>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology in the future of business. i'm emily chang. facebook is saying the cfo is leaving later this year. the social network reports a 72% rise. we will have a lot more on facebook and a bit. apple takes on its critics to see the company is stagnating and reporting a huge quarter, its best quarter ever. more than $45 billion five $10ent and profit of

million, 7%. that is a new record. they also boosted their share buyback program i am joined by our editor at large, cory johnson, in new york. munster.eagene with you.nt to start what was the biggest thing that stood out to you today when you heard what was said? >> the iphone number was the most impressive. they use that as the tip of the spear to get their ecosystem out there. that number was substantially better than what was thought. emerging markets, that is what really stood out. there was a lot in that report. this was not your average quarterly earnings.

there's a lot on the allocation side and it is dense -- dividends. the number was a disappointment. a look athen you take the numbers, paul kedrosky called a financial engineering that has nothing to do with apple's core business. how do you respond to that? >> he is completely wrong. i like to say that about paul because it is completely fun. not the crooked financial engineering that i used to look for when i was a short seller looking for companies that were cooking the books. that is not what they are doing there. every apply capital in a lot of ways that make the stocks look more attractive. the stock is something that is completely different from the business. you saw an acceleration of iphone sales. the analyst did not expect to see that era that was pretty strong from these guys. they're great successes that are

happening in the iphone, as well as in the iphone department. it is a gross margins were taking a hit because it has been such a widespread product update. these devices were being billed when the component costs were at their all-time highs. we saw those gross margins come down. we saw the iphone units rise pretty dramatically. there is strength in that is nice. at the same time, we haven't seen new product categories. we have been waiting for innovation to come from apple. way fromiring people a apple. >> they said their focus is on product. you asked about apple tv and why he said it is no longer a hobby. what was his answer? we satisfied with it? >> is answer was it is more than a billion dollar revenue business and it shouldn't be a hobby.

my take is when you're approaching a $2 billion revenue business, a billion dollar hurdle is still hobby level. he did make a couple of references to future updates to apple tv and future products in that category. anhave been talking about apple tv. to answer your question, i think if you look hard at what he was saying between the lines, he was still saying that there is an opportunity for them to change the living room. they have fallen behind in that when you think about amazon and some of the updates to roku box. it all plays into this thing that it is important in terms of products for apple. we think that tv whether it is a set top box or new apple tv is one of those areas. >> i want to talk about how

apple is doing in china. iphone sales did hit a record. china?apple doing in >> better than we thought. we talked about this last time. stimulate iphone sales in china. of it is still to come. >> what else is still to come? >> the one thing that people are expecting is a larger screen. that is something that gene talked about. everyone is waiting for that to come out. a lot of people are holding out on buying the new phone until that comes out. >> how much does it matter having new products? they seem to be doing just fine. >> the company is doing great. they're making boatloads of

money. there has never been anything like this arguably in american business, certainly technology. the products are beloved. sales have never been so big. if you want this to be a growth company and take things to yet another level, investors want to see a higher multiple in the stock. had at innovations that with the iphone and ipad that was simply amazing. in other areas, they have to come up with new products. we consider gross prospects -- we can see the growth's prospects. >> we will continue this conversation after a quick break. i will talk about apple's upcoming stock split. ♪

>> i am emily chang. this is "bloomberg west." us, we are joined

talking about apple. cory johnson is in new york. nster and crid yu also join us. are they trying to get more everyday people in on the ground floor? .> i think that is part of it i think there is a side story were apple and google -- google change things up with the different share lasses --c la classes. apple is intensely competitive with google. in some ways, they are trying to some of the returns. i could understand why someone would say this is un-apple like. i like the fact that tim cook is being aggressive in doing something like this. >> we do know that tim cook had

a meeting with carl icahn. icahn backed down. agreed with he apple's increased buyback and extremely pleased with the results. many analysts failed to understand the company. cory, i know you'll agree with the last part of the statement. do you think icahn knows more about the products that are becoming than the rest of us? to back down or stop rattling ing in thehold company. i think that is the point. like to not be a growth company? yeah. like to split the

stock are going through a buyback. the increase in the buyback is the size of 3m. it is an incredible amount of numbers. under mentally, it is a different kind of company than it has been in the past. >> we are getting some sound of what tim cook said on the call. let's take a listen. stock price does not reflect the value of the company. >> would you agree? >> i do. one statistic that was mentioned that i feel wholeheartedly about is the strength of the apple ecosystem. there is maybe half one billion ios devices. that anre seeingi is asset that a huge

people don't talk about. when you think about apple moving into the home and wearables, that means potentially more revenue. >> but other companies are doing that already. this is where you did that on apple as a pattern company. generateeing them radix. >> what he sees the biggest competitive -- generating products. see?at do you android is huge. there are other companies that are moving in quickly to the home and smart tvs. what is the biggest competition for apple that lies ahead? >> i think it is still google and their partners with android. at the core of what google is trying to do is to control every device. that is ultimately apple's goal.

paths, google takes a partnership approach and apple does it themselves. that is clearly the biggest risk. you will see some players pop up and down from time to time. the future is all about connected devices and the consistency of the devices in being able to control those devices. it will take big players to do that. apple and google are the two companies. aspires to do that at some point, but it is apple and google at this point. >> the numbers are looking good. when you hear what gene has to say, how do you see this playing out? openthink that is an question. that is the point. they're not introducing new products yet, but they could give new legs to the growth story. when you look at other businesses, businesses that are

not doing well -- look at itunes. .tunes is falling like last fm and spotify growing fantastically. why is dropbox having such success and having people upload cloud files and the i continues to struggle? there are lot of failed efforts that apple could be doing better for a variety -- and for a variety of reasons are not. >> he said that they do not do everything. they want to do a few things well. do you agree? >> i agree with that. i would add to that that the stuff that they need to go after, they need to go after the opportunities, too. i think there are some things that are out of the box.

at one point, i thought it would be crazy for them to do such as getting into the car business. if you think about that, think about the future of the opportunities, i think apple needs to really broaden its horizons. i agree with cory. they missed some opportunities here. the bigger question is whether they will continue to miss opportunities or the substance of what will come out in the next nine months? i think we will be pleased with their r&d spending numbers. i think we will learn a lot about where that r&d will be spent in the next nine months. >> all right. johnson,ter and cory you guys will be sticking with us. we will talk about that facebook cfo leaving and the facebook latest status update. ♪

>> welcome back. i am emily chang. mark zuckerberg has been on a spending spree as of late. they have announced that the cfo is leaving. the first quarter revenue of $2.5 billion and 72% net income million. kirkpatrick, i have to ask about david ebersman leaving. they say he is ready for a role other than cfo which i assume

means ceo. the numbers look great. why is he really leaving? >> i would say cynically, if you have made as much money as he and you have aspirations, why wouldn't you leave? he has had a fantastic job there. he is leaving the company and extremely wonderful conditions as the results indicate. five years at a company that moves at that pace for a guy who is not 25 is probably tiring. it doesn't seem to me to be terribly significant except from a personal standpoint. about david concern ebersman leaving? >> no. as david said, the company is in great shape here and there is no concern. i had e-mails from investors wondering about it, but i think the strength of the financials are going to outweigh any sort

of concern around the transition. >> so he will be replaced by david wehner. the former cfo of zynga. he joined facebook a couple of years ago in a senior finance role. david, in terms of the numbers as you see them today, what is your biggest take away? >> can you say, wow? all of the things that cory was apple earlier about firing on all cylinders, the same could be said about facebook. you have got to look at the numbers. you have got to look at it globally. they are doing amazingly good work. people were so blown away, including me, and confused with the whatsapp surgence. mark zuckerberg must have felt perfectly comfortable taking such a big leaps as those where. he could see his numbers in the

day-to-day business so strong that he is not that worried about taking a long-term investment. the president is well covered. >> gene, you are one of the guys who does studies on what social networks teams are using. are you more worried than david or are you optimistic? >> i have a ton of respect for david. i think on this topic, maybe we are at different ends. i think there are lot of things going on with facebook. i think there are opportunities they have not tapped into. for instance, instagram and video. all of that to be transformative in the next couple of years. i do believe there is a shift in the u.s. teens. we have done a survey and you see the deterioration. when you look at the leaves instead of the forest when you look at the data, there is a trend there that probably also

drives zuckerberg to do what he is doing and being aggressive and think longer term. i think he is aware of some of these drifts in some of the usage. >> he did say that there's no priority to make money off of instagram or to make money off of messenger. they are forcing people to use now. bigger picture, david, are you satisfied with what you see? people know how all of it fits together. there is a drone company that they just bought. >> i disagree with what gene said before. clearly there is a shift in usage, by more of the forest and the trees kind of guy. i see the relentless progress that they are making to a sheryl sandberg called the world's first targeted marketing platform at scale onto which i

think is a powerful way to think of facebook. there is enormous opportunity. they are very well hedged. they own instagram that is one of the key things drawing usage of american teens away from facebook. i think have enormous opportunity globally that they are beginning to tap. admit it is a gigantic sort of effort for social benefits that will benefit the company, but in the long term. how much they will spend on that, is that justify, i admired it. journalist who is deeply immersed in the pop culture of the company. >> gene, are these big buys justify? -- justified? >> i think it is justified because at the currency to do it

and the business momentum. they think they can take it in a different direction. there is this recent ipo in china. the are thinking about doing things around messaging. i think facebook could take a page out of payments. >> david, what do think the grounder plan -- grander plan is? >> to connect everyone on the planet. last 6-9changed in the months is a part leo approach instead of a one -- portfolio approach instead of a one arrow kind of approach. they have a portfolio they are building all the time. you have a long-term alternative strategy. interesting stuff. and genekirkpatrick

munster, thank you to both of you for joining us. we will keep our eye on facebook. coming up, google is available in 100 cities around the world. we talked about this major milestone. ♪

>> this is "bloomberg west," where our focus is on technology and the future of business. i am emily chang. in a statement, zynga says mark pincus will focus on his role as chairman. they have appointing new executives to oversee zynga. of $61 millions as sales tumbled. and they launch in beijing. uber is available in 100 different cities now around the world.

to 35 countries and cities like abu dhabi, manila, santiago in just four years. thank you for joining us. i have lived in beijing. i know how hard it is to get a taxi. i know how hard it is for u.s. companies to operate in china. how did you guys get this done? what were the challenges? >> there have been challenges for a long time since we launched. inhave built and expertise taking on these different dynamics. we are figuring out how to make it work. >> and china, what were the particular challenges? people who are very interested in how this business can help theirs. we have to be pretty aggressive. we had to figure out a model to

work with the national companies. it is working well. >> you gave rides to two techies. one was a leading tech blogger. i thought it was cute. what kind of feedback did you get from them? >> it is an enormous cities they took a while to get the service level up to the way it is here. athink a lot of people -- as figure how to operate in china, we will be able to take those learnings and apply it to software. we are taking the time to learn and bring them back to the u.s. likes to hire hustlers to get it done, one person said. what does he mean by that? wouldn't use the word hustlers. i would use entrepreneurs. we have to celebrate that difference. start fromsolve and

the ground up and understand what that transportation is like there. i think that is what he is getting at. >> you are in 100 cities. are you pleased with market share? how many of those cities do you think we have a lot of work to do and you want to do more? >> we have a lot more work to do frankly. i'm very happy with where we are. i think there are different challenges. there is the building of the team that is a difficult part of it. recruiting is a big thing. i'm pretty happy with operations. i think what we have done has kind of answer the question of whether uber works everywhere. it does, and i can say that confidently. we are going to go deeper into

the market and continue around the world. >> the uber pricing strategy has been talked about. there has been controversy around it. to getting thed car, which people appreciate. there is the one dollar safe ride. what does the money go towards? why is that the way you chose to do it? >> safety is a huge priority for us and always has been. there are certain pieces of our economics that goes to safety. is going to things like background checks with drivers and training with drivers. there are a number of pieces around economics of the given ride that is safety. we want to be clear about that dollar going to those things. thiseaking of the future, year we are seeing bigger and bigger valuations. what is next for uber?

how was the latest fundraising going? >> we're focused on building the service out everywhere. that is part of uber 100. that is why it is so exciting for us. use exciting things like uber rush in new york -- you see exciting things like uber rush in new york. we did very well. i think that is the main thing. how broad can you go? so that uber is not just a private driver high-end offering. >> how do you think about fundraising versus ipo in market conditions? >> we're thinking about what the business needs to grow. right now we have plenty of money in the bank. we are excited to execute on the business in front of us. the markets change here and there. we will keep a close eye on it. right now it is execution mode. >> what city is next?

>> what city is the next. tijuana? that will be interesting. a big market. there is a lot on the horizon. >> thank you so much for joining us. coming up, and music videos have come a long way from mtv. we talk with the ceo of vevo. ♪

>> i am emily chang. this is "bloomberg west." special series. vevo is the dominant streaming service for music videos. the billions of videos viewed worldwide. viewership has increased nearly 50% since last year. how is the company keeping up

that momentum? jon erlichman joins us from new york. >> when you think of music videos, you think of mtv. in the world of vevo, it is like channels everywhere. we have rio caraeff, the president of vevo. how are people watching videos now? >> everywhere. on apple tv, xbox, roku, they're androids. vevo is about giving people music wherever they want. >> break it down. say you're on the go and you are on the phone. how much traffic do get from people watching videos on their phone? >> it is amazing how fast it has changed. arey, but 50% in the u.s. happening on smartphones. world40% is around the

are happening on smartphones. that dudid not exist two years ago. >> you also want to get their attention in the living room. you guys have all of these deals to be on different platforms. roku.n you're on tv on amazon. is it one video in the living room? >> on tv, people watch more videos than on any other platform. 200-400 minutes per month per user in the living room. in roku, it is 400 minutes. minutes. 200 compare that to four minutes on a n apple ipad. you can have a sea of music videos wash over them. >> lots of partnerships.

you want to be everywhere. recently have expl anded your partnership with them. >> we took a look at the deal and asked how we could be bigger. we need to be on more platforms. we've engineered the deal to drive for scale. we want to get to a point where we are streaming billions of streams. we had to change a few things to make that happen. now we are embedded in the new yahoo! screen products. we think this is going to drive more volume for videos. >> you talk about possibly other investors coming into the company. the report recently involved dreamworks animation. can you set the record straight on that? >> we have been talking for a while now to interested investors who want to help vevo

become a bigger company. we want to great for programming and launch in more countries. we want to have better products and be a lot bigger than we are. it we think the time is right to bring in some new investors to help us achieve that -- we are starting the ball rolling. we're not going to talk about any specific investors. >> you're not looking for someone who has a lot of cash who will sort of sit and watch you guys. you're looking for people who can add something or bring something to the table? >> everyone has cash. it is about what they can do to help vevo become successful. what could they bring to the table in terms of distribution and marketing and content production? these are the types of things we're looking for. >> you guys are making videos available everywhere. you have this interest in traditional music-based television. he did he is making a big push in that area.

is making a big push in that area. are people sitting in their liver him and turning on a channel to watch music videos for a long time? -- in their living room and turning on a channel to watch music videos for a long time? --more people are watching tv viewing is not going down. people are watching more tv than ever before. paid pursere to be scriber fee from a cable operator, but we are trying to get to the tv in any way possible. more people are using connected tv boxes and game councils and smart tv to get videos. having a linear channel through your cable operator, we do not think that is what people under 34 are watching. >> a lot of stuff going on. thank you, rio. rio caraeff is the president and

ceo of vevo. >> vevo is keeping music videos relevant. you have been looking into how studios are keeping the movie going experience as well. a lot of us are not going to movies these days, especially when everything is on netflix and apple tv and on-demand. i can just watch it on my couch. >> it is true. you're hearing a lot about international audiences that are enjoying this experience. there is l.a. live in los angeles that wants to go down this road like having moving chairs and smoke and winds in the u.s. here is what we learned. ♪ >> welcome to the movie theater of the future. if you thought 3-d was cool, try adding moving chairs, bubbles, strobe lights, and smoke.

>> let's do it. taking -- shaking. >> you like the bubbles? 4dx.ey rolled out now they're l.a. live venue and down for delay is retrofitting one of its theaters. they concoct $700,000. >> to be competitive and relevant in the movie business, you have to constantly be evil thing. >> in all of -- constantly be evolving. >> the effect of digital is you have total environmental control. you're not just showing the movie. at the same time, you have effects that are timed exactly what the movie. four offfects engage the five senses.

smells are piped in at the right time. >> smells like burning rubber. it is raining. i'm in the theater and it is raining. cost aboutxperience six dollars more than the movie experience. the hope that it will pay off. >> we anticipate there will be a strong demand to roll it out another movie theaters. >> and sort of flying through the air. >> we are moving with him a little bit. and the wind. whoa! whoa! that was crazy. emily, there you go. i'd love going to it is all about time. i want to conserve it. thank you for bringing us that latest installment. another multibillion-dollar

valuation for silicon valley startup. should investors be worried about another tech bubble? ♪

>> welcome back to "bloomberg west." i am emily chang. pure storage has raised an additional 225 million dollars from investors and has tripled in value since its last funding round in august. joining me is scott. thank you for joining us. >> thank you. >> you're trying to transform the way that businesses store your data -- their data. why is this transformative. >> it was much faster and much more power efficient and space efficient.

inside mobile devices. the same inside data centers. ticky billion dollars will be spent per workload that needs great performance. yet they are put on mechanical discs. >> why is it just taking off now? >> it was about getting flash into the mobile phones and tablets. frankly, it has been deployed in scale in data centers like google and facebook. that technology has been proven out there. we have figured out how to get the costs of flash down so it was kind -- cost competitive. >> how do you justify your evaluation tripling in a matter of months? >> so, the business has grown at that pace. the business has more than tripled over the same period of time. we grew 700% year-over-year. >> do you worry about it too

high valuation? much.do not worry so this is a very ambitious company. it is a $60 billion market that we are chasing. trans to lead the formation -- transformation. it we achieve those goals, this is a small mark along that path. >> more people say that we are in a bubble. david einhorn, said there is a clear consensus in his last letter to investors that we are witnessing the second tech bubble in 15 years. do you agree? >> i partially agree. the good news is the disruptions that are coming today, there are so many happening at once. loud, mobile, they data -- big data. taken together, every incumbent technology and vendor is getting

disrupted and fundamental ways. they are accidental threats to businesses. there is a lot of opportunity for onto the nurse. that being said, the fund-raising climate was a lot more conservative than the last round. >> really? you are seeing a pull back? >> i would say there is an appetite for businesses that are growing explosively, but valuations have been pulled back a little bit in terms of multiples they are prepared to give you. >> give me some color there. when you talk about the funding appetite, what do you mean by that? >> it is the level of enthusiasm is similar, but there's a lot more at diligence done in terms of tying the business to reality and how this business will grow and perform in the months and years ahead. >> with the plan going forward, on, you saidctivisi you're trying to fend off potential acquirer's. what is next for you guys? >> we want to build the next

storage company. there's so much staggering growth. we are an independent company. no one tells us who we can talk to and who we can talk to. they would want to constrain which markets and customers we can go after. as an independent, the whole world is a potential marketplace. >> one year or two years of an ipo? earlier rather than later. we are running the business like a public company now. we have got some more work to do. the key thing is always to be in a position to do the ipo when the market conditions are favorable. we never want to have the ipo with a gun to our head. >> right. thank you for joining us. it is time for the bwest byte, where we focus on one number that tells us a whole lot. cory and jon are in new york

together. what have you got for us? [laughter] bytwe bwest byte, the refers to a twitter post -- 106,872. #mynypd. they were able to get people to put up their favorite moments of the nypd. they showed things that look like frisking and suggestive police brutality. they weren't all bad. icfail.ee that #ep >> yes. >> all right. be sure to catch "bloomberg west" tomorrow.

i have a special guest. ♪

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>> welcome to "lunch money." i am adam johnson. here's what we have on the menu today, at the top we have a wildcard, our exclusive interview with mom at el-erian. he responds to the company and a plunge in earnings season. we will run you through those companies around the world. taking a trip to asia, for countries that have a problem with china, the ultimate destination for anyone who likes the finer things. finally an innovation, soon on the proof. we will step inside of the