Will Dell Win Buyout Fight?: Bloomberg West (08/15)

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Aug. 15 (Bloomberg) -- On today's "Bloomberg West" the focus is on innovation, technology, media and the future of business. Hosted by Emily Chang with Editor-at-Large Cory Johnson and Senior Correspondent Jon Erlichman from Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

? pier 3 in san francisco, welcome to the late edition of bloomberg west where we cover the media companies reshaping our world.

Let's get straight to the rundown.

Did michael dell get a boost from a bad earnings report?

It plunged more than 70% in the last quarter and could help him win the fight to take the company private.

Will you soon be able to pay with facebook?

A new feature to make the checkout process faster when shopping online.

And with more people cutting the cable cord, roku is cutting into apple tv's user base.

First to the lead.

Results are in for dell as the pc maker pushes earnings in the heated buyout battle.

Flat from the year before, but profit tumbled 72%. they could not make up for the worldwide pc slump.

The release comes a day before a hearing on activist investor carl icahn's request to fast- track.

He wants to stop the board changing a rule in which they can vote on the buyout plan.

A vote is scheduled for next month.

Who benefits from today's earnings?

We turn to cory johnson he was here with today postural down -- with today's report.

This is how michael dell looks at the company, not howcarl icahn -- how michael dell looks at the company, not how carl icahn looks at it.

Sales were basically flat, we call zero %0% year over year.

The strength of lenovo that we reported last night or early this morning, their business is taking off.

I think what was interesting was to see their server business really doing quite well.

It is growing at double-digit rates.

24% year-over-year growth is pretty impressive.

They had an increase in pc sales.

The quarter was not terrible for dell.

Was it designed to look bad?

Companies try to do things to make the numbers look better in any quarter.

The company has reasons, michael dell had reasons.

There is so much crummy behavior from companies, the numbers that don't hold information when it matters.

They have damning information long after the results -- but the numbers can help his case.

I think they will hurt more than help his case.

The answer is icahn benefits.

The business is not as crummy as it had been.

The signs of the turnaround are very evident in these results.

Dell could have kept these in the back pocket and i think that they should be commended for it.

Cindy is the managing director and research analyst at discern, and she worked at dell.

Do you agree with what he is saying?

Yes and no.

It very rarely happens.

When i look at the bigger picture of dell, michael has been at the helm trying to turn this company around.

He has had the opportunity to get into mobility.

Much like lenovo has done.

Ibm's pc business in 2005 was one of the larger in china.

Lenovo gets more than half of their revenue from mobile now.

They have tried again and again and have failed.

Per some reason, they're mobile business is down 10% year-over- year.

They failed in tablets in smartphones where lynne novo has seen success.

-- lenovo has seen success.

They will focus on taking the company private and even if they don't, that is their great hope.

Profits were down nine percent year-over-year.

Do you think the numbers were bad enough to help michael dell vasqu's case?

I would be inclined to take the money being offered.

I have heard that the additional bump up in price offered a couple weeks ago is all my go ichael.

I don't know if that is correct.

We have reported the same thing, michael dell has reported his cash to bump up the offer.

Given everything we know about the pc business since the deal got announced in early february, even faster than it had been, silver lake still wants to be in the deal.

And the pc business is far from dead.

While you were gallivanting off doing an exciting story, the pc business has done quite -- every time somebody does a pc is dead story, they probably did that story on a pc.

We have seen a slowdown in the refresh of the pc business.

They don't buy one every three years, maybe every five or six years.

The business is still there.

And i think that has been a key component to dell selling all their other offerings.

I think you are right.

Tech is a crummy business.

How bright is the spot?

Is it bright enough to signal some positive potential here?

I think a couple things are going on here.

It is better than down 70%, but that is not something to get me excited.

Servers are being virtualized.

They are trying to get into software but that is the domain of a company like youngware.

Hardware gets commoditized even more than it has been.

Dell is trying not to be a hardware company anymore.

What happens tomorrow and ultimately in this battle?

That will be in the hands of the judge.

It will probably get decided tomorrow.

If the judge sides with icahn, it will open up more bits and more offers.

He has indicated he is not terribly fond oficahn icahn and his antics.

It could mean that the board was doing the right thing.

Do they end up going private?

As we all thought they would at the beginning?

A larger part seems to be a courtroom battle.

I am not going to try to make a call on the attorney part.

Do you think they should go private?

I think if they can be turned around, they have better hopes as a private company.

It is easier to do that behind closed doors.

How difficult will this be ? i can throw out names from last century like date way -- [inaudible] it may be gets taken out.

We are seeing microsoft starting to get cozier with hardware companies -- to mention gateway, we have seen microsoft struggling with the problem of inventory.

Any company goes into the hardware business, they get stuck with inventory and they try to mess with the channel.

There are so many problems out there.

We will see at least one decision and part of the way this story might end, we will see.

Thank you, cindy and cory.

Facebook knows your birthday, relationship status, and it can know your payment information as well.

That story, next.

? ? this is "bloomberg west." i'm emily chang.

Facebook wants to make their products a for more than one billion users.

The program rewards people that report security problems within facebook.

The chief security officer was on surveillance this morning to discuss.

No one is perfect when it comes to security, so you need to engage with smart people around the world.

You will have great benefit when you do.

By crowd sourcing, we are not outsourcing.

We are increasing the quality inside the company and all the way around.

We have hired a couple of people that we have gotten to know through the bounty program.

Dosh facebook has issued a reward , the youngest of which was 13 years old.

Facebook is touching it rejigg -- using the information to check with partner sites.

It will begin with one or two partners.

Andy russell is the founder and ceo at sugar media group that invests in digital media companies and is also the cofounder of inside hook.

What is facebook trying to do here?

What is the grand plan?

Facebook is going after a massive market.

Paypal has revenues of $6 billion.

If they can grab a small part of that, it is a huge upside for facebook.

We give them so much information already, do we want to give them our payment information as well?

That is a huge question.

We tell them who our friends are and what we are doing that night.

It has become the "manage our life walks box." it is a great question and something consumers will have to wrestle with.

Go ahead with the benefits.

The benefit is for the consumers.

It makes it extremely easy to transact.

One click a way, and for the merchants, that drop off or bounce rate between a purchase and non-purchase to have to go to paypal and back, one click away to make a payment will increase the payments by 30% for the merchants.

Right, so what does it mean for retailers?

It is a massive opportunity.

I think something like 15% of e- commerce is done on a mobile device and that is growing at a rate of 30% this year.

Retail on your mobile device is an absolutely huge opportunity and another way for retailers to tap into the consumer.

The better it is going to be for the retailer.

There is the immediate spontaneous purchases right there as you are checking out.

The easier it is, the more purchasing is going to be done.

Facebook would not be performing the transaction, but is this a step in that direction?

Could day, someday, process payments as well?

If they do process the payments, the margin goes way up the cousin they are not going through the credit card companies and it could become a cash flow opportunity.

There is fraud risk, validation of who the consumer is, a lot of protection and work that paypal has gone through years and years to proerfect.

It is clearly something they are thinking about.

They are not just doing this to experiment.

They are looking at this as a way to monetize the relationship with their consumer.

Thank you so much for weighing in.

Cutting your cable core?

You are not alone.

New numbers on streaming media and which devices are being used the most.

? welcome back.

Sony might be on the verge of improving the streaming tv offerings, reaching a preliminary pact with viacom to stream cable programs to sony tv, gaming console s, and blu-ray players.

That includes nickelodeon, comedy central, and mtv.

More americans are cutting their cable cords.

They are using street he rejigged -- streaming services.

24% use apple tv.

Jon erlichman is in l.a. interesting numbers and equally interesting is the global sales of connected televisions hitting 300 and 30 million by 2017. -- 330 million by 2017. we are joined by anthony wood, the ceo of roku.

Do the numbers match up with your own stats?

You have talked about apple and rope to -- roku splitting that.

We roughly split the sales but roku is quite a bit higher.

What we have always known is that our customers really use their box a lot.

They buy to stream, and they use it a lot.

Although sales are roughly similar, usage is much higher.

But the sales are no doubt climbing.

The last public number you shared was 5 million in april.

Are you north of 6 million now?

The last number we gave out was 5 million, we have not given out any new numbers but sales growth is very strong.

The interest is growing by leaps and bounds.

New content, we have over 1000 channels.

It is pretty clear that the tv message of the future is everyone streaming.

We are starting to see strong growth as a development.

Google has unveiled -- people like the price of it.

The immediate question to ask, is it hurting roku?

Have your sales since the launch of chrome cast been affected?

Sales went up after the launch of the product.

We saw the same thing when apple launched several years ago.

Sales doubled even though they took half of the market.

Still a lot of americans don't quite understand it yet.

The biggest thing that helps us is anything that build awareness around the category.

Google starting to get into this builds awareness and when customers do research, they realize we offer great content with competitive prices.

They almost always byuy a roku player.

Do you feel pressure to lower the price of the box?

Google went pretty low, two.

-- low, too.

We launched theroku 3 we lauched the roku 3 at $99. it became the most popular sku.

People love streaming and if there is extra value, they will pay a little extra for it.

We do offer the $49 player.

It offers mobile access is a feature.

The product is focused on using their phones, that is a mode that using a lot of people want to do.

But not all of the time.

We think having a regular remote control with a non--- screen tv interface is what makes a complete product.

Mobile access is a feature and not a complete product.

Speaking of money, you have raised a lot of it.

Are you going to do any acquisitions?

We still have $60 million in the bank and we know that the market is exploding.

We want to make sure that we take advantage of this as quickly as we can.

We will work with smaller acquisitions but we don't have anything in mind right now.

Tank you for sharing your time with us and sharing.

Apple has been criticized as losing its innovative edge.

Roger has some suggestions next on "bloomberg west." ? ? you are watching "bloomberg west ." china mobile is in negotiations with apple about carrying the iphone.

They are talking about tech issues, china mobile posting a two percent gain.

Building a new 4g network hitting the bottom line.

It makes chipmaking equipment , replacing mike splinter who will remain chairman.

The demand for semiconductors remains sluggish.

Microsoft is getting into the chip business, designing and building their own chips for the very first time.

The chip for the xbox console kinect motion sensor.

Manufacturer of the chip will be outsourced to taiwan semiconductor.

We are just a few weeks away of the next iphone due to be introduced on september 10. updated ipads will be in the fall.

Is the company losing its innovative way?

We spoke with elevation partners and an apple shareholder about what the company should do to get its groove back.

I think that apple has extraordinary business opportunities right now.

I would look at icloud, and recognize that people using the iphone are running their lives off of it.

If you think about what google does where it gives you alerts to what is going on in the real world as it pertains to your life, we are scratching the surface with those kind of contextual applications.

I want apple to give me an itinerary for the day, shows me the traffic as it is happening on my way to work, shows me the wikipedia of people i will see.

Your phone has all of the data for you and apple can process that in the cloud.

They have the wrong people running those businesses.

These are fixable problems.

If apple is not the innovation leader anymore, who is?

I think that innovation is the wrong thing to look at.

It has become a buzzword that does not mean anything.

The industry has moved from the early adopter phase of smartphones to the middle and later adopters.

We are in a lull, a. of digesting -- a period of digesting new cycles.

There are a lot of companies coming off of glory days and have not figured out their next step.

Things do not grow in a linear fashion to the sky.

Apple is not one of the horizontals.

Yahoo ahas been in a downdraft fo rar a long time.

It will cause hedge fund managers, who are frankly struggling on their own, they are also having problems.

They are trying to make something happen.

Tec is a big target because people have not forced tech companies to use their cash wisely.

Another company is blackberry . is this going to go the way of palm?

The issue is that they were the worlds best at managing e- mail e-mail in a mobile setting.

-- managing e-mail in a mobile setting.

There is a market for that which is substantial and ongoing.

Black areas now a company in decline.

-- blackberry is now a company in decline.

It is a national -- natural extension of windows.

They are trying to bring windows into the mobile environment.

It has millions of active users who are satisfied with the products.

E-mail is not as sexy as video and other things that people do on smartphones.

Let's talk about twitter here.

Companies in the downdraft or horizontal, twitter has not said they are going public but the steps have been taken, many perceive, to be going public.

Will it continue rising ? things are getting better.

Facebook is an example where things are getting better but twitter is a mixed bag.

It is an extraordinary marketing success.

They viewed twitter as the most important thing since air underwater.

They somehow got it to be attached to every media product on earth and has made themselves part of a broad conversation.

The value of that is huge.

I think that the twitter product is terrible.

Tech 101. you have succeeded in the strategic thing of enormous value, please make your product is great as the service is.

I like it and i think it does go public, but probably not right away.

That was roger mcnamee earlier today.

Is the nfl powerful enough to get cbs back on the air for 3 million time warner cable customers?

That is next on "bloomberg west." ? ? welcome back.

This is "bloomberg west." dan lobe targets disney.

Their hedge fund acquired 100 and $13 million -- $113 million.

He wanted sony to spin off part of the entertainment unit, a move that sony rejected.

Is it possible oprah winfrey could star in a film on her own network?

Two of her most trusted advisers are hoping so.

Eric and sherry, presidents of the oprah winfrey network has said it is something they are willing to explore.

Everybody wants more opera, don't they?

Eric and sherry find themselves in a pretty good spot right now.

If you think to the launch of the oprah winfrey network in 2011, the ratings were a disappointment to some and we saw opera step in as the ceo.

-- oprah step in as the ceo.

Since then, the ratings have picked up in a big way and they are cash flow positive.

She will be on the big screen with the movie "the butler." she talked about oprah's acting.

If i were to tell you my secret dream which i know eric shares which is not on the table in terms of really serious business discussions, it is for her to star in something.

To act in something on her own network.

Wouldn't that be something?

Have you talked about it?

Just you.

When she sees the interview, it will be the first time she has heard about it.

You could have started something there.

She has an exclusive list, lo indsay lohan.

These exclusive interviews have always been a big thing for her.

For own, they really want to have these tentpole events to drive a lot of activity and interest.

She has 20 million followers where she can get the word out to help raise awareness to some of her other programs.

Also worth noting that lindsay lohan be doing a documentary steering -- series.

And then potentially, you know, oprah from the world of reality might be doing a little bit more acting.

Jon, thank you.

We will have much more of your interview with the presidents of the oprah winfrey network next week on "bloomberg west." more than the 3 million time warner cable customers are still without cbs as the company's fight over how much cbs should get paid for its signal.

What impact will the nation's highest rated sport have?

Who better to talk about this then the former san francisco 49ers officer.

I thought it would be interesting to look at how you think the leagues are looking at this battle between cbs and time warner.

The pga took it on the chin last week because they were not broadcast during one of their four major championships.

I imagine the nfl is freaking out.

3 million people, they are not happy.

When millionaires and billionaires are getting back from their vacations, the players are working hard, there will be a solution because there is too much at stake.

The gold standard of sports, the nfl.

These events don't get broadcast, who is winning?

It is preseason only at this point, but is cbs getting hurt more because they paid so much for the contract?

Cbs is getting hurt and time warner is losing money.

The fans just want to watch the games.

You can take my kids and my house, but don't take my games away.

One of the argumentative point is digital rights.

You think there will be a resolution before this.

Is the nfl in the room when these discussions are happening?

Are they calling time warner and saying fix this or telling cbs to take what they are offering?

There are lots of backroom conversations with any kind of legislation.

It is real money, hundreds of millions or ultimately billions of dollars.

The money is always negotiable.

If it is something more significant than that, nobody is seeing it.

Wax is the step from preseason to the regular season to be the difference maker?

Like your first date and getting married, it is a major step up.

I am surprised it did not happen for the pga championship.

Tiger won the week before and is a ratings bonanza.

But he did not have a good tournament and phil mickelson had a terrible tournament.

There are a few classic events.

The masters is number one.

It the british open.

The nfl is in a whole different galaxy.

That is why the years are working a little slowly right now.

When you talk about fans not getting their foot all, it is like a kid not getting a candy bar.

They will scream and ultimately the parents will give them the candy bar.

Does it wrap up until then?

Or does it not happen until week one?

I think that we see some digits raised before we have a solution.

Fox is launching a new sports network.

They have tried this before and it did not work.

With nbc and comcast competing with espn, does fox have it figured out this time?

They have the money to put into it.

Sports is a global language that is getting stronger every day.

Fox has a global footprint and there is enough space.

We think about sports more and more in our society.

Here is an opportunity to see if one mistake turned into a massive success.

Andy doluchich, thank you.


The transportation of one of nasa's facilities, we will take you to mcdonald's serving up footage of the moon.

You can also catch us on your tablet and bloomberg.com.

? ? i'me mily emaily chang, this "bloomberg west" is on your tablet and bloomberg.com.

You think mission control, giant space centers, but what about an abandoned mcdonald's? we are here at mcdonald's. we relabeled this mcmoon's. what is the basic premise of what you are up to?

The lunar orbiter image recovery project.

They were sent to the moon in 1966 and 1967 by nasa to do the first photo reconnaissance of the moon's surface.

This was the precursor to the apollo missions.

The project is to go back and get the complete historical record of the moon as it was in pristine condition before anybody -- think about how much it would cost to fly a mission in 1966. it is an instinctual thing.

You are back here, here is a fry . they come all the way back here, more canisters.

And more canisters.

To see that many canisters is really strange.

I will introduce you to austin new does all of our backhand work.

Hide the porn.

[laughter] it significantly degraded the actual quality of what was taken on the spacecraft.

It was not a digital process back then whereas right now you can do what was impossible to do in 1964 and 1965. i love this picture because this is the north pole of the moon.

It is incredibly important because, i think, this area right here is where the first permanent outpost is going to be on this ridge.

Do you get tired of thinking about this?

I am a lunatic, what are you talking about?

This is a miracle of 1960s american technology.

These bumps or craters, this is 200 meters across the moon's surface.

Neil and buzz landed safely on the moon because of these images.

I really want this material to be conserved.

Part of the scientific validity is going back to the original sources.

That was ashlee vance.

It is time for the bwest byte.

Cory is here.

What do you have for us?

14,000,000,400 and $41 million.

-- 13,144,000,000 million.

Is the pc dying?

It is a big number, i will not argue with the number.

I know that cory johnson walks around town with only a tablet.

He is a tablet man, a modern-day man.

And you have one of those keyboards that you attach.

I stopped carrying a computer , i am only bringing my ipad but i carry a keyboard.

I still carry a laptop, a tablet, and two phones.

I like the phone.

When you get some new apple products hitting the market, we are talking about the new ipad and the new ipad mini.

Emily goes for the ipad mini.

I love it.

[laughter] you don't travel quite as light.

I don't travel light, but you always have to be prepared.

[laughter] over packed.

I am glad we don't travel together.

Thank you for watching this edition of "bloomberg west." we will see you tomorrow.


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