cory: live from your three in san francisco, welcome to "bloomberg west." i'm 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.

>> the fomc is it that 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 politicize the process. cory: meanwhile, christine lagarde and ecb president mario draghi both say that more strength is needed for great reforms. president obama has vetoed a bill approving the production of the keystone pipeline.

the senate will vote to override it the veto. votes are needed to override in both houses. the pipeline would go through oklahoma, and nebraska. the fbi is offering a reward for the fugitives related to the hacking. he is the hacker known for the game over zeus virus that got over $100 million from victims. olbermann has been it taken off air from ees be a -- espn.

he continued to send it twitters . after criticizing their difficulty with the english language than all apologized. espn called the exchange completely inappropriate. hewlett and packard's meg whitman said the company's turnaround remains untracked. the earnings tell a different story. revenues are down to 1.4 billion. dig deeper and some things look even worse. revenue was flat. printing revenue is down 5%. h he is down. it was trading higher but is turnaround on track?

bloomberg intelligence joins us from new york. i mean missing analyst estimates. this company has 13 or 14 quarters with less revenue. >> it was a tough revenue. you did have margin improvement across the board revenue growth remains challenges across the segments. we see the same pattern of this corridor as we did last quarter. it remains more challenged on the enterprise side they are not on the pc side. pc segment doing ok. enterprise segment still challenged. on top of the execution and operational issues you have the currency which was pretty

substantial and likely to be there for the remainder of the fiscal year. >> it it's a big deal for this company because they sell so much to europe. a lot of the goods it in the printing business is supplied it in japan. they have a hedge built into their business. but that did not save them. >> no. in their defense, the edges can only protect you so much. you are a little bit more protective, but when you sell goods it you can dramatically change prices to meet currencies swings or you will scare off the customers and give competitors and upper hand. it impacted them pretty substantially this quarter. >> i feel guilty like i am ripping on it too much. what they promise here is the

shift away from pc. the shift towards enterprise. the margins might be better. is it still possible are we seeing that to hp may have a better opportunity but cannot rise to it? >> it is a structurally challenged industry. selling servers, networking gerry in a fast-commoditized world where the way of doing business and companies like facebook and google larger medically undercutting branding and going with unbranded gear is a big deal. the tech spending from the traditional industry is growing slower. in that environment, you have to compete with branded the year and with the likes of cisco lynn novo ibm.

it is not easy. they have certainly their own challenges as well. at on the currency affect overlay and it does not paint a pretty portrait. >> operating is a little better than last year, but with the top line shrinking so much, it is not going to make this a bigger better company. do we need to accept a notion that to the shrinkage is -- i don't know it is not going to be a big is this like we thought. >> at meg whitman is definitely betting against that. we will wait to amc if when you do's lit that and you are off to a smaller base, it is nothing to scoff at but certainly a lower

base relative to the combined hp. you can extract is cost savings and become more agile. i think that is the bigger challenge to be quite honest. >> this morning they announced a big deal for deutsche bank. >> those are the kind of deals you want to have many of. it is the financial services industry with a lot of spending. high-margin business. those are the kinds of businesses you want to have many. >> thank you very much for the pre-and postgame show. "bloomberg west" will be right back. ♪

cory: i'm cory johnson. here are some top stories. the metrolink train collided with a truck this morning, knocking four 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. layoffs are coming 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?

they are rushing out to get the latest bells and whistles? kevin: really, what is happening is there was so little 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 the even ford set near-miss and gm and chrysler's bankruptcy, the writing was on the wall before that. they started to reign in tech spending before that. we have basically a lost generation of technology. as that opens in the investment spending that is the products we are seeing now. we have a lost generation of tech knowledge he. 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. so people driving onto a dealers locked with a 2010 model year, completely different tech model from what they are seeing

even in left over 2014 models. 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, safety is a good example. 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 warnings. we went from protecting you after you have a crash with airbags, inside curtain airbags and it mean airbags, and we go to collision up warnings.

and, we have skipped right over that and gone to collision warnings in and then we skipped right over that to where we have vehicles that can correct themselves to keep themselves in the correct driving the. they are probably better drivers that we are in a lot of cases. cory: as far as the significant increase in the crisis of -- the price of cars, it seems to be regardless of sales overall. blowing right through the recession. 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

number of 30 2000 and four 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. once interest rates come back up , that could be a faster turnaround. 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. up near 27% or 28 percent. if you think about traditional three-year lease terms, probably somewhere around 25th -- 2017 and 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 $17 billion with 5% profit. up and percent to year per year. 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 comcast customers. they might need comcast pipes to do it. walter: comcast has the broadband pipes, but what dishes -- dish is 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. andy harvey also joins us and he covers comcast. i wonder, when you look at what is going on with comcast and dish 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. yes, they are going about it to

in a little bit to different ways. there are people that have just said, i don't want to a bit bundle. congress -- 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 is that just a bad trend 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, dish is nothing of the sort. do you think that will hurt their position in the merger? walter: i think it 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. so i'm not sure if the government was worse off for substantially better off by dish's participation. more importantly, those rules were set and approved by the five commissioners, including

commissioner applied. so, they are playing by the rules. just like at&t and verizon in past years. cory: walter and andy, thank you very much. bloomberg west will be right back. ♪

cory: you are watching " bloomberg west." i'm cory johnson. does edward snowden have 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. a report from the intercept based on the snowden reports, the company says that gemalto was hacked. they make think cards. such a hack would give them access to the very keys they are supposed to encrypt. spies at apparently broke into the e-mail and facebook accounts of the employees of gemalto. and google and yahoo!. 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 the and decryption up protocols -- and even protocols -- encryption protocols 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 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 so they can read traffic and get in there. the whole idea is to get after a target to win it 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? technically of course, the targeted piece is you are going after specific phone numbers and people. the problem is that to if you do not to understand the general landscape of the signal in environment you are operating under, you will not have a way to find that 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 have, and that is why the back you cleaner approach is still being used. cory: he responded in the article, and i want to give you a chance to respond, he indicates that the target was notgemalto per se, but to attempt to trying cap the web is that possible to reach as many mobile phones as possible. with the aim of trying to monitor mobile communications without the user consent. without trying to let anyone know. holland is ticked off because of course 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.

so 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. so 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 300k 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

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

in apple pay. jay, 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. if you look at the way that 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. the consumer experience. and then they launched. they are 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. tim cook last week said that two thirds of all contactless 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. and, the other players in the ecosystem benefit as well. 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 with the mobile 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 are a payment processor, we know how to it is to have good relationships with the 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? jay i think it: 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 pyott stands to make $100 million if he is terminated. how about a fire sale at boeing? the aircraft maker has buyers for 10 early generation 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 san francisco, home prices rising 9.3% year-over-year. second after that is miami. 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 etsy 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. >> primarily secondhand, preowned jewelry and watches. 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, on a rolex yacht master, the same watch will have 20 different prices on ebay. 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 you snap a picture, it does not look as impressive. >> absolutely. it is impressing because if you show the retail price and then

for example, this watch is $11,000 retail and is on our site for $6,500. we take into account what you're -- what year the watch was made how badly is the condition. and then there are other fact there's 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 was interested in having you in because i have seen a handful of marketplaces 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 -- when everyone used to go to ebay for everything.

>> that is true. and initially, you had the 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 and others just do not offer. for example in jewelry. when you go jewelry shopping you require specific services like warrantee, refurbishing, where the item came from. ebay does not offer that 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 checked before it goes onwards. where the ebay take all of the millions and do this? probably not because it is only manual. cory: will you site be able 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 emojis.

they will give a range of skin colors and added a lot of different rings to address some of the diverse city criticism apple has gotten. 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 emojies. i will look for new characters in my feed. 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. ♪

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