Verizon `Divorce’ Makes Perfect Sense: Butler

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Aug. 29 (Bloomberg) –- Bloomberg’s John Butler reports on Verizon’s attempt to acquire U.K. partner Vodafone’s 45% stake in Verizon Wireless, a potential $130 Billion deal. He speaks with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

This is the early edition of "bloomberg west." i am emily chang.

You can also watch at our later time, 3:00 pacific, 6:00 p.m., for your bloomberg top headlines.

More rye grass being made against the rim wildfire in yosemite national park that is threatening the bay area water supply.

The fire is now about 30% contained.

Firefighters expected have it fully contained within two weeks.

About 192,000 acres have burned.

Vice president joe biden says the obama administration is committed to passing gun-control laws.

He swore in new atf director todd john spirit he also announced to executive actions on guns.

One closes a loophole regarding weapons registration, the other seeks to curb the import of surplus military weapons.

Fast food weichert -- workers are walking off the job today calling for higher wages.

The nonunion workers at restaurant like mcdonald's, wendy's, and kfc, are demand the right to organize and want wages of at least $15 an hour.

According to the federal government, the average fast food worker makes about nine dollars an hour.

We turn back now to our top story.

Chinese smartphone maker has poached egg top google executive as it looks to expand its business beyond china.

-- is leaving to go to xiaomi.

How much of a watershed moment is that for the chinese smartphone company, and put more pressure on apple to exceed in china?

Joining us is gordon chang who has been following xiaomi's growth in china.

What is xio aomi, and what we need to know about?

It sold its first smart phone and 2011. it has not even been two years.

This company is probably going to have somewhere between $15 million and when he million dollars in sales.

Ogle global next year.

It is following some chinese companies that are doing very well in the u.s. zte is a company that has either a third or fourth place in the u.s. depending on who you look at, which analysis you except.

Also, zte had 85 .7% growth in the first quarter of this year in the u.s.. this really is a warning that it is not just zte, it is also xiaomi.

You have an interesting analogy when it comes to apple.

Why should apple be worried, and tell us about the comparison that you like to make.

The comparison i like to make his gm and toyota because gm stated the barn puddle -- ceded the bottom part of the car make it to toyota because they did not think it made sense to sell low margin cars.

Toyota was able to use its expertise and experience.

It now has attacked gm at the top appeared as as been a fundamental mistake for gm.

It is the same as apple which is unavailable in a smartphone.

Essentially the problem here is that you have toyota selling both at the top and the low end, and they are really eating gm up.

I think it is very important right now for us to look at this whole thing and say this is not just a car phenomenon, this is also a smartphone phenomenal.

Apple should really see what is going on in the car market.

Xiaomi only sells in china, but could this have broader implications around the world if xiaomi start selling world ride?

-- worldwide?

The face of android right now is working for a chinese company.

Xiaomi only felt outside of mainland china just hong kong and taiwan.

Next year, they will be all over the place.

As they sell more, their manufacturing costs are going to decrease.

I think that they will probably be the low-cost manufacturer eared that is going to have enormous implications for apple, which is having so many label problems -- labor problems in china right now.

So while apple is dealing with all of these unsavory labor practices on the flying under the radar, zte, you long, and of course xiaomi.

What should apple do you go what a cheaper iphone bd solution?

-- do?

What a cheaper iphone bd solution?

And have got to compete with xiaomi in their home market.

Right now, apple is probably in seventh place, maybe six place according to some analyses.

Really it has been dropping fast, losing almost half of its market share in a year.

With a new offering, it will probably get some back, but apple's marketing tactics and china are all wrong.

You know, xiaomi is not just going to give apple time to sort of catch-up because xiaomi and the rest of them are going to go after apple in all of these markets, including the u.s. what you say apple's marketing check meath and china are all wrong gekko -- techniques in china are all wrong?

It is not have cross marketing.

Xiaomi has cross marketing.

It is offered on q zone.

It has like 710 million resident users.

This gives xiaomi an easy path to expand fast.

Apple does not do this.

It hasn't stored of shunned all of these in social marketing techniques, or at least onto the same extent that chinese companies have used to them.

Clearly you look at xiaomi and say the savings have been working in china.

Apple should probably take a page out of them.

It is not competing in the united states, xiaomi it is competing in china with xiaomi right now.

-- in the united states with , it is competing in china with xiaomi right now.

It will have an upper limit and let the changes the way markets are like they were for the smart phone market, gordon chang, thank you so much for weighing in on "bloomberg west." as tension between the u.s. and syria heats up, the u.s. is gearing up for a potential wave of hack attacks.

You can also watch us streaming on your phone, tablet, and at

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

You can also watch at our later time, 3:00 pacific, 6:00 p.m. eastern.-- is poised to exit the best investment ever make, potentially pocketing as much as $130 billion from its 45% stake in verizon wireless by letting verizon buyout its share.

My partner, cory johnson, back with more.

This is a huge deal, emily.

Telik on a mystery -- the telecom industry is a big deal.

Blumberg analyst joins us right now, john, this is a huge issue.

The vodafone, the airstream, this is an import and part of the verizon for a walk what word wrong in this deal -- for a while.

What went wrong in this deal?

I would not say anything went wrong percent.

From vodafone's standpoint, they do not have any control when they get paid a dividend heard from a perspective of the verizon wireless, or verizon, pardon me, the wireless division is its crown jewel.

I think divorce if you will hear makes perfect sense.

At this point, they're probably just trying to work out a fair price.

And divorcing to be a theme on our show today.

In terms of that fair price, with a metric are we talking about here?

A different kind of metric applied, or not is a higher one, what are they looking for, what is verizon thinking about in terms of the value of the asset?

First of all, verizon would never pay vodafone a price where it would not be a creative overtime if not right out of the blocks.

I think verizon has the price in its head.

Voted --vodafone is kind of an acquisition growth story in a no growth market.

They're currently focused on africa, which is a frontier markets with high growth potential.

They are also looking at acquisition.

They did one recently in cable, they are now looking at some fixed assets.

For them, getting $60 billion in cash immediately to go towards acquisitions would be great for them.

Would they have or would they be prohibited from going up against verizon in certain markets?

With that kind of cash, the debt that is afforded telikecom companies, they could go anywhere.

I do not see it.

They could.

Vodafone has had their play in the states.

It seems they are done with that now.

The domestic carriers have really consolidated within the u.s., but have not really diversified geographically like we see with vodafone and its european peers.

All right, blumberg analyst john butler, thank you very much feared emily?

-- bloomberg analyst john butler, thank you very much.

Like the u.s. preparing for a retaliation from hackers.

The national security agency has tapped packers computers in the middle east to see if they would be able to disrupt u.s. power grids by financial is the -- financial assistance or critical if a searcher.

These respirations become even more critical as the "know your times" -- " new york times" website went down.

I go rightly joins me now from washington.

-- michael riley joins me now from washington.

What do we know and why should we be so worried?

Back in the day when the u.s. did a military strike in the middle east or anywhere, they had to be worried about terrorism as a possible reaction.

Now, they not only have to worry about terrorism, but they be increasingly have to worry about cyber attacks, which is a different kind of asymmetrical warfare.

As they go into the planning process for a potential attack, a strike on syria, they're looking at all sorts of players in the middle east and what they can do.

There is a lot of action going on at fort meade, the headquarters of the nsa right now, developing intelligence profiles of these hackers.

They have to worry about not just syrian hackers, who are probably near the bottom of the latter in terms of their skill level, but also syria of the allies, which include the iranians, who were much better at this and potentially have been -- have a possibility of attacking utilities or electrical grids or even possibly russia, maybe now with official sanctions, but russian hackers are really good at this.

And they are up for higher purity syria could hire some of this stuff done.

What companies in particular might be targeted?

We saw the "new york times" targeted.

What other companies could be hit?

It is a lot of image they want to do and how far they want to escalate this.

The most serious concerns would be critical infrastructure companies, utilities, electrical generation companies, you know, anything -- water plants -- anything that delivers critical services.

That would be a really serious escalation in this battle.

It would possibly invite some retaliation.

Apart from that, what we have seen is an ability and a willingness to go after companies that are either brand names or have some connection to sort of destabilize markets.

So the iranian hackers, for example, have gone after the banking industry by doing pretty certificate -- sophisticated attacks.

These things have lasted over month.

The consumer only sees they can get to their wells fargo atm or website.

Over a period of time until the bank can restore services.

But it really doesn't shake the baking -- it really doesn'shake the shake the banking industry.

They are on high alert dirty go after brands.

Twitter, to one of the targets of the syrian armies, or a media company like the "new york times ," who covers appeared quite alright, bloomberg news michael riley, something we will be following.

Thank you very much.

We'll be right back with more "bloomberg west" it is a moment.

Welcome back to "bloomberg west." i am emily chang.

Technology is pushing the sport of sailing to no limits as we approach the sears america's cup races right here on san francisco they.

Here what oracle ceo larry ellison has to say about his lands to defend the oldest trophy in the history of sports.

We have the best rational sailors -- professional sailors who are incredibly fit athletes driving these unbelievably fast boats to their limits.

So it is the limit as to what technology allows in the 21st century sailing.

Can sailors safely keep up with these high-speed technology changes?

Our editor-at-large cory johnson is back with more.

Assailing have come a long way since the original america's cup.

The original schooner america one in 1851. julianna goldman th -- julianna goldman for guthrie is an author.

I have been america's cup deke for a long time.

That is great to hear.

Long before cnn and ted turner was only known to me as a sailor from atlanta.

This is been really interesting to watch growing up around san francisco.

The story in your book is really interesting about how larry brought this here and really forced it into places including yachts that did not really wanted.

That is exactly right.

The story of his 10-year struggle and the losses in 2003 and the loss in 2007 and being called a chump and sell servicing -- soul-searching about what he had done wrong, and then finding the secret weapon, this winning recipe to come back and win in 2010. he ordered again with this unlikely, nor of the golden gate yacht club.

It is a big, fancy yard club.

-- yacht club.


francis yacht club wanted nothing to do with him.

Well, i think it was really over control.

Larry ellison is in a position where he can obviously have control.

He is fond of control.

Yes, by his own admission he has ocd, and he is definitely used to control.

He is a perfectionist.

Favorites is al -- st.

Francis also wanted control.

He found the marriage made in hand -- and heaven with the golden gate yacht club.

There has been so much drama from the start of the america's cup to the state, as you are referring to.

The technological the lines -- designs have been amazing.

But then this is the cheating game, team oracle illegally waiting some boats.

The judges may force them to forfeit races, kick sailors up the team.

Which is astounding to me and perspective -- perplexing because the oracle racing team have some of the world's top sailors.

They don't need to do anything like this.

I spent a lot of time with these guys.

I spent a lot of time with the larry ellison, and they are an ethical group.

We're going to take a quick commercial break.

Julian guthrie, welcome back" --"bloomberg west" will be right back.

Welcome back to "bloomberg west." i am emily chang.we're talking about the technology of sailing and pushing innovation of sailing.

I will get back to my partner, cory johnson.

Julian guthrie and i are talking about the cheating scandal that is going on.

It is a very strange thing.

Among the worlds top sailors.

They don't need to do anything like this.

I know these guys to be very ethical.

So the jury is out.

The jury will -- quite literally.

Hopefully we will be able to move forward and have a fantastic america's cup finals.

On the other side, the technology problems of the boats, a number of phrases where boats could not finish, which makes for an unexciting finish.

But the technology of these boats is really -- obviously tragically one of the sailors died, and an oracle boat capsized losing a $10 million book, but what is the big take away from the technology decisions made about this race?

I think there are cool things about the america's cup.

I did not start out being a fan, but now i am a total of devotee.

You have the technology, the boats, the seven-time boats which are typically flying on the water.

You have the hard wing above, like the week -- the wing of a jetliner.

And they are going faster than the speed limit on the golden gate bridge.

They're going 50, 54 miles per hour.

You have got the great stories of the sailors and the builders and the engineers.

I think you're going to see a really exciting race.

There is great drama behind it.

I think once you move past this controversy, get past the latest controversy, there will be some really neat things to behold.

Flying above the water, as you say, julian guthrie, really neat book, it is 56 minutes happy hour, and that always means it is time for bloomberg television's on the market.

Bloomberg's olivia stearns has more.

Stocks are rising again for a second day as concerns over serial do appear to be dissipating in the markets.

-- oversteer yet do appear to be dissipating -- over syri a do appear to be despairing.

Shares of campbell soup cooling- off even though the company expected a better-than-expected quarter profit.

They have intensified competition.

The second software watching us forte.

Matt miller is watching it.

The stock shifting into high gear after the company said u.s. sales may exceed 16 million vehicles this month.

They're fast to make all friendly, and increasingly they are in hot demand.

That is right, electric cars are becoming america's favorite new auto.

Elon musk of course in the spotlight with tesla.

Now the detroit giants are following in his footsteps.

The one question for car manufacturers and how quickly will the broader market actually but battery-powered autos into garages.

Ford ceo alan mann ali told betty on "in the loop" they will help transition to all electric.

I think we will see more hybrids first, the fusion hybrid.

We will see more plug-in hybrids.

And then overtime at the gallery -- the battery costs come down and the size becomes less and we have more in the structure, then we will see more and more.

Hybrids have been in such a high demand that ford has been unable to roll out enough cars to keep its customers happy.

Experts say america's second largest competitor-ish shifting the market to meet demand.

Fusions are in various short supply and they're selling very quickly.

Our supply numbers show that they are half of what the industry is.

Markets uncertain like the hybrid version, they are really lohse probably -- really low supply.

They have a shot at it next

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