>> live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. tesla is taking steps to build a battery giga factory. it could cost $5 billion. they're offering up to $1.8 billion to fund it by pumping out more batteries, they're hoping to make more and more affordable electric cars. e're joined now from l.a.

shares are going crazy. they had another record high. why do investors like this so much? about the future. if you look at the fundamentals now the share price makes no sense. some people think the future is very right. they will do 35,000 cars this year. they want to scale up. they mentioned that the giga factory. that is a big deal and critical to them trying to achieve this goal of getting to multiple thousands of vehicles or year. i understand it, tesla consumes our is one of the largest consumers of lithium ion batteries in the world. how much would a giga factory help? >> i think elon has said that it

helps and changes everything. theill potentially be largest battery factory on the planets. it will have more production the selfthen all of production in the world. this single facility will have more by 2020 is the target. them a very low cost potentially. that is the company goal. a very low cost to feed their plant in california and maybe other production operations. if you have also said they are trying to get partners investing in this with them. panasonic, their main battery supplier has already been identified as one likely partner. that is not yet appear to be an official agreement. there was a japanese media report that said panasonic may invest as much as $1 billion of its own. which is another elon-affiliated companies will

apparently also be involved in this facility to use the cells made their for its solar power systems. this is a very fascinating project. we do not have a lot of specifics about when they will break ground. the competition has been announced between four western states -- texas, new mexico, arizona, and nevada. to $5 billion. 6500 jobs. >> elon musk said this could make a more affordable tesla. thank you for giving us that update. today, the ibm ceo took the stage in barcelona, spain. coming at a crucial time for the world's biggest computer services company. last year, the headcount dropped for the first time in one decade as the company tries to rein in costs. three chance that are reshaping

the tech industry there is a tech, cloud, and engagement. they spoke about how these trends are impacting how business is being done. >> i can see lots of folks. brings technology to the forefront of every industry and profession. we were briefly talking about education. it makes me think of this. one of the most important things for any country or company will be the education needed for the future. this stream is not just for mathematicians. it is going to be a threat to every profession and to greet you get. you will hire that to wait. 100 companies say higher data scientists. this will be systemic about what your skills are. andogram about a tech

analytics that is brought. not just for my days, as you are so nice to point out how many years ago that was. >> i can get away with it. >> we're the oldest people here. this whole point, it was about how you have to have that as a silver thread. you cannot count on just hiring engineers. it is almost like you are trying to make ibm a role model. you are making big changes. i sold a number of businesses. i think you announced the acquiring of cloud and. he recently taught another cloud service company. data centers around the world which is really a huge number. you have announced a $1 billion investment here. you are making very rapid changes in your own business. required up to

speed. >> do you think of ibm as having -- you are customers one of the biggest companies in the world. it is not a choice. that is the interpretation i would take away from you. whatfect, you are showing other customers need to do, right? >> i know many people in this audience work for a company that maybe had a history. goi say, any company has to through some transition. what we started out doing, timeclock, it is not what we do today. transitions. the i think that applies to everybody that is out there. >> do you think the mobile industry is changing as quickly as it will a changing? brings a so-called over

the top thing. it could have been developed by a carrier. but it wasn't. thatdidn't want to give up the revenue. people will have to be on fundamental, more than they have. how do you feel concretely about the mobile industry and how they are doing? >> i think there are examples of people who are moving very fast. there has been a lot of change in this industry and related industries for quite some time. you can look at a short snapshot. this whole industry. i think it is better to think of it as an ecosystem. that is evidenced by how many people are from different parts of that. i think it is moving along very fast, but i also think there is also -- but there will be many benefits as they put new models.

you will see a lot of this creativity and innovation come. in barcelona. up next, we will be speaking with david kirkpatrick. that is next. ♪

>> welcome back to "bloomberg west." i am emily chang. we just heard from the ibm ceo. i wanted to dig deeper into the business strategy and what she had to say. david kurt hatcher conducted that interview in barcelona -- david kirkpatrick conducted that interview in barcelona. david, i will start with you. what was your big take away from speaking with her? we rarely hear her speak publicly so it is fascinating to hear what she has to say about ibm's business.

what is your big take away from the interview? >> i think it is interesting that she chose to make one of her first big talks at the congress.ld it shows you how mobile is becoming essential. ibm is recognizing that is an essential shift. she even recognized the mobile challenge. their signature technology they are so proud of, they are applying to mobile and asking people to submit ideas and they will give three prizes. i think she has the right vision of the right changes. data, cloud, she calls it engagement. others would call it social. these changes are happening simultaneously. she has a giant aircraft carrier that she has to shift. i do not think she is all the way there, but she is doing some

smart things and people took a favorable impression. jobs by thetting thousands. i believe the revenue has dropped for seven quarters in a row. to what extent did ginni rometty inherit these problems and to what extent is she being blamed? >> she is nearing one year-and-a-half in her role. one could argue some of these were inherited. david'sreally, to point, try to move this shift, - ship. really bring ibm through that transition that she talks about that other companies need to go to. >> you would say she inherited some of these challenges, right? >> some of them, they did come along when she took over. technology began before she came in. she had to bring her company into this new cloud era in terms of keeping up in the tech space.

ondavid, what is your sense what ibm is, now? and what ibm is becoming? >> you have to realize a lot of the revenue has been coming from really low margin or in some cases losing money. possiblyny could quite shrink and be more profitable because even though its revenues have been going down, its profits have not. earnings per share are doing well. when you sell off -- what was it, i don't know how many they sold to lenovo the other day, but the fact is they are shrinking by choice in some respects. the key is to figure out how to grow in new profitable eras. revenue isf their hardware. that is a way lower number than it was until recently. that is a big, difficult shift. >> in terms of jobs, i note that

ibm recently committed to keeping 3100 jobs in new york state through 2016. cutanalyst said they could 1300 jobs. does that jive with what you are hearing? >> it does kind of jive. the company has had to shift and maybe needs to become smaller. they did this when they sold the server -- computer business to lenovo. it might be about shifting that focus to some of these cloud, social, mobile areas away from the legacy hardware businesses. that might mean cutting those jobs. we have heard they are already .tarting to cut overseas the job cuts are supposed to start coming in the u.s. as early as this week. it does really kind of jive with this big ibm shift into this new era. >> she focused a lot on watson today.

david, some the things we have been hearing, it sounds great. some of the clients that have used it have said it is too difficult to teach watson everything it needs to know in order for it to be helpful. it takes too long. what about those kinds of concerns? >> they are up against -- and about it. they are going up against google, all to mentally amazon will be in this business. these are much more modern companies that have intrinsic web dna. this also know really well how to operate superhigh volume systems. i haven't used it. i have a feeling it is one of those technology sets will take a long time to prove itself. it would not surprise me if it turned out to be pretty good. i do think they are pretty proud of this thing. they keep talking about using it to diagnose various kinds of medical cases, but that took

them a long time to input sufficient data to make it useful. cool thing about it. the more information you put into it, the better it gets. in that way it is like to go. >> how well a quick is ibm, really, to compete and google and amazon's territory? >> it depends on the space. we see them opening up their cloud platform. opening up watson to developers to try to build out the ecosystem to outside help to revolutionize these products. investors will tell you that amazon got ahead in the cloud space and ibm might be trying to keep up. it seems like they are making a concerted effort. a bot software last year. it is a bit of a raid here in cloud services. as she said today, they are pushing to get that company there. we will see if they can really expand as much.

ahead.l -- full speed in barcelona, thank you for joining us today. still ahead, it is old versus new in the private space race. why a air t-year old space -- why a 13-year-old space pioneer is coming to take on elon musk. ♪

>> welcome back. i am emily chang. a is elon musk versus 30-year-old high-end air. in september, orbital completed the second successful launch to the international space station. joining us now is david thompson. thank you for joining us. we hear a lot about space x and virgin galactic. how does your business differ from theirs? originalorbital is the commercial space company. we were started back in the early 1980's. we have been a pioneer in ,eveloping commercial rockets

privately-owned satellites, and other technologies over the last 30 or so years. >> where do you think they saw the opportunity here? business is there in the private space race? why would they get into this business if you have been doing it so long? yikes you would be surprised. in the 30 or so years. satellites and rockets have gone from being a fairly small part of the space community to having today led to global businesses that count over $100 billion in revenue last year, and that includes both satellite-provided services and the manufacturing of the satellites and rockets and so on that are used to place those satellites in orbit. >> you guys are the fifth largest government contractor on

space vehicle. how does that compare to space x, for example? >> we have been working at it a good bit longer. we are larger than most of the new generation of space companies. now ourustry, even products are focused on small and medium satellites and rockets are developed, it still takes a while to conceive design , produce, test, and to deliver. >> you had seven successful launches in the last year. you are starting your busiest year yet. what are you going to be so busy doing. thiswill be the bulk of year's business? >> last year was a very busy year for us, emily. we developed and delivered and about 50 different

types of rockets and satellites. this year we are looking for almost 60 operational ovens to take place. to some of them are used in global communications and imaging systems. operated in conjunction with nasa to supply cargo to the international space station. used in scientific and military applications, both for customers in the united states and overseas. new>> you just signed a agreement with skybox imaging. a tummy about that and the future of space -- the space -- tell me a little at about that in the future of commercial space race travel. >> we are pleased to team up with some of the new companies like skybox imaging to provide some of the technological infrastructure they need to implement their business. there have been a variety of is thatof new -- of wave

have developed. developing lower-cost imaging satellites that make their projects available in almost real-time to lots of different kinds of customers around the world. next, david,t is in terms of the commercial space race? >> i think one of the really exciting areas for the next couple of years will be partnerships between government agencies and private companies. this is a relatively new way of doing business. we teamed up four or five years ago with nasa in a partnership to develop the equivalent of a federal express-like delivery service so that in a couple of days, an essential item of cargo can go from the ground and into

space for astronauts on the space station. we will see more things like that develop where the discipline and the efficiency of the private sector can help the government carry out its mission. a >> we will have to leave it to their. we will be back. ♪

>> welcome back to "bloomberg west" where we cover innovation, technology, and the future of business. u.s. prosecutors are said to be investigating possible criminal violations by the bitcoin exchange. the fbi is probing criminal activity at the exchange. this comes after mtgox was shut down when hackers stole bitcoins. banning drivers from wearing google glass. the device is in the experimental change, lawmakers

are concerned about the potential for distractions. google has hired lobbyists to educate lawmakers about the device. >> barnes & noble reported revenue that fell in the third quarter. 50%. were down spending in the north division is being cut after lowering prices to clear inventory. the company did announce plans to release a new model. now to security flaws at some tech companies which seem to be apple all too common when introduced an update for its software. as they haveg discovered another flaw that allows harmful apps to log all of your keystrokes. that has said in the past

it does not disclose, discuss, or confirm security issues until a full investigation has occurred. nowsenior engineer joins me . been coverings this. we start with you. how big of a problem is there with my iphone right now. as i understand it, somebody could see all of my tabs, swipes, browsing, and e-mails. >> absolutely. a lot of people have this general idea that these vices are impervious. apple provides a level of security that you don't have to worry about. apple has taken care of that for you. because the prevalence has been so low compared to the android platform, people just get that idea that they are secure.

they might be a little less careful when they are browsing the test that apple stamp of approval. >> tummy about the flop. >> it is a vulnerability that allows people to break out or gain more permissions on your phone than apple intends them to. apple tries to prevent applications from doing certain things like reading your print reader. a reading that raw data. this phone ability allows the attacker to do that. imagine an application that could record all of the thumbprints on your thumbprint scanner. violation would that be? >> taken together, this plus the os 10 ball -- flaw as well, this sounds bad. >> you are correct. everybody runs iphones. most people are not running any sort of third hardy security application on even the mac or iphones or anything like that because they have his idea that

apple is protecting them. >> you have been working with apple on this. how responsive have they been? inapple is one of the best patching things very quickly. you have the whole security model of them setting an application before you're are allowed to's install it. that does not exist for other vendors. i can send you something, but you cannot run it. because they have a tall workflow security, they are naturally better. >> tinder, according to you, you discovered a major security flaw which would allow bad actors to track down the exact location of someone using this service? >> absolutely. the flaw we uncovered allowed you to triangulate someone's exact location as they used the mobile dating acpp, tender.

contacted tender about this. they say they stopped is and 48 hours. you say something different. >> i do not know behind the scenes what they did, but from my understanding, they fixed it shortly after. give us details on the fix so we had to check on their own, and on january 1 when we checked, it appeared detached. >> you say this vulnerability existed for 40 to 105 days. shortly after being contacted, the implemented specific .easures our users privacy and security continue to be the highest priority. they did say they do not know if any situations where people use this information to try to find someone, but it does go back to this policy. they have released short statements, i saw a headline that talked about apple's deafening silence.

should companies be more upfront about what is happening? >> absolutely. there are a number of breaches in the bay area where apple had information about the vulnerability and did not disclose it. there was a vulnerability window that didn't need to exist. >> what should companies do? they do have to balance not alerting all the bad actors out there before they fix it, right? >> there is a balance there is protecting users and informing users as was waiting for the fix. prioritizing fixes and getting them out as fast as possible is the right way to do things. once you fix them, being upfront and saying, this is what happened and how we fixed it. >> have vulnerabilities been out there all the time or is technology moving so fast that security cannot catch up? >> they have always existed. companies that have been in the press more have come up with

programs to proactively contact largest security companies like microsoft and adobe both have programs for they will give trusted people the information about the vulnerability before it goes out. >> apple has historically prides itself on having the best security. did they drop the ball? are not in your head. >> this is one of the core flaws -- one of the worst i have seen because it allows all encrypted traffic of the operating system. it is exactly as bad as you would expect. you wonder how it was discovered. you hope it wasn't discovered in the wild by someone getting exploited by this. it is a complete circumvention of any of their encryption. >> when will this be safe to use? how long will it take? >> i imagine it quick fix in days or weeks. >> weeks? i don't everybody knowing what

i'm saying. weeks? will it really take that long to fix? qa process.a whole >> the fix is quick but any have to go through the whole quality assurance process or else they push a fix out and your phone crashes when you get the patch, you will not be happy. >> all right. i will be careful for the next few days and weeks. q i both for joining us today. it still ahead, how do hollywood twitter, use whatsapp, and facebook? we will talk to one of tvs biggest hits. ♪

>> welcome back to "bloomberg west." i am emily chang. the next original netflix series is coming to new york city. they are teaming up with disney to film for live-action tv series featuring marvel characters. it to be the world's -- the world of heroes and villains. it is the biggest production deal in new york state history. speaking of hollywood, one of twitter's earliest backers includes a hollywood director. he has directed over 100 hours of television including lost, heroes, and gray's anatomy. ehrlichman, our senior west

coast correspondent joins us live. did i say his name correctly? >> that is very much it. if you think about the tv viewing experience, it is changing a lot. people are not just walking -- watching a show, they want to talk about it on different platforms. he is different -- he is aware of that and wanting to incorporated. he is clearly comfortable directing a tv show and at the same time investing in startups. tell us how that came to be. >> i have a great history of investing in business companies that followed him through his odeo spunhen twitter out, there was an immediate understanding that they would be a big connection. we didn't know what it was, but it is funded either by to the early e-mails of the things we are talking about are now

becoming standard and in place for all these shows. the ongoing thing we try to do is evolve that. how do we bridge that gap and continue that conversation year-round? it is come your time at the biz stone. let's talk about some of the ways you have been able to use social media, other platforms a video to get the word out and make the story a more interesting experience. >> by the way, i love the buyer you guys did on me. you guys make me sound so cool. thank you. banshee, i started working in house and i developed an app that was the first content-based cap. app.

banshee became a canvas for me to create something that would be social at its dna. it was important for me out of the gate. in 2011, i started mentioned it would not air until 2013. it was anticipating where the audience would be going. how will the the -- how will the viewership happen? be able to quickly evolve where things are going. our socialor all of efforts. they all tie to the story -telling of the show. we do not use social media as a marketing tool, it is all content delivery and storytelling which by default ends up marketing us. it is a great collaboration which is all the marketing and social team. they are my partners and storytelling as much as the creative execs. let's talk about the

evolution. everyone is talking about the $19 billion purchase of what's out. should we be thinking of messaging apps as the tv experience down the road the same way that twitter has become part of that experience? >> it is a good question. i am not as a first with what sapp as i am with twitter. i see twitter as the true second screen experience and where the conversation of an episode is happening and diving into that stream is phenomenally exciting on friday nights. we have an unprecedented casting producer participation to be part of that conversation. nights, everyone is piling in to watch the show but also twitter is furthering our multi-platform storytelling. it is really the key of angie. all the different places people go to get content and at the heart of that is social media

with twitter. >> before we go, nbc announced that heroes, and show you directed, we'll come back as a miniseries. for the broadcast networks, what do you think about this need to eventot more big programming to keep people invested and interested. to keep them engaged, knowing what they're are up against these days? hear thatexciting to heroes is coming back. i had a great time on that as well. there is aink certain excitement. i think that taps into the way people get when they are away from a movie franchise. 24 is being rebooted. it is also a nice thing about banshee. we are off the air for eight months of the year. when we come back on, i have tried to keep the people that are loyal to the show up to date and involved with our production all the way through up until when we start airing again. a around-the-clock job.

the event is as good as the show itself. it will not matter unless there something there to back it up. we followed it up with welcome to banshee.com. the title sequence. the title sequence. all these places that people go to get story. the event needs to be built on people cane places go. >> the executive producer of the cinemax a show, banshee and an early investor in twitter and pinterest. >> thank you so much. we will be back with more after a quick break. ♪

>> welcome back to "bloomberg west." i am emily chang. every year, young people drop out of high school in the united states. one nonprofit is trying to change that.

build teaches entrepreneurship to disadvantaged students in the bay area and boston. buildo and founder of joins me now in the studio. so many people in tech support you guys which is part of the reason you are here, in addition to the fact that you guys feel teaching entrepreneurial skills is the key to adding them to stay in school. why is that? >> i think people in tech support just because the power of entrepreneurship and creativity. we have been fortunate that our supporters span from early entrepreneurs to new ones. we have found that entrepreneurship is a really powerful vehicle to help students be successful because it forces them to take healthy risks. that is what entrepreneurs do. a lot of kids are not inspired by high school but they are inspired by making money. >> you are teaching them how to start their own businesses.

why would that make them stay in school rather than drop out to try to do this thing? >> it is all about making school relevant. for lower income students, high school has no meaning. if you can show how learning math is going to help with making money and writing a business plan can be helpful to rid we have an amazing mentor program. they work with their students and role models. guys have this in 20 schools. you are trying to get some more. what is your goal here? >> we think it is a critical time for build. everyone is talking about getting through high school and being prepared for the high school. kids aren't very at the same time, academia, everest document the importance of risk and resiliency. need to embede our program and hundreds of thousands of schools because we have found a solution to stem the tide and about young people

to be prepared for the world of work. >> what is your success rate? >> we are excited about the fact that 99% of the kids who go through our program graduate high school and 95% go to college. more amazing than that statistic is that we are serving students to our disadvantage and disengaged. entrepreneurship has inspired them and ignited their passion for school and the world of work. >> i have seen the kids speak. it is moving which is why i have been so interested in you guys. petra big dollar, jack dorsey was introducing reset my hair. now it is the pinterest ceo. do theyd of support give you? did he give you money or time? >> we are selfish and ask for money. -- we ask for everything. they invest in our programs but they also give time. these are role models for our students. i believe these entrepreneurs

who themselves. not all of them loved high school. that is what we are training our kids. every student is going to become an entrepreneur. we wanted to have that mindset and be viewed in that opportunity recognition. we can see they see themselves in our kids. a we are auctioning off pinterest with in turn. do you want it? >> i love it. but i have to come here for a day. >> we are excited about that. it is an opportunity for someone to have a week with him. probably a younger person, someone in high school to learn about pinterest, tech, and social media. we're hoping it goes to support our students. >> we will be there covering it. thank you for joining us. thank you for watching this edition of the show. we will see you tomorrow. ♪

>> welcome to "lunch money." i am adam johnson. in motors, tesla plus charge. driving to new heights. the earnings parade in full swing. even something for the oktoberfest crowd. breakfast time in the east and recipe for success? sports. this is executives, listen up. you can learn a lot from russell wilson. the fabled swiss bank account allowed wealthy foreigners to a baby taxman, but the crackdown in recent years has put tanks -- bangs on the firing line. today was credit suisse's turn to answer.