>> live from pier three in san francisco, welcome to "bloomberg west." i'm cory johnson. kentucky republican senator rand paul has rangers a bill to further audit -- reach introduced a bill to further audit and remove limits on the government accountability office loan scrutiny of interest rate divisions and asset rate purchases -- asset purchases. taking further steps to ensure the freedom of two hostages.

an state has threatened to kill the hostages. -- islamic state has threatened to kill the hostages. electronic arts all revenues drop 9% in the third quarter. the 146% gain and profit. they continued to make progress selling mobile and digital titles. zillow executives say the purchase is still on track for this quarter. home prices slowed in their games. -- games. -- gaines. >> you had significant regional differences. in manhattan, home values are increasing 70% year-over-year.

-- 17% year over year. in the midwest, they are appreciating much more slowly. >> sales rose in december, the highest level in more than six years. there is no question apple is at the top of its game selling 74 million iphones in the first quarter. the largest quarterly profit ever for any company ever apple is making big growth in china. with such lofty numbers, is there room for more growth? can china be the key to that? when the earnings cross and that, my mouth opened. lorne the way optimistic analyst estimates of 65 million. >> no question about it.

one of the data points i took away from the call yesterday's day sold 34,000 iphones in our every hour during the quarter. it speaks to a tremendous quarter that apple put up. the question as to what extent can they continue that momentum. >> i read an analyst note saying the problem is the numbers to good, they can never do this again. it is insanely stupid way for wall street look at something. here is this company on deaths door one decade ago. >> or you can think about it more recently, there were significant questions about the next generation of iphone products and what other categories apple would pursue. there have been disappointments along the way. yesterday was a pretty

resounding indication that apple is doing a lot of things right at this point. >> let's talk about the iphone. it looks like the six plus sold a lot more than the six. that helped gross margins quite a bit. >> obviously, they were asked about this and they highlighted the fact that they did not provide specifics related to the products in question. it is fair to say that the iphone six plus sold a lot better than people anticipated. it makes sense because they have not had a so-called big screen phone in the market since they started selling the iphone in 2007. there was a big opportunity to capture not only new smart phone consumers but also those folks that have been with downright it -- with android. i could have pulled through potential for apple for a number of quarters.

if they're are using things like itunes and the app store and building around that ecosystem. >> the percentage of revenues were lower -- the sales and marketing expense did not grow that much. >> the way we look at it is they got better scale from the sales and marketing and that happens when you're talking about a huge company during holiday season. i would agree with the notion that there are other ways that apple can make its brand and products more visible on a regular basis. one thing to keep in mind is i think they were looking to hire some folks and build a team around social. i expect that to be much more of a focus from a marketing perspective for apple. >> the ipad results were not great. they introduced a new product and sales fell year-over-year

for the fourth quarter in a row. >> if there were any things to highlight that were neutral and negative, you have to start with the ipad. there is no missing words -- the results were pretty bad. look at the revenues, declining 22%. the asp's were down -- there were not any indications from apple that this is going to change anytime soon. as you referenced, the iphone is the company's most profitable product. you have a new iphone six plus cannibalizing sales of the ipad that is not so bad given that you have a higher blended margin and the iphone has residual benefits in terms of long-term contracts and carrier relationships. it is worrisome and i don't

think they have a quick fix for it. >> $9 billion in sales is not too bad when it comes to the ipad. i do wonder about the future of the tablet as a product line. >> that is an interesting thing to consider over the next number of quarters. people are taking a step back and realizing the ipad probably is not going to notably contribute to growth. that makes apple more focused and reliant on the iphone which injects a new level of risk into the story. a great quarter people understandably are enthusiastic about what apple delivered. to be frank the more and more reliance on the iphone means there is more risk when it comes to things like carrier subsidies and competition that might occur on the smart phone level that we have not seen as much over the

last year or two. >> the macintosh sales, four quarters in a row of sales accelerating meaningfully. which is a nice boost. >> no question that when you look at the quarter, you lead with iphone but not far behind his mac. -- is mac. that's when the pc market at best is flat lining here. the fact that mac is gaining shares is significant as well. >> i would agree. always appreciate having you on. thank you. bruce a meyer was been offer company -- marissa mayer will spin off alibaba. we'll talk about what yahoo! is without ali baba and the big spinoff. ♪

>> this is "bloomberg west." here's a check of the stories making headlines around the world. tensions and the border after hezbollah militants fire a missile. two israeli soldiers were killed. israel retaliated launching aerial and ground attacks and has block. -- at has block. -- at hasezbollah. anti-austerity party sriza took power. china's government goes after ali baba group saying the company has failed to crack down on shady emergence and bribery. -- shady merchants and bribery.

last week, jack mock discussed his relationship with the chinese government. -- jack ma discussed his relationship with the chinese government. >> i told my people and team, we love the government, but don't marry them. >> you have never gotten money from the chinese government? >> not. i don't want it because if the company is taking money from the government, that company is rubbish. >> alibaba tells bloomberg news it is working to improve its technology. yahoo! is finally revealing what they will do with the $40 billion stake in the company. they will spin it off in a company called spinco. they will avoid a $14 million

tax. marissa mayer said it a lot of thought went into the decision. >> after an exhaustive review we are pursuing the transaction we believe maximizes value for our shareholders and optimizes transaction efficiency and certainty. >> ali baba and yahoo! -- she calls it an exhaustive review. it went on forever. they have spent so much time and money. take a piece of the yahoo! business and spin it off with the ali baba shares. >> the irs is ok with this. this is a new way of saying we can take this state we have and make sure -- shareholders happy by not having this huge tax.

they had the ipo last fall and took a big tax and investors do not like that. >> the spinoff is fairly simple. as a citizen of this great nation, wanting my roads and bridges and schools to be better , missing $14 billion in revenue is fairly amazing. >> it's a lot of money. >> even to me. >> exactly. a lot of questions out there about how we do our taxes. how did we lose this $14 billion? it is not the first time it has been done. >> the cfo of yahoo! should get kudos for coming up with this plan. it does start to reveal what is left over. we saw sales numbers falling again with the core business

that is yahoo! despite billions spent in acquisitions. >> it was the outlook for this quarter that was disappointing. it was not a great quarter. rss told me look, there will be ups and downs. -- marissa told me. >> we have seen the sales numbers go down and out. >> q3, we had some hope. we are back to declining revenue in the fourth quarter. big trends in mobile and social pressuring yahoo! they have to figure this out. alibaba might not be such a big question. >> they had a billion dollars in revenue for the fourth quarter. less than they had one year ago in the same quarter. on top of that, you have a

business generating profit and free cash flow in the market -- and the market is valuing it at zero. >> baby yahoo! is not google or facebook or twitter. it has a real business and hundreds of millions of users and a lot of legacy here. don't count them out. we will see what happens as all of this begins to unravel. there are a lot of folks that think that as well. >> you talk to those people doing these valuations, do you get a sense that the bulk of the company is at technology -- adept technology? >> right now, there is a dual path. reset has invested in both

things. -- most festive in both things -- marissa has invested in both things. you can make arguments on both sides. yahoo! is trying to play on both trends. >> thank you very much. san francisco judge ruled moment ago about a big lawsuit claiming current loss favor air b&b over home away. we will have the ceo to talk about it, next. ♪

>> i'm cory johnson.

this is "bloomberg west." a district court in san francisco dismissed a lawsuit brought by homeaway challenging thereir airbnb laws, claiming they were favoring airbnb. what does this mean for the future of homeaway in san francisco? carl, what does this mean? >> we think this is really good news for homeaway. it clarifies that we are not a hosting platform under the ordinance. which i find curious since we are the largest vacation rental company in the world. san francisco decided to argue that we are not a hosting platform they are trained to regulate. that is a pair conclusion. we said it this was -- we said

this was an airbnb law. it has operated quite well for the last several decades. >> i wonder what this means for similar struggles you might face in other jurisdictions, whether in the u.s. or abroad. >> one part of the lawsuit that remains unresolved because by dismissing and saying homeaway is not part of the coverage -- intended coverage of the law they dismissed the discrimination. it's something we need to decide if we are going to press. >> i'm curious about what airbnb and homeaway means for the future of a given city. when the residencets -- maybe new

york city won't be a ghost town in the summer. >> our industry is coming into cities. there is growing pains as that happens. what you will see -- people are not converting entire buildings into short-term rentals. people are not running their home full-time. a typical homeaway wants to use their home a lot of the time which is why they want to rent it part-time. i don't think a lot of this jerk only in ominous falling and the whole city structural change will materialize at all. >> i want to talk about the super bowl. an event where tens of thousands of people go into a city and look for somewhere to stay. what is going on in phoenix? >> the demand for homeaway in phoenix has been quite high, up

200% over the last couple of months. at this point, it is fairly booked up. we had a 3600 listings at the start of the season for the super bowl weekend. 500 are available now and 200 of those came on in the last week or so. the demand is driving more supply. a great opportunity for people in phoenix to list their property with homeaway because the demand is quite high. when you really want to see or want to read short term this is a perfect opportunity. >> what does it mean on your end to run with this? super bowl is an event you can plan for come on the world series or nba finals. >> often with the event planners. our favorite folks are sxsw.

we work with those event organizers to make sure they have availability on our site. >> do you call them up and say -- >> they call us. they're looking for accommodations. the special olympics is driving towards their 2015 games in los angeles. we are helping those folks find homes for young people with disabilities. >> a very non-tech way to solve a problem. call someone. >> it is pure organizers have a lot of challenges. we are the preferred partner for that. >> thank you for joining us today. up next, more on the super bowl. 70,000 fans head to the stadium and more heading to phoenix. can the nfl provide enough bandwidth to deal with those selfies and facebook posts?

the chief information officer will join us with those details. ♪

>> you are watching "bloomberg west." super bowl 49 this sunday more than 70,000 fans will be there. but will they be able to get online? with the nfl stepping up wi-fi standards for all the stadiums we have michelle mckenna doyle. very interesting challenge you have with this big game. >> absolutely. all of our games present a big

challenge as far as connectivity goes but nothing like the super bowl when you at all the fans and the amount of media, etc. it definitely creates a challenge for connectivity. >> i want to take you back to 2008. it was a very different technology world. there was no instagram. the best selling phones in the world were made by nokia. >> you just have to work really hard to make sure they are continuing to reinvest in them. in 2008, the conductivity we did have was focused on download ability. if you wanted to do something you downloaded it. now you see fans creating their own content and wanting to publish it themselves. that's what it is all about, making sure that all the clubs,

particularly when you are hosting a super bowl, that you have the latest and best conductivity. from wi-fi, pervasive throughout the whole bowl and staff at all carriers. >> mark cuban told me he would wire all of the seats in the american airlines arena. it sounded crazy. the nba was not doing anything in that regard. talk to me why the nfl is trying to create some sort of wi-fi standard for its stadiums and what that standard is. >> if you look across our stadiums in the country, they are in varying stage or age or some of them have been recently opened, like the 49ers new stadium that has the latest and greatest. for investment purposes and planning purposes, we wanted the clubs to know what the base standard would be and that is to make sure the fans get what they

want. they want to be connected. we know that the at-home experience has become amazing. watching from your sofa and surfing the net and getting all the data. but we know the best place to watch an nfl game is in an nfl stadium. so we want to take advantage from a connectivity standpoint. it was on -- or would it -- it was important to make sure all clubs understood and we will work very hard through all partners to help them get their. >> we were looking for someone to blame for the crummy 49ers season and we have decided to blame you. the new stadium is a lovely place. but after halftime, no one is going back to their seats. the home field advantage isn't happening. >> that is a really good point.

at the end of the day technology should be about augmenting the game experience and not replacing the game experience. we not only give standard conductivity guidelines, but we also work closely with all the clubs to make sure the in-stadium experience creates an awesome game experience for fans and for players that are on the field. and it obviously plays much better on television as well when fans are in their seats cheering and not online somewhere else or doing something else. i think it is a calibration that has to happen as you go along and making sure that you do keep the game at the center of the attention and not get too carried away by all the cool devices and things you can do. >> i was up at the seahawks field caught a game up there and those fans are so passionate. >> oh, my gosh. >> and so freaking loud. . it's incredible. .

when you meet with these teams, how does this integration happen? you say you were closely with them. what form does that take? >> each team has a leader of technology and usually a leader of game day presentation a producer of sorts that produces the live game day presentation in the stadium. so there is good coronation that goes on between the technology that is available along with what will happen. so using the super bowl as an example, we program things that will be happening within the super bowl that is well correlated with the in-stadium aspect that will be ready for super bowl 49. and that coordination has to be tight because it should enhance and augment the game experience. at the end of the day we don't want people looking down on their small screen to watch the game. we want them watching the game on the field and augmenting that experience with their devices. >> hopefully there will also be

some wi-fi enabled scale so we can weigh the football as well. thank you very much. i can't wait for the game this weekend. >> thank you very much. >> facebook is in -- facebook as a massive amount of user information that they gather all the time. but how do they find it? how do they store it? we will talk about a company that provides analytics for in-patient people.

>> "bloomberg west" i'm cory johnson. how does facebook analyze data quickly? enter ana, the palo alto-based

company. the ceo joins me. i like this notion of your company. there is so much data being gathered by companies, either intentionally or unintentionally. >> how goal is to make data part of everyone's day, not just data scientists, but everyone be able to integrate data into every decision they make. >> what do you mean? >> we have a backend and a very integrated front end and allows people to look at behaviors overtime. your machine behaviors, user behaviors. you can begin to group people by those behaviors. >> what is it like for the user.

you say everyone using it i am trying to imagine like a google search or something. >> it has a visual interface. there are drop-down menus for all of your column values, type heads, just really easy to use. its like when you have when it sent all the sudden you into windows and everything was just there and easy to use. >> why is this possible now? what wasn't possible in your technology that is possible now? >> my background comes from intel. at intel, it was very clear how much storage was getting cheaper. >> processors getting faster and stores getting a lot cheaper. >> a lot of the tools are made in the 1970's. it cost $200,000 to store a gigabyte of data. >> my phone has 120 gigabytes. [laughter] >> yeah.

but when it was $200,000 a gigabyte, a lot of these were invented. so they save their inventory, the customer lists, their accounts. as soon as that data got stale they threw it away because it was too expensive. data tools, that is the kind of data they were expecting. low in the home, today it is to sense -- it is 2 cents to store data. >> tell me about the inspiration for this, when you first noticed this problem. >> my cofounder came out of facebook and facebook is really -- >> i thought your cofounder came out of your living room. >> i am indeed married to one of my cofounders, i have to

cofounders, but they both came out of facebook. what they saw was that facebook was able to pull all of this data from all over the world and onto your homepage in under a second. >> was the me -- what do you mean? >> it is coming from data centers. they are able to pull that and download facebook homepage are the quickly. you take that mindset and you look at the data analytics tools and data processing tools. they are still outdated because they still think of data as one slice of time. we are able to slice and dice down to the raw level as well as group people based on behavior all in seconds. >> does facebook have a tool like this or does facebook need

a data like this? >> facebook has a much earlier iteration that my cofounder made named scuba and people use it for slicing and dicing data. we have added a much more powerful second. you can not only slice and dice what you can look for behavior patterns. you want to know which issues are working and which machines have security risks. you want to improve your software. >> interesting stuff. thank you very much. stories making headlines around the world. cyberattacks causing businesses -- costing businesses $4 billion a year. the number one and number two risk factor at every company. >> in certain specialist lines of course, in 2012, the cyber

risk premiums we think were running at about 850 million. it is now 2.5 billion. so they have traveled. and the demand is ever increasing. >> nelson also says he is seeing more capital going into reinsurance. a panel of experts listed by google to review privacy issues. they report will be at odds with eu eu regulators. google has received more than 200,000 requests to remove more than 750,000 links from its website so far. nintendo reiterating it is expecting the year to be a profitable one. sales of the wii u the game

maker slashed it's forecast by less than half. "bottom line" with mark crumpton coming up in a few minutes. >> the u.s. federal reserve open market committee statement will be released at 2:00 p.m. washington time and we will have team coverage. our washington correspondent will give us details and our roundtable will sort it out for us. i will be joined by john herman and giants want -- and diane swan. and scarlet fu will have wall street's reaction. bottom line coverage of the fed statement begins at 2:00. >> thank you very much.

facebook, google, twitter, they have all released devonte -- released a alarming diversity reports. what can silicon valley do to address issues like race and gender and get routed of -- get rid of the tech bro who are raising up their collarss?

>> i'm cory johnson. recent diversity numbers from tech companies show a very white and asian-maille dominance. some advice. they have already held thousands

of minority students. with talk about this all the time, how tough it is for these companies to make these changes. why is it so hard? >> several reasons. obviously, right now, they are pointing to the pipeline, lack of quantity of students especially one that represents populations. what we have learned over 45 years, one of the hardest things is corporate culture. as students matriculate out of college and go looking for work it defaults to a referral system. also we noticed a lot of companies hire at certain schools and only certain universities. >> i heard a story. a recruiter once told me that at google they didn't even know

the names of historically black colleges because the hadn't been on there they had looked at. >> right. we were founded to address this particular issue back in 1970 and also partnered with industry who also recognized, the startups of their time, intel and hewlett-packard and stuff. they have been working at it for quite a while. the difficult thing is, you know, like you said, they don't know the historically black universities the hispanic universities, and there is travel universities and colleges as well. grade students. every -- great students. every student we work with love to compete and get in there and collaborate. they are used to working on projects so we are really preparing them for what employers are telling us this is what we are looking for. >> when and how do you deal with these students? >> may say is unique in several

ways, but one that we are most proud of is that we are in the education system in california all away from elementary school, what we call their precollege programs come all the way through high school into community colleges and into undergraduate institutions. a student can come into mesa and follow from sixth-grade of till they graduate or they can start with mesa in community college. >> you are really tried to find the students who could be great employees for these companies and get them to ready to walk out of college with the right kind of skills so they can get the attention of those recruiters. >> absolutely. in mesa, the a stands for achievement. our founders back in the day realized that our students were not being academically prepared. their are certain -- there are certain gatekeepers and barriers.

for the rigor of the first couple of years, all of these -- all of this great research shows up to 40% to 50% stem majors either drop out or change majors within the first two years of college. >> because it so hard. >> it's hard. to imagine taking four ap classes at once and that is your life. you are transitioning. you are a kid from a rural town in california and now you are in a major -- many universities are like big cities to them. they have their own culture and they have to adapt. the first weeks and months in college getting there. it's a strange place and sometimes you feel like you don't belong. >> mesa director, julian

martinez, thank you. we focus on one number that tells us a whole lot. phil mattingly joins us from new york. >> the u.s. byte is $600,000. that was the fcc fine in october slapped on marriott international for blocking personal hotspots at one of their places in nashville. in a so-called "enforcement advisory" on tuesday, the sec said it is expensing a disturbing trend among hotels and other commercial establishments blocking personal wi-fi. marriott and a industry group had petitioned the fcc to change their mind. the fcc fines this unlawful and is with the public's right to their airwaves.

>> i found this story fairly amazing. i'm glad you brought it to our attention. why would marriott do this in the first place? why do photos not want people to have personal hotspots? >> there wasn't exactly a good explanation for it. there was an apology from marriott and then there was a push to get a formal ruling from the agency that underscore that whether or not they felt they were doing something wrong, they wanted to know the rules of the road and see if they could push it somewhere in the future. tom wheeler coming out and saying, under none -- under no uncertain terms, this is the way it is going forward. nobody can do this and there will be significant fines of other companies and hotel changes -- hotel chains are to do this in the future going forward. >> you can get the latest headlines online and your tablet. we will see you tomorrow.

>> this is a special edition of "bottom line your co--- "bottom line." policy makers have been meeting to discuss interest rates as inflation remains below their 2% target and as the economy shows signs of improving. the fed said it could be a vocal patient" in raising rates since raising rates for the first time since 2006. peter cook is at the fed. we will hear from him in a few minutes. also joining me is john herman director of interest rate strategy at usc goodies. -- u.s. securities. scarlet, let me start with you.

what are the markets expected to hear today? >> they are not expecting to hear a whole lot because the fed set the scene in december. the federal reserve is looking at the labor market and the lack of robust inflation and perhaps reeling from the market turmoil we saw our earlier this week and certainly earlier in the month with the swiss national banks decision. having said that, the employment picture is still fairly robust. no one is expecting the federal reserve to change his timeline all that much. having said that, we have heard roman from some economists. morgan stanley put back the date for the lift off until mid-fit -- until mid-2015 or the end of the first quarter of 2015 from the start of 2016. the consensus still remains mid 2015. >> is patients still the watchword -- is patience still

the watchword? >> yes. i don't think they will have an absolutely clear vision on this year as much as they would like to so i think they will have to sort of keep things fairly simple straightforward in the assessment and just allow the economy a few months, that they can get a better read. >> what will the feds read be -- what will the fed's read be? >> they will go slow, a glacial place. the question is who is going to dissent? charlie evans has gone on record saying he doesn't want to raise rates until 2016 or does not think they need to be listed until then. the fed is walking the fine line saying they welcome lower oil prices but we don't welcome to low-inflation -- too low

inflation. >> right. we will have wall street's reaction as well. it's time to go to peter cook. he is standing by with the fed's decision and statement, the first meeting of 2015. good afternoon. >> the fed is more bullish on the u.s. economy. there is new language about inflation running too low, but they expected to eventually rise toward the 2% target and they are factoring and international circumstances. let me walk you through the statement -- first of all, the new language on the economy. information received since the federal open market committee met in december suggests economic activity has expanded at a solid pace. labor market conditions have improved further. some of the new language on inflation