emily: live from pier three in san francisco, welcome to "bloomberg west." here's a check of your top headlines. a sign of strength in the u.s. jobs market. for the sixth straight week, few were than 300,000 americans filed first-time claims for unemployment benefits. the total number of people currently receiving benefits is the lowest since 2000. goldman sachs posted highest earnings-per-share and more than five years. all major businesses beat estimates and the bank confirmed plans to boost its dividend.

here's the group's cfo. >> a slow but staple recovery continued to gain support. the long-term expectation of slow but steady growth remains intact. emily: citigroup posted its biggest quarterly profits as the financial crisis. first quarter net income jumped 21% to more than $4.7 billion. citi's expenses dropped 10%. international monetary fund chief christine lagarde warns greece will not be allowed to skip a debt payment. she spoke to bloomberg. ms. lagarde: we never had an advanced economy asking for delay payments. i hope this is not the case with greece. i would certainly not supported. emily: greek officials told creditors they might run out of money and miss a repayment to the imf. people said greece's latest

payment did go through and the warning was just part of an ongoing discussion. microsoft and yahoo! have made some changes to their long-term search partnership. the update gives yahoo! more flexibility over how it makes money from advertising. no longer requiring it to use microsoft to serve ads es. microsoft will handle the relationships with advertisers for bing. a 10 year deal between the two companies that they struck in 2009. etsy shares surged today, the stock opening at 93% 30 one dollars after pricing at $16 a piece. the website raised $267 million in a public offering. the challenge will be for etsy to keep sellers happy while building scale for investors. investors have 62 million reasons to be excited about netflix that is the number of

global subscribers the service boasts in its latest earnings report. the international growth has yet to result in additional profit. international streaming has actually cost the company $160 million in the last year. also costing the company is piracy which the company said is a long-term threat outside the country. "bloomberg west" editor at large cory johnson is here. and from arlington, virginia martin is here. he has raised his target price. wire use a positive? -- why are you so positive? >> people are loving netflix. we did a consumer survey as netflix was going into earnings and it is telling as people use netflix as much or more than tv. if you are a netflix subscriber 49% say they watch netflix more than they watch tv. 57% if they had to choose said

they would choose netflix ever pay-tv. this is four and a dollar a month service. this argues that they -- this fo r an $8 a month service argues they can raise rates. once they finish their international round over the next two years elca stairstep and earnings that is a great argument to own stock. what they are doing domestically will be replicated around the world, where the market opportunity is larger than the u.s.. emily: i love netflix and i watch it a lot. is that enough? cory: interesting work that he did with the study. my kids do not even know how to use the cable guide. they do not know how to say netflix, but they know how to run it.

the international expansion, right now the stock market does not care about earnings. a year ago, analysts were banging the table, they were looking for $1.40 in earnings. the company comes yesterday with $.38 in earnings and it is off to the races. they are investing in growth and spending fortunes on marketing market is 12% of the revenue. now they are shifting that to international. it is unproven in some markets that they are going to have to go into. free cash flow is a big deal. they are negative free cash flow. at some point they might need to raise money if they want to continue this kind of growth. and talk they are spending on original content. how dependent is netflix's success are hits like "house of cards." can they keep it up? barton: it is a great part of the story.

something i never expected them to be as successful as they have been with original content. they have to hundred 20 hours of original content this year. that will double over the next year to 600 40 hours. that is more original content that you will get. as they have grown this original content the time people spend easing the service has increased. subscriber's spent an average of two hours a day watching netflix in the first quarter. that was up nearly 30% year-over-year. i think there is a direct connection between the original time spent. i think they have a model that gives them a lot of data about what people want. those two things have put them in a powerful position. people like their service but they are paying a lot less for it. that is an opportunity to

extract value. emily: let's talk about piracy. with hbo this week 4 new episodes of "game of friends wer -- "game of thrones" were leaked. is netflix's beef with piracy different? cory: i was surprising how much time they spent talking about it and talking about the new fcc rules. i was surprised to hear that about piracy. there is the question about what they do about user authentication. there has been a suggestion that they will charge similes multiple people different accounts. they have introduced something in the last year where different members of the family can sign in differently. one wonders if in order to get some of the goals barton is talking about raising prices and

getting more revenue per user, may be by providing up families. wanting to have better authentication. emily: i could use anyone's account. i can using your account. i that a vulnerability? barton: it is an opportunity. they have been generous allowing pass word sharing. ever time you will see revenue per subscriber growth through measures like claiming down on password sharing. other measures like letting you pay more for premium options like 4k streaming. on top they will raise rates. if they charged everyone a dollar more per month he uses the service globally right now that would be 750 million dollars more to their bottom line. a little goes a long way in this model. it will go a long way to turn around concerns cory highlighted about free cash flow. emily: if everybody keeps paying

for it at a dollar more. barton: if people like it more than pay-tv the odds are good they will pay that. emily: what are you going to be watching? cory: i am anxious to watch "daredevils." i am concerned about content costs and lack of free cash flow. and concerned about their ability to take hits. may be barton is right that they have data magic and they will figure out what people like. "marco polo" was a face plant. they cannot afford a lot of mistakes like that. they have been very smart with the shows that they have picked. if you look across the history of hollywood, there are people who are great at programming until they are not anymore and that is a netflix risk. emily: thank you both. we will be watching all of those

things. hundreds of commercial planes could be vulnerable to hacking according to a new government report. we talked to one of the researchers behind the report, next. has meerkat lost the live streaming battle to periscope? ♪

emily: i am emily chang and this is "bloomberg west." a major warning on in-flight wi-fi from u.s. watchdogs. plus, the rapid rise and fall of meerkat. a check of your top headlines. the french senate approved a meseaasure forcing search engines to prove how they rank results. he french economy minister said the parliamentary bill will not hold up. it could be removed within days.a day after the european

union accused google of abusing its dominant in search. ben bernanke has a new gig, working for a hedge fund. he will become a senior advisor at citadel, the firm run by can griffin. bernanke will meet with clients and offer analysis on economic and financial matters. while in-flight wi-fi connects travelers to the outside world, it could give hackers a way into the plane's onboard computer system. the government accountability office reports that hundreds of commercial planes may be vulnerable to cyber attacks through passenger wi-fi networks. many modern cockpits rely on the same wi-fi passengers are using, meaning a hacker could commandeer a plane or shut down warnings and navigation systems. how can airlines and the faa keep hackers out of the sky? dr. gerald doingdillingham is the director of civil aviation at the gao. we also have mark, former deputy

undersecretary for cyber security. think you for joining us. this is something that scares everybody when you hear a report like this. how serious is this? dr. dillingham: we are talking about the potential for this intrusion to occur, rather than saying this is an imminent threat. the faa is taking precautions. we are talking about the future as more and more aircraft become more internet-dependent. emily: how exactly does it work? if the plane is on cabin wi-fi the passenger wi-fi is connected to the cockpit system and that is where you see the vulnerability? dr. dillingham: as we described in the report, the example that we gave was that in the cabin

passengers have broadband available to them. they can upload a program onto the computer. if that program has malicious software and it and -- this is important -- and the ip connection on the airport is able to connect with the cabin then you have to possibility. right now, there are firewalls that prevent that kind of incident occurring. keeping in mind that fire walls our software too. to date the faa has special rules for preventing this. we are putting to the fact that 10 years from now when maybe 60% or 70% of the fleet will be new aircraft that we see today in terms of the dreamliner or the a350 there needs to be

regulations and standards so that this does not become a special condition. emily: mark comedy chertoff group is constantly examining frets like this. how concerned are you? mark: i agree with dr. dillingham:. the biggest issue, we are concerned about technology touching each other. obviously there's a great concern when you think about the avionics of an airframe or the communications of an airplane being able to touch the same wi-fi or entertainment systems that the in-flight passengers use. as dr. dillingham: said, while they may be protected with firewalls or devices, those are regularly defeated by bad guys. we have to get better about thinking about building security into these controls at the

beginning, at the design phase. i posit that building security into the design of an aircraft is just as important as the leading safety and efficiency features into the aircraft. the world has changed. as things are more and more ip-enabled, we have to think about this from a security perspective as much as a safety perspective. emily: planes that could be affected, boeing 787 dreamliner, airbus a350 and a 380. what percentage of commercial aircraft are we talking about? planes were than 20 years old? dr. dillingham: we do not have account. i would not say that most planes are newer than 20 years old. the fleet is being renewed.

what is important now is as was said, to build in security and that is what we are talking about. the older fleet had more separate controls and not as many points of potential contact across the systems. a third of those rip-based. going forward it will be 50% or 60% by the end of the decade. that was the point in our report, not to cause concern among be flying public that this was an imminent danger but to point out that cyber security challenges change every day and the faa must not only build security in and make sure the manufacturers build security in that constantly been monitoring it because the threat changes every day. and you need to be one step ahead.

that was the basic point of our report. emily: in the worst-case you are saying a hacker could commandeer the warning and navigation systems. worst case scenario, could a hacker bring a plane down? could a hacker fly a plane into a building? mark: that is the worst case scenario. i don't think anyone is predicting that is certainly the concern we have. we need to keep the controls separate. the system's separate said that that potential does not exist. when you think about this, when you have a wi-fi network connected on an aircraft it is like a wi-fi network anywhere else. you could potentially have bad guys on an airplane that could compromise the wi-fi on the airplane. segmenting these networks is

incredibly important. i know that the manufacturers are thinking about this but we need more people in the airframe manufacturing and the faa and the government organizations that can think like bad guys. think about how bad guys would seek to circumvent the security controls. emily: all right. we know that the house transportation committee is taking a look at this. mark from the chertoff group and gerald dillingham, who wrote the report. thank you. what is next for meerkat? has the live streaming app run through its 15 minutes of fame? ♪

emily:. this is "bloomberg

west." live streaming services from meerkat two periscope have been hot in technology. just as quickly as they rose, one seems to be falling out of favor. meerkat has fallen out of the top 1500 downloads on apple. . scope is at 169. has meerkat had its 15 seconds of fame? here meerkat to discuss is sarah. meerkat got a splash when it came out. i got a message that said emily plus meerkat equals boom. sarah: it was buzzy. the contrast between how much we heard around sxsw and now is stark.

to soon to say it is dead. it is so tiny that it was barely significant enough in the beginning to weren't all that buzz. -- warrant all that buzz. a chart shows that less than 1% of iphone users are on meerkat or periscope, its competitor owned by twitter. it is early days. emily: you are saying periscope is not doing well either. they only have 80,000 solitary. -- followers. sarah: people talk about the live streaming wars but it is such a small slice of the overall population using these apps it is really not a phenomenon yet. it is not a big thing. they are trying to get there. i know some people have used apps like this in the past and

said this is so interesting and i'm having a good time. whether that translates into the kind of popularity that instagram or snapchat has is yet to be seen. emily: we will keep watching. thank you so much. we will be right back with more of "bloomberg west." ♪

emily: this is "bloomberg west," we focus on innovation, technology and the future of business. let's get a check of headlines. russian sanctions imposed by the u.s. and eu are motivated by politics and meant to contain russian development. this according to vladimir putin, who spoke earlier on his annual call in tv program. president putin: sanctions are a political issue and we should not expect them to be lifted soon. it is a strategic issue for our western partners and it is probably not much to do with ukraine anymore. emily: putin when on to say that

despite sanctions and strains on the economy, the banking system remains strong. most economists now expect the fed to wait until september to raise interest rates. 71% of participants in the latest survey see the fed voting on its first rate hike in nearly a decade in september. that is up from 32% last month. the change comes after recent week payrolls and manufacturing reports. . ahead for the three largest cruise operators. bookings are up 4.4% from 2014. 23 million people took an ocean vacationed last year 51% of those were americans. it means confidence is on the rise and americans are starting to spend more. blackstone's earnings doubled in the first quarter subclassing $300 billion. the largest alternative assets

manager had sidestepped fallout from declining oil prices. steve schwarzman put the firm's strategy in basketball terms. >> we are like a basketball team without a 24 second clock. we do not have to shoot. we do not have to be invested. we just wait for an easy shot. we keep passing the ball around and go for a layup. we only in private equity have to do 10 to 12 investments in a year to invest money. emily: blackstone led a deal to buy $23 billion in assets from general electric last week. joawbone taking apple pay with its own feature. the ceo explains how it came about. >> we teamed up with american express while ago about how could we use that real estate to create a seamless payment experience and that is what we have done. i think it is -- forget wearable

payments, it is the easiest way. you take the device and it has a mark that shows where the tag is. you tap it and that is it. emily: the up4 will sell for $200 and ship this summer. nearly a week after apple watch preorder sales began, how successful was the launch? apple says feedback has been positive. so positive you will not be able to buy the watch and store until june. apple's svp of retail and online stores angela ahrendts defended the decision to keep sales online. "it's important to remember that it is a new category. we designed a new approach. we are previewing a product in our stores before it has started shipping." during this is analyst walter and from massachusetts jp.

how successful was this rollout in that it differed from typical product rollouts like the iphone. walter: we really do not know yet because the company has not released any numbers. that is not a huge surprise. they have not been announcing pre-ordered for the ipad for the last several models. it was a good marketing event the wash technically sold out within a few minutes for many models but you do not know what the inventory was behind that. emily: in her memo, angela ahrendts says, "are we going to launch every product like this from now on? no." what is the best strategy for apple? how should they be launching these product? jp: it was important, i agree with angela ahrendts that they

teach people what this product is about. there has been a wearables market for a couple years now. presumably, apple has just sold in 6 days more smart watches then have been sold until that point over a period of two years. for them to do that they have to teach people why do i want this and what is it capable of doing. if the early adopters do not understand the device, they will run into problems. it is a logical strategy. emily: walter, you say the rollout was typical? walter: when they launched the product, you had the product selling out as far as preorders. a typical apple thing. we do not know what the inventory is but there is a reflection that there is strong demand. i doubt apple sold out of a couple hundred thousand watches. there are probably preorders in the millions. that has been typical for apple. the delivery dates get pushed

out very quickly after going on sale. emily: there's always a question whether apple is trying to increase demand by holding back supply or whether they just cannot make enough for everyone who wants to buy one. what is your take on what is going on, with the watch in particular? jp: in this case there are supply chain concerns. they are not easy to verify but the engine, the haptic feedback, the vibration mode, there have been questions about how quickly they could get those made. also the display being used was a concern. all of that said, i agree with the other guest, this is typical. apple likes quick sellout dates, it creates more buzz. emily: how do you expect demand to evolve? there are surveys out there, one saying 11% of iphone users will be buying the watch. walter: those are based on people you have never touched or

used the watch or seeing their friends use it. the initial surveys should be taken with a grain of salt. you have to see how the product gets used in the market. in the u.s. alone which has a mod of disposable income, there are 100 million active iphone users. globally it is 500 million. and a lot of customers have a product that this is an extension of. keep in mind, we are in the june quarter as far as the products selling. if they sold 5 million during the quarter, that is $2 billion in revenue on an estimate, that is $45 billion. the numbers are not going to make or break it is an extension of the ecosystem. it is tim cook's new product category as a ceo. emily: interesting to read all the reviews. some of them are conflicting, some of them are confused and people do not seem to know how they are going to be using this

thing yet. have you tried it out? should we want one? jp: i have tried it on. the thing that is noteworthy is how physically device it is. is something that you can use to pay for goods at the star with apple pay. you can get on your airline flight using it. you can soon open the door to your hotel room at starwood hotels. there is a very physical aspect that i think is. unusual that people are not familiar with it is worn directly on the body and that is something people have to get used to. having a computing device that close to you at all times is a learning curve. emily: walter? walter: i hope another function will be a remote control that controls the apple tv with new functionality that gives me an alternative to the $120 i am paying directv. that could be another function for the watch and a precursor to

new product categories apple can get into. i have also tried the watch. when i first tried it it felt very glitchy. my more recent test of the it was performing flawlessly. some of the criticisms online have been focused on uses of the watch like scrolling through twitter feed that most users i do not think will be using the watch for. there will be ways that people use the watch that are just not thought about today. we are very positive on what the potential is for the watch. emily: if you have not ordered it, you can get it in stores in june. walter and jp, thank you both. up next, a trip to seattle to see how the chief technology officer is tapping into mobile tech talent. new york's own cto is giving payphone booths a lease on life as wi-fi hotspots. ♪

emily: this is "bloomberg west," i am emily chang. we hear from the chief technology officers of seattle and new york on their tech agendas. the chinese scooter company ninebot is aiming for a u.s. ipo in the next two years. the news coming a day after announcing it hot u.s. rival segway. the company has seen a sales growth rate of 400% since 2012. gopro founder might be the highest-paid executive in the u.s. he was granted 4.5 million restricted stock units last year, giving him the number one spot on bloomberg's ranking of highest-paid u.s. executives.

if you have not heard, the concept of a city having a chief technology officer is gaining steam in the u.s. there is a national cto in washington, d.c. other major cities have followed suit, from new york to chicago and seattle. that is where we went to meet michael mattmiller. one of the youngest municipal ctos in the country. bloomberg shows us how the former microsoft strategist is wiring his world in the pacific northwest. >> seattle, washington, the emerald city has roots in nature. high tech is pushing it to grow silicon branches. enter michael mattmiller. >> the bus leaves in two minutes. >> x microsoft and now seattle's chief technology officer.

before dawn, he's online. >> are they going to cover e-mail archiving? >> pushing his digital initiative. >> this is our dashboard, where the public can get information on the government. >> performance seattle is the centerpiece. launched in february, open public data shows the state of the city. >> with metrics from mine city departments departments from the police department to our utilities. >> home burglaries, car thefts, potholes, all here. [sirens] >> seattle police 911. >> coming from here and other departments every 15 minutes. michael mattmiller: the public gets a real-time view of what is happening, how is the city reducing crime? how are we doing at responding to fire 911 calls. >> mattmiller is one of a growing number of ct has across the u.s. from new york to los angeles in washington, d.c. a sign of high tech's importance

in good governance. michael mattmiller: every year we award between 300,000 dollars and $500,000 to community organizations that offer literacy trainings or access to the internet. >> i'm so excited to see the results of your effort and i cannot wait to use them. >> innovation by the people, for the people is another digital push. michael mattmiller: we have a huge technology community. what a better way to engage the public to be part of finding the great app or piece of technology that will help people make better decisions. we will work with government data and provide traffic information alerts. we are going to build better buses. i can click in this and i can see what is going to happen with the ferry. >> at the end of the event, the winners.

helping people in wheelchairs helping drivers carpool, and choosing the best methods of transport. michael mattmiller believes technology is key to improving the lives of his citizens. michael mattmiller: best thing about being cto is the ability to work with passionate people who care about working with the public and also using technology to improve our city. emily: bloomberg there. "bottom line" is coming up. mark crumpton joins me from new york. mark: investor fears of a greek debt default caused the country's bond yields to surge after reports that greek officials told creditors earlier this month that they might run out of money and miss a repayment to the international monetary fund. imf managing director christine lagarde spoke to bloomberg today. we will have some of her

comments. and managing director of janney montgomery scott will join me to discuss the situation greece and the impact it is having on euro bonds. back to you and san francisco. emily: thank you. coming up, new york's chief technology officer shares his plans to bring internet access to all new yorkers. ♪

emily: i am emily chang. this is "bloomberg west." we visited seattle to see what the city's cto is doing to wire the emerald city. let's find out what new york has in store. last year, new york appointed its chief technology officer with a mandate to develop a strategy for technology and foster the city's tech sector. here she is, joining us from new

york. new york's first chief technology officer what is your number one priority? >> my priority is to make new york city the most tech friendly and innovative city in the world. while we care about cool technology, we also care about closing the digital divide. it is probably the modern issue of our time. emily: you want to turn old payphones into wi-fi kiosks. minerva: this is something we are excited about, linknyc. we are turning all of the old payphones in new york city into free wi-fi hotspots. there are a couple cool things about it. who uses a pay phone anymore? second, we are using the existing infrastructure to make

them into this modern, sleek and beautiful device is going to provide wi-fi access for free within 150 feet radius. it is going to have a tablet installed in it so even if you do not have a device you can make a free phone call in the united states using that tablet. it is going to have digital advertising on the site, which is paying for it and it is not going to cost taxpayers money to have free wi-fi instead of payphones. emily: one of the things we learned about seattle is they have a digital dashboard. they have a lot of data sets about what is going on. new york has something like that as well. what is the most exciting thing you have discovered? minerva: new york city has the largest of the data portal in the country. we were one of the first to put it out there and we plan on expanding it as well. we are going to continue to

grow. we created this have to find -- hackathon around the data. more surprising is the creativity of new yorkers to use the data for themselves in creating their own dashboards. emily: what about financial investment? everybody is interested in technology but what kind of investment is the city going to be willing to make to take advantage of some of these technologies? minerva: this is sort of a twofold thing. we see the importance of the tech sector to new york city. in terms of going back, we just announced a $150 million investment in life sciences. that is money and lab space. we are investing in health tech. we have all the industries in new york -- fashion technology, food technology and government technology.

technology that governments use. so that is another area we are very focused on. i was just in a session on civic technology with the u.s. cto. i have met earlier this week with the executive director of digital for the u.k. government. there is a growing trend in using technology across governments to deliver government services better and also help everyday citizens' lives be easier. emily: minerva tantoco, chief technology officer for new york city. thank you for joining us. we will follow you as you make your way through new york city. time for the bite one number that tells a lot. kojo -- cory: two. yesterday, richard branson was at the chicago bulls game against the atlanta hawks. he was part of the entertainment when he knocked over -- a 64-year-old billionaire -- he knocked over two giant fake bowling pins.

emily: oh richard. just two? cory: his first nba game ever he is in chicago opening a new hotel. you and i were talking about unicorns. there are a few people, he has created seven. he also sold 80% of his interest in virgin active. a cool $1 billion. emily: he's game for anything. cory: i had a blast with him in phoenix last week. a fascinating guy. a tech entrepreneur pushing all kinds of batteries and thinking about how his businesses change lives. a really interesting guy. emily: thank you for watching this edition of "bloomberg west." all the headlines on bloomberg.com and bloomberg radio. see you later. ♪

mark: from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line" the intersection of business and economics with a main street perspective. to our viewers in the united states and to those of you joining us around the world, welcome. full coverage of the stocks and stories making headlines. soaring inflation and declining currencies in venezuela. saudi arabia's