>> live from pier three in san francisco, welcome to the late edition of bloomberg west, where we cover the media and technology companies that are reshaping our world. i'm emily chang. let's get straight to the lead -- microsoft's long search for a successor to steve ballmer is about to come to an end. the board is preparing to name ceo. nadella as he has been running microsoft's enterprise and cloud business and has been an employee at microsoft since 1992.

the board is also considering replacing bill gates as chairman, possibly with john thompson. he was the former ceo of symantec will stop this is according to people have been briefed on the process and how it has been going. bloomberg told vision did it catch up with him after the web conference in paris and ask him about the ceo search. >> the microsoft board is working on the process. ceo and i'mr is the actively engaged in running the enterprise group. >> [inaudible] >> i said everything i'm going to say about that topic. >> we have jon erlichman from l.a. -- he helped to break this story. will start with you. how close is the board to naming him and how did they come to this decision? far along intty

this process and what a process it has been. this is something that began and we were notified last year in august that steve ulmer would be stepping down within 12 months. we thought there might be a decision by the end of the year and that didn't happen. have this allo resolved by early 2014. if you think about how big a process it has been, maybe we should cut some slack to microsoft in the sense that they talked about having at least a hundred candidates. some of them being from big companies that are not iker soft. whether it was ericsson, forward or qualcomm -- the long list of internal candidates -- i think they are far enough along in the process that you have this understanding that somebody like satya nadella, who truly is running one of the growth parts of the microsoft story and is one of the news parts of where microsoft is going, coupled with

maybe heaven and it at -- a second executive chairman john thompson, all of a sudden the board is feeling better about where things stand on that front. there's still a lot of questions about what the future of microsoft will be given steve ballmer laid out what he saw as the future he for announcing he would step down. >> i'm curious to know your thoughts. you've been an employee at microsoft for a long time. -- he's been an employee at microsoft for a long time. can he inject the change microsoft needs? >> if you look at what he has done, he's done a phenomenal job and brought a vision to the cloud part of the business that moves them on a trajectory to be relevant on the third platform and be relevant in a cloud- enabled world. perfect candidate here and to john's point, that's why this search was so

difficult. they were searching for a candidate who would be a well- rounded woman or man who could manage all aspects of the business. at the end of the day, they had to go where they felt the person would take microsoft in the future and that is to the cloud and third platform. that's what we are seeing here. it's an acknowledgment that microsoft is not going to be the company we have known them to be in the past. >> a little bit of a safe bet. our guestbring in from seattle. i know you're close with some of the microsoft executives. what do you think of the choice of satya nadella? >> i think it's an excellent choice. i think i've shared that on your show before and there are two things to add -- one is that he has been able to push the limit on things like running clinics on azure, the microsoft cloud.

that's a big shift in thinking for microsoft to do something like that. his ability to change the isnking and get angst done an important a compliment. the second thing is he is very external focus. for someone who has been at microsoft a long time, he's one of the most engaged people in the marketplace. he spoke to our ceos this year and i know he a gauges with the tech community in silicon valley as well. little moreo talk a about the choice but i also want to get to the other ward changes with john thompson replacing bill gates potentially as executive chairman. bill gates was just on bloomberg television and we asked him what his plans for the future are and how he will continue to be involved. >> my full-time work will be the full-time foundation for the rest of my life full-time -- for

the rest of my life. my wife and i are enjoying it. i'm not going to change that, though i will help out part- time. >> jon erlichman, what can you tell us about a potential board shakeup coming and will gates remain and will ballmer remain in the boardroom? >> these are all good questions. thinkingart with the of what goes into a ceo selection. as we highlighted, this is a company that has spoken to a lot of outside candidates about this job. concerns named as a possibility to coming to microsoft is what's going to be like in that boardroom? am i ultimately reporting to bill gates? what is steve ballmer's involvement going to be? he just outlined what his future is for this company -- how much will room door i have as a chief

executive? there's that narratives and then there's selecting an internal candidate and this idea of people looking at that and if bill gates remained as chairman, people asking the question is this the same old microsoft? is there something different that is more pr issues, the bigger issue at the board level is if you are satya nadella, and this is someone very well known in the tech community and doing some innovative stuff, what about running a company like microsoft -- a big global beast, having to deal with all sorts of different jurisdictions and tax stuff? a lot of messy things that come with being a large company. since we are talking about john thompson, you've got someone who has run a large technology company, but somebody who has a good relationship with wall street. it all starts to make some sense.

waiting to see what happens in the boardroom itself, but given your familiarity with how things work internally at microsoft, do you think he can make the changes that need to be made with the gates and ballmer potentially still in the boardroom? >> i think it is possible. beo believe it would unlikely for both of those folks to be on the board one year from now. the reason i say that is less to do with microsoft specifically than historically what you see. i think it is a typical for a ceo to remain on the board for an extensive time beyond making that transition. in this case, you have the two former leaders of the company, the only two ceos in the history of the company, and one of the two of them remaining on the board, and that in all likelihood being gates, would be

enough. but i'm just speculating. can get a lot of value out of either bill or steve to the point that this is a big, complicated company in an era where technology is rapidly changing. new ceo, first-time ceo, i would want all the assets i could possibly have at my disposal. especially people i worked with and trusted for a long time. >> obviously, they know satya well and they trust him. we will continue this conversation in just a few minutes of stop we are continuing the conversation on the future leader of microsoft. ♪

>> welcome back. i'm emily chang. microsoft's board is close to as the newa nadella

ceo. he currently runs the enterprise and cloud business. we are also reporting that all gates could be replaced as executive chairman by john thompson who has been leading the microsoft ceo search. sources are telling bloomberg news all of this. i want to bring in our special roundtable, jon erlichman, who helped write the story. spoke with satya nadella just last month in paris. listen to what he had to say about what he thinks is most exciting. microsoft is an exciting place to be right now. if you look at her oddly what we are doing with our devices and services, the launch of the surface two and xbox, what we're doing with cloud computing, it's an amazing spot to be in.

having an impact across society at large, that is why it is exciting to be at microsoft. >> any clues as to what his strategy might be? what should his strategy be when he takes his post? there is he's talking a lot about other parts of the business. he's talking about client welding and the idea of hardware and software closer together and creating a differentiated customer experience. talking about cloud services and bringing a vision to the company that i think they need to be bold and they need to work very hard to try and create a new kind of solution that may be for lack of a better term, their religion in the past had not allowed them to do. he needs to think about his sort of general and the kind of

people running xbox and allowing them to continue to innovate and allow them to innovate in the consumer parts of the business as he calls on his strength, which are in the server tools and cloud-based business. i think the changes at microsoft are very positive. change is good here and he's going to bring a fresh perspective and probably exercise some demons some -- some have not been willing to do in the past. >> you have to wonder if he will make some tough decisions. some people have said microsoft should split it consumer and enterprise businesses in half and make them two separate companies. what will be the biggest challenges for him going into this? >> you are raising one good topic, which is thinking about all the business units and undertaking a very thoughtful analysis of which of those businesses are truly strategic? time tol take a little figure out, so i don't think

we'll see any moves in the first couple of months. but perhaps more important than that is notice how he used the word excitement at least three times in that short clip that you have. energizea need to re- the community excitement around microsoft and microsoft assets as a platform, whether that is xbox or their cloud to form because microsoft is the most successful of the traditional big tech cap companies as you look at revenue growth and market cap growth, that there isn't the same level of excitement. especially in this era, you need the community on your side to win beyond anything you can do yourself. >> he said exciting a few times. listen to this, he says it again. >> it is an amazing spot to be to and invading and taking

market and having broad impacts across society at large. that is why it's exciting to be at microsoft. >> and that's why you are in it for the long haul? >> absolutely. >> not just exciting, but amazing. has early sounds like he the support of the employees and the respect of the employees, but is it almost too rosy what you are hearing from him? think people can be optimistic and realistic. tech companies have a challenge right now and microsoft is one of those will stop they have a broader suite of phonics they are out there trying to push and succeed at in different markets. , his't think his optimism external facing presence, suggest he isn't a realist as far as the challenges ahead. lex what do you think? on some of the

things that have been said here, what he needs to do going forward, what he needs to focus on is being able to grow the company across multiple dimensions. i agree he will be studying different aspects of the business, but i would take a little issue with the idea that there hasn't been excitement. steve ballmer has wrought a lot of excitement and a tremendous amount of passion to this company. now is therewe see needs to be an evolution and what has been so impressive about what he has done to date is he has brought developers harnessed the and developer network onto the service and tools product tommy's bringing those people to azure and making microsoft relevant in the cloud. that is the kind of fantastic excitement that is platform, it

is developer base, it needs applications that differentiate microsoft in the future, but that is the kind of fundamental rethinking the company needs to do to be relevant going forward. multiplet across dimensions will be difficult to do, but he has accomplished a tremendous amount. i don't know that it wasn't that there wasn't excitement before but it needs to be in the new era of computing and that's what he has the possibility to bring. rex it's hard to forget steve ballmer jumping around. he did bring a lot of energy and enthusiasm to the job. -- steve ballmer havege, does satya nadella the charisma that the leader of a company like microsoft may need to have?

>> i thought you were going to ask does he jumped onstage stage, and i don't have the answer to that. i think we had to continue to dissect this word exciting because everything you've heard is correct. growing and there is a fun part of that story and they are a fun, nation of google and amazon, but relevant when we talk about companies like salesforce to a certain degree. in the world of the consumer, the story we have told is one of devices that apple makes that people want to buy, that manufacturers like sam some on the consumer level, people not really being that interested in microsoft products. twoink bringing those together or finding a way to change the messaging is going to be one of the big challenges. >> jon erlichman, our senior west coast correspondent in l.a..

we're going to have to leave it there. thank you all for weighing in. the microsoft board close to its newatya nadella as ceo. coming up, a security breach hits yahoo!. we will talk about that, next. ♪

>> welcome back. we are turning to our top story -- microsoft's aboard appearing to make satya nadella the next ceo. joining us now is a former microsoft executive who worked .irectly under satya nadella he joins us on the phone from seattle. tell us what he's like. he has been for quite some

time at microsoft identified as a rising star. i had the good fortune of working with him early on in my career when i joined the company in 1995. -- there are two or three main strengths i can see with him and why perhaps microsoft accepted him. if they are selecting him. the first is he has a wonderful ability to be able to identify near-term win-win opportunities across the company, especially among product unit and divisions that might not be inclined to collaborate. and to do so in a way that enables multiple organizations to find a win-win solution. is within a large bureaucratic organization like microsoft, a really rare asset to have. has a very strong

engineering background but has gone so far as to expand his skill set in terms of bringing on more executive skills with his executive mba from northwestern. or maybe it was the university of chicago. communicateo really across multiple disciplines in the company. andgners interacting collaborating with engineers, sales and marketing. that's a rare goal set in the company. >> i want to continue this conversation after a quick break. michael kim, former microsoft executive that worked closely .ith satya nadella we will hear more from him after this quick rate. -- quick rate. ♪

>> welcome back. i'm emily chang. our top story, iker soft is asse to naming satya nadella their ceo, the guy who runs their cloud and enterprise business and has been working at microsoft since 1992. someone who worked with him is michael kim, a former iker soft he is the founder and ceo of habit design. he joins us on the phone from seattle. you were talking about how satya internally andar was identified very early on. but externally, he is not a known quantity. how much does that matter? seattle it's the

culture. we tend not to toot our own horn too much appear. it could be a cultural personality you are saying. as muchthink it matters in terms of microsoft's next stage of evolution. i think you see someone who has a proven track record to take on very ambitious and challenging and dangerous raj x. makehen also to be able to people feel they are moving onto the next big thing. i think those are attributes you would want to see in any executive regardless of how much they to their own warm -- toot their own horn. >> does he have the charisma he needs for a job like this? >> it is a good question. i don't know him other than my interactions with him early on in my career from 95 to 99 in microsoft. i don't know him personally that

pastand in the most recent , if you look at his performance he isesentation on stage, the kind of person who can engender quite a lot of confidence, someone who can identify and articulate new opportunities in a way many different teams can rally behind. it is the kind of charisma you need to have an someone who will lead microsoft to the next level. >> do you think he has what it takes to make difficult decisions, whatever they may be? hard to tell. many decisions are made without a book disclosure in terms of how they were ultimately made and who is involved in the decision. my experience has been he evaluates data that leads to a

decision very carefully and understands multiple facets of decision-making, not just perhaps the engineer's perspective, which is very important in a multidisciplinary point of view. to take on willing very difficult challenges that were very risky for the company, whether it the new web search or cloud services -- these are not projects you would want someone who wasn't willing to make tough calls to be in a position to do. so i think he does provide a kind of decision-making that could lead microsoft to the next level. >> michael kim, ceo and founder of habit design, thank you for bringing us your personal experience there. week, facebook turns 10 years old and bloomberg is this

week sat down for an interview with mark zuckerberg of the anniversary. we will find out what plans he has for the next 10 years of facebook. ♪

>> welcome back to "bloomberg west turcotte i'm emily chang. google reported earnings after selling itser mobile unit to lenovo. they reported an operating loss of 384 million dollars from its motorola holdings. growth is up for the internet giant while cost per click is down. i would like to bring in general partner and cofounder of blue fund ventures -- john malloy. you knew that it would be a success and google bought it. focusinglike google is

on a lot of other things aside from its core business which is search. should google be doing that? >> absolutely. google already dominates the category of search. the hard thing is to think about the future and i applaud larry page for thinking further out, which is what he has to do to make sure the company succeeds for a long time. >> what is the future? they bought nest, they are working on self driving cars and designing fashionable frames for eyeglasses and have robotics companies. >> you and i talked about this before -- they dominate the internet of the old. desk top internet. internet today is defined by mobile. if you think about it, they are looking at the internet of the future out in the real world. those things are connected by the internet -- cars, home appliances, all of those things are actually going to be connected, so i think they are

making a lot of really interesting moves. >> when google buys a company, what's that process like? is theg and difficult process? how much due diligence is done? >> they have a lot of experience doing it, so they are pretty good. most venture capitalists would tell you they are a good professional acquirer, so they know what they are doing. about the you think nest acquisition? it looks like apple and feels like apple and everybody. apple might buy it even though apple doesn't buy big things. >> it is a moonshot. if you can do it and combine it to the backend of what google does and create connected homes, that's the big idea and it is also the big if. thermostats and smoke alarms, but can you connected to the internet? >> someone suggested nest could be the consumer brand on other products like cars and tv.

what do you think of that idea? gooddon't really have a hardware brand. >> to jump ahead to another question you are going to get to anyway, look at what they did with motorola. are tried hardware and getting out of commoditized hardware and that is really smart. where they have to consider hardware is markets that are emerging on nest all stop nest is a nascent market, there's not much competition. smartphones are extremely competitive, a low margin business and i think it's a very good move what they did. but we heard larry page speaking from beijing. we know he has been having problems with his voice will stop it sounds more raspy than it has in past. we don't get to hear him speak publicly very much will stop is that a problem for google? of having a figurehead and public voice and someone to communicate with the strategy

is? >> if someone is doing the thinking, you're making the right decisions, i think you can find people to do your speaking for you all stop >> what you as a of satya nadella choice? >> you had me come down to talk about google and the news comes out about michael's -- about microsoft. the news is disappointing. googlehand, you have looking to redefine markets and then you have we hired an insider -- they're good at unifying parts of the company, but that's the wrong message. lex we are continuing to follow both stories. thank you for joining us today and being flexible enough to talk about microsoft as well as google. --amazon also reported sales to $249p 146 or seven million, but growth is slowing ship stuff cost to eight into the profits.

brad stone joins us now from the newsroom. he is an expert on everything amazon. what do you make of the numbers today? we thought amazon had a good amp -- a good holiday quarter and then this. >> was put in perspective. they did have a good holiday quarter. toommerce in general, 13% team percent, depending on who you listen to. it is good overall. for them, it's a slowdown. they have been putting down 25%- 30%. -- spending on supply chain of thecfo on one conference calls said they were considering raising the price of amazon prime. buildingcommitted to up the supply chain because they are building for 10 years from now. >> has eaten into profits. how can they bring -- other than thereg amazon prime, are

other inventive ways of bringing the price down? there talking about eying the postal service or fedex -- would that ever happen? >> may be way down the line. they start running more trucks and they are already doing that with the rollout of amazon fresh. maybe there are some ways to lower costs that way but they have to basically grow into this infrastructure. the more customers they get, the more they buy and spend, the lower those marginal operating costs become. it is what they are doing. they are building all this logistics capacity because they think they're going to grow into it over the next 10 to 20 years. >> what about them potentially working on a gaming console or live internet tv service or payment system where merchant could check people out on a question on a kindle

our >> i put credence to all those rumors and many of them we have reported on. amazon wants to be everywhere. they have worked on the set top box for a year. it's a way to get into the living room and put those amazon video initiatives and its own programming, get that into people's living room. they face a challenge because so many of these retailers view amazon as any number one. unlike ebay and paypal, i think amazon has its work cut out for them. >> i want to talk about your story on the cover of bloomberg is this week, your interview with mark zuckerberg. mark zuckerberg turning 30 years old and facebook turning 10 years old. what struck you this time is different? that he has entered a time of self reflection.

he has these two anniversaries and he says he spent a lot of the fall just thinking about his three year, five year and 10 year plan. he made a vow to write a thank 2014.te every day in he's also reconnecting with the hisy visionary flair around reims for facebook and talk to us about the 10 year plan to connect the 5 billion people around the world who are not on the internet. not a great business model associated with it, but that is facebook's moonshot, to connect parts of the world that are not yet online. >> we know what the last 10 years have looked like, what do the next 10 years look like according to him? thise talked about initiative -- it's more longer- term. thing fromprising the interview is something called facebook creative last. they will be producing lots of

independent standalone apps. the first one they released today. what he told us is they want to do more of these things. real orthodoxy a around one single way to share. people should use their names and be on this big app called facebook. more flexibleo be and understanding the different segments, teenagers for example, have different ways they want to share and create lots of different environments to satisfy everybody. >> facebook has worked on a lot of things in the last year that haven't worked out, things like facebook home, where facebook takes over your operating system on your smart phone. poke which was supposed to be taking on google. to make thisg things better or are they moving on and doing other things? >> it is on a case-by-case basis. point, they tried to

redo news feed for facebook itself and they have been very slow rolling out those changes. big that it'ss so hard to move the ship in one direction and move everybody along. not having to change the furniture in people's homes every time they go to sleep. said it was the last product developer desktop computers will stop they are still working on it and focusing on mobile first. i don't think they have given up any of those initiatives, they've just focused on mobile phones where users are increasingly turning to facebook. brad stone, check out his story in this week positive vision. it's a great read. coming up, the crown jewel of the nfl kicks off with the super

bowl. but who will be the big winner on sunday? that's next on "bloomberg west." ♪

>> welcome back. season will be coming to an end with its premier event, the super bowl, this sunday in new york. but ticket prices are at their lowest in years with cold- weather scaring some fan soft will stop who will score the touchdown this weekend? thethat, i want to bring in san francisco 49ers ceo and jon erlichman us from l.a.. there is fox and the brands will be advertising and the teams. who will be the real winner this weekend -- not the 49ers, unfortunately. the winner is the consortium of all of these entities.

it's the perfect laboratory of technology, of in person fandom in the big apple. isis a cold big apple but it still going to develop hundreds of millions and ultimately billions of dollars. >> obviously the broadcast rights are extremely expensive. are they still worth the investment? >> absolutely. this is appointment tv. even though we might see technology affecting fans going to the live event, they know, the league and broadcasters know the revenue is coming in because people are watching. and even if up there are fewer people sitting in the stands, it's an incredible laboratory of broadcasting to see what's going to happen now and in the future. is it as accessible as it could be? i think the last four super bowls have been the most watched in history. could the numbers be higher if

it's that much easier to watch on any device, anywhere, all the time? >> yes and i think that is the way we are going. we will be doing virtual television where the fans not enjoying the cool temperatures in new york will have a chance to experience the ip parties will stop if you just look at the massive level of interest in the day itself, yes, they will be able to access it. what about the future of the stadium experience versus the home experience? gottene experience has her with a high death tv and you don't have to freeze your but often the cold. i visited the new levi's stadium, it's one of the most tech savvy stadiums in the or it will be when it opens. ticket prices for this game are the lowest they've been in years will stop how do the stadiums and teams balance that? >> they

balance it in the fact that you can experience this front porch of americana and actually go to the game and you can buy it in terms of what you are watching on tv and mobile devices. you have a 360 degree immersion with the nfl and you can see it with other sports and that's how they are able to generate this incredible revenue. >> because so many of the game rights are locked up, when there's an opportunity to get your hands on the game, you often see adding wars and there's a lot of questions round thursday night football and one nfl executive telling bloomberg it could be as big as a sunday night or monday night game. terms ofou think in the potential audience and how it will factor in into who wins the rights for thursday night football? >> id will probably be a regular broadcaster but i would like to to the eggs broken and go

someone completely new, technologically speaking. major point another -- a multibillion-dollar deal. a 24/seven will see on will stop this is the end sunday, but the next morning, they start the next 365 day cycle and the nfl has done it better than anyone. >> i do want to ask you about the 49ers -- there has been a big change their. is there anything negative going on behind the scenes? why did he leave? >> the niners are going in a positive direction. i don't know gideon that well but he did his job in terms of financing the station -- the it in termshitting to open it in the summer of 2014. the team is winning, the stadium is going to be a major true for the league and i can't wait to

see what happens in super bowl l . >> they've come so close three years in a row. upbut it is perfectly ramped to be the first team in history to win a super bowl in its home stadium. >> 2016. we have to wait two years. >> they could win next year, but when you are in that level of competitive capability three years in a row, that's great. if richard sherman didn't grow his fingernails long, maybe the niners would be in new york. fax have you seen the new levi's stadium? >> i have and i work for levi's. spectacular and they've done an amazing job getting the stadium ready. rex the former ceo of the 49ers will stop jon erlichman nla, thank you both. thank you for watching this edition of the show. we will see you friday. ♪

♪ >> welcome to "lunch money." i am adam johnson. facebook hits puberty. and game day, get a room. finding a bed at the super bowl ranging from the expensive to the less expensive. around the world, central bank smacked down. the indian bankhead is not happy. and we will look at the business of transforming stadiums. and finally in sports, pro football. dan reeves has the big job, but not everybody gets to be top dog. all right, what everyone is