>> live from pier three in san francisco, welcome to "bloomberg west" were cover technology innovation and the future of business. u.s. stocks got hit hard today. the main reason was disappointing earnings. microsoft had its worst day in a year and a half after sales of its -- sales in its business software softened overseas. caterpillar falling 7% after plunging oil prices took a big bite out of its business. the swiss national bank's decision turned out to be a boon for traders at j.p. morgan

chase. the foreign-exchange traders made about $300 million on the day of that. citigroup barclays and deutsche bank all took it on the chin to a tune of about $400 million in combined trading losses. at&t says sales grew 4% in the fourth quarter but somebody reported a loss of $4 billion due to underfunding the pension. they added subscribers as discount leeward subscribers. we will have more on at&t and its plans to expand in mexico later in the show. google fiber is heading south, not going south, moving business itself. they say they are bringing superfast internet service to atlanta charlotte, and raleigh-durham along with nearby

suburbs. google fiber brings internet speed about 100 times faster than the average u.s. connection. it's already available in kansas city, austan, and provo, utah. now to the lee -- apple does it again. the world's most valuable company post another record-breaking quarter. revenues were $74.6 billion, a 34% jump over last year. net income up year over year. here is tim cook will stop >> interest in apple products is at an all-time high with over half a billion customer visits to our physical and online stores. demand for the iphone has been staggering, shattering our high expectation, with sales of over 74 million units driven by the unprecedented popularity of iphone 6 and iphone 6 plus. >> i phoned flying off the shelves, 46%, up the biggest quarter then they had a year

ago. in china sales of 70% in the quarter. apple shares rising in after-hours trading. here to break it down is gene munster. i did a big o with my mouth when i saw that 75 million. >> i did the same thing and i was wondering what the catch was. it just could not be that good of a number and it turns out it's a clean number. investor expectations were for high 60 million. that 70 million was comfortably above that. anyway you cut it, it was impressive. >> we were on live tv and they were talking to someone else and i was trying to get the producers to come to me because that was the number. but there were so many other numbers in this quarter, it seems to me the margin suggests

it wasn't just dig iphone sales, but big iphone sales. the iphone 6 plus. >> they talked about that on the call, some of the geographic mix. they say they sold more iphone 6 is than any other one. sounds like in the emerging markets, the six plus has been the big winner. that has been suspected, given that they have not had an answer to the larger screen samsung's. that has a nice impact on gross margins. their gross margin guidance for march was better than expected and would have been better if not for the effect impact. anyway you look at it, it looks optimistic. >> 46% unit growth year-over-year on the biggest quarter they've ever had a year ago, it's interesting that the

numbers were so strong and the market reacting as if it's going to continue to happen. is this going to continue to happen with the iphone? >> they talked about the sustainability and that's the core question for investors. at some point we will have to start comping these incredible numbers. investors think six months ahead, so we are always -- we're already working to that question. first-time buyers are at an all-time high. they say they have been tracking the switch rate from android two iphone and it was the fastest market share gain from android which all plays into this theme which is the product cycle will have more legs than investors expect. then you have the benefit of the watch, whatever your expectations are for that, and it says like it's going to be april. put all of these together and there's still the big elephant in the room. what do you do with the big comps year?

everything for march looked good. >> average selling price for the iphone is $687. if that stays somewhere in there -- the price of components is going to come down and margins could conceivably get better. >> they could. without the impact of the fx, they should be inching 40%. they had a peek of 47% two years ago but that's obviously unrealistic. it's safe for investors to think of margins inching higher in march and june and if you are a believer that starks fought -- that stocks follow margin, it suggests apple will move higher over the next six months. >> ipad however, kind of disappointing. it was a lackluster announcement and maybe the results suggest

maybe they knew it was not going to be that they a deal because the sales are down four quarters in a row. >> it has been a big disappointment will stop there seems to be a trade-off between the ipad and some of the mac sales. a record mac quarter, so what you are actually seeing is people going back to the phone and the desktop and the ipad is caught without a home right now. they talked a little bit about this on the call in terms of the business side, more businesses standardizing and that should have an impact. bloomberg reported a lot about a larger screen ipad. i don't think it changes the broader theme which is that it's probably a low single-digit grower. >> i have to say just and it only, fred hickey is a high-tech strategist and i look forward to

getting it on my ipad and i wonder if a lot of users are lining the killer app there for once we have big phones and very skinny ep's, wondering what is going to differentiate it. >> numbers with just that's exactly what's happening. >> we've seen four quarters of this. it seems though there's some bigger trend. couldn't the tablet be a fad? >> i don't think it's going to be a fad. there needs to be more applications to optimize the formfactor to get it to grow again. it's just the replacement rate i think we will start to normalize the growth rate, so if single-digit growth is a fad, it

probably depends on your perspective. >> big earnings in technology. they are doing something amazing a yahoo! -- avoiding billions in taxes on its ali baba stake. it should have been a big gain for the government but it's a big game former is a meyer. we will talk about that when bloomberg west continues. ♪

>> i'm cory johnson and this is "bloomberg west ." this then off keep on coming -- yahoo! says they will spend off a $40 billion stake in alibaba to a separate company called spin go. -- called spinco.

martha meyer has been under pressure from activist to find some kind of value in the alibaba asset and turn more money to shareholders. the news has yahoo! shares rising in after-hours trading big time. even as the company reported the rest of you who saw a 2% drop in sales and a 52% drop in its fourth-quarter profit. what took so long? spin it off? that's it? >> i think they had a great outcome. it couldn't have turned out any better for yahoo! investor. it will beg the question which is what happens with the fundamentals once the spin runs its course? give yahoo! credit -- that a tough challenge and hit a home run on that perspective.

>> since can goldman is a big golden state warriors fan, we are going to call it three points. when you look at the deal, what jumps out at you? >> there's no secret that yahoo! is taking alibaba and yahoo! japan together is worth more than yahoo!'s market cap will stop investors are not happy with that. i think this is a partial surrender by the management team to make the investor happy. >> where is the value in the japan business? >> it is a growing is this, not as fast-growing as alibaba but it is still a going business. next it is better than yahoo! domestic? >> yahoo! domestic is trying to figure out what to do next.

>> should we be happy for yahoo! or mad for u.s. taxpayers? the notion they can take this $14 billion tax bill throw in a little operating business and combine it with $40 billion from alibaba and say we don't know any taxes -- that's a pretty amazing loss for the citizens of this country my for the money to use. >> that is a good question. it's not the first time this has happened. liberty ventures did this for their stakeholders as well. it's still getting paid, just not a company paying for it. >> paying less taxes is always goods -- is always good so i'm

all for it. >> says the guy who comes from the city where bridges are collapsing. i have not run the transcript yet. what do we hear about the tumblr business? >> i will say that the branded advertising growth, which is the key number it was down about 5% in the september quarter. you could look at it as less bad. my guess is they probably played into it. when you look at all of the things they have talked about whether it is at tech or other properties, it begs the bigger bastion everyone is asking and that does -- that is where does yahoo! fit into the bigger internet longer-term? i don't think any of those questions were answered longer-term.

>> it says they think they are the leader in the world in programmatic neo-advertising, which -- let me unpack that silly phrase. in other words, advertising with seo content that automatically goes out to pages without advertising where it is going to go -- that's a big is this. >> big business and the right thing to be talking about. brite role is a great acquisition to tap into that and it plays into a bigger question which is who is yahoo!? there has been rumors about them looking about -- looking at scripps. they've got a great salesforce and i think they should embrace their media background. that would be a way forward for them. >> i think so too. >> i usually agree with you but it seems like it works together.

creating the platform to put ads on their media could be used to cross the internet in the same way google is a search engine. >> the question is does yahoo! still have the tech dna? >> they boast about hiring lee schneider -- she is hiring a business talking about a half billion dollar advertising business. >> yes. >> i think the jury is still out. it's hard for a big company to turn around. ibm is more the exception than the rule. >> what would you like to hear? what would change your mind about this company? >> something exciting. programmatic video could be in that but if you look at the exciting things going on, i don't feel they've got the spark.

>> we appreciate. interesting results and we will look at some coin news coming out of a company backed by the new york stock exchange launching a big business today. ♪

>> this is "bloomberg west" and i'm cory johnson. when investors not giving up on bitcoin despite its losses this month. draper bought about 32,000 bitcoins -- if you liked it at 600, he loves it at $200.

one of the reasons for the resurgence has been the opening of the first regular did bitcoin exchange run by queen base. joining us now is the founder of coin base. i was totally dismissive -- it seemed like a smart technological mechanism to remove the money in one libertarians wallet and put it in other libertarians wallet. >> that coin is a powerful new technology. it's going to make payments more efficient, to make them fast cheap and global. the exchange we just launched yesterday as a way to bring stability to the ecosystem and help the price become less volatile and keep growing the bitcoin ecosystem. next us talk about white would make trip -- >> let's talk about why it would make transfer treiber -- transfer cheaper.

>> a lot of people have not been able to transfer it in a safe manner yet. maybe they had to wire money to a foreign country and now they have somewhere in the u.s. backed by the new york stock exchange, we hold insurance and are based in the u.s. -- >> -- coin is fascinating because it raises interesting issues like insurance. why is that important? >> hackers all over the world are trying to get their hands on bitcoin. having a cyber crime insurance policy is a great way to bring confidence to the ecosystem. >> do you imagine a world where we will see people in currency desks trading bitcoin the way they are trading swiss franc's him of the euro and the dollar? >> it's already happening. day one, we were trading millions of dollars in bitcoin on the first day. a lot of them were traders on wall street. they spent their day at the desk

doing a real job and then went home and started trading bitcoin will stop it's starting to happen in a very big way. >> do you think price stability starts to happen with more regulated trading? why is it necessary to change the dynamics of what has been a highly volatile market? >> it's just getting more people into the ecosystem. it's going to make it less volume -- less volatile. there were many ups and downs given on which provider was going to be a and which was going to be down. now we will hopefully be a bedrock and get people more confidence. >> the new york stock exchange backing is interesting. >> they want to have a portal or some visibility into this trend. you can see the similarities in

their business and hours and they decided to give us a good chunk of money to go after this. >> the notion of all the things they provide and the ledger that goes with every bitcoin transaction trade, is that part of this business that would benefit from the trading platform? >> you are going to see a lot of the activity on the bitcoin ecosystem happening on the block chain. it's a public ledger and will allow a lot of innovation. you can transfer any digital asset between two parties without a trusted year he. that means if you are in the business of being a financial intermediary, you might see pressure -- >> do you mean like a stock exchange? >> not really. we are in a similar position facilitating trades between people who want them.

>> the story on bitcoin has only just begun. lyft is losing its fuzzy pink mustache. we have to think of a new look for the company would we sit down with their ceo. ♪

>> you are watching "bloomberg west is quote where we focus on innovation, technology and the future of business. lyft is getting new look -- getting a new look. the number of rides offered by the service jump fivefold last year -- that's like 500%. that's a lot. they are rolling out a new advertising campaign and they are also giving the car a new look -- dropping the iconic fuzzy pink mustache for a glow stache.

the pink mustache had to go. >> of the pink mustache was an incredible launch device stop it is what made the company in a lot of ways. it has been a defining symbol of the community. last summer, we brought on jesse mcmillan, who is the creative director at virgin america. he said the mustache has been around for two years, let's work on what is next. >> they get a little dirty after a while. >> talk to me about how you look at your business. it is sort of you guys and uber out there. how do you define your business against uber? >> it's a very competitive space. the way we look at it, there's red and butter and to be able to

have a car a few minutes away from you in every city, beyond that it's about the ban -- about the brand and the experience. we are focused on having the most affordable and memorable rides and we've developed a way to scale up the community. these incredible drivers that really care about making everybody's day a little bit better. we've developed an interesting system for scaling the community across the country and we have the mentor program or top drivers in each market on board each applicant. you hit a button and in 30 seconds, your match with one of our top drivers. they will meet you in person and do your first test drive with you. they will tell you what it means to be a lift driver and how to

be great at it. that has been the core of what allows this special community to scale across the country. >> i drove a yellow cab in new york and they're probably howling in the controller control room because they are sick of these stories. i paid all the knuckleheads i had to pay and bribe the dispatch guy to give me a car and then i got behind the wheel and thought ok, i know how this is supposed to work, but people in the back seat would ask simple questions and i would have to learn all of those things. i'm sure i gave some memorably crummy rides. what do you mean by memorable? >> when we say memorable, we mean having a fantastic experience. having a conversation with the driver -- we have some of the

most amazing, phenomenal drivers in the world. we recently did an economic impact study and found in l.a., 50% of our drivers are artists photographers and actors any use lyft as an income support to support their dreams. each city is different. in san francisco, the industry is entrepreneurship and people are starting businesses, but they are using lyft to fund our businesses. you are going to get somebody with an interesting ambition or interesting life story to tell. if you ask the driver why are you driving for lyft, you're bound to get an incredibly interesting story about why they are there. >> you had about 500% growth. your oldest city is san francisco? >> san francisco is to an half

years old. second is l.a.. >> your oldest market how is it with the newest market? >> it's on track with the rest of the country. this is a massive market, so what was misunderstood by a lot of folks out launch was lyft and uber are going after the $11 billion limousine and taxi market. we are going after the $2.2 trillion consumer transportation market. lyft is out there to compete with personal automobile ownership. we want to create a better way to get to work every day, a better way -- >> a commuting alternative as opposed to the occasional special function? >> exactly. we've blown way past the limo

market and have taken on every trip. >> what do you think is the purpose of licensing drivers and cars? i understand the argument that says this is meant to keep incumbent players -- but there's a reason those laws came into play. do you think those laws have an effect or not? what is i think they are incredibly important and we are working with regulators across the country to create a new wave of regulation. there's a government prescribed program. we have to do a criminal background check and a vehicle inspection. those are core ingredients in

any city. we do this in every city whether there regulation requiring us to do it or not. i think the regulations that protect public safety and require stringent drivers records are important. what took the turn in the taxi industry is when they started fixing prices and limiting the number of drivers on the road. that has really crippled the taxi industry. >> it is hard to defend day bad taxi ride. the state of the taxi industry -- when you go to places with great taxi drivers, like this city with great taxi drivers and know the history what's going on around them, you jump into a cab in other cities and they don't know what's going on around them. in london, they have great taxi drivers will stop >> london definitely has the best taxi drivers the world. it takes years to become a black cab driver in london. >> do you aim to keep your

people on long enough? >>lyft has a whole mix of drivers. we love that and embrace it. others are using it as a stepping stone for the next move in their career. we support both. >> give me one compelling reason you think your business is going to be bigger than uber in the long run. >> uber is a great logistics company. it is great car service. but they don't have the same dna. they are not going after every ride. we are going after this $2 trillion industry and we are going to continue to drive the price point down so that when you get from point a to point the, you open up and get the most affordable and memorable ride.

>> great stuff. we appreciate it. the u.s. wireless market may be saturated but that has at&t looking south of the border. we will tell you about their big plans for mexico, next. ♪

>> i'm cory johnson and this is "bloomberg west." at&t is buying another mexican wireless provider -- the recent deal to buy nextel mexico from its bankrupt parent for $1.9 billion will stop at&t plans to combine the two companies as it looks to build its first north american service area covering both the united states and mexico. what could it mean to threaten carlos slim? joining us is our senior telecom analyst, john butler. these are big moves by at&t.

will there be one wireless service for everyone on both sides of the border? think so. this is a big big move for at&t. it's the first time when you think about it a u.s. carrier has stepped outside u.s. borders to grow. what at&t has talked about for a while but didn't do until it moved down to mexico as they talked about looking at other markets in getting into markets where they saw the kind of head room where they could grow their 4g service, grow the data side of the business. i think mexico represent all of that and more. >> boosting average revenue per user seems like it will do just the opposite. >> it is quite low right now. the mexican market is mostly prepaid.

it's going to take time but once at&t gets into that market and begin to sell additional services they can probably get the average revenue per unit up. particularly if they do a good job penetrating the enterprise side of the business, really selling mobile into companies. honestly, that's where the money and the margin as will stop >> -- that's where the money and margin is. the big difference is that it's predominately a prepaid market so you're not signing the two-year contract. instead, you are signing a month to month contract. you are also dealing with a sizable come a dominant carrier. in the u.s. we have a duopoly with at&t and verizon. in mexico it dominated by carlos slim and american mobile.

that's a force to be reckoned with. i think at&t has the size to reckon with them quite frankly i'll stop -- quite frankly. it represents a growing threat, albeit quite small at this point. >> it's a 69% market share. that's a lot. if we are looking at a situation with all of its half, at&t is holding a minor asset like t-mobile or sprint, it's tough to beat 69%. >> think about this -- the regulators are making slim slimmed-down unintended to less than 50% market share. so they are getting smaller and they will have to's and out those properties -- they will have to spin out those properties.

at&t seems more likely to buy than build. i'm sure they are talking to carlos slim at this point so they can grow quickly through the purchase of robberies from him and upgrading the network weekly to expand. >> some of the other players, whether it's verizon or sprint or even t-mobile could they expand their network south of the border because of their inability to expand north of the border? >> telecom south of the border is in my opinion ripe for the picking. they are behind the u.s. in terms of smartphone penetration, data services, average rates, all of that. there's a lot of headroom for growth can get a foothold and i think at&t has made the right move by taking that first step right outside the u.s. into mexico. >> john butler, thank you very much. coming up, what you need and when you want it. the trend is going strong

expanding to booze. they can deliver a bottle of scotch to your door in under 30 minutes. that's next. ♪

>> i'm cory johnson and this is "bloomberg west." have you ever wished just a few keystrokes could separate you from your alcohol eschew mark saucy is a new on-demand liquor store in your pocket. the app lets customers pay for alcohol with area liquor stores as partners. i spoke with the ceo but the business of mobile blues will stop >> -- mobile booze. >> we all came from the social and mobile space and we wanted to do something new connected to a traditional market. the alcohol space is hundreds of

years old and reasonably untouched by technology. we saw huge opportunity and being able to unlock different assets of that market. >> when you look at the market numbers, it's amazing how enormous the booze business is. >> it's amazing. there's over 105 ilion dollars and alcohol sold through retail stores in the u.s. every year. a little over 90 billion dollars that goes on premise. it is a massive market. >> what are the regulatory issues? >> it's a very old industry and right after prohibition, the government set up a three-tier system that separates producers distributors and retailers. the regulatory environment varies state by state. any market we operate with as a company -- >> what does that mean? we have to have physical locations or licenses to make these kinds of deliveries? >> we are basically a dispatch

and delivery network for retail liquor stores. we partners -- we partner with retailers and air actually purchasing from retail stores and we make sure those orders get routed to them very quickly. at the same time, when able -- we've been able to work with some of the largest rands in the world to introduce new and interesting campaigns to connect them with their customers. >> how do they work? >> one of the partners we are working with is the number one brewer in the world. anheuser-busch -- >> they make budweiser. >> and a couple of others. they are an absolutely massive company, so it has been cool to work with them, being such a small startup. we've been able to unlock their digital campaign. it's the first time in anheuser-busch ad could be clicked and connected to a purchase. they can purchase it and it will

be there within 20 to 30 minutes. >> how do you get paid? >> we get paid as a service from the retail partners. we drive the orders and provide customer support to help them run the delivery system. once every two weeks, they pay us a fee based on how much volume in traffic we are driving their way. >> for me ask you about competition. you feel like you are differentiated how from the competitors you've got out there? >> from the very beginning, it had to come back to the platform we were building. most people went after the seamless web or the alcohol industry where they send in order off to somebody. we felt it was important to build the dispatch and delivery infrastructure to be able to control that experience much more tightly. for us it was very important to have the infrastructure so we

had more control over the deliveries. >> the ceo of saucy. the bwest byte is one number that tells us a whole lot. what have you got? >> 3.8 billion. that is how much revenue analysts are expect inc. facebook to announce in its earnings tomorrow. but in tech, it is all relative. that's a slowdown from the prior year's quarter, the fourth quarter in 2014. it's also a slowdown from earlier quarters this year. the question for facebook is can they prove these things they are investing in like messenger and oculus can deliver revenue over time. next i guarantee the analysts will be wrong. -- >> i guarantee the analysts will be wrong. in the case of facebook i think

they always beat. to me, that's the analysts getting it wrong. the analysts are supposed to figure out what the company is doing. >> but the company is supposed to set low expectations. >> which is why the whole thing is ridiculous. to be growing at 50% -- >> 46% growth in the prior year, but it's still slow. >> i'm checking the wonderful bloomberg command that tells us he earnings surprises -- every quarter except for the first one, they exceeded analyst estimates, which means the analysts lou it every time. but it will be an interesting quarter for facebook. good stuff. thank you very much. you can always get the latest headlines on your phone your tablet, bloomberg.com and bloomberg radio. or is more "bloomberg west" tomorrow. ♪