones -- supply constraints, the fingerprint reader, people regulating it may not be available right away.
I made it clear.
People make fun of me on twitter.
The strategy is you can get a 5c, wait for 30 days and return it.
That's not fair play.
Let's get to a news.
The big story, twitter going public.
It tweeted the news saying it filed paperwork with the sec.
It gave no details and did not have to disclose financial data because the company's revenue is below a billion dollars.
Lambert has learned goldman sachs will be the lead underwriter.
Jpmorgan is bulking up its compliance operations.
It plans to spend an additional $4 billion and commit 5000 extra and ploy ease to clean up compliance issues, according to "the wall street journal." it will also add 2.5 billion dollars to litigation reserves in the second half of the year.
The clock is ticking for the nasdaq and other u.s. exchanges.
The sec giving u.s. stock and options exchanges 60 days to come up with a plan to better and build problems.
Regulators met with the executives to discuss the growing number of tech issues that have rattled the market.
Remember than that -- nasdaq litan late last month.
Let's talk about twitter, the top story, making a splash.
Announcing on twitter it secretly filed for an ipo.
Overtaking the news at goldman sachs will be the lead underwriter.
Joining us for the hour is just mccracken, the guy you want to talk to, the head of bloomberg deal coverage.
This will be a bonanza for the bankers you talk to.
What other banks are on the twitter ipo?
Morgan stanley, everybody is watching to see where morgan stanley will be.
Last year, morgan stanley was at facebook, number one.
If you are in the valley, from what i am told, there is a battle between morgan family and oldman.
Why would even -- twitter one morgan stanley with the ipo?
You could look at facebook and say it did not go well but morgan stanley had a slew of other tech ipo's that went well, which is how they got the facebook deal.
Where is morgan stanley, citi, jmp, etc.? when it comes to tracing, we don't know the specific breakdown of revenues or financials -- when it comes to pricing.
What are you hearing about valuation?
What is out there right now, 10 point $5 billion.
I think the thought is 11, you will see something in that range.
You have to look for valuations and exchanges, where they will list.
We also don't know what it might be.
Might they not list on nasdaq because of the recent problems?
If aly baba a --libaba -- alibaba, if they can to the united states there is no chance they will list on the nasdaq.
Check i the o's have been few and far between.
A few out there, a company calledcheg that people have been waiting for.
A great year for ipo's overall.
There have been more than any year since 2007 and they've raised over $30 billion so far.
Jeff mccracken, thanks for your initial thoughts.
He is head of our deals coverage.
Tom, you spoke with hank paulson, the former treasury secretary five years post- lehman.
Really interesting interview on many levels.
I spoke to the secretary yesterday.
Of course, he is a movie star.
Look for "hank" on netflix, on monday.
We agreed -- not larry summers, nor is he janet yellen.
He says of himself -- hank is candid, indiscreet, asked quickly.
-- acts quickly.
Here is what he has to say about avoiding financial disruptions.
We will certainly have other financial crises.
As long as we have financial markets, there will be crises.
Most of them will be manageable.
What we need to do is avoid these massive disruptions.
You can see the entire interview out on bloomberg.com.
I heard about some of the revelations from the film that he did with "bloomberg businessweek" and netflix and the idea he congrats not making it clear to the public that they were bailing out main street and not wall street.
Clearly a major message.
He is very frustrated about that.
And vote -- and talking about how bankers demand high bonuses and did not get thezeitgeist for the moment, the more humble.
Frank calderoni from cisco, wonderful to have you here.
You went from ibm, sandisk, all -- and lots of other operations.
What are the politicians not getting in the business world?
What do they need to learn about the day-to-day grind so they can then talk to america?
I think it is important that business and politicians come together.
We are really looking for the same it checked it, to see how the economy -- same objective, to see how the economy can improve.
Number one, how to create jobs.
The more there can be that interaction between the two and think about jobs and how to stimulate jobs, that is important.
Tax reform helps a lot in helping drive and stimulate businesses to make the right investments.
At cisco, your message in the annual report is vision and strategy.
It looks like the strategy is extension -- expense reduction.
Our strategy is growth.
The next three to five years, it is to grow the business five percent to seven percent.
" $50 billion company.
-- we are a $50 billion company.
We have to make innovative investments to keep growing the business and make sure we are innovative and competitive.
You mentioned jobs early.
Cisco cut five percent of the workforce, 12,000 over the last two years.
What inning are we in and job cuts?
The first thing i would say, i have been part of cisco for nine years.
When i joined, we were 34,000 employees.
We are now over 75,000. clearly going in the right direction.
I think the key thing, as we start looking at technology and what really happens is you have to constantly be innovative, and you have to make changes in your portfolio to make sure you are investing in the right areas.
Where are you hiring?
Data center and cloud.
Last year we grew our business 43%. we are investing in security.
We did an acquisition.
Software and services.
To her point about what inning are we in, what inning are you and mr.
Chambers in resurrecting and turning around moving forward cisco?
You feel like the second ending -- inning of the new cisco or well into the plan?
We have been 29 years as a company -- come on, but 12 years of stock underperformance and you turned it around, to your great read it.
Where are you in the turnaround?
Wax or a turnaround standpoint, -- from a turnaround standpoint i think we are in the early innings.
We have great opportunities.
It is difficult from a leadership perspective to make decisions about reducing the amount of employees we have.
Even though we will reduce about 4000 jobs on a global basement -- basis, we are also making investments.
Are they jobs in america or in china?
We are a global business.
We are making investments in all of our geographies, including the united states.
Yes, we are taking our workforce down, but we are reinvesting in parts of the business, and we expect our workforce to be able to the venue to stabilize and grow.
You can hear the distinction between the chief financial officer of what we hear from too many ceo's e, frank has the specificity -- specificity.
We were asked about potentially new acquisitions.
Our twitter question of the day -- what is twitter worth?
We paying us @bsurveillance.
? good morning, everyone.
"bloomberg surveillance." i'm tom.
Franco the romney -- frank calderoni, chief financial officer of cisco.
If the dividend does not grow, he will be out on the street.
This is exciting to me -- never have a dividend, heaven forbid, and all of a sudden the use of cash.
How important is a dividend to you and john chambers?
Or are you sort of faking it?
I think it is very important.
We talk a lot to investors and we have been talking about what is important to them.
A little over two years ago we did not have a dividend and now we have one of the highest yielding dividends in technology, just under three percent yield currently in a matter of a little over two years.
It is listening to investors, what is important to them.
We started with a low dividend and we increased it cents.
It also shows the level of confidence we have as a board and management.
What is the dividend growth?
I don't want to pin you down, but is a double-digit or is it angled digit?
Verizon, where it is barely growing, or would you make it pop?
In a little over two years we increased it twice.
We have been showing support for the dividend.
One of the key things we let out to investors, in addition to returning cash to shareholders we want to set a minimum of 50% annual free cash flow that we will contribute to the dividend and stock buyback.
I love that.
I know you are a big company.
If anonymous gdp -- a phenomenal gdb play.
But you have guys whispering in your ears, save the dividend growth for investment.
We have cash, $50 billion of cash.
We want to use the cash to return to shareholders but also to continue to make investment in our business to grow in the three percent to five percent range -- i am sorry, five percent to seven percent in three to five years.
We do that through organic as well as acquisitions.
All executives walk up to the cfo's desk and there is a big sign flashing, no.
What does it take to get you to say yes?
We look at our portfolio on a regular basis and it is making the trade-offs.
What are the areas we want to make an investment in?
We look at what has the opportunity to not only grow topline but bring the return.
Those investments that come forward to me that have good returns over the longer term, but at the same time we have to make decisions in the portfolio to back off on some we may have done five or 10 years ago.
I have a million questions.
We will come back.
And also, frank calderoni on verizon.
? this is "bloomberg surveillance." i'm sara eisen, as always with tom keene and scarlet fu.
No agreement on syria was reached between the u.s. and russia after a second day of talks.
Secretary of state john kerry called the talks with his russian counterpart constructive but the two sides ailed to reach a deal on how to get syria to give up chemical weapons.
Jeffrey zients will replace gene sperling as the rector of the national economic council.
Jeffrey zients has held positions in the obama administration since 2000 and nine, and was former acting chief of staff office of management and budget.
The voyager i has left the solar system.
It traveled 12 billion miles beyond the funds.
It crossed out of the solar system apparently in late august.
According to nasa, it was the first spacecraft to break into interstellar space and it has enough power to operate until 2025. do you think they will run into the bad guys in transformers?
I don't know.
Let's get michael bae to help us out.
Taking notes right now.
[laughter] we are back down to earth now to talk about corporations' use of cash.
Interest rates are rising.
Before the era of easy money ends, corporations are raising money with huge deal.
Verizon, the largest that offering this week.
The corporations -- and they can thank ben bernanke.
The timeless debate of best use of cash in the allocation.
Train calderoni limited at cisco with previous tours of duty at sandisk and on the western front for ibm.
You live in a land of financial regression.
How do you go day to day at cisco with this incredibly low interest rate environment?
A good thing or a bad thing?
I think this has been a good thing the last euro two years, because i think it has allowed for investments at a very attractive rate.
To help not only the u.s. but the global economy.
You look at it.
To the verizon deal yesterday, we can look at this anyway we want.
The investors -- "the wall street journal" has pimco and blackrock taking down a quarter.
The cfo of verizon, the cfo of cisco, it is the ultimate victory lap, isn't it?
First of all, as you said, it is the largest bond transaction sent apple a couple of months ago.
It says a couple of things.
First, for verizon, a show support for verizon as a company and also the transaction with the vodafone.
It also shows there is a tremendous amount of cash on the sidelines.
The fact investors were so hungry for this deal, does it make you as a cfo tempted to go out and raise cash yourself?
We have $16 billion in debt from that perspective.
We constantly look at the balance from a leverage perspective.
It is attractive.
I think the companies in general . if we have the need, i think we would go to market.
We also have cash on the ballot sheets so we have funds to make appropriate investment in the business.
This is the heart of it -- the guys like franco baroni bet the interest rate market question mark do you watch "bloomberg surveillance) every day trying to game the interstate market?
We look at what needs we have and how to balance that.
Where the rates have been, it is attractive, as we have seen with verizon.
If we have a need to make an investment, we will consider.
Right now we have a good balance as far as the debt we have and the amount of cash we made for investments.
We have been very active, especially in the last year, with acquisitions.
We are putting money to productive use for long-term return.
It is good to bring in the head of our deals coverage right now.
Spent 11 billion dollars buying 60 companies, branching into software and services and focusing really on those areas -- -- can i ask a question about offshore cash in europe?
You guys, pfizer, ge, sitting on the little money overseas.
What extent does it drive your strategy and acquisitions overseas?
Are you more interested in deals because you have the cash?
We just close our fiscal year, $50 billion of cash.
10 is in the united states, $40 billion offshore.
We stated in the first -- perspective -- and the reason we have the balance of that because of the corporate tax laws in the united states and some of the penalties associated with moving the money around.
One of the things we do consider is where we make the investment.
We stated in the last two years that we expect to look much more at investments outside the united states where we have the catch.
We made some.
A little over a year ago we made the nds acquisition, around $5 billion, which was based in europe.
We made other smaller acquisitions to try to use the offshore cash to make investments to drive the appropriate return in the business.
Mostly in europe?
We have had some in emerging markets, in china, but most of the larger ones we did was in norway and we did nds in the u.k.. those were the two larger ones that were outside the united states.
I think of microsoft and nokia, using overseas cash.
An incentive for companies like cisco to look overseas for acquisitions.
Microsoft was able to use offshore cash with the skype deal a couple of years ago.
I think that was the largest offshore cash use we have seen.
And ge has used it over and over as well, sitting on the cash at least until the government does something -- tax reform is going to be critical to give companies the stability internationally to rebalance the funds and use it appropriately, so we are not driven toward focusing on investment in other parts of the world.
Coming up, we will talk more about the mysterious twitter valuation and the potential ipo with another company that may be convinced to go public, the ceo of gilt.
? this is "bloomberg surveillance." i'm sara eisen, with tom keene and scarlet fu.
Company news now.
Big firms snatching up verizon's bonds.
Pimco bought about a billion dollars of debt while blackrock shelled out about $5 billion.
They help verizon sell all the bond it needed to fund the $130 billion buyout of vodafone buys a stake in the partnership.
Trader joe's, the latest company to change the benefits program to fit the affordable care act.
It is ending health benefits for part-time workers starting next year.
Instead, workers will be given $500 to help them buy insurance coverage on exchanges.
United airlines accidentally offered tickets for free yesterday afternoon.
The tickets resulted from faulty data entered into the reservation system.
United would not say how many flights were booked.
The airline is still deciding whether to honor the tickets.
What you just said about trader joe's -- i'm sorry, that is the most important news of the week.
Henry paulson doesn't matter, that is just -- the reverberations.
Here's a $500 check.
Go take care of it yourself.
I don't get it.
Not trying to editorialize, but whatever your belief, republican or democrat, that is a huge announcement.
One of the unintended consequences for obamacare -- from obamacare.
And the registration deadline on october 1, implementing obamacare.
Twitter, the ipo plan, jon erlichman literally has been up all night digging into the story and he joins us from los angeles.
I watched your coverage yesterday on "bloomberg west" when the news hit, and it was terrific.
You have been adding up the math to find out what we know about twitter's business, because they don't have to disclose it.
The numbers are growing really quickly.
E-marketer put out estimates of where the business has gone the last couple of years, something like $140 million revenue in 2011 and this year they are expected to top 500 million, and then potentially next year a billion dollars which is a number we reported first before anyone else, the goal of 2014 , the year they could top a billion dollars.
It plays into the timing of the ipo.
The last few months, some of the acquisitions and key hiring, suggest they were going down the road.
But when i had conversations with my sources early in the year about what would be one of the key deciding factors, they talk about market conditions.
I am looking at the market.
I see the s&p up 18%, the nasdaq up 23%. facebook blowing both of those away.
Facebook is probably the most comparable company for the market to twitter.
So if marketing -- conditions are as such, the writing i guess is on the wall.
A good point about the timing and the run-up we have seen and facebook shares.
It is also interesting to look at what the future is for the company.
Is it just going to generate avenue from advertising or will it move the needle in terms of e-commerce?
Making a big purchase, the biggest in its history, moving into the advertising space the way it has not before.
It wants to own a certain market, but wants to own the market reserved for prime time television.
They spoke developed #recently to say, hey, we will also make a play for being relevant in prime time.
Twitter wants to be the place that gets a lot of real-time advertising dollars.
The market still is in a lot of ways and tangible, but they are trying to make the case.
You are our west coast stud.
Where do the deal could decide?
Is there some kind of coffee shop or pizza parlor where all the big decisions get made?
That's a good question, tom.
Jack dorsey has his favorite coffee shops, which is sometimes we try to fo