>> welcome to "bloomberg west." i'm cory johnson. huge news from at&t. after the close, the company announced they $10 billion air pockets of fourth-quarter earnings. now pre-tax earnings will be a pretax loss, $7.9 billion in the fourth quarter. the supreme court agreed to

consider legalizing same-sex marriage nationwide. the justices will take up gay rights cases that asked them to overturn bans and declare to the entire nation whether people can marry the partners of their choice, regardless of gender. the decision is likely to come in late june and could bring gay marriage to 14 additional states where it is now illegal. the world's largest currency dealer lost $150 million after the swiss central bank's move. the losses on the thanks trading desks are not related to -- bank's trading desks are not related to [indiscernible] samsung approach the company about an acquisition. quote i talked to him yesterday and he said it is a rumor. there's no truth to it. earlier this week wenders approached -- reported that

samsung approach like very -- blackberry. now to the lead, to silicon valley, the stunning decision of the swiss national bank. it has caused major turmoil in the markets. it is about to have a major impact on the business of selling technology. a handful of important silicon valley companies depend on europe for substantial portion of their sales. the stronger dollar makes those products more expensive. there's a marginal difference between a cisco router and a lucid router might mean falling sales for cisco. silicon valley companies have significant exposure to europe and japan. the euro and yen have been falling and could be in for a world of hurt. the senior fx strategist joins

us. are all the companies in silicon valley adequately hedged against this big swing, or could they be heard here? >> -- hurt here? i'm sorry, andrew. >> i'm sorry. it is very likely that these firms do have some hedges. it's doubtful they have hedges against the magnitude of the climb. the drop in the euro, the drop in the yen is probably larger than many of them had been hedges against. -- bet hedges against. >> sebastian, you have direct knowledge. are you saying these technology-focused firms really understand and have prepared hedges? can you prepare for a swing like this? >> i have no private knowledge of our own clientele. as a general rule, you generally hedge what you call expected

cash flow over a certain horizon of time, whether it is a few quarters. in some cases they will use options to cheapen their hedges. they may have been caught offguard with a sharp rice -- price or sharp drop in the euro. this is less likely. some of them are the equivalent of sophisticated hedge funds. you can imagine some of the well he -- the very well-known names. the problem they have is a structural issue. you will get a rising dollar. you do have to decide what are you going to do. [indiscernible] what are you going to do with it? if you have the equivalent of a competitor in europe, how do you need to adjust your position relative to them. in terms of funding, are you funded in dollars?

maybe now is the right time to find yourself in euros. >> if we focus on the euro -- sebastian, i wonder how it starts to affect sales when companies have got products nationally -- marginally not that different, maybe you can tell the difference between a cisco router and lucid router but when cisco has 36% of its sales happening in europe, when garmin is competing with phones and tom-tom and they have 36% of their sales in europe, the stars to be a problem in the marketplace, does it not? >> one is competition in the euro zone. the ecb trend of weakening the euro is to achieve that goal. that is one of the objectives. simply because the euro is falling growth will eventually rebound out of that.

however having said that, the euro has fallen considerably. it creates a significant advantage for guys in parts of the eurozone. and apple is still an apple. typically the u.s. exports very high added value as a whole. they will do quite well as the euro stabilizes. what matters to them is the growth that is more than a relative prices. >> when i think about apple going into their app store, it might not seem like much to some people. they raised an app in russia from one dollar to $1.20. that's not going to help your sales. >> it probably isn't going to help their sales, but there are other forces at work facing apple in russia that suggest they decided rather than worry about sales to try to maximize what they can get from these

sales. there are other forces at work such as requirements from the russian government to house operations data in russia which is being viewed as punitive. it is not just the currency issue for apple in the case of russia, it is these larger issues as well. when a currency impacts, they offer the choice of keeping local and accepting the revenue loss or adjusting the price locally to keep that. that is a choice different venues will make depending on the edition. cisco might take another approach and say we are going to sacrifice -- we will keep our prices competitive locally and accept the lower revenue when those euros come back into dollars. >> i suspect we will be hearing a lot about this in conference calls in the next couple of

weeks. -- calls in the next couple of weeks. andrew bartels, think you very much. the french government on high alert after reports of terrorist cells active in the country. technology firms are helping france and other governments crackdown on those cells. next, what the business of technology is doing to aid the search for terrorism. ♪

>> welcome back. i'm cory johnson. president obama is currently hosting the british prime minister david cameron at the white house. they have been talking about how the u.s. and u.k. can work together on cyber intelligence and security, especially in

light of the terror attack in paris. >> britain and america both face threats to our national security from people who hate what our country stands for and you are determined to do us harm. in recent weeks we have seen appalling attacks in paris, in nigeria. the world is sickened by terrorism. we will not be standing alone in this fight. >> what is going on in africa and paris -- prime minister cameron is asking for the president's help in pushing social media companies to prevent extremists from communicating in secret. what could a closer cyber partnership mean between the two countries? good to see you. former homeland security guy, you should know something about this. what is the current state-of-the-art in terms of the terrorists? what are terrorists using?

what businesses are they using to spread their plans? >> taking advantage of everything that we use, they are using. they are using it because it's a way to recruit people and spread their message. what david cameron is talking about this week is how do we gain legitimate access to this technology lawful access to this technology, to ensure we can monitor communication that may inspire people to be radicalized. he's focused on cyber security, which is emerging as one of the primary threats to this country and to both of our nations. >> let's break our conversation for the moment. i want to talk more about the stuff that happened in the last week. what happened in paris shocked the western world. what happened in africa with thousands of people killed last week has not gotten a fraction of the attention, but it's amazing these things are happening at the same time. we know the terrorists are using

twitter and facebook to recruit. what are they using to communicate the messages of their plan? >> they're using a lot of dark web resources, where it's difficult to access through a traditional search engine. they're going through a certain ip address that only certain people know about. they are accessing that to communicate in encrypted or encoded communications to coordinate activity. much of it is really led by people that are inspired online people that get radicalized by watching videos, by subscribing to the right websites, reading this literature getting training material online practicing, and moving forward and carrying it out. >> there was a case of a guy arrested an ohio man who had plans to go to the capital and had weapons according to the fbi. >> it looks like there was an informant who went into the bureau and indicated that we believe this person is being radicalized.

he had recently converted. he wound up working closely with what turned out to be an f b i agent who was posing as a jihadist to collaborate on a potential attack in the capital. due to that informants we were able to start monitoring is communication and realized this is a potential threat. it turned out it was a real one. >> where is the business angle here? what are you guys doing to help the government figure this out and make money for yourselves as well? >> the business angle of this right now is how people can still use facebook, whatsapp snapchat but those companies' obligation to share the information with the government. traditionally a law firm order comes in. it goes to one of the telephone companies. i can monitor the communication. the challenge today is a lot of the technology companies don't

really retain that information. >> what information with a store? >> -- would they store? >> records of communication back and forth, images back and forth. when you have instant delete or instant encryption, it makes it harder for law enforcement to lawfully access it right that is the issue that david cameron is discussing. to your larger question of what companies are doing right now, there's a lot of companies such as mine that are out there with new tools and platforms for security. we have clearly not solved this problem yet. >> let me offer some pushback. whatsapp has created an instant encryption for all their android devices that will keep them from being able to see this stuff for storage in any way. they want to promise their users anonymity. silicon valley has pushed back. they never have the communications. >> that is a problem that

cameron is highlighting and other lawmakers are highlighting, how are we going to make sure we are secure as a nation if we can't access this means of communication. that is why it's always helpful to talk about something we all know and are comfortable with like a telephone. you and i use it every day of the week. if people want to gain access to our conversation, they go and get a lawful subpoena. right now, people get a lawful subpoena and you hand it to one of the companies we mentioned, how do they comply. they still have a right and responsibility to comply with the authorities. they are claiming no we don't, we want you to go to the user. the problem with that is how are they going to a, identify the user, and b -- >> it's not just a business question, but a societal question, whether or not we will have total privacy or whether or not we will allow legal surveillance. >> this is what slow down from the disclosures of edward snowden.

the technology industry has to ensure that privacy of their employees' communication. they have a responsibility to work with their government authorities. >> tricky, tricky issue of business as well. brian white, think you very much. google says it will no longer sell its current prototypes of google glass as he goes in for an overhaul of glass polish. what does it mean for the future of this thing that was supposed to be so big? ♪

>> this is "bloomberg west." google announced it will no longer sell the current rotor type of google -- prototype of google glass to consumers. glass will not be kicked to the curb but there is renovation on the digital spectacles. nest labs apparently will work on a redesign of the product. joining me is bloomberg contributor and glasshole paul kedrosky. no you're not a glasshole. have you use these, paul? >> yeah.

i have messed around with these. >> i want to thank you for not doing that. >> you are not the only one. they did not do much for me. i did not end up buying one. i have messed around with them a number of times. it's one of these classic technologies that this is really interesting, now i have no idea why we continue to use this. >> is the notion here that this was -- it is so dorky. could it ever get around that? i was looking earlier today. showing pictures of sergey brin wearing google glass. he's a burning man guy. the sarah jessica parker wearing them, she looks like a dork. emily chang, she's beautiful. looks ridiculous wearing those glasses. >> yeah.

if nothing else, it's going to be great time capsule material. you'll be instantly able to say oh that was from 2013. i can tell from the google glass. that was part of the problem, it was so idiosyncratic and strange. leaving aside the functionality it made you look goofy. that only gets you so far. the benefits have to be really high. i will give google credit read -- credit. very few companies would be prepared to so loudly and noisily fail and change publicly on a lunch like that. others would be branded, have google glass xl and google glass 2. they are saying this isn't working, and we are going to try to fold it into something else. >> that aside, i wonder if there is an enterprise use case here that may never be google's to optimize.

optimize an obstacle pun. write for a living? i've tried that. >> you're using your left and back are nicely. there's an enterprise case here. even here in san diego, i was at the medical center talking to some doctors about medical technology for a project. they are really interested in these kinds of things, in particular because the new hotness especially among top surgeons is to rebroadcast what they are doing from their own point of use. it is to be you would broadcast from a side camera and see somebody doing surgery on a meniscus. this gives them another angle for showing what they are doing. it's a nice way of experiential learning for people whose hands are otherwise occupied to want to show what they're doing. there's a bunch of these industrial use cases that will pop up more and more. >> the industrial thing is very

interesting to, the notion that you could have a grunt level worker who is working in an amazon warehouse, picking things off shelves or whatever where they can have some knowledge of what they are doing, barcode scanning happens even more quickly, and you can spend less money on those employees and have them empowered by technology, not training. >> all of those kinds of applications will begin coming up in a few years from now we will be saying this is what it was going to mutate into. credit to google for trying to open up a brand-new markets and saying maybe there is a consumer market here. they were wrong. but that is ok. >> may be our last thing will be the timestamp on those images of mark andreessen, standing there launching an investment syndicate around glass. >> it's a keeper. time capsule, baby. >> paul kedrosky, thanks for

coming on. we are going to talk about nielsen and twitter and what it means for big tv programs try to push themselves to a bigger audience. ♪

>> this is "bloomberg west." close but no cigar. that is what elon musk said. it's not a bar. elon musk calls it an autonomous spaceport drone ship. it's unbelievable. this thing comes in at an angle, skips off, explodes as it hits the autonomous drone whatever. that happened on saturday. sappacex has been working on a reusable rocket. spacex was prepared for failure.

they said in a statement the attempted landing would be trying to balance a rubber broomstick on your hand in the middle of a windstorm. hope springs internal at spacex. new data from twitter and his partnership with nielsen indicates tv shows generate a lot twitter activity before they premiere also generate good ratings. the top 10 shows -- can twitter draw eyes to the screen as a promotional tool? it's really interesting to hear this notion of twitter as a -- is it chicken or egg? is it leading the viewer or showing the viewers already care? >> it's a great question. we've been able to determine it is a little bit of both. we know there's a very cyclical relationship in that tweets and seeing tweets can drive ratings,

but ratings drive tweets. we're excited to keep studying that phenomenon. >> television has been a focus of twitter, particularly in the last two years. what sort of events led you to say this is a big deal? >> it's a culmination of many years of work. there were company studying social tv as far back as five or seven years ago. twitter was the first very open public data set these companies had access to to study what was going on between social media and television. because our data is so public, we are able to really dig in and see what is going in -- on under the covers. [indiscernible] everyone wants to know what is the big show. what we have now is the relationship with nielsen, where were able to determine on a weekly basis what shows are at the top of the list, middle of

the list, and bottom of the list. we have partners out there who do great work to bring twitter into their program experiences. we do see if that can help with the ratings. >> my favorite show, "bachelor," lots of tweets about that. i can't believe the choices she made. i never watch "bachelor." that is a show that generates a lot of tweets. what is it about that show and what does that say about other shows? >> we have been studying this relationship for quite some time. some of the new research we have from late last year shows us that things like live tweeting while the show is airing on television having the talent celebrities, producers, writers tweet while the show is going on helps a tremendous amount as far as driving engagement, as do simple things such as putting hashtags on the screen. we have seen early signals that those tactics really help.

>> i thought the epic fail along those lines was the grammys two years ago. they mention twitter in just about every toss and tease and guest. it seems ridiculous. you're saying that really works? >> there's a fine line between being over the top and using tactics that we know work. that is part of our role at twitter on the research side, to figure out what works and how much to use and when to use it so we can best help our partners. >> what is your favorite show you have seen this work with? >> we recently released some research in collaboration with the folks behind tgit. there is some great work where they have been spearheading and leading the industry in terms of live tweeting while the shows are going on. that is something we have been very excited about. >> a scandalous show -- i have

seen it on an airplane and loved it. it was a fun show. it's exactly the kind of show that i will turn twitter off because i'm watching it tivo'd or on a plane or whatever, i'm watching it on demand. what effect does on demand have with these things? i don't want to know what happens in the third inning. does that start to hurt the twitter connection? >> we are studying that right now. we know that spoilers are a great thing but can be kind of challenging for audiences. we know people are choosing to watch tv on their own schedules. these are things we are thinking about pretty actively on twitter as well as in collaboration with our media partners to figure out how we can bring the best experience to our community. >> this is created an opportunity for different revenue streams for twitter for a different way to twitter -- for twitter to make money? >> we are in our financial quiet period. >> i don't mean this quarter,

just thinking about how your business works. you are obviously already selling promoted tweets and so on and sold by the networks, sold by the shows. i wonder if there are different revenue streams that could become potential in this new world where you guys end up being a protector. >> absolutely. we offer different types of targeting and advertising. some of those flavors are well aligned to what we hope to do with our media partners. that is something we are really eager to further explore. >> as long as it does not ruin the "bachelor." anjali midha, thank you very much. just a few short years, fantasy sports has grown into a multibillion-dollar business. how did he get so big so quickly and so legally? we are talking to one of the major players in this game. ♪

>> i'm cory johnson. it is one of the biggest weekends in the nfl. championship games are lined up for sunday. chances are you are playing fantasy football as you're watching these. this has become such a big business. one company helped reinvent the fantasy sports business turning fantasy into a daily contest giving up $200 million in prizes this year alone. marketing dollars are big in this business. joining us to talk about growth in this business is the draftkings ceo via skype.

you guys are killing it. is it amazing how big this business is getting so quickly? >> it has been a really exciting nfl season and beyond our expectation. >> what were your expectations and how big has it grown? >> you mentioned we were going to hand out $200 million in prizes this year. really, i think this year it felt like we have been at this for a few years now and it felt like this year is the year it really started to hit the mainstream. you could hear people talking about it who were not part of that niche, that were casual fantasy football players. this is the first year i felt like we saw a lot of these people start to flock to the product. the market is huge. it should continue for several years to come. >> this is not sports betting.

it kind of is. you are going up against somebody else and putting a little money on the table to see who is right. >> fantasy sports is certainly competitive when you are playing against other people. one thing is the traditional sports setting, you typically are playing against the house. here it is fans playing against each other. the other big difference is this is a game of skill. the conglomeration of many different statistical analyses and things that can happen in a game that requires quite a bit of insight and forethought and analysis to really be good at. there are people that can be good at sports betting but it's a little more random when you are betting on a single event. >> you guys have got 350,000 users.

how much overlap is there when people are on both sites? >> from research we have done, it seems like there is quite a bit of overlap particularly amongst the players that play a lot and like the game and get into it. they chant -- tend to try both sites. some people prefer one or the other. you do have a lot of players that don't overlap, that choose to stick with one or another. there are many that lay on both. >> -- play on both. >> among the moats around your business is the analytics tool how this wide receiver does against this kind of defense how this linebacker plays. talk to me about the development of those tools and where that gives you an edge for draft things. >> draftkings has made a lot of investments this season and will continue to and building out our

content for helping people to understand the different nuances of the game, look at the day-to-day want, and more easily figure out who they want to pick. i don't think people want to spend hours upon hours on it. it is a skilled game. if you put in more time, you are better. our challenge is how do you take that information and put it in a way that people can consume and use more easily. you still have to be smart. you still have to see the angles other people don't see. we think it will help appeal to a wider audience. >> your marketing budget has got to be a monster to deal with. you guys are spending a lot in marketing. marketing as a percentage of revenue -- where do you imagine that will be for this business as it matures? >> i think the revenue potential for this business is enormous in the multiple billions of dollars.

it is obviously a certain point at which your marketing message is out there and additional marketing is not going to help your cause. at this point in the early stages of the industry, when everyone is trying to acquire customers and the market is still developing and our brand doesn't have the level of awareness we believe it will ultimately have, right now we are doing a lot of marketing and our competition is as well. that will continue for a few years. it is quite a large market and there are still many people who have not been introduced to the game that we believe are out there. as a business matures, certainly we will continue to spend on marketing but it will not rant nearly at the rate the revenue will. where it ends up as a percentage is anyone's guess. with the industry being as big as it is, this can be a high-margin business. >> in terms of marketing live

sporting events is becoming one of the most expensive places to advertise in all of media. >> you are talking about the deals with the sports league like major league baseball, nhl -- >> yes. buying an ad at the super bowl is not going to be easy for you guys. >> i do not think you guys will see us at the super bowl, at least not this year. that one we will probably skip. when you think about the leagues and teams, there is obviously an advertising component. for us it is bigger than that. there is integration with the game that you can do. if i look at where the world is going, live sports and watching sports is one of the only non on demand media outlets out there. people can tape, but it has an enhanced [indiscernible]

live. there is so much on the technology side with the gentle and mobile that you can do to integrate with that -- digital and mobile that you can do to integrate with that. >> jason robins, thank you. ♪

>> it has been a tough week for bitcoin. prices falling 32% in two days. prices fell from $290 to $173. it has bounced a little bit. venture capitalists have poured hundreds of millions of dollars into this technology, maybe the fastest growing area of venture capital investment period in silicon valley. bitcoin had its 15 minutes of fame, or is there more than meets the eye? i don't want to make fun of tim

draper, but he's the poster boy for what not to do with $18 million, right? >> yeah, it is quite a hit he has taken. classic winner's curse. 44 and 45 bidders. back up, i think it's around $600. do the math. that is how far it has fallen since tim bought it in the auction. >> we know the price after he paid it jumped dramatically. that may have reflected what he put on the market. he really sees a future maybe not in the value of the coin, but a technology behind it. i was describing our morning meeting as the tip of the iceberg. the price is the least interesting thing about bitcoin in a big way. >> it has become almost a cliche comment about bitcoin, anytime

anyone talks about the value of the currency and what is happening with bitcoin you respond with that is hardly interesting. what is interesting is the framework, this way of anonymously tracking transactions relatively cheaply and freely, making transactions that previously got hamstrung by the existing financial system. it is a really key point. we can't separate it from how much of the bitcoin frenzy has been about the speculation related to the currency and these two things gotten so mixed up. it's as if you mix up html this markup language that created the web and website some selves. the value of these things are tied together. >> the idea i'm thinking about -- dominant sight in the early web, lycos will be the future of the world. the internet was the exciting

thing. the technology might be. >> it's like html. it is a markup language for currency, like html is a markup language for the world wide web. the notion is powerful that it is a platform, getting all wrapped up in what happens in the day-to-day bitcoin prices. >> to what extent -- for me and i think for most people, when they really start to dig into what bitcoin is, they walk away from those meetings thinking i will take a couple bitcoins too. when the personal wealth of so many people in the ecosphere is getting crushed, what is that due to the development of those business plans by those people -- does that do to the development plans of those people? >> tim or barry silva, or even

the winklevii, who were investing in it as a speculative currently, that is a different proposition than what fred wilkin is doing at union square. they are investing in block chain as a technology, kind of like html that supports these kinds of much less costly transactions spread across geography and time. i don't think what is happening with bitcoin has very much impact on what happens with respect to investing in the block chain technology no more than lycos influence whether or not someone is likely to take html seriously. >> maybe the lesson might be that we would make more money owning the banks than owning the money in the banks. thank you very much. have a great weekend. "the bwest byte," we focus on one number that tells us a lot. sarah frier joins us. >> 60 million. that is the number of fans of

youtube stars that will be starring in youtube's own halftime show. they're going to produce their own to air during the super bowl. you will be able to watch those videos. >> there is going to be one single youtube thing that they want to gather a big audience around? >> mostly catered towards the people who watch super bowl for the commercials. youtube has always been really big about showing super bowl commercials before they air. so many people come to watch those. this is like bringing on commercials and generally funny people. >> what about the real super bowl traditions of halftime? >> the puppy bowl, i will switch to that in a moment. the great thing about the second screen experience is you can do all those things. >> look at those dogs. you bet katy perry. she has her thing going.

the puppies -- >> the puppies will always be adorable. >> for me the lingerie bowl is really hard to top. actually, i have seen the laundry -- ia haven't seen the lingerie bowl. you could crash more barges into rockets. you could have anonymous drone crashing bowl. the puppy bowl is going to be hard to beat. >> all these youtube stars are so popular with everyone these days. >> the youtube promise ultimately says that 1000 videos, 1000 different things to look at our more valuable than one big thing. the super bowl proves that. sarah frier, thank you. headlines all the time on your phone and tablet and bloomberg.com. "bloomberg west" will be back next week after we know who is

going to the super bowl. see you monday. ♪