Live from pier three in san francisco, welcome to the early edition of "bloomberg west." i am cory johnson and for emily chang.
Our focus, innovation, technology, and the future of business.
Twitter announced a new partnership with comcast.
It is about retaining the tv.
One month after unveiling new iphones, apple has upped it'ss ipad lineup.
The mystery is solved.
These mysterious white billboards about government spying programs are popping up in major cities across the u.s. we will talk to the companies behind these billboards to explain what they mean.
First, another day of press conferences and finger-pointing in washington with little progress dealing with the government shutdowns, and there is the looming that ceiling standoff.
Peter cook is with us.
No one is blinking still.
No one is blinking.
Republicans and democrats talking past each other again.
A lot of public its place of outrage and finger-pointing aimed at the other side, but not a lot of progress behind the scenes towards reaching a deal over the shutdown and over that lemming challenge of the debt ceiling.
Senate democrats once again acting on their own, trying to push forward the bill that would lift the debt ceiling and would not attach any conditions to it whatsoever.
They are trying to woo republicans on their site to support this legislation.
Harry reid on the floor today and flooring republicans to join in, including john boehner.
I am happy to talk to john boehner any time.
But it is obvious to me that no amount of talking will make the speaker willing or able to end the shutdown to prevent catastrophic default.
The house speaker taking to the floor himself in the house, again talking about the president's health care law and urging that the individual mandate he delayed.
That that would be the only fair thing to do in this environment, given that businesses were given an extension.
No real signs of progress.
John boehner did meet behind closed doors with the house democratic leader, nancy pelosi, and her number two, steny hoyer.
Not clear on what they talked about.
Again, no real progress to report.
What about the white house?
We have one invitation from the white house, but it is not to john boehner.
The president will be meeting with house democrats, again talking strategy with them and trying to rally the troops to stay unified.
He will offer a similar invitation to other lawmakers in the coming days.
Chief washington correspondent peter cook on this capital showdown, thank you very much.
16 days away from the earliest possible date that twitter can be -- begin an investor roadshow or even start training -- trading.
Today, twitter is announcing a new partnership with comcast.
It wants to boost revenue and take advantage of social media buzz.
Twitter will provide links to various tv shows.
The links will let users record or watch programs on the comcast cable service.
And a feature only available on comcast-owned channels.
This service starts next month.
For more on how big this deal is for twitter and cable companies at large, let's bring jon erlichman in from los angeles.
It has been a big week for twitter as it pertains to television.
They started we -- nielsen unveiled this new way to measure tv because of all the talks taking place on twitter.
There was an announcement between twitter and viacom tied to international markets.
Now you have what i do, basically treating twitter as a tv guide with this partnership between twitter and comcast.
It is largely tied to some of the nbc rogue ramming.
You can click on a link and see what people are talking about.
It allows you to watch live shows on nbc or on-demand.
You can set your dvr through the see it feature.
Comcast owns fandago and there is the option to buy movie tickets.
If you are twitter, you love this.
It is about the tie between twitter and television, but also new business areas that twitter could push into will be looked at.
You think of the pending go -- the fandagongo announcement and it is along the same lines.
There it stood -- the discussion of over-the-top, and it seems there is a paradigm.
Look at comcast, time warner cable, any of the big pay tv players -- they have spent so much time on authentication and tv everywhere, this idea of being able to watch different programs through the cable that you pay for on your phone, on your tablet, because that is the reality.
People are consuming more shows as they go.
If they cannot easily access that through the cable provider they are already using, heck, there are other options.
You can pay for netflix.
Another great example is directv offering the sunday ticket package on your phone.
At big campaign this year called football on your phone.
That is all the great stuff.
With this deal, we will have to use this as a test case of whether or not twitter truly is a tv guide.
Is it a place where people want to talk about the shows they have been watching and get lots of reaction to that?
Or do people truly want to discover shows this way and then literally watch them from there?
Looks interesting stuff, indeed.
It is interesting to see them tackle this right away.
Thank you very much.
Now to apple.
The company is planning a press event and two weeks.
They are suspected to unveil new ipads, according to a person with knowledge.
A new version of the original 9.7 inch ipad will be introduced as well as a new ipad mini with a high definition screen.
We have a guest joining us and he has a sector perform rating on the apple shares.
I want to know would you think about what this means for their business.
The tablet business exploding -- what does this mean for that?
Well, i think there will be some kind of demand for it.
It has been a long time since we had a real change on the big ipad.
I absolutely think that the ipad mini will be a product many people will like.
There will be a couple quarters of a lot better ipad sales from what we have seen.
What do you mean about the change?
Smaller physical hardware.
On the 9.7, it will be a little bit smaller.
A slightly smaller tablet to hold, even though the screen is the same.
What do you make of the timing of the announcement?
What does it mean about shipping for the holidays?
Back to school is already over.
Yeah, back to school is over.
We're expecting the big one, the 9.7, to wants fairly shortly after the actual event in a couple weeks.
The mini is a little less certain.
I think they will try to get it out in november in front of the holidays.
When you look at this, does the new one matter as much in terms of drumming up new demand or is it just sort of maintenance and updates?
Can it create new markets for them?
Wakes you know, i think it is one of the things we have seen over the last year -- maybe the tablet market, particularly at the high-end, not quite as big -- really?
I was thinking about the adoption rate of radio, television, and everything faster.
Smart phones, tablets.
You think that is tailing off?
This is the fastest adoption we have seen.
It may be the fastest to hit the ceiling we have seen.
There will be permutations of this, but it does not look as big as the smart phone market.
Thinking about ipads, you have to be thinking about a cam that is smaller than iphones.
-- a tam that is smaller than iphones.
That means total adjustable market.
You do not sell as many ipads and a quarter than you sell iphones.
Why is that?
What is it about the market for tablets that limits itself?
The two critical things are lack of subsidization, so you do not have incentives to replace it every two years, and the other is the usage.
People use tablets a lot sitting on the couch, sitting at home, and the reality is if you are just using it for web rousing and e-mail, and ipad 1 is still pretty darn good.
You may not feel compelled to upgrade it.
What are we learning about the upgrade cycle for tablets?
One of the interesting developments over the last year or so has been the realization of pc upgrade cycles being much longer than they ever have been historically.
Are tablet upgrade cycles starting to look the same?
Yeah, you know, for a lot of people, i think there is sort of a good enough event horizon.
Once you have a screen with a processor behind it that is relatively fast, you do not need a lot more than that.
In those circumstances, yeah, the replacement cycle can be four plus years.
I think that is what we're starting to see.
Unlike phones where it is basically two years, you are seeing it extend quite a bit.
Take analyst in lovely portland tom at oregon, thank you very much.
Samson pushing into new smartphone frontiers, introducing a phone with a curved display.
We will tell you about the galaxy round, next.
? this is "bloomberg west" on bloomberg television and streaming on your phone, tablet, and bloomberg.com.
Samsung will unveil the first smartphone with a curved display.
It features a five point seven inch curved display that is designed to make the screen viewable from different angles.
It is more comfortable to hold.
He goes on sale in south korea today.
As of now, samsung has not announced plans to sell the phone in other countries.
Sleek, sexy, fetish object -- yes, i'm talking about a number stack.
It has a cult following with hundreds of thousands of users.
The company behind it is launching a new product category of smoke alarms and co2 alarms.
A detector like nothing you have ever seen.
Joining me is the founder and ceo, tony fiddell.
It is a smoke and co alarm.
I have the thermostat -- thank you for be in the customer.
I thought it was something i should try out.
It is interesting.
Of all of the things in the world to innovate, you settled on the thermostat.
And now this.
Well, why not?
I was building a house in lake tahoe, and i wanted it to be green and connected.
Amateur every single system.
The first thing that hit me was the thermostat.
I cannot believe that the thermostat controlled over half of my house's energy.
Yet, i cannot use it.
It was ugly.
So we wanted to go after that problem.
There are smart thermostats on the market besides yours, and they are a pain to use and hard to program.
After the thermostat, when we were designing the thermostat and eight came out, we were given a great success rate.
-- and when it came out, we were given a great success rate.
I was thinking about smoke to take theirs.
I was sitting there at night staring up at this ceiling.
I looked at this object.
It is yellowing, ugly, and i do not know if it is working.
I had no idea if it would wake me up at night.
In some cases it is in the kitchen and you are grilling, it goes off.
You are toasting bread, it goes off.
It is so annoying.
It is supposed to be safe in the government says you have to put them in your house.
Nobody likes them.
Why is the product design and things like that so crummy?
This new device has a very loud horn, which is maybe a good thing, but it is mandated, the decibel level of the horned.
If you're just burning bacon, egg cries wolf at you.
99 times out of 100, the original smoke arms go off without any warning.
It is like, look, you are crying wolf.
So we gave it a thing called heads up.
It is a simple feature.
Instead of going off every single time there might be a problem, we say -- heads up, we think there is smoke in the kitchen.
You might want to check it out.
Just a heads up.
But it is simple.
It does not cry wolf.
It is just a heads up.
We wanted to give people information, not just beeps, so they can take care of the problem.
How is the business?
Interestingly, about 10 million to 12 million thermostats are sold every year in the u.s. for smoke alarms and co2 alarms, over 35 million sold.
We think this is a great business to go into, better than the thermostat market.
So we are very pleased.
You were so involved in the ipod in the beginning of the iphone.
I wonder what you think about -- i was in new york when this one came out.
I wonder what you think about the design direction of the company.
From an apple perspective, they have a very defined language of how they do things.
When you look at it, they take incremental but very important steps, like the fingerprint sensor, written the display -- retina display.
Each of these things, while they may feel incremental, they are big sea changes.
Apple does things when they really believed in them.
They do not add 10 more features and nobody ever uses them.
I will get my alarm system ready.
Absolutely, you have to have a nest attacked.
And i can probably reach the button instead of using a broom stick.
Even better, you do not have to get your broomstick or a ladder.
You can just wave at it.
Tony, thank you very much.
Nike is laying out its plans for the future.
Next, how technology is fueling growth at nike.
? this is the early edition of "bloomberg west." meg whitman says the company is performing better but still faces many challenges.
It is said that hp's revenue should stabilize and next year will be pivotal.
There will also be a big restructuring.
We will have much more on hp' plans coming up in the late edition of "bloomberg west." nike is hosting its first investor meeting in over two years.
This ceo laid out the company's long-term goal.
Stephanie ruhle is on the west coast live at nike headquarters in oregon.
Technology and nike have always gone hand-in-hand, right?
Without a doubt.
Mark parker kicked off the day talking about numbers.
Remember, they are expected to hit $30 billion by 2015. they're going to hit that, and now they are expecting $36 billion in 2017 year the stock is now hovering around highs.
If you look at digital numbers, for 2013, they are expected to be about 540 million dollars.
Kick that up to $2 billion to put out digitally by 2017. people have said this is a marketing committee that sells shoes.
Clearly, it is so much more than that.
When mark parker got up to speak, it was all about innovation.
When we combine our resources, the strength of our product innovation, our expanding manufacturing capabilities, we call this innovation amplified.
It is a powerful driver for growth and one that will define not only nike that the entire industry.
Innovation amplified -- remember, mark parker is more than just a ceo.
He has been with the company for decades and started as a designer.
He is still a designer.
It is often why he gets compared to steve jobs.
Steve jobs was a design enthusiast.
Mark actually takes out a paper and pen and does it himself.
He talks about a succession plan . he said the new management structure they have in place in 2013 as the company completely aligned.
If you think about where they are innovating, talk about their flynet sneaker.
It only retails for $150. it has been a breakthrough for runners.
And it has been a winner from a fashion perspective.
Tons of people are wearing their wrist bands.
They have a new one coming out next week.
People say that is the big innovation.
I do not know if there is a more interesting company van nike.
In terms of innovation, what are competitors doing?
Who are the competitors?
One would think a adidas or under armour.
Let's talk patents.
Nike has matured over 600 at and spirit adidas, 30. under armour, 24. apple has 500 and the last year.
They look more like an apple than adidas did remember how apple performs?
We look at apple as a company that puts out incredible products that focus on design.
That is also what nike does.
Nice to see the new fuel band as well.
Cool is an understatement.
Everyone on the east coast is talking about the shutdown.
In oregon, they are lighting it up.
And some people talking about football.
Julie hyman is in new york.
Let's look at the stock market today.
We have a mixed picture of a tug-of-war continuing over to miss him that, yes, janet yellen is going to take over as head of the federal reserve, and that the same time, the washington shutdown continues.
A couple individual stocks to look at.
Internet stocks again today -- yelp is recovering a little bit.
Pandora and netflix continue to see weakness.
These more volatile stocks are leading some of the losses.
That is it for "on the markets." back with more in 30 minutes.
? this is the early edition of "bloomberg west." i am cory johnson.
You can catch us at our lady year -- later time, 6:00 p.m. on the east coast.
We are closer to the deadline for raising the debt ceiling.
Julianna goldman joins me.
What is the latest?
Everything is still pretty uncertain right now.
We might see a little bit of momentum, the contours of a possible solution might just be a short-term solution though.
Later today at 4:00 p.m., the president as having the house democratic caucus chair over at the white house to talk about the shutdown, potential budget talks, the fight over the debt ceiling.
A white house official says the republican house caucus and then the democratic and republican senate caucuses will also be coming over or invited in the coming days.
What the white house is saying now that they are open to would be a short-term deal to extend the debt ceiling, to reopen the government, to allow for some sort of negotiation over a longer-term budget solution.
We're not talking about the 10- year grand bargain, $4 trillion in savings kind of deal, but something much smaller.
The question will be whether or not republicans will bend on revenues.
Once you get those negotiations, then the white house is saying, ok, we will have budget negotiations and then maybe the debt ceiling can be brought in at the end.
Within the hour, the president will be officially announcing janet yellen as his nominee for fed chair.
Interesting timing here.
Yes, it is, but they need to get the clock started.
Ben bernanke's term expires at the end of january.
It takes a few months to go through the confirmation hearings, to set up the meetings with the senate banking committee.
Look, this will become a political circus with janet yellen versus larry summers.
When larry summers pulled his name out, it was going to janet yellen.
They had to accelerate.
It took a few weeks.
Last week was not a good time to nominate her with the craziness that the government shutdown.
This week the president did not go to asia and there was an opening to finally get this nailed down.
Thank you very much.
From shutdowns to startups, last month, billboards begin going up in san francisco, les angeles, and new york with messages like "the internet should be regulated" and "your data should belong to the nsa." these signs caused quite a stir.
We do not know who was behind them until this week.
It turned out to be a marketing campaign by bit torrent.
These filing service is notorious.
We have a member of bit torrent.
Tell us about these billboards.
These are a way to introduce ourselves again.
Bittorrent became a verb meaning piracy.
In 2004, it was a place where people were exchanging a lot of copyrighted stuff.
It is a misconception.
Bit torrent is a protocol.
Today between 20% and 40% of all the world's internet traffic every day -- simply, it is a better way to move large files.
That is what it was branded for.
A lot of the people that used it to use large files were piracy websites.
But today, facebook, twitter, wikipedia, etsy -- anybody moving large data sets is likely to be using bit torrent.
It is a fascinating technological invention.
Essentially, using the bandwidth available of all kinds of people to make files move from one place to the next, right?
That is exactly right.
It is about distributing data and media information without the need for central servers.
We have always thought this was a really good thing.
The problem was the american public did not know what a server was until a scandal.
Suddenly we realized that this was a good time to start telling our story and a bigger way and reintroduce ourselves.
What is the business model?
It is three revenue streams.
In sumer electronics licensing.
Lots of people moving large media files.
Lots of people want to use the bit torrent brand so they can say they can move things about easily.
There is no real way to move like a 4k giant movie file to an internet-connected tv down the web like we have today.
It was not designed for that.
Bit torrent is the next evolution of the internet.
There was a time when it was thought of as a challenge to artists, but now you're working with artists such as madonna.
In the last year we have worked with artists from every single major label and from some of the biggest hollywood studios.
We have 170 million people using bit torrent products all over the world.
There's about 70,000 titles available for streaming on netflix.
So people worldwide actively using bit torrent products to look for licensing.
The thing they like about bit torrent is there's no middleman.
Nothing in the middle asking artists for their data.
We do not make platforms.
We make protocols.
That is why we're so good for the entertainment industry.
So madonna or her people are using your company to get stuff out without having to go through record labels or whatever?
Madonna's motivation for working with us was interesting and she made a film that is very much about free speech and people generally not being able to say what they want.
For her, there was no other choice.
Bit torrent made so much sense because of our reach.
It is a revenue-generating project for you as well.
No, it was more of a collaboration.
Madonna gave us advice as well.
We wanted to get behind this message that madonna was putting out there.
For us, it was a great association for the bit torrent brand to be associated with madonna, but we really believed in the message she was trying to get out there.
Our technology was designed to do just that.
Interesting, thank you very much.
Heavy machinery and wine -- does not select the save as, nation.
But one winery in napa valley -- we will show you how the technology has made its way to the vineyard, next.
? this is the early edition of "bloomberg west." i am cory johnson.
You can catch us on our late oh -- later show.
Innovation, technology, and the future of wine.
The wine business embracing new technology, even robots.
Rachel crane traveled to napa valley for the first taste of some high-tech wine.
People have been making wine for centuries.
This is the future of winemaking?
This is the future.
But never like this.
Napa valley's hall wines is one of the first to use automation in their craft.
It uses hand sorting machines.
Their job is to identify the best fruit.
It compares the grapes.
If it is not a match, it will kick that out.
This is the nuts and bolts of it.
The robot takes pictures at 10,000 frames per second and analyzes them instantly.
The picture was taken, and accepted as a match.
Then the berries will come across onto this conveyor and be dumped into the bin for good fruit.
If it does not match, there will be a puff of air.
What is this?
This is what was rejected.
I do not want that going into my tank.
The old way was hand sorting and people used pumps.
Different things affected the condition of the grapes.
And the critics -- why are they skeptical of this?
Is it because it goes against tradition?
I think they like the element of romance and tradition and having people sorting.
This is really the old way of doing it.
This is the way you do it.
And there is probably enough to do -- how many bottles in here?
Probably three or four bottles.
And americans drink a lot more than just three or four bottles.
Consumption is only increasing.
What kind of investment was the optic sorter?
$175,000. it is interesting -- compared to the cost of labor or sorting, we will see that return in a couple years.
How do you expect the optical sorter to impact your business?
As a winemaker, quality, and it is a pretty cool tool.
Eight vineyards in napa valley have invested in robotic sorting.
They all hope the next one will be their best vintage yet.
Are we going to see better wine in the next five to 10 years?
I think every vintage is going to be better if it goes through the optic sorter.
Rachel crane now joins us from new york.
Most people do not know this, but i am drinking on the set.
It is actually a hall cabernet.
Nice, where is mine?
It seems like yield is the most important thing.
I wonder if that expanse of this sort are helps them -- of this sorter helps them improve yields?
This machine will not significantly impact their yields at all.
Hall is a midsize winery, and they expect their numbers to remain relatively the same.
I spoke to him about how the consumer would be impacted by the incorporation of automation with hall.
They said it is beyond just the taste.
The consumer can expect to see -- cannot expect to see a lower price point, unfortunately.
The wine may be tastier but not exactly cheaper.
It is interesting that this stuff continues to change after thousands of years.
Still ahead, we see an employee brain drain -- at twitter?
You can watch streaming on your tablet, phone, and at bloomberg.com.
? this is the early edition of "bloomberg west." i am cory johnson.
Now to our focus on twitter as we wait for the company's ipo in just a few weeks from now.
16 days left until they can do the investor roadshow or choose not to do so.
According to our next guest, a big concern for investors might be the possibility of an employee brain drain after the ipo.
Joining us is ryan smith, publishes a platform that helps companies with employee retention.
Brain drain is a big issue for companies.
A lot of people hanging around for the ipo.
Often they leave afterwards?
I do not think it is a twitter-exclusive problem.
It is something that happens with any hypergrowth company.
Someone isn't happy where there is something going on and they go to lunch and come back with a new job.
Or is a lot of data around this problem and you need to get ahead of it.
In reality, you cannot control how people think.
You can only control the environment around them.
Transparency is a good way to start.
You are in the data business.
You do corporate surveys.
What kind of data do you see?
Is a pricing thing is we're not seeing enough of it.
As part of our business, we are helping our customers focus on the customer side.
They are metric their business around the customers.
-- they are metricing their business around the customers.
Organizations are not gathered enough data around employee engagement.
It has been this long hard process that happen once a year primarily, and that does not work.
Designing a survey can be difficult.
You have just the right questions.
How does your business work?
We developed an online survey platform where individuals can create any sort of instrument or assessment.
They can send it out and gather feedback in real-time.
We think about the world pretty simply, around customer insights, market insights, and employee insights.
And we have got over 5000 organizations worldwide that are able to basically collect data and be right.
Give me an example of a place where that would work?
Crate and barrel just launched a review on our life form.
They were a berlin -- able to survey in a cheaper, faster, and better way.
Employee insurance plans -- that is something we did internally.
The insights there were super monumental for us making changes going forward.
We are not assuming what people want.
A company could be going in one way and you do the survey and find they should go a different way?
We had a lot of questions about what to do with our insurance platform that we were providing to our employees.
It was clear that this was a hot one for our employees.
We gathered the data and made a change.
It was favorable for them.
And terms of market focus and customer focus stuff come a where do you see surveys having the greatest impact?
Those are to do very separate things.
Around the customer side, it is critical that we find out as early as possible how a customer feels and whether the engagement was positive or negative.
You want to see how likely someone is to recommend your business to someone else.
Viral growth is a huge thing.
A recommendation from one customer to another is super impact full.
Companies are trying to get ahead of that.
From a market standpoint, what companies do not know -- there is a lot of data they do not have.
The most important data is what you do not have.
We are helping companies, when there is a problem in the boardroom room or in their business, they can qualtrics it and get the data and make it right.
Thank you for joining us.
We will be right back with more.
? welcome back.
Coming up on the lead addition of "bloomberg west," how do you find hot tech workers in silicon valley?
The talent wars tear tear :00 p.m. pacific, 6:00 on the east coast.
Bloomberg television is "on the markets" in new york.
Julie hyman is watching the market.
We're watching stocks in this post-poll situation, tug-of-war situation over the expected appointment of janet yellen as fed chair and the continuing government shutdown.
A little bit of optimism in the markets now that perhaps there is some agreement being cooked up in d.c., but not a lot of optimism.
We will get the fed minutes in just a few moments, so that will play into trading.
Now for the sector report, focusing on financials.
We have been crunching the numbers to figure out which of the nations largest tanks are likely to pose the biggest profits in the third quarter.
Michael moore joins me with the details.
Let's look at this ensemble of the six biggest banks.
What are we expecting?
You have seen a lot of banks warn about mortgage banking and fixed income trading.
Mortgage banking has been slower because of rates going up.
And fixed income, everyone was wedding -- waiting for the fed tabor decision.
It is really going to depend on what businesses you are big and.
The question is, can they cut costs and up to keep up with the drop in mortgage?
Morgan stanley, equity trading probably did pretty well.
You saw the stock market go up.
They have a big retail brokerage.
That is expected to do pretty well.
It depends on what businesses you are in.
It seems like expectations for earnings estimates are pretty low.
We have had a lot of analysts cutting the numbers.
Expectations have come down a lot because of all these warnings.
Jpmorgan saying that trading is going to be down.
Some of the european banks saying similar things.
So expectations have come down a