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00:00EMILY: I'M EMILY CHANG AND YOU ARE WATCHING "BLOOMBERG WEST." LET'S GET YOU STARTED. THE STATE DEPARTMENT HAS ISSUED A WORLDWIDE ALERT AS THREATS OF TERRORISM HAVE INTENSIFIED. BRUSSELS REMAINS ON HIGH ALERT, THOUGH OFFICIALS SAY SCHOOLS AND SUBWAYS MAY REOPEN WEDNESDAY IN THE BELGIAN CAPITAL. AUTHORITIES CHARGED A FOURTH PERSON WITH TERRORISM RELATED OFFENSES TODAY AND PLAN TO KEEP THE ALERT AT THE HIGHEST LEVEL UNTIL NEXT MONDAY. FRENCH FIGHTER JETS ARE NOW FLYING MISSIONS TARGETING THE ISLAMIC STATE IN IRAQ. THEY ARE THE FIRST TO BE DEPLOYED FROM THE CHARLES DE GAULLE AIRCRAFT CARRIER. AN EXPLOSIVE BELT WAS FOUND IN A PILE OF RUBBLE. OFFICIALS SAY IT WAS PACKED WITH EXPLOSIVES USED IN THE ATTACKS. VLADIMIR PUTIN PLEDGING TO EXPAND TIES BETWEEN TEHRAN AND MOSCOW. RUSSIA HAS OFFERED A $5 MILLION LOAN TO IRAN. HE MADE HIS FIRST VISIT TO IRAN SINCE 2007. EMILY: I AM EMILY CHANG AND THIS IS "BLOOMBERG WEST." COMING UP, ALIBABA FOUNDER JACK MA IS IN TALKS TO BUY A STAKE IN ONE OF ASIA'S MOST VENERABLE NEWSPAPERS. PLUS, HIGH-SPEED INTERNET ACCESS MEANS NO DAY OF REST FOR HOLIDAY SHOPPERS. WALMART MOVES CYBER MONDAY TO SUNDAY. AND HEWLETT-PACKARD HAS STAND-ALONE RESULTS TOMORROW. WE WILL PREVIEW THE NUMBERS FOR HP ENTERPRISE AND HP QUEUE. FIRST, TO OUR LEAD. JACK MA IS IN TALKS TO BUY A STAKE IN A NEWSPAPER. HE WOULD BE FOLLOWING IN THE FOOTSTEPS OF OTHER TECH EXECUTIVES GETTING A FOOT IN THE MEDIA BUSINESS. THERE IS JEFF BEZOS, WHO BOUGHT A STAKE IN THE WALL STREET JOURNAL, AND CHRIS HUGHES, WHO BOUGHT A MAJORITY STAKE IN THE NEW REPUBLIC IN 2012. I ASKED JACK MA ABOUT THIS EARLIER THIS MONTH. TAKE A LISTEN. JACK: I HAVE TO CARE FOR MY SHAREHOLDERS AND OUR STRATEGY. EMILY: WOULD SOMETHING LIKE THAT MAKE SENSE? JACK: YES, I THINK. WE INVESTED IN WE BOW -- WE BO AND ONLINE MEDIA. WE INVESTED IN SONY BECAUSE PEOPLE SAY THAT INTERNET DESTROYED THE OFF-LINE RETAIL BUSINESS. WE SAY WELL, IF YOU CAN DO BETTER AND WE WORK TOGETHER, WE CAN DO BETTER. WE WANT TO MAKE AN EXAMPLE. IF SUNNI CAN BE BETTER, IF A REGIONAL STORE CAN BE BETTER, WITH THE MEDIA, SAME THING. WE THINK INTERNET PLUS MEDIA MIGHT BE VERY INTERESTING TO HAVE, FOR US TO UNDERSTAND THEM, FOR THEM TO UNDERSTAND US. WE WANT TO SET EXAMPLES, AND ALSO, FOR US, WE NEED MEDIA TO HELP OUR SMALL, MEDIUM SIZED COMPANIES, TO PROMOTE. BY THE WAY, ADVERTISING DOLLARS FROM SMALL BUSINESS CAN HELP THE MEDIA. IT CAN HELP THE ECONOMY IN A WAY. EMILY: SO, ARE YOU GOING TO BUY THE SOUTH CHINA MORNING POST? JACK: I DID NOT SAY THAT. I AM WATCHING SEVERAL COMPANIES RIGHT NOW. EMILY: SO, THAT WAS A COUPLE OF WEEKS AGO. WHY DOES JACK MA WANT TO GET INTO THE MEDIA BUSINESS AND HOW DOES IT FIT INTO ALIBABA'S OVERALL M & A STRATEGY? JOINING ME NOW IS DAVID KIRKPATRICK, A BLOOMBERG CONTRIBUTING EDITOR . SOUTH CHINA POST FANCIES ITSELF A BIT OF A SEPARATIST FROM THE MAINLAND IN TERMS OF POLITICAL LEANINGS. TOM, I WILL START WITH YOU. WHAT DO WE KNOW ABOUT THIS? TOM: AS OUR COLLEAGUES IN ASIA HAVE POINTED OUT, THERE ARE DISCUSSIONS OF BUYING SOME KIND OF STAKE. WE DON'T KNOW EXACTLY WHAT THE FINANCIAL TERMS ARE. BUT AS JACK MA EXPLAINED IN YOUR INTERVIEW WITH HIM, THERE ARE A LOT OF DIFFERENT WAYS YOU CAN SLICE THIS. LIKE JEFF BEZOS , JACK MA HAS BEEN A REAL DISRUPTER OF THE INTERNET. THIS IS AN OPPORTUNITY FOR HIM TO BRING SOME OF THE MOJO HE HAS BROUGHT FROM E-COMMERCE IN CHINA TO A PUBLICATION THAT OVER THE LAST SEVERAL YEARS HAS NOT DONE AS WELL FINANCIALLY. THAT SAME DISRUPTION THAT HAS SO MESSED WITH NEWSPAPERS HERE IN THE U.S. EMILY: IT'S INTERESTING, GIVEN THE POLITICAL SIGNIFICANCE. UNLIKE THE UNITED STATES, ALIBABA HAS A TIGHT RELATIONSHIP WITH THE CHINESE GOVERNMENT. IT'S A NECESSITY OF DOING BUSINESS. THE SOUTH CHINA MORNING POST HAS POSITIONED THEMSELVES AS AN OUTSIDER WITH REGARD TO THE GOVERNMENT. DAVID, WHAT DO YOU MAKE OF THAT? DAVID: THAT'S A GOOD POINT. I DON'T THINK IT'S EASY TO ANSWER THAT QUESTION. I DON'T THINK JACK MA SHOULD BE VIEWED AS IN THE POCKET OF THE CHINESE GOVERNMENT, FOR ONE THING. HE WOULD LIKE TO BE SEEN AS AUTONOMOUS, BUT AS YOU POINT OUT, IN REALITY, YOU CAN'T HAVE A BUSINESS OF THAT SCALE WITHOUT THE NODDING ACCEPTANCE AND PROBABLY ACTIVE PURSUITS ARE PATIENT -- ACTIVE PARTICIPATION OF THE GOVERNMENT. THIS IS LIKE THE WASHINGTON POST OF THE REGION. FROM JACK'S POINT OF VIEW, SOMEBODY WHO WANTS TO GET INTO A HIGH STATUS PRODUCT, THIS IS THE PLACE TO GO. IF I WERE A HONG KONG READER OF THE PAPER, I WOULD HAVE SERIOUS RESERVATIONS ABOUT IT BEING CONTROLLED BY A CHINESE NATIONAL. ALTHOUGH, IF YOU ARE GOING TO HAVE A CHINESE PERSON CONTROLLER, JACK MA IS PROBABLY AS INDEPENDENT A THINKER AS SOMEONE IN CHINA CAN BE. EMILY: YOU ARE FOCUSED ON GLOBAL COMMERCE AND E-COMMERCE, BUT HE IS SAYING HAVING THIS COULD HELP OUR BUSINESS. DAVID: IT SEEMS LIKE EVERY TECH COMPANY NEEDS TO OWN A NEWSPAPER THESE DAYS. THIS IS MEDIA MEETS COMMERCE. THEY ARE ALL COMING TOGETHER ONLINE AND OFF-LINE. IF YOU OWN A MEDIA OUTLET WITH A SUBSTANTIAL REACH, OBVIOUSLY, YOU CAN USE IT FOR YOUR PURPOSES AS WELL AND EVERY MEDIA MOGUL WILL SAY WE CAN'T DO THAT -- WE WON'T DO THAT. EMILY: EXACTLY. DOESN'T IT DEFEAT THE PURPOSE OF BEING A STANDALONE MEDIA ENTERPRISE IN THE FIRST PLACE? CYRIAC ROEDING : I AM SURE JEFF BEZOS DID NOT ONLY HAVE BUSINESS REASONS TO BUY THE WASHINGTON POST. THERE WAS PROBABLY ALSO A PERSONAL INTEREST. I WOULD NOT BE SURPRISED IF THAT WAS THE CASE HERE. EMILY: ALIBABA HAS BEEN $13 BILLION IN DEALS SO FAR THIS YEAR. I SPOKE WITH MIKE EVANS, WHO IS IN CHARGE OF GLOBAL EXPANSION FOR ALIBABA AND ASKED HIM ABOUT THE M & A STRATEGY IN PARTICULAR. TAKE A LISTEN TO WHAT HE HAD TO SAY. MIKE: IN THIS SECTOR, E-COMMERCE, WHERE WE ARE APPROACHING CLOSE TO 400 MILLION CONSUMERS, THE CONSUMER DESIRES ARE CHANGING DRAMATICALLY. A BIG PART OF OUR STRATEGY DOMESTICALLY MEANS WE HAVE TO BE POSITIONED WITH THE RIGHT INVESTMENTS TO SATISFY THAT DEMAND. EMILY: TOM, HOW MIGHT ALIBABA USE THIS INVESTMENT TO SATISFIED A MYSTIC CONSUMERS DEMAND? TOM: TO THE EXTENT THAT, AS JACK MA SAID IN HIS INTERVIEW, YOU MIGHT BE ABLE TO FIND WAYS TO BENEFIT YOUR SMALL TO MEDIUM-SIZED BUSINESSES THAT DO BUSINESS ON ALIBABA. I AM NOT SURE EXACTLY HOW HE PLANS TO DO THAT. THE REAL KEY HERE, AS WE HAVE BEEN ALLUDING, AS CMP -- SCMP IS SO HIGHLY REGARDED, A VENERABLE NEWSPAPER. THEY ARE GOING TO HAVE TO GO TO GREAT LENGTHS TO MAKE SURE THEY KEEP THE REPUTATION THEY HAVE HAD THESE OF THE MAINLAND CHINA. IT IS A GLOBAL NEWSPAPER IN MANY WAYS. WE LOOK TO IT FOR AN AUTHORITATIVE VOICE ON MANY ISSUES. THEY ARE GOING TO HAVE TO WORK REALLY, REALLY HARD, AND YOU DON'T WANT A SITUATION WHERE IT IS STARTING TO FEEL LIKE JACK MA IS TURNING THIS INTO A VEHICLE WITH ANY PARTICULAR POINT OF VIEW OR BUSINESS STRATEGY. EMILY: AT THE SAME TIME, THE WALL STREET JOURNAL IS REPORTING THAT ALIBABA IS SHOPPING ITS STAKE IN THEIR VERSION OF GROUPON OR YELP. THEY DO MOVIE TICKETS AND RESTAURANT BOOKINGS. ONE OF ALIBABA'S COMPETITORS IS TRYING TO NAIL DOWN A STAKE IN THIS COMPANY. WHAT DO YOU MAKE OF THAT? CYRIAC: IT'S A DECISION TO SEPARATE THE ASSETS FROM THE OTHER WORLD. ESSENTIALLY, ALIBABA IS SAYING WHY SHOULD I OWN A 7% STAKE IN SOMETHING WHEN ONE OF MY TOP TWO COMPETITORS IS ALSO HOLDING A STAKE? WHY WOULD I WANT TO BE IN THAT RATHER THAN CONTROL MY OWN DESTINY, BUILD MY OWN WORLD, AND COMPETE LIKE CRAZY IN THE MARKET AGAINST THE PLAYER THEY CURRENTLY HOLD A STAKE IN? THEY ARE BASICALLY SAYING LET ME GET OUT OF THIS THING, CONTROL MY OWN WORLD -- AND THEY ARE GOING TO HAVE A BATTLE THERE BECAUSE THIS IS A MARKET LEADER. THEY ALSO HAVE ALIPAY , THE LARGEST PAYMENT PLATFORM THAT IS INDEPENDENT IN CHINA. ALL OF THESE THINGS COMBINED. TAO BAO, ALIPAY, AND BUILDING THEIR OWN COMPETITOR, THAT'S PRETTY INTERESTING. THEY HAVE ALREADY PUT A BILLION DOLLARS INTO THE JOINT VENTURE, SO THIS WILL BE THEIR TICKET TO FREEDOM. EMILY: I LIKE THAT. STICK AROUND WITH US, AS WELL AS DAVID KIRKPATRICK. WE ARE GOING TO BE TALKING ABOUT CYBER MONDAY, OR BLACK NOVEMBER, AS WE ARE NOW CALLING IT. TOM GILES, THANK YOU FOR JOINING US FROM NEW YORK. A NEW REPORT DETAILS THE CONTINUING ECONOMIC SHIFT. ACCORDING TO A LONDON FIRM, THE NUMBER OF STARTUPS IN CHINA NEARLY DOUBLED FROM 2010-2014. THE COUNTRY HAS BEEN PUSHING TO DEVELOP A CONSUMER-ORIENTED ECONOMY. TO HELP WITH THAT TRANSFORMATION, CHINA HAS PROVIDED SUBSIDIES AND FINANCING TO PROMOTE INTERNET AND TECH INNERVATION -- INNOVATION. THERE ARE 4000 NEW BUSINESSES LAUNCHING EVERY DAY. COMING UP, A RETAILER MOVING ITS CYBER MONDAY TO SUNDAY. WE WILL TELL YOU WHO AFTER THE BREAK. AND AFTER A DISAPPOINTING EARNINGS REPORT, WILL GAMESTOP GOES THE WAY OF BLOCKBUSTER VIDEO AND RADIOSHACK? THAT'S NEXT. ♪ EMILY: WE ARE WATCHING GAMESTOP, FALLING AS MUCH AS 15% IN TODAY'S TRADING. THE FORECAST MISSED ESTIMATES, EVEN WITH THE HOLIDAYS APPROACHING. SALES OF A HIGHLY ANTICIPATED A -- EA GAME ABOUT STAR WARS FELL SHORT OF EXPECTATIONS. WALMART IS PUSHING CYBER MONDAY BACK TO SUNDAY. ALL 2000 OF WALMART'S DEALS WILL GO LIVE AT 8:00 P.M. EASTERN THIS SUNDAY, RUNNING INTO THE NEXT DAY IN PART OF WHAT THE -- AS PART OF WHAT THE RETAILER IS CALLING CYBER WEEK. THIS IS PART OF A LARGER TREND OF ROLLING OUT SALES BEFORE THANKSGIVING. JOINING ME IS DAVID KIRKPATRICK. AND SYRIA GRITTING -- CYRIAC ROEDING. CYRIAC: THE PROBLEM IS THIS IS ACTUALLY RED NOVEMBER. THE BOTTOM LINE FOR THE RETAILER DOES NOT LOOK GOOD. EMILY: 50% OFF. HOW CAN ANY OF THESE COMPANIES BE MAKING MONEY? CYRIAC: THAT IS THE BIG PROBLEM. ALL OF THESE RETAILERS ARE SAYING WE HAVE TO STOP DISCOUNTING. THEN YOU WALK INTO THE STORE AND IT SAYS 40% OFF. SOMETHING IS NOT RIGHT. THEN BLACK FRIDAY COMES ALONG AND IT 60% OFF. WE NEED SOME NEW STRATEGY. EMILY: DAVID, HAVE YOU BEEN SHOPPING ONLINE LIKE I HAVE, OR ARE YOU WAITING FOR BLACK FRIDAY? DAVID: WITH THE WEATHER, A LOT OF RETAILERS ARE FEELING THE HIT OF A LACK OF CLOTHING SALES FOR CLOTHING PEOPLE WOULD NORMALLY BE GETTING FOR WINTER. IF YOU LOOK AT THE STATISTICS FOR WHAT IS CALLED CYBER MONDAY, THE DOLLAR AMOUNT OF SHOPPING HAS GONE UP DRAMATICALLY YEAR AFTER YEAR, BUT IT STILL AMAZES ME HOW LITTLE COMMERCE IS HAPPENING ONLINE CONSIDERING THE KIND OF CONVENIENCE AND DEALS, AND THE EFFICIENCY THAT HAS EMERGED IN OUR ECONOMY AROUND THIS. I THINK IT'S LOGICAL FOR WALMART TO BE PUSHING THIS REALLY HARD, ESPECIALLY SINCE AMAZON HAS COME UP THEIR TAILPIPE SO HARD. EMILY: AMAZON STARTED A COUNTDOWN TO BLACK FRIDAY ON NOVEMBER 1. BUT THIS SHIFT IS SOMETHING YOU KNOW A LOT ABOUT. SHOP KICK IS FOCUSED ON OFF-LINE TO ONLINE AND ONLINE TO OFF-LINE . CYRIAC: 92 PERCENT OF RETAIL SALES IN AMERICA ARE HAPPENING IN BRICK AND MORTAR STORES. EMILY: THAT IS SHOCKING. CYRIAC: 92% OFF-LINE. $2.9 TRILLION IS THE TOTAL. $1.4 TRILLION IS INFLUENCED BY PREVIOUS ONLINE ACTIVITY. YOU GO ONLINE TO CHECK OUT A PRODUCT, BUT YOU END UP BUYING IT AT A BRICK-AND-MORTAR STORE. THEN MOBILE COMES INTO PLAY. YOU CAN INFLUENCE THAT. SO, ONE OF THE THINGS WE DID AT SHOP KICK WAS TO SAY WHAT IF WE COULD REPLACE A 30% DISCOUNT WITH A $.30 REWARD AND ACHIEVE THE SAME ? WE TRIED IT WITH BEST BUY FOUR YEARS AGO, AND IT TURNS OUT IT'S TRUE. SO NOW, YOU CAN SEE THAT WITH ALL THIS TECHNOLOGY, THAT YOU CAN DRIVE PEOPLE TO THE STORE AND REWARD THEM JUST FOR WALKING IN WITH $.30. EMILY: INTERESTING. NOW, OVERNIGHT, APPLE CHANGED THEIR PHONE BILL BOARDS TO APPLE TV HERE IN SAN FRANCISCO. WE HAVE VIDEO OF THAT. I AM ASSUMING APPLE TV WILL BE ONE OF THE HOT ITEMS THIS HOLIDAY SEASON. WHAT DO YOU THINK? DAVID: PEOPLE SEEM EXCITED ABOUT IT. SHOP KICK IS REALLY BEAUTIFULLY POSITIONED FOR THIS TRANSITION WHERE WE ARE TRYING TO GET CONVENIENCE BOTH IN THE PHYSICAL WORLD AND THE VIRTUAL WORLD. YOU COULD SAY APPLE TV IS AN EXAMPLE OF THE SAME TREND BECAUSE IT IS TRYING TO BRING TOGETHER THE TRADITIONAL TV EXPERIENCE WITH THE CONVENIENCE AND CHOICE OF THE INTERNET. THIS IS THE BIG STORY ABOUT COMMERCE GENERALLY, WHICH REALLY APPLIES TO A LOT OF THE STORIES WE ARE DISCUSSING TONIGHT. THE VIRTUAL AND PHYSICAL WORLDS HAVE TO COME TOGETHER BECAUSE THAT'S THE WAY WE ALL LIVE. EMILY: APPLE TV IS NOT COMPATIBLE FOR FOUR K YET. CYRIAC: I DON'T FULLY GET THAT. I THINK IT'S STILL A COOL PRODUCT. I THINK IT'S GOING TO BE A HOT ITEM UNDER THE CHRISTMAS TREE THIS YEAR AND A LOT OF PEOPLE WILL GO FOR IT BECAUSE IT IS FINALLY THE INTERFACE EVERYBODY HAS BEEN WAITING FOR. REMEMBER STEVE JOBS SAID IT WAS A HOBBY. NOW IT HAS TURNED INTO A BUSINESS. WE WILL FIND OUT AFTER THE HOLIDAYS IF THAT IS THE CASE. EMILY: WELL, I AM GOING TO BUY ONE. I AM READY FOR MY UPGRADE. HOPEFULLY MY HUSBAND ISN'T WATCHING THIS PARTICULAR SHOW. HE JUST GETS THE BILL. THANK YOU SO MUCH. DAVID, YOU ARE WITH ME THROUGHOUT THE SHOW. THANK YOU SO MUCH. ACTIVIST INVESTOR CARL ICON HAS ANOTHER TARGET IN HIS SIGHT. FILINGS SHOW HE HAS TAKEN A 7% STAKE IN XEROX. SHARES IN THE DOCUMENT TECHNOLOGY COMPANY ARE SURGING AFTER HOURS. CARL I CHAN IS ONE OF WALL STREET'S BEST KNOWN ACTIVIST INVESTORS. JUST LAST WEEK, WE REPORTED THAT HE SWAPPED A LARGE POSITION IN EBAY FOR 45 MILLION SHARES OF PAYPAL. COMING UP, IS THIS STEEL MEDICINE FOR INNOVATION? -- IS THIS MEGAMERGER BAD MEDICINE FOR INNOVATION? AND HOW THIS COULD GIVE US THE BEST CLUE YET ABOUT WHETHER ALIENS EXIST. ♪ EMILY: A MAJOR DEAL TODAY IN THE PHARMACEUTICAL INDUSTRY. PFIZER AND ALLERGEN JOINING FORCES, CREATING THE WORLD'S LARGEST DRUGMAKER. THE IN VERSION STRUCTURE ALLOWS PFIZER TO TAKE ADVANTAGE OF LOWER TAX RATES IN IRELAND, BUT THERE ARE IMPLICATIONS ABOUT R & D AND INNOVATION IN THIS AREA. WHAT DOES THIS MEAN FOR R & D? WHAT DOES IT MEAN FOR INNOVATION? >> BRETT SAUNDERS, THE CEO OF ALLERGEN, SOON TO BE COO OF THE MEGA ALLERGEN-PFIZER, DOES NOT BELIEVE THAT PHARMA SHOULD DO DRUG DISCOVERY. HE THINKS THAT STARTUP DRUG COMPANIES SHOULD BE DOING INNOVATION, WHEREAS PFIZER SHOULD BE FOCUSED ON MARKETING, GETTING DRUGS THROUGH THE LATE STAGE OF THE PIPELINE AND OUT IN THE MARKET. HE THINKS A PHARMA SHOULD CUT BACK ON EARLY-STAGE ARE ANY -- R & D. EMILY: IS THIS A LOSS FOR HEALTH CARE? OUR NEW DRUGS GOING TO BE CREATED? CAROLINE: THE MAJOR QUESTION IS ARE BIG DRUGS BEING MADE OUT OF THE PIPELINE? THERE HAS TO BE PEOPLE WHO WILL BUY THE DRUGS COMING OUT OF BIOTECH. THAT'S A QUESTION. IS THERE ENOUGH CAPITAL IN THE SPACE THAT THESE SMALL DRUG COMPANIES CAN IPO, CAN GET BOUGHT BY BIG PHARMA, BECAUSE THEY NEED TO HAVE BUYERS. RIGHT NOW, THERE IS. EMILY: VC MONEY HAS BEEN FLOODING INTO BIOTECH AND THESE SMALL COMPANIES. WHAT SORT OF TRENDS ARE YOU SEEING? CAROLINE: IT'S INTERESTING WITH RESPECT TO DRUG INNOVATION. THERE ARE TWO SETS OF VC FIRMS. THERE ARE TRADITIONAL LIFE SCIENTIST. THEN YOU HAVE TECH VCS IN SILICON VALLEY WHO ARE INTERESTED IN HEALTH, BUT A LITTLE MORE CAUTIOUS ABOUT GETTING INTO THE DRUG MAKING WORLD. THEY WILL DO DIGITAL HEALTH, DIGITAL APPS, SOFTWARE COMPANIES AROUND HEALTH, BUT THEY ARE SCARED OF MOVING INTO LIFE SCIENCES BECAUSE THEN THEY HAVE TO DEAL WITH THE FDA. EMILY: SO, OBVIOUSLY NEW DRUGS ARE GOING TO KEEP BEING CREATED, BUT WOULD YOU SAY THE PACE IS GOING TO CHANGE? CAROLINE: NOT IN THE NEAR FUTURE. SO FAR, WE ARE ON A WAVE OF INNOVATION WITH NEW MONEY POURING IN, AND WE WILL CONTINUE ON THAT TREND FOR A WHILE. EMILY: THANK YOU SO MUCH. HP ENTERPRISE AND HP QUARTERLY REPORTING EARNINGS TOMORROW. WE WILL TELL YOU WHAT INVESTORS ARE LOOKING FOR NEXT. ♪ EMILY: I'M EMILY CHANG AND THIS IS BLOOMBERG WEST. WE ARE JOINED BY JULIA FOR A FIRST WORD UPDATE. GOOD MORNING. JULIA: THANK YOU, AMALIE. JACK MA IS MAKING HEADLINES AGAIN, BEING LINKED WITH SOUTH CHINA'S MORNING POST. TALKS ARE IN AN ADVANCED STAGE AND AN ANNOUNCEMENT MAY COME SOON. IT WAS ONCE THE WORLD'S MOST PROFITABLE NEWSPAPER, HOW IT -- HOWEVER, IT HAS STRUGGLED IN RECENT YEARS. JACK MA WILL JOIN JEFF BEZOS AND CHRIS HUGHES IN GOING TO PRINT. TAKATA -- FORD HAS JOINED HONDA, NISSAN, AND TOYOTA IN SAYING IT WILL NOT USE TAKATA PIES INFLATION IN ITS VEHICLES. TAKATA HAS ACKNOWLEDGED -- TAKATA'S INFLATION AND ITS VEHICLES. TO CUT ACKNOWLEDGED IT IS UNDER STRESS -- TAKATA HAS A KNOWLEDGE DID IS UNDER STRESS WITH MORE THAN 20 MILLION VEHICLES BEING RECALLED -- HAS ACKNOWLEDGED IT IS UNDER STRESS WITH MORE THAN 20 MILLION VEHICLES BEING RECALLED. PETRO CHINA WILL USE PROCEEDS TO MEET ANNUAL GROWTH TARGETS. AND AFTER WINNING A PATENT SUIT , UNWIRED PLANET'S SHARES SOARED. EMILY: INTERESTING. HOW BIG A DEAL IS IT? IT SEEMS LIKE A FAIRLY SIGNIFICANT WIN FOR A SMALL PLAYER IN THE TECH SPACE. JULIA: ABSOLUTELY. THE COMPANY'S WIN GOES A LONG WAY TOWARD VALIDATING THEIR PORTFOLIO. IT'S A GOOD TECH COMPANY. IT ONLY HAS 16 EMPLOYEES, BUT IT'S ONLY REAL ASSETS WERE ACQUIRED FROM ERICKSON IN 2013. A LOT DEPENDS ON THE OUTCOME OF THE LAWSUITS. AND ALSO NEGOTIATIONS OVER THE FEES UNWIRED USES TO CHARGE THEIR TECHNOLOGIES. A LITTLE-KNOWN TECH COMPANY, BUT WATCH THIS SPACE, IT SEEMS LIKE IT IS GOING TO DO ALL IT CAN TO PROTECT ITS PROPERTY. EMILY: THANK YOU FOR THAT UPDATE. EMILY: I AM EMILY CHANG AND THIS IS BLOOMBERG WEST. NOW FOR A LOOK AT SOME TECH COMPANIES WE ARE WATCHING, I AM JOINED BY ANAND SRINIVASAN AND OUR GUEST FOR THE HOUR, DAVID KURT PATRICK. DAVID, -- DAVID KIRKPATRICK . DAVID, WE TALKED SO MUCH ABOUT SQUARE LAST WEEK. THE COMPANY IS OUT TODAY WITH A NEW CHIP READER. SQUARE ORIGINALLY ANNOUNCED THIS PARTNERSHIP AT THE WORLDWIDE DEVELOPERS CONFERENCE. WHAT DO YOU MAKE OF THIS? THE FIRST READER THAT CAN ACCEPT WIRELESS TRANSACTIONS? DAVID: IT'S A BIG MOVE AND WELL TIMED. THEY HAVE ALWAYS BEEN VERY NARROW IN TERMS OF WHAT THEY DID. I THINK IT'S INTERESTING THE WAY THE STOCK JUMPED ALMOST TO THE LEVEL OF THE PREVIOUS PRIVATE INVESTMENT ROUNDS WHEN THERE WAS SO MUCH HAND RAKING ABOUT THE PRICE THEY WENT OUT AT. I THINK THEY WERE LOOKING FOR THE POP AND THEY GOT IT. JACK DORSEY, DESPITE HIS MULTIPLE RESPONSIBILITIES, IS A GREAT CEO. EMILY: I DID SPEAK WITH JACK DORSEY ON THE FLOOR OF THE NEW YORK STOCK EXCHANGE LAST WEEK. TAKE A LOOK AT WHAT HE HAD TO SAY. JACK: WE ARE GOING TO FOCUS A LOT OF ENERGY ON THE NEW READER. WE WANT TO ACCEPT A CHIP CARD WITHOUT HAVING TO THINK ABOUT IT. EMILY: SQUARE AND MATCH BOTH WENT PUBLIC LAST WEEK. BOTH HAD A BIG TOP. THEY -- BIG POP. THEY BOTH ENDED DOWN SLIGHTLY TODAY. WHAT YOU MAKE OF THE PERFORMANCE WE HAVE SEEN SO FAR? >> IT'S CHALLENGING BEING A PUBLIC COMPANY IN ANY ENVIRONMENT. IT'S A DIFFICULT ENVIRONMENT AND THE NEW IPOS ARE FIGURING THAT OUT, PARTICULARLY , MANY OF THESE COMPANIES HAD HERALDED EVALUATIONS ON THE PRIVATE SIDE. NOW THAT THEY ARE GOING PUBLIC, THERE IS A LOT MORE RESPONSIBILITY FOR THEM. EMILY: DAVID, IT WASN'T JUST A POP. IT WAS A FAIRLY SIGNIFICANT POP. DO YOU THINK THESE IPOS WERE PRICED POORLY? DAVID: THERE IS A LOT OF PSYCHOLOGY AND IPO PRICING AND PART OF IT IS YOU WANT BUYERS TO FEEL IT THEY HAD A GOOD DEAL -- GOT A GOOD DEAL. I THINK IN SQUARES CASE, IT SEEMS LIKE THEY COULD'VE PRICED AT HIGHER AND STILL DONE FINE, SO MAYBE YOU ARE RIGHT. MAYBE IT WAS UNDERPRICED. EMILY: HOW OPTIMISTIC ARE YOU ABOUT THE FUTURE OF SQUARE TO BECOME MORE THAN A CREDIT CARD PAYMENT PROCESSING COMPANY? THESE OTHER BUSINESSES MAY BECOME MORE SIGNIFICANT. THE CEO IS EXPECTING TO SEE A LOT OF GROWTH. BUT WHAT DO YOU SEE SQUARE BECOMING? DAVID: I THINK SQUARE IS A SMALL BUSINESS SOFTWARE COMPANY. IT'S NOT JUST A TRANSACTION IN PAYMENTS COMPANY. I THINK JACK DORSEY SEES HIMSELF AS EMPOWERING SMALL BUSINESS OWNERS AND ENTREPRENEURS EVEN TO THE LEVEL OF PEOPLE WHO ARE SOLE PROPRIETORS. I KNOW IN HIS MIND HE THINKS IT'S ANALOGOUS TO THE WAY TWITTER EMPOWERS ALL OF US TO BE BROADCASTERS ON THE INTERNET, WHICH WAS A REVOLUTION, AND HE WANTS TO CREATE ANOTHER REVOLUTION FOR SMALL BUSINESS. EMILY: WE ARE FOLLOWING TO OTHER STOCKS, HP ENTERPRISE AND HP INK. THIS WILL BE THEIR FIRST EARNINGS REPORT SINCE THE BIG SPLIT. WHAT ARE YOU LOOKING FOR? >> I THINK WE WILL SEE A TALE OF TWO CITIES AND THE EXPECTATIONS WILL REFLECT THAT. FROM HP, I WANT TO SEE GROWTH. ON THE ENTERPRISE SERVICES, IT IS A SELF-INFLICTED WOUND THEY HAVE TO CORRECT IN ORDER TO SHOW SALES GROWTH. HP INK, GIVEN THE TRIALS OF THE PC MARKET, I WANT TO SEE STABLE GROWTH, BUT I ALSO WANT TO SEE OPERATING STABILITY AS THE QUARTERS GO ALONG. THEY ARE BOTH LARGE COMPANIES EVEN AFTER THE SPLIT, SO I WANT TO SEE SOME SERIOUS PROGRESS ON OPERATING INCOME AND CASH FLOW FROM HP INK AND I WOULD LIKE TO SEE SOME SIGNS OF SALES GROWTH FROM HP ENTERPRISE. EMILY: DAVID, DO YOU THINK THAT ONE OR BOTH OF THESE COMPANIES CAN REALLY REINVIGORATE THEMSELVES? DAVID: ANY COMPANY THAT IS PRIMARILY A PC COMPANY, IT'S A LEGITIMATE QUESTION, HOW WILL THEY REINVIGORATE THEMSELVES? BUT I AM CURIOUS, I WOULD LOVE TO ASK A NON--- ANAND, HP ENTERPRISES CALLS THEMSELVES A CLOUD COMPANY. DO YOU THINK THEY CAN COMPETE WITH MICROSOFT, GOOGLE, EVEN IBM? ANAND: YOU HIT THE NAIL ON THE HEAD. THIS NOTION OF A PRIVATE CLOUD IS YET TO BE INVENTED. IF IT'S AN INNOVATION, IT'S SOMETHING THE CUSTOMERS DON'T WANT OR HAVEN'T FIGURED OUT THEY WANT YET. WHEN WE THINK OF A CLOUD, WE THINK OF GOOGLE, FACEBOOK, YAHOO!, AMAZON, MICROSOFT. INTEL HAD ITS ANALYST DAY LAST WEEK, AND HALF OF THE ENTERPRISE I.T. IS GOING TO THE PUBLIC CLOUD. THE OTHER HALF IS LOOKING INSIDE THE COMPANY AND BECOMING A DIFFERENT SORT OF PLATFORM. EVEN INTEL IS SEEING THIS. THIS NOTION OF A HYPER CLOUD WITH HP, CISCO, OLD TECH THAT MAY OR MAY NOT BE LEGITIMATE IS A STRUCTURAL PROBLEM FOR HP ENTERPRISE. IT'S A FANTASTIC QUESTION. I THINK THE ANSWER -- WE WILL FIND OUT SOON ENOUGH. EMILY: WELL, WE ARE GOING TO BE WATCHING THE NUMBERS TOMORROW AND WE WILL BRING THAT TO YOU. THAT'S WHY LOVE YOU, DAVID, FOR HITTING THE NAIL ON THE HAD THERE. ANAND SRINIVASAN, THANK YOU AS ALWAYS. MAY THE FORCE BE WITH GOOGLE USERS. TODAY MARKS FOR WEEKS -- FOUR WEEKS UNTIL THE PREMIERE OF THE FORCE AWAKENS AND GOOGLE IS ALLOWING USERS TO CHOOSE THE DARK SIDE OR ARE THE LIGHT. YOU CAN USE CUSTOM MAPS AND YOUTUBE. THERE ARE MORE FEATURES TO COME. THERE IS ALSO A TALLY. SO FAR, THE DARK SIDE HAS THE EDGE, BUT NOT BY MUCH. UP NEXT, ANOTHER DEPARTURE AT YAHOO!. WE TALLY UP THE DAMAGE WITH MARISSA MAYER. ♪ EMILY: TOMORROW ON BLOOMBERG, PIMCO MANAGING DIRECTOR RICHARD CLAIRTON ADJOINS SURVEILLANCE AT 6:30 A.M. EASTERN. -- CL ARIDA JOINS SURVEILLANCE AT 6:30 A.M. EASTERN. ROB BURNETT IS LEAVING YAHOO! AND ADDING TO A GROWING TREND OF DEPARTURES. -- ROB BARRETT IS LEAVING YAHOO! AND ADDING TO A GROWING TREND OF DEPARTURES. IN TOTAL, YAHOO! HAS LOST 13 KEY EXECUTIVES THIS YEAR ALONE. WHAT IS BEHIND THE MASS EXIT US? HOW MUCH DO THESE DEPARTURES POINT TO YAHOO!'S STRUGGLE UNDER THE LEADERSHIP OF MARISSA MAYER? JOINING US IS OUR EDITOR AT LARGE, CORY JOHNSON . IT SEEMS LIKE MORE BAD NEWS FORMER US UP. CORY: -- FOR MARISSA. CORY: IT'S A HARD THING. MANAGEMENT CHANGE MEANS MORE MANAGING CHANGE. DAVID AND I BOTH NO MARTHA NELSON. SHE IS PROBABLY BEST KNOWN FOR CREATING IN STYLE, ONE OF THE GREAT MAGAZINES OF THE LAST TWO DECADES. WORKED AT PEOPLE AS WELL. WHEN YOU START TO CHART SOME OF THESE NUMBERS. YOU SEE A SIGNIFICANT CHANGE IN THIS CALENDAR YEAR OVER THE STEADY DRUMBEAT OF CHANGE OVER THE PRIOR YEAR. PRETTY SENIOR EXECUTIVE DEPARTURES. WHO IS SENIOR? WHO ISN'T SENIOR? EMILY: A COUPLE WERE BIG HIRES FOR HER. AND YOU HAVE BOB PECK OUT THERE SAYING IT MIGHT BE TIME TO CONSIDER NEW LEADERSHIP AT THE TOP. DAVID, YOU AND I WERE TALKING ABOUT THIS LAST WEEK AND YOU WERE ON THE SIDE OF GIVE MARISSA MAYER MORE TIME. DAVID: I AM ALWAYS ON THAT SIDE. I TRIED TO BE CHARITABLE. I LIKE HER. I THINK SHE DID GREAT WORK AT GOOGLE. I THINK WE HAVE TO LOOK AT YAHOO! AND THEIR QUOTE UNQUOTE STRATEGY. IT FEELS VERY REACTIVE. AS COREY POINTS OUT, IF SOME OF THE KEY EXECUTIVES SHE BROUGHT IN TO BUILD A POWERFUL MEDIA BUSINESS, TO IMPROVE THE POWER OF THE MEDIA BUSINESS, ARE LEAVING, THAT'S NOT A GOOD SIGN. THEY CONTINUE TO HAVE GOOD BUSINESS IS LIKE YAHOO! MAIL AND SOME OF THE APPS ALL OF US USE, THE WEATHER APP. I EVEN LIKE THE NEWS APP THAT DELIVERS HEADLINES, BUT IN REALITY, THEY ARE NOT BIG ENOUGH TO SUSTAIN A COMPANY THAT IF IT WERE EVER TO SPIN OFF ALIBABA HAS TO BE PERCEIVED AS AN EXCITING COMPANY WITH THE CAPABILITY TO GROW. EMILY: WE WERE LOOKING AT SOME OF THE NUMBERS . JUST THREE OF YAHOOS BOARD MEMBERS WERE ON BOARD BEFORE SHE JOINED. I WAS SPEAKING TO SOMEONE WHO IS NO LONGER ON THE BOARD AND HE SAID MY GOODNESS, GIVE THE WOMAN A BREAK. GIVE HER SOME TIME. I MEAN, DO YOU THINK SHE HAS HAD ENOUGH TIME? CORY: I THINK THURSDAY VERY CLEAR DRUMBEAT OUT THERE SAYING THAT WHAT SHE IS DOING ISN'T WORKING. OREN BUFFETT SAID WHEN THE REPUTATION OF THE BUSINESS IS BAD -- WARREN BUFFETT SO WHEN THE REPUTATION OF THE BUSINESS IS BAD AND THE REPUTATION OF THE MANAGER IS GOOD, THE REPUTATION OF THE BUSINESS WON'T SURVIVE. CHANGES BEGET MORE CHANGES. I THINK MARTHA IS A TERRIFIC EDITOR, BUT A LOT OF PEOPLE DON'T LIKE TO WORK WITH HER BECAUSE SHE IS A TERRIFIC EDITOR AND LIKES TO MAKE CHANGES ON HER OWN. A WAVE OF CHANGES AT ONE LEVEL CREATES A WAVE OF CHANGES AT ANOTHER LEVEL. I DON'T THINK THIS SHOULD BE A GREAT SURPRISE TO YAHOO! WATCHERS BECAUSE IT HAS ALWAYS BEEN THUS. EMILY: THE WOMAN IS ABOUT TO HAVE TWINS. SHE IS ABOUT TO GO ON A SHORT MATERNITY LEAVE. I WANT HER TO SUCCEED, DAVID. HOW DO YOU SEE THIS PLAYING OUT? NOBODY CAN THINK OF SOMEBODY BETTER THAN MARISSA WHO DOESN'T HAVE A JOB. DAVID: TIM ARMSTRONG DIDN'T HAVE AN EASY JOB TURNING AROUND AOL. HE IMPROVED IT. THESE OLD MEDIA BUSINESSES BASED ON AN OLD MODEL ARE NOT AN EASY TASK TO REVIVE. IM SYMPATHETIC TO THE NOTION THAT MARISSA NEEDS TIME. I THINK THE NATURE OF HER HIRING AND HER PERSONAL DISABILITY IN THE INDUSTRY, SHE IS UNDER A MORE INTENSE MICROSCOPE THAN ANYONE ELSE AT A COMPANY OF THAT SIZE OR A COMPANY THAT IMPORTANT. THE COMPANY'S IMPORTANCE MAY NOT BE AS GREAT AS THE SCRUTINY SHE GETS WOULD INDICATE, ASIDE FROM THE FACT THAT IT OWNS THIS HUGE CHUNK OF ALIBABA, WHICH IS SORT OF AN HISTORICAL ANOMALY. IT'S A TOUGH CHALLENGE. I THINK SHE HAS A LOT OF GIFTS AS A LEADER, BUT AS I HAVE SAID BEFORE, I HAVE BEEN DISAPPOINTED TO SEE THE STRATEGY BECOME MORE AND MORE REACTIVE. EMILY: AOL, GOOGLE, AND TWITTER ALL HAVE HIGHER PROFITABILITY PER EMPLOYEE THAN YAHOO!. CORY: THEY HAVE SUPER HIGH MARGINS. SHE HAS BEEN THERE FOR QUITE A WHILE AND SPENT BILLIONS OF DOLLARS TO MAKE IT HAPPEN FAST. SHE DIDN'T SAY THIS IS GOING TO GO SLOW. SHE SAID IT'S GOING TO HAPPEN FAST AND SHE SPENT BILLIONS OF DOLLARS OF INVESTOR CAPITAL TO DO SO, AND IT HASN'T HAPPENED. EMILY: CORY JOHNSON, OUR EDITOR AT LARGE. DAVID KIRKPATRICK, IT HAS BEEN GREAT TO HAVE YOU HERE THROUGHOUT THE SHOW. COMING UP, A MASSIVE SCIENCE PROJECT IS UNDERWAY IN THE MIDDLE OF ONE OF THE DRIEST DESERTS ON EARTH. THE DIRECTOR OF THE GIANT TELESCOPE PROJECT TELLS US ABOUT THIS MAJOR UNDERTAKING, NEXT. PLUS, A FIRE WARNING THAT COULD HAVE SEVERE IMPLICATIONS FOR FUTURE MISSIONS TO MARS. WE WILL EXPLAIN NEXT. ♪ EMILY: TODAY IN OUT OF THIS WORLD, MATT DAMON MAY HAVE BEEN ABLE TO SURVIVE MARS IN A HOLLYWOOD MOVIE, BUT IN REALITY, SCIENTISTS ARE NOWHERE NEAR READY. A REPORT FOUND THAT DEEP SPACE TRAVEL POSES SERIOUS DANGERS TO ASTRONAUTS HEALTH, INCLUDING IN ADEQUATE FOOD, RADIATION EXPOSURE, AND HEIGHTENED RISKS OF DEVELOPING CANCER. IT COMES AS A WARMING -- WARNING AS NASA PLANS TO SEND THE FIRST MANNED MISSION TO MARS. STICKING WITH SPACE, CONSTRUCTION HAS BEGUN ON THE GIANT MAGELLAN TELESCOPE, A MULTINATIONAL SCIENCE PROJECT LED BY THE U.S. TO BUILD WHAT WILL BE THE WORLD'S MOST POWERFUL TELESCOPE AND GIVE US USE INTO SPACE UP TO 10 TIMES THE RESOLUTION OF THE HUBBLE TELESCOPE. BUT WHY? JOINING ME NOW FROM L.A., THE DIRECTOR OF THE PROJECT, PAT MCCARTHY. THANK YOU FOR JOINING US. IF IT IS MORE POWERFUL THAN THE HUBBLE TELESCOPE, WHAT KINDS OF THINGS WILL YOU BE ABLE TO SEE? PAT: IN SOME CASES, THINGS WE HAVE NEVER SEEN BEFORE. IN MANY CASES, WE WANT TO TAKE OBJECTS AND PHENOMENA WE SEE TODAY AND SEE THEM WITH 10 TIMES THE CLARITY WE HAVE NOW. IN PARTICULAR, WE KNOW THAT THE MILKY WAY IS TEAMING WITH PLANETS BUT WE CAN ONLY SEE A FEW OF THEM BECAUSE THEY ARE TOO CLOSE TO THEIR STARS. WITH 10 TIMES THE PROJECTION OF THE HUBBLE TELESCOPE, WE COULD SEE COMPOSITION AND STRUCTURE, AND UNDERSTAND IF OUR SOLAR SYSTEM IS TYPICAL OF PLANETARY SYSTEMS IN THE MILKY WAY OR UNUSUAL? IN ADDITION, WE CAN GO BACK TO THE VERY FIRST MOMENTS OF THE UNIVERSE, BEFORE THE BIG BANG, TO SEE THE EXTRAORDINARY CLARITY IN WHICH GALAXIES FORM, BLACKHOLE'S FORM, AND BECOME THE UNIVERSE WE SEE AROUND US TODAY. EMILY: IS THIS TELESCOPE GOING TO HELP US DISCOVER IF THERE IS ALIEN LIFE OUT THERE? IT LOOKS LIKE WE HAVE LOST DR. MCCARTHY. WE ARE HAVING TROUBLE WITH HIS HEARING. PAT, CAN YOU HEAR ME? ALRIGHT, IT LOOKS LIKE WE ARE HAVING SOME TROUBLE WITH DR. MCCARTHY'S AUDIO. SUCH A GREAT STORY. WE WILL TRY TO BRING HIM BACK FOR YOU AT SOME POINT. DR. PATRICK MCCARTHY, WORKING ON THE WORLD'S MOST POWERFUL TELESCOPE. THEY SAY IT IS GOING TO BE FINISHED IN THE EARLY 20 20'S , 10 TIME THE RESOLUTION OF THE HUBBLE TELESCOPE, WHICH IS 34 FEET WIDE, THE LARGEST TELESCOPE IN THE WORLD, CURRENTLY. THIS ONE WILL BE 85 FEET WIDE, AND I AM HEARING THAT DR. MCCARTHY IS BACK. THAT, ARE YOU THERE? DO YOU READ ME? PAT: YES, I AM. EMILY: SO, MY QUESTION WAS, WILL THIS TELESCOPE HELP US DISCOVER OF ALIEN LIFE IS REALLY OUT THERE? PAT: I THINK IT WILL HELP US DISCOVER IF PLANETS ARE CONDUCIVE TO ALLOWING LIFE TO EXIST. IS THERE WATER? IS THERE ATMOSPHERE? IS THERE CHEMISTRY SIMILAR TO OUR OWN? I DON'T EXPECT WE WILL SEE ALIEN LIFE OR LITTLE GREEN MEN, BUT WE WILL HAVE AN UNDERSTANDING OF HABITABLE CONDITIONS CONDUCIVE TO LIFE, WATER IN ITS LIQUID PHASE, TEMPERATURES RIGHT FOR LIFE, CONDITION SIMILAR TO WHAT WE HAVE ON EARTH TODAY. EMILY: YOU ARE TARGETING EARLY 2020'S . HOW SOON WILL THIS BE OPERATIONAL? PAT: OUR GOAL IS TO HAVE AN EYE ON THE SKY IN 2022. BY 2024 OR 2025 WE SHOULD HAVE FULL CAPABILITY AND BE DOING SCIENCE FULL-TIME. EMILY: DR. PATRICK MCCARTHY, WORKING ON THE BIGGEST TELESCOPE THE WORLD, THANK YOU SO MUCH FOR JOINING US. THAT DOESN'T FOR THIS EDITION OF BLOOMBERG WEST. TOMORROW ON THE SHIP -- DOES IT FOR THIS EDITION OF BLOOMBERG WEST. TOMORROW ON THE SHOW, HP HAS EARNINGS REPORTS FROM TWO SEPARATE COMPANIES. ♪

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