corey: live from your three in san francisco, welcome to "bloomberg west." and cory johnson. janet yellen said the fed will not raise rates before it sees more improvement in the economy. in testimony before the senate banking committee today, yellen repeated the pledge to be patient. flex the fomc is it that it can be -- it can begin to normalize policy means that it is unlikely the economic conditions will

warrant an increase in the target federal funds rate for at least the next couple: meetings. cory: yellen also strongly criticized congressional efforts toward monetary policies say it would put aside the process -- the politicize the process. david kelly jpmorgan chief global strategist is not optimistic about the outlook. correct given the state of the -- grexit given the state of the greek economy and the strategy in the last few years, bring greece along long enough for the rest of the periphery and the european economy to get healthy and for the european banks to get healthy. and we are moving a good deal along that road right now. cory: meanwhile, christine

lagarde and ecb president mario draghi both say that more is needed -- more strength is need for great reforms. ukraine accuses the progression rebels of using the truce to reinforce other lines of attack on the ukrainian troops. meanwhile, foreign ministers from russia france, and germany met today to reaffirm their commitment to the cease-fire deal. sony has named tom rothman as the new chairman of the sony pictures group after the departing amy pascal, who is leaving after the mass of the cyber attack -- the massive cyber attack. meanwhile, sony has also extended the contract of entertainment ceo michael linton. and apple is going to overhaul its genius bar for his concierge

service. starting the week of march 9, customers seeking genius bar assistant can walk into the store and get a specific time to return for the apartment. this is based on an algorithm that prioritizes the priority of your problem. now to the lead. the gut wrenching contraction at hewlett-packard finally over? hb is already out with news this morning. the company says it signed a 10 year multibillion-dollar deal with georgia bank to modernize its i.d. systems. multibillion, but how many -- with deutsche bank to modernize its i.t. systems. multibillion, but how many billions? they won't say. i know somewhere in the future there will be a slip of the company, but these quarters matter -- a split up of the

company, but these quarters matter, yes? >> absolutely. it is a big driver of the company and the pc business is cyclical. it is a large business particularly as it relates to the cloud business. and they want to emphasize software, hardware, and services. the flight this matters a lot to hp -- stuff like this matters a lot to hp. cory: will we get a sense of how they will do as to businesses separately echoed or will they wait -- separately? or will they wait until the deal is done? >> i think we will get into the end of the year be went -- the end of the year when the deal becomes a reality. thus far, the revenue growth picture has been very lackluster on the enterprise side. hp income is doing nicely on the other hand.

the pc business is the one that is carrying topline growth for the company. cory: and specifically, we've seen 12 of the last 13 quarters of sales decline. but in terms of gap profitability, that is also going down a lot for this company. what are we supposed to look at? are we just to ignore the topline company -- the topline numbers? the call that has gone from $8 billion a quarter down $5 billion from last year that is a much less profitable business and a smaller business. >> the hardware business, particularly in enterprise, is commoditizing more rapidly with companies like hp, dell, and ibm not necessarily having all the answers. the move to the cloud-based model using commoditized hardware is hurting both growth and profitability for these companies. how these companies and whether

hp is able to strike large deals, such as the one with deutsche bank, affects the topline and the profitability of the company in the long run. and most of the profitability movement of hp have come from cost cuts from employee reduction. that story will end at some point. cory: and add to that one of the improved metrics that meg whitman is paid by. in her defense, it is nowhere near where mark hurd was getting paid. but she's also gotten a big pay raise in the last year. her take-home pay according to sec filings, with nearly $20 million last year. and in spite of the company's struggles, things get worse for the company, but better for her each year. is this a drop in the bucket? >> hp has had some structural

issues and reduced debt pretty substantially. the company is financially better off. better than where it was a here and a half ago. that said, now the cost part of the game is over. what are you going to do for me from the topline perspective? that is what people are waiting to hear. cory: you mentioned topline growth. i guess will order of her compensation is the improvement of the actual cash flow coming into the company. but one way of improving that cash flow is selling receivables. they sold $2 billion worth of essentially the notes. basically, companies -- customers that owed them money receivables, they count that as cash flow. it is legal, but it makes the cash flow look better than it was, particularly over 2002 when it was over $1 billion.

>> that cash flow is part and parcel of the equation. if you compare that to companies like ibm, both on the vb aside -- the bbs site as well as the cash flow side, you do have some restructuring going on from time to time. the challenge both at hp enterprise and hp going forward will be more at the topline that at the bottom line. -- more at the topline van at the bottom line. because you squeeze that more for the company. cory: thank you very much. "bloomberg west" will be right back. ♪

cory: i'm cory johnson. here are two some top stories.

the metrolink train collided with a truck this morning knocking for cars off the tracks will stop no one was killed. the driver of the truck was taken into custody and is being questioned. google's eric schmidt will talk about the four-year antitrust investigation into google's business practice. this is the first meeting with google's executive since she took office in november. abbvie,, the parent company of some cable channels -- at viacom , the parent company of some cable channels including mtv, dealing with shrinking platforms because the competition. existing tech, bells and

whistles increasingly driving car sales. kevin, people aren't waiting for your hovercraft from tesla? kevin: really, what is happening is there was so little invest and -- investment in technology through the bankruptcy of gm and chrysler, all of that pent-up technology is now hitting showrooms and with the average vehicle age being 11 plus years, people looking at these products are fascinated by the new tech that is out. cory: there are so many dynamics at play. there is the economic state of the union, if you will. there is the state of the debt markets with superlow interest rates right now. but the collapse of the subprime markets and housing market in 2007 and in 2008, what happened? even with a company that didn't go bankrupt, like ford, you can still see a significant collapse

in their tech investments in terms of the billions of dollars they spend on r&d. kevin: sure, and if you figure with even fourth near miss, and gm and chrysler's bankruptcy the writing was on the wall before that. they started to rain in tech spending --reign -- they started to reign in tech spending before that. we have basically a lost generation of technology. if you think about a noticeable difference in automotive technology in about an eight year window, we have compressed that to about a four year window. people driving onto a dealer's lot with a 2010 model year, completely different tech from what they are seeing even in leftover 2014's.

cory: it's interesting, and every year when i go to the ces show, and thankfully i did not have to go this year, but every year they tell me it's the best and brightest and these are the newest bells and whistles. it sounds like what you are saying is we are about to enter and age of significant technological innovation from all of the automakers because of the downturn in r&d spending from 2007 and 2008. kevin: sure, and if you look at it, there are three main areas that we talk about. safety is one of them. fuel efficiency and engine efficiency in general. and the other would be infotainment. if you look at the safety side of things, we've almost leapfrogged over collision mornings. we went from protecting you after you have a crash with airbags inside curtain airbags and knee airbags and indigo to collision mornings. and we have skipped right over that worry half -- and then we go to collision warnings and

then we have skipped right over that where we have vehicles that can still themselves to keep themselves in the lane. we have bypassed the effort where is a vehicle is going to warn me, then just fix it in the first place. speaking of autonomous driving and these vehicles, these are the steps to get there. little by little, we realize we can make the machines better drivers then we are, and they already are in a lot of his. cory: as far as the significant increase in the crisis of -- the price of cars, it seems to be respective -- regardless of sales overall. i wonder if that is about easy credit, subprime lending. which is a just dominant part of the car business now and wasn't 10 years ago. kevin: and if you look at the

price chart that you have coming have a $28,000 transaction price in the u.s., and now up over the full year of 2014. that additional monthly payment increase is being offset by lower interest rates at least in terms of the payment. and then if you think about the total cost of ownership, the lower gasoline prices play into that as well. you are seeing consumers going to dealerships and see all of us new tech. they are willing to pay more, because what you are paying for in tech you are getting back in lower interest rate and equity you can low -- roll into your loan rate, too. cory: talking about what janet yellen was saying with there is no inflation, what you're saying is that with lower prices -- lower oil prices, interest rate could turn around.

kevin: another area of new vehicle sales that it's having an effect on is least penetration, which is at an all-time high -- lease penetration, which is an all-time high. if you think about traditional three-year lease terms, probably somewhere around 25th -- 2017 leaseand e.on, we will get this flood of -- and beyond, we will get this flood of awfully squiggles coming back into the market. they will have a fair amount of technology and then you will have quality awfully -- off-lease vehicles competing with those at a higher interest rates. now the used market is going to start to look like a better deal. it is so close in terms of the affordability gap now that everybody just buys new. cory: i will keep my powder dry for a few more years.

kevin tynan, thank you very much. "bloomberg west" will be right back. ♪

cory: this is "bloomberg west." i'm cory johnson. a big day for comcast with the net neutrality proposal. marching ahead the ceo said the sec will approve the deal and soon. the company reported sales of $71 billion with 5% profit -- of $17 billion with 5% profit. the company says it needs this merger.

walter talk to me about this quarter for comcast. it was an interesting one on a lot of levels. what stands out to you? walter: to be honest with you, i thought we were going to be talking about dish today. i thought comcast talked a little bit about the wi-fi strategy, which i thought would be interesting as well. cory: interesting developments for both comcast and dish. trying to find ways to go after those new customers. walter: comcast has the broadband pipes, but what dishes trying to do with respect to their position erdogan -- charlie ergen has realized that with services, you've got a certain timeline on how long you can actually grow that business or sustain the ebitda they have

now. comcast has been in the wireless business before and is now talking about a wi-fi strategy and there are other companies around the world that have done something similar. comcast will have to rely on the existing wireless providers out there to handle the traffic that they cannot handle on these wi-fi hotspots that they have in the market. it's a different approach for two companies that faced some challenges in a pay-tv business. cory: yeah, because the customers seem like they are looking for something different. and he joins us and he covers comcast. is there a common law in their about what subscribers are showing a preference toward? andy: subscribers want to watch what they want to watch when they want to watch it, and that is showing to be a challenge for the industry.

there are people that have just said i don't want a big bundle. comcast is trying to address broadband and trying to make the video product better. cory: andy, when i look at the comcast quarter, they are betting substantially on content , not just on the universal acquisition. but that only grew 1% year-over-year. what do you make of that? is that a trend, or a dad order for programming? -- or is it a bad quarter for programming? andy: a little bit of both. they had tough columns on the film side. but i don't think if you look at the collection of assets you would say that the group profile is going to be anything other than low or single -- low mid or single digits.

cory: walter, dish has been criticized by sec commissioners about the process by which they acquired licenses and last auction by essentially partnering with tiny companies and pretending to be a small company when, of course, this is nothing of the sort. do you think that will hurt their position in the merger? walter: i think it takes off -- ticked off some commissioners already. some $30 billion went to paying down the debt. there are studies that you can look at that if you don't use designated entities, the sum that way would have raised would have been far less. i'm not sure if the government was worse off for substantially better off by dish's participation.

moreover, those rules were set and approved by the five commissioners, including commissioner by. they are playing by the rules. just like at&t and verizon in past years. cory: walter and andy, thank you very much. we will be right back. ♪

cory: you are watching " bloomberg west." i'm cory johnson. does edward snowden had any reservations about blowing the whistle on the surveillance program? yes, he says he wishes he had done it sooner. the nsa would not be as accustomed to abusing its powers. he held a forum that after winning the oscar for the best documentary. i watched the first half hour of it last night. it's really amazing.

he is still releasing information about what the nsa has done in his surveillance programs. based on's written document -- on snowden documents, the company jim also was hacked -- gemalto was hacked. such a hack would give them access to the very keys they are supposed to encrypt. they broke into the e-mail and facebook accounts of the employees of gemalto. and by breaking into those accounts, analysts were able to figure out who was passing what information. cedric, this is a fairly amazing , focused effort. they are doing the things that you expect spies to do but they were spying on employees at

yahoo!, employees at google employees at the wireless companies to figure out who might have the codes that would get them in the front door. cedric: that is right. it's good to be with you. according to these reports the nsa and counterparts were in all of these areas, saying that they would go after the different parts that not only pertain to the sim cards themselves but those that they were made by. once you get into the encrusted piece, then every thing else becomes open by those going after it. it's a pretty extensive operation. cory: and fairly interesting the intercept article saying it was so clever that it was like using a key to go into the front door instead of breaking the door down. cedric: that's right, because encryption is about -- all about

the keys. and in this case, very complex algorithms to denote the modern encryption systems. it's very hard by themselves for agencies like the agent -- like the nsa to go in and break the more modern in christian -- more modern encryption systems. that is why they are looking for other ways to get in there while so they can read traffic and get in there. the whole idea is to get after what is necessary to get after that target. but of course, it pertains to everybody using the sim cards, and that is basically the entire population that uses a cell phone. cory: one of the documents indicate that the brits got access to 300,000 cell phones or mobile phones in somalia and said, we don't need to use these, but they gave them to the nsa and they were very appreciative. but the notion that they would go after 300,000 phones that

they did not even have any reason to want suggest that this was a vacuum cleaner and not a target of terrorists. cedric: this is the entire problem with collection as it exists right now. intelligence agencies have to look at whether to approach this from a vacuum cleaner perspective or do i go in and have targeted collection? with the targeted peace and you're going after specific evil, specific phone numbers that's a much -- with the targeted piece when you are going after specific people specific and numbers, that is a much better approach. but otherwise, you will not have a way to find the proverbial needle in the haystack. the target you are looking for will not become evident until you understand the background behind that target. and that is the difficulty that intelligence agencies -- intelligence agencies have and

that is why the vacuum approaches being used. cory: he responded in the article and i want to give you a chance to respond, he indicates that the target was not gemalto per se, but to attempt to trying cap the web is that possible to reach as many mobile phones as possible. essentially, it was this approach to try to get everything without letting any room -- without letting anyone know. the u.s. is supposed to be a cooperative partner with holland. is this the kind of thing that goes on all the time? or is this a change from prior decades? cedric: in prior decades, you cooperated with all of the intelligence agencies. when you're dealing with a partner like holland or any of the western european partners, it was normal decades ago to

tell them what you were interested in and they would assist from their local either law enforcement agencies or the intelligence agency themselves depending on the country. there are a lot of things that are different about this. in many ways, the business relationships that global companies like gemalto have complicated this, because it's not just a dutch company. in essence, it's a global player, and as you pointed out, is the largest producer of sim cards in the world. they have an interest in maintaining security at the nsa -- in maintaining security. and the nsa and other vested and interested parties have a reason to go about getting the algorithms to track those they are interested in. as far as the intercept of 300 thousand targets it is basically getting the lay of the land. and there are targets in somalia without shabbat and other terror

targets using that as a place, as a base. but you need to understand from an intelligence perspective what is out there before you can go after each of these individual targets that you are truly interested in. that is why there is that difference and that inherent trouble that inherent dichotomy between going after specific targets and the big vacuum cleaner. cory: it is an amazing story -- an amazing technology story as well as is the story. "bloomberg west" will be right back. ♪

cory: i'm cory johnson and this is "bloomberg west." google is buying patents from soft card. they're going to work with google. soft card will be preinstalled in the new wallet out on android

phones. google has a big challenge are now in apple pay. -- big challenger now in apple pay. j, talk to me about what this means for the world of contactless payments. jay: the biggest thing in the industry is that apple has its first real competitor. apple has been approaching the market in a holistic sort of way. they lined up the banks. they lined up hardware obviously because that is what they do. there continuously adding issuers, mastercard, etc. google wallet did not approach the market quite that way. and i think what you are seeing now with this deal with soft card the capitulation of the

model that the mobile carriers will run with this. you are seeing that model being exited and having a full competitor with google at the helm to pete with apple pay. cory: google may indeed be a pioneer, but you said -- but they say you can judge the pioneers by the number of arrows in their back. many payments were going through apple pay in the fourth quarter. suddenly, they are the one to beat in the market. jay: i think that says more about the other two or three players in the market, not to take anything away from apple. i think we will start to see that even out. cory: you tell me. the requirements of merchants to accept liability after october 1

if they don't have new cash registers, will that drive a big upgrade cycle toward contactless payment as well? jay: i think it will, because in order to incentivize these types of payments, they will have to -- merchants will have to change their hardware and business model. when you put something that has real functional value to it, the changes can be made. cory: is this a marketplace kind of business where it is going to be one company that ends up dominating? or will there be a couple, or even dozens of payment platforms? jay: i think there is room for a couple of winners. with this move of google lining up carriers and being able to distribute them by default on all the phones, it will bring a space where more innovators can enter more easily.

it will be interesting to see if google does what apple did with the banks and line them up. we know how important it is to have good relationships with banks. it will be interesting to see how they bring the ecosystem in line. that will determine how much of the market they can control. cory: is the fingerprint the only -- only as an option on the iphone 6 plus, for the five and the six plus, is that a significant differentiator here? or do you think that customers will and you to engage in sort of unsafe activities with the payment mechanisms on their phone? ja i think ity: becomes cheaper and cheaper. whether it is fingerprint or voiceprint, all of those can be differentiated. cory: thank you very much.

let's bring you up to speed with some bloomberg top headlines. a golden parachute for the ceo of botox maker allergan if things don't work out, david hyatt stands to make 100 -- david pyott stand to make $100 million if he is terminated. how about a fire sale at boeing? the aircraft maker has buyers for 10 dreamliner's that had problems during final assembly. boeing is selling them for last -- less than half of the list price. the planes were too heavy and could not fly as far as necessary. ethiopian airlines is expected to purchase eight of the dreamliner.

home prices in 20 u.s. cities appreciated at a faster pace in 2014 than the year before. the s&p case schiller index showed property values rose 4.5% through december. the biggest gainer, right here in sanford, home prices rising 9.3% year-over-year. second after that is miami. mark crumpton is coming up at the bottom of the hour -- at the top of the hour. mark: the company whose sales outlook weekend says it is unable to raise prices in much of the united states. what is keeping potential new home buyers on the sidelines? and how will the housing market uneven recovery impact the company's bottom line? the company's ceo, doug yearlyey will join me in a few minutes. cory: "bloomberg west" will be

right back. ♪

cory: i'm cory johnson and this is "bloomberg west." ebay still dominates in online auction, but increasingly specialty marketplaces like scetsy are using special technology to authenticate items and it's getting to be a big business. recently, my guest was asked to describe how the niche market works. >> we authenticate and best price everything will item leveraging our system on the site as well as the pricing engine to price these items in

real-time. 80% of the folks are there do not know the prices of the jewelry and watches they own right now and are only getting $.10 to $.15 back when they go to sell them. cory: where are they typically selling them right now? >> they either sell them off-line at the jewelry stores or they are trying to sell it on ebay. the problem there is, most of the shoppers are not trusting the sellers, because they see the prices all over the place. for example, one same watch will have 20 different prices on ebay and no one knows why. cory: these are beautiful items and some of them are very expensive. what makes a watch like that on your site -- because it's very beautiful to see in real life, but when used a picture -- when you snap a picture, it does not look as impressive. >> exactly, for example this

watch is $11,000 retail and is on our site for $6,500. we take into account what you're the watch was made, how bad the condition is. and there are other factors as well as demand. we are able to give you real-time pricing. and whether it is photographed in house or even by sellers, we have a system that cleans up the images and make them much more beautiful. cory: i have seen a handful of marketplaces creek up -- crop up. reverb, or etsy for that matter. i wonder if there is something about the state of the marketplace today that makes it possible whenever when used to go to ebay for everything. >> that is true.

and initially, you had ebay for everything. we are starting to see in a last three to five years and what we will continue to see in the next five to 10 years, vertically integrated marketplaces that require specific customers experiences that ebay or etsy etsy and others just do not offer. you need to be able to trust the seller and where the items came from. these pieces have stories. we have seen this happen not only in our vertical, but with handbags, apparel, and shoes. we believe there is a lot of vertical in the integrated marketplaces to be created. cory: they have developed a particular system around cars that is a little bit different than the rest of ebay and it's enormously successful. >> correct, but i think ebay is

widely focused and has many different verticals. certain verticals require more manual operations than others. when the items sell on our site, nothing ever gets to the seller unless it goes through our appraisal offices in new york city. it has to get check he forgoes onwards. -- checked before it goes onwards. will ebay check everything you go probably not. -- will ebay check everything? probably not. cory: will it be to scale? >> we have technology that processes items in real-time. for example, the watch. we look at the face and the serial numbers. cory: how much is the watchword? >> this watch right here is worth $22,000. cory: you actually scan the watch to take pictures of it and see how real it is? >> yes, we scan the inside, the

back, the faith and the serial numbers. we are in different industry databases and other off-line databases and we are able to determine if it is a fake or not. using that scanning technology we are able to authenticate items through leveraging technology. admin through our pricing engine, we are able to determine what the pricing should be for the watch. in turn, giving the seller the best price back and the shopper the best value back, and everybody is winning. cory: time for the number that tells us a whole lot, the bwest byte. alex joins us from new york. alex: today's bwest byte is 300. that is the number of emerging

from -- emojis. it is to give more diversity to what they introduced in 2011. cory: what, they are not just using white dudes? alex: they picked five colors. there is still criticism that they are not doing enough, but it is definitely a step for them in terms of integrating more look into these weemojies. i will look for new characters in my feet. cory: i will look forward to deciphering your text. alex: i will do that just for you. cory: we appreciate that.

you will see more "bloomberg west" tomorrow. ♪

>> from bloomberg world headquarters in new york, i am mark crumpton, and this is "bottom line." ♪ to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this tuesday. "market makers anchor erik schatzker on the greece bailout extension period and peter cook will speak with the senate banking