emily: live from pier 3 in san francisco, welcome to "bloomberg west. i am emily chang. the list of republican hopefuls continue to grow. announcing his candidacy, known for strong opposition to president obama, speaking earlier today in detroit, ben carson. mr. carson: i am not a politician. i don't want to be a politician, because politicians do what is politically expedient.

i want to do what is right. emily: also announcing today former hewlett-packard ceo carly fiorina, who confirmed her plans on good morning america this morning. ms. fiorina: i think i am the best person for the job to understand how the world works and our government has become a giant, bloated, corrupted urography. emily: but check this out. somebody other than carly fiorina posted 30,000 sad faces, one for every person she laid off as ceo of hp. the pimco total return fund, falling behind the vanguard total index fund after two years of client withdrawals.

meantime, it is the beginning of the end for the bull market, an investment group predicting stocks and bonds will soon run out of steam. a phase that a monetary policies, and they say credit-based oxygen is running out. google is buying as software startup. terms of the deal were not disclosed. it will help users organize items by understanding scheduling and habits, and it could be used to improve the google gmail, calendar, and other services. pinterest is opening up their revenue model to companies. the main goal is to drive traffic to its site. the company was valued at $11 billion in a march fundraising round.

now, to our lead. after leading cisco for two decades, john chambers is stepping down as ceo, naming chuck robbins as his replacement. robbins has been with the computer networking giant for 17 years, most recently leading the global sales and partners team which they say generates 47 billion dollars in business. they shared information about the transition this morning. take a listen to what robbins had to say about his plans going forward. mr. robbins: we will have a level of rigor that may be even tougher than what you did, john. emily: cory johnson joins us and a guest joins us, and i will start with you. what do you think about chuck robbins and how he will run this company? guest: as you said, he was running the global sales organization, so for investors he really was not front and center.

my guess is he is a very good choice, and i say that because cisco right now is really trying to push, make a renewed push into enterprises, so i think having a salesman at the helm is probably the right person for the job, if that is your objective. emily: john chambers leading the company for two decades, what does this translation mean -- transition mean? cory: shareholders do not celebrate that biggest stocks have not done well, though a lot of stocks have. with a company that john chambers came to run 20 years and one quarter ago, it was an emerging company in the emerging world of the internet. the internet has changed. technology has changed dramatically since then, and all of the cisco competitors have fallen by the wayside at that time. if you think about who their competitors were, the four horsemen of the nasdaq at the

dot com. we were talking about worldcom 3com, and then throw in somebody else, like enron. look at what has happened to all of these competitors. look at what has happened to 3com. look at wind. look at ascend. there are so may companies that try to be great, big companies in the space of networking, and the cisco technology evolved largely through acquisitions but they made sure they were not being left out of anything that was happening in the world of technology, and as a result, cisco is still a big, strong dominant company, one of the most important technology companies in the world. cisco is a relevant company and a more relevant company today, and none of its competitors have been able to pull it off. emily: and yet, shares are lower than 10 years ago. john, why is that? why are investors so hard on cisco right now?

john: they were a victim of their own success in many ways. the company did so well. you get so vague. it is kind of apple's conundrum, and it gets tough to grow off an ever larger base, and i would add that the networks are undergoing a big, big transition from this hardware intensive design to these new software design networks, and i am sorry, software defined networks, so it is more of a software defined going forward, and they are in the midst of that transition. they are doing well so far, but in order to stay relevant, they need to stay all head -- ahead of that whole wave, and i begin will be his biggest challenge going forward. emily: what is the first thing on his agenda? cory: the way that networks work

have changed a lot in the last couple of years. to virtualization of networks, and the software. virtualization at a different level, but with a software manner. and security. networks are more software defined, if you will. the accounting of the company has used to stay on top of technology has hurt the stock. what they have done it essentially, and i am going to oversimplify it, but they have issued a lot of shares to companies that they acquire, and then they have used their free cash flow to buy back shows -- shares, and the result has been not a lot of cash flow finding its way to the investors ultimately, but it has kept the company in the central position in technology and the networks but really at the cost of shareholder return. emily: john, what are you going to be watching for over the next months, weeks, years, about how chuck robbins leaves this

company? john: let's talk months and years. that is what is important to investors. if you look at a horizon of, say, one year to two years, my feeling is that cisco needs to step up its acquisitions. its early success was really based on being a great acquisition growth story. they remain so, but they are making smaller acquisitions recently, and i think they have to move on to bigger acquisitions, to really grow to dominate this market again. particularly as we make that transition we touched on a moment ago over to software. emily: to take a strong company and a strong situation to work. you will be back with us later in the show, cory johnson. coming up, the world savvy investors gather to share

strategy, and we sit down with some of the biggest names, this hour. ♪

emily: this is "bloomberg west.” i am emily chang. uber drivers in brussels are at risk of having their cars confiscated. uber has argued it is a tech platform rather than a transport company, and some have urged to shut dom -- shut down the site. they are taking it seriously. goldman sachs is planning an expansion into the online lending business for individuals and small business, according to an internal memo. they have hired a man who ran the u.s. parts division. the exact type of programs goldman plans to offer is still under development.

the 20th annual investment conference is underway in new york, the event bringing together the world's most savvy investors to share insights and strategy. my colleague stephanie ruhle is standing by with a guest. stephanie, take it away. stephanie: just leaving the stage. two ideas. walgreens. do you think they are doing barry: i think it is a transformed company. it is like night and day. stephanie: really? barry: yes. this company has a shareholder base that has really turned over. it has a former that is refreshed. old board members are leaving. new board members are coming on with direct, relevant experience. the whole management team has turned over. one of the great entrepreneurs

of all time is running the company today. stephanie: the sort of vertical improvements, is that the right strategy, or should they be looking to acquire a rite aid? barry: like i think there are internal changes that should be made and are being made, a lot of cost coming out of the business. there is a lot of capital allocation decisions that are being made. they are more efficient, but then there are also strategic decisions that need to be made and the company is looking at alternatives. stephanie: are the store makeovers are enough? barry: the costs are way out of control. this company, it stopped growing its store based in 2008, but it

just continues to grow its expense days, -- space, and there are excess costs to come out of here. but the company has never really looked at its strategic position and come up with a coherent strategy with how to address changes in health care. stephanie: but, for now, you feel they are addressing everything and are on the right track? barry: that is not coincidental. they beat estimates. stephanie: another name youo mentioned, qualcomm. we know they are doing a buyback. is that enough for you? barry: no. that is the first step. they knew to do the buyback quickly before all of the other changes. that is the first thing. there are a lot of similarities between walgreens and qualcomm. i mean, i can basically take

walgreens and just write qualcomm on top of it, and it would pretty much work. there are costs that need to come out. this company has a really bloated cost structure, and its r&d has not been run efficiently, with return on investment capital discipline. the company needs to change. management gets compensated. stephanie: it seems when you came out after qualcomm, world -- their response is we are already on it. i don't think that is what you're looking for. barry: no. we are looking for substantial change. it has been very constructive. i do not think there was much they could say when they first came out. i am confident that they will get it and that they will make the changes we think they need to make. stephanie: management is open to reducing how much they get paid? barry: changing the manner in which they get paid, i hope so.

i certainly hope so. they need to. right now, they get paid on return on operating income and whole numbers. they do not get paid on a per-share basis. they do not get paid on a per-share basis. share distribution. stephanie: one making an argument that that is how you need to pay top talent. that is a whole lot of dough. that is what people at that level expect to get paid. barry: if they perform. stephanie: so what needs to be separated? barry: i don't know yet. they need to do a transparent review and figure out if it should be kept together or if they will derive more value by being split up. something is not right. stephanie: how have they

responded when you basically said look at the board. old white men. barry: i did not say that. stephanie: i am going to say it. barry: we will see. we have told them they need to reduce the size of the board. they need to turn over some of the long tenured board members and they need to bring over some fresh perspective with the board. shareholder perspective. people who have direct industry experience. stephanie: you said walgreens and qualcomm, similar, but change the name, but for you as an activist, it sure sounds like walgreens is a lot more positive to work with. barry: well, keep in mind, we are well over a year into the walgreens situation. it took time for a lot of those situations to take place. stephanie: for you, is it easier to work with her companies or smaller companies? barry: well, ironically, i think larger companies. they are more responsive.

they don't want to be on the board of a company that is underperforming, and they do not want to be put in that light and so we find that they act pretty quickly when we show up. they do not fight us too much. stephanie: is berkshire too big? barry: i will leave berkshire to somebody else. stephanie: doing a lot more for companies than you ever did, what do you think? barry: i am not quite sure he said that. i think karl said buybacks are good if the management is good and is creating value, and i think he agreed with larry that if a company is just buying back stock, and the management is not

capable of generating value and investing capital in a more attractive manner, then there is no point in buying back stock. stephanie: but our traditional money managers just rubberstamping boards, and we are not seeing boards turn over? barry: i think boards have changed and are getting more receptive, and that is a good thing. stephanie: barry, thank you for joining us. emily, we ran out of time, but i really feel like barry was going to say more women on those boards. i am not sure, but i feel maybe he wanted to say that. what do you think? emily: you tried. do you want to give it a shot? stephanie: you know he has got all of the right answers. emily: stephanie ruhle, thank you for that interview with

barry. we will be back after this break. ♪

emily: this is "bloomberg west.” i am emily chang. disney is rescheduling a meeting so that people can attend this funeral of dave goldberg, he was just 47 years old. he was the husband of disney board member sheryl sandberg. the meeting will be on tuesday instead of after the bell. dave goldberg was one of silicon valley's favorite ceo's. a man of fierce of intelligence.

a proud and supportive husband of sheryl sandberg, a doting father of two children, and a dear friend of our show. his life was cut too short, but we wanted to take a moment to remember him. i want to welcome our special guest for the hour, dave gold were, ceo of survey monkey. date: thank you. it will be fun. emily: ceo dave goldberg joins us about surveymonkey. dave: i took my first company public. we had $10 million in revenue. we were not profitable. they were using the public markets to raise capital. now, all the bankers, they tell you if you do not have a billion-dollar valuation, don't even waste your time. i have a long background in online music, and for a long time, we were the upstart, and now streaming, and particularly

pandora for online music, is mainstream. you know, when i was a kid, i built model rockets. a drone is cooler than a model rocket. if i can just push a button and call a self driving car, i think that is the ultimate to the "jetsons" future we all want to say. -- to see. ♪ emily: tributes have been pouring they.in. they paint a picture of a talented leader and compassionate.

a sharp man. universally adored. a man who was kind and good and generous with his advice. goldberg talked about how proud he was of his wife or beating the fight of gender equality at home and at work. she was a leader in that fight also. we will miss you, dave. this world was made better because you were in it. ♪

just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway.

i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. emily: this is "bloomberg west,” where we focus on innovation, technology, and the future of business. a shooting outside dallas at a community center hosting a provocative contest for a prophet mohammed cartoon. one officer was wounded. a video purportedly from al qaeda has named the indian prime minister narendra modi as its latest foe.

the guys in the video said that he, along with entities like the french satire newspaper charlie hebdo are, quote, waging a war against muslims. the prime minister has faced criticism. and after abandoning a $45 billion plan to buy time warner cable just 10 years ago, a cable giant benefited from sending up more than 400,000 internet customers. it is a sign of how the comcast business is changing. for the first time, they have more internet subscribers than cable tv subscribers, and staying with cable, cablevision says they are feeling the pain from cord cutters. the customer base is down over 2% from one year ago, and still they posted a quarterly revenue gain of 2.5% today. they are targeting customers who drop their service.

they will offer the hbo's standalone service. and turning it over to market makers anchor stephanie ruhle in new york at the investment conference with a chief investment officer, keith. stephanie, take it away. stephanie: thanks, emily. you just left the stage great talking about yum! brands. you are a top investor. steve: so, for a starter, yum! brands is a great brand. kfc, taco bell, pizza hut. stephanie: do you have a favorite of the three? keith: i think i am a pizza hut guy. it is twice the size of mcdonald's in china, and there have been three successive food safety scandals in china, which have caused earnings to be at trough levels, so they were doing about one dollar per share of earnings today. when they get back to 2012 revenue, we would do better. so a great business in china.

a way of investing in the growth, the organization of the middle class, and to grow to perhaps over three times that over a decade plus, so we invested in a great business with a first rate management team that is going to change and being discounted by the market today is the market is looking at today and not tomorrow. stephanie: what about the fact that all three brands are off trend in the way people should eat? that is something that is plaguing mcdonald's. keith: let me step back. yum! brands is positioned differently. it is appealing to millenials. it is hip. kfc chicken. it travels better. and this is a phenomenal company that opens five stores a day three in china and two in the rest of the world. that is every single day. no days off, so there is massive

growth globally. they are betting on this thing called fast food, but it works and yum! brands has great brands, global scale, and they have moved quickly to embrace their success. success in china has caused them to evolve in a different business model, where they don't own and operate the models. so there is different volatility and different risks, but still a fantastic business. loeb. have something in common. -- stephanie: yum is a new name for dan loeb.

do you have something in common? keith coleman when the most successful investors over the last 20 years also has a big position in yum! brands. what i want and what most shareholders want is the same thing. which is having a great company, learning from the lessons of the past, and having some corporate change to position the company to really, really drive over the next decade, so often companies are able to take one step back to make two step forward. taco bell has a motto. it is "live mas." don't become to but with 20% when you can have -- don't be happy with 10% when you can have 20%. we have done two active investments. we invested in commonwealth, which became equity commonwealth, and realogy capital partners. sam is the chairman of equity commonwealth. there is a great ceo and chairman for free. now, why is it that this has occurred? because there has not been the same level of governance and liquidity in the asset class as happened in corporate, and in order for real estate, it is much more of a private market.

in order for it to grow, increased governance, increased accountability, it will really enhance value. today, they took some big steps to enhance accountability. they need to do more, and i think the onus is on them. to act like good fiduciaries and if you do, your real estate will be worth more. if you do not, it won't. if real estate does not have good governance, it does not need to be a public market asset class. if they can trade at a premium to their nav, then it should become a living organism, so i think the real estate world, at one time, the whole market cap of the reit's, it is become a great public market asset class, and one of the reasons is transparency, disclosure, and alignment of interests. stephanie: dan loeb, and what about carl icahn? you are a carl icahn protege.

he said he is majorly bearish in the high-yield market. keith: i would defer to carl. his stomach is as tough as anyone's when it comes to this. we have had a good period of time. interest rates are low. federal banks globally are accommodating, and if you put money in your wallet, and it gets taken out every week, every month, that is what negative interest rates are, so if money goes into your wallet and disappears, people will do something different, and people are doing something different. they are buying equities, so as long as it is accommodative, i think you will see it continue to appreciate. the challenge will be when we start to see some inflation, which we have not, or when we start to see asset bubbles build, which is the other risk of sort of free and loose money, but for now, i think equities are attractively priced. i agree with carl. i do not think the risk/return

justifies the credit. the best way to do this is to borrow money with a company that invests in itself. access to cheap capital. by plant and equipment. that is a great way to short credit. stephanie: ok, before we go, last year, you were talking about a short in the energy industry. keith: i think the challenge is having buyers and sellers meet. the majors have unlimited capital but not the right ones. a lot of the companies with the right assets, the shale assets for a $36 oil in parliament image, they don't have the right balance sheet area -- 48 $36 oil environment, they do have the right balance sheet. there should be consolidation, but i think it will take a little longer than people

expect. stephanie: keith, thank you for being here. i will see you in just a few when i returned. i am going to be sitting down with the one, the only bill ackerman, so stay with us. the 2015 conference here at lincoln center. don't go anywhere. ♪

emily: we are continuing our coverage of the investment conference, and we are standing by with our own stephanie ruhle who has bill ackman. stephanie: bill, always great to have you here. i have to start with a friend or foe of yours, carl icahn, aching -- making comments. what do you think the value of activism is right now? bill: it is getting critically important. i think that is why it is getting so much press attention.

it is shifting back to the owners of the business in a very dramatic way in the last 10 minutes, as a result of that. stephanie: what about the idea that corporate ceos are not making responsible decisions because they are scared. they are under the desk saying i hope bill ackman does not call. bill: they are not short-term value changes. it is to fundamentally improve a business over many, many years. they are long-term changes. there are some shareholder activists that push for leveraged buybacks, but for the most part, you look at nelson, kinds of changes proposing at dupont, these are fundamental long-term business changes. howard hughes, and the other companies we invest in. these are changes for the benefit of the company over the long-term.

i think management should be able to look at that. but the biggest fear that aco has is that he or she is underperforming. it is likely an activist will show up, not for short-term reasons but for long-term reasons. stephanie: we know you had great success with burger king. we were talking to keith meister and yum! brands. bill: the franchised business is one of the great businesses in the world, run correctly. the folks at restaurant brands previously burger king, have done a fabulous job, and we like that team. i hope keith does really well with yum! brands. i think it is a great company with great potential. stephanie: whether we are talking about allergan or others.

will it get bigger than that? bill: what is interesting about health care is health care companies have never been run -- many of them are not run for the benefit of the owners. many of them are very wasteful in the way they operate their businesses. you have a business with 80% to 90% gross margins, you might be much less disciplined about cost control, and you also have the pressures to keep health care costs down, and those are creating a lot of opportunities for commendations and efficiency, and valiant and has really been leading the charge in changing that whole sector. so you're seeing an industry and transformation in a very dramatic way. stephanie: you have got two board seats. are you seeing the changes you want right now? bill: paul, an activist, he is very excited he has joined the board. the company is going to announce earnings in the next two days or so.

obviously, i cannot comment, but i think it is a great company and will do very well over the long-term. stephanie: when you look at companies you take a big stake in, is there a better success with smaller or larger companies? who is the most responsive? bill: if our ideas are good, the management and boards are generally responsive. stephanie: are there some that do not make sense for you? if you look at a berkshire hathaway, do you say too big? bill: i think he is one of the greatest. i think it is one of the cases where you can justify the conglomerate. i would rather be a passive investor in berkshire. the question is what happens after warren buffett is gone? what does the company look 20, 30 years from now. it is rarely while the founder is alive that there is a shareholder activist. it is when there is no longer an

oenr -- owner in the boardroom, so i am not worried about work sure needing an activist for a generation. stephanie: but are you worried about the berkshire future? he is not a young man. bill: even after he is gone. the subsidiaries run themselves on an autonomous basis. it is a really decentralized company, and they have got some important guiding principles and he has focused a lot on building a culture. ♪

stephanie: you talk about not launching a campaign like herbalife again. bill: i think it is very good for outing fraud, but it is not a great and productive use of time. stephanie: because of all of the capital? bill: i would say it is just

something that is, no matter what the track record of the short seller is or identifying fraud or problematic companies you come out with a company that is violating the law, people are skeptical of your motives because you have an opportunity for profit if the business fails. say that simply do your trying to make a profit. it is not worth the brain damage, i would say, so i would have to think very, very hard before another public short. the question is if i get involved with another. that is the question. stephanie: you think shortselling makes sense, but what about the market? bill: i think shortselling is very good for the market and for outing fraud, that there is a problem. you do all the work, you suffer all the spotlight and the criticism and some amount of reputational damage from in accurate articles in the press. is it worth that investment to make a profit? there are easier ways to make money, i would think.

stephanie: getting ceo's to take suggestions, isn't that easier than a regulatory short, when you're in the pothole of the u.s. government? bill: the fundamentals in the case of herbalife will likely take the company down before the regulators do. expect a very bad quarter tomorrow. we expect continued deterioration in the business. i would love to see the regulators finish their work but -- stephanie: your position, that is not the regulator not responding, that is the government saying we just disagree, and we are the role makers, so where do you stand on that? bill: for frannie and freddie, i do not think there is an alternative solution to preserving the housing finance system in the u.s.

if you want a 30-year repayable mortgage, i do not think you can have it without fannie and freddie, though, therefore, the truth will prevail. the best outcome here for the taxpayer is that the company is preserved. the best outcome for kind of the credit market is that the company is preserved, the best outcome for shareholders, so i do not know who is harmed by fannie mae staying in existence. the debate should be about how much capital fannie and freddie hold, not about whether they should continue to exist. stephanie: are people looking at what fannie and freddie are doing, or are they just too overwhelmed, saying they do not want to risk this to get richer? bill: with respect to the fannie mae common stock, i think most of that is held by investors. many people own fannie mae and other stock. 80% of the company is actually owned by the taxpayer, so the only way the shareholders of

fannie and freddie get rich, if you will, is it the taxpayer does very, very well. stephanie: fannie and freddie are a long-term trend, and herbalife is a long time trade -- bill: herbalife is a short-term trade. stephanie: you are not in and out of anything. bill: we have been in howard hughes for six years. we are a long-term holder. we will hold these businesses for years, so it used to be you criticize an activist for being short-term, and perhaps there are some short-term activists, but the good ones are business builders, people trying to create longer value. stephanie: carl icahn said he is mildly bearish on equities. and more bearish on the equity. bill: credit spreads are pretty tight, so the absolute yields

you can earn own a below grade credit is very low, so it is hard to make a lot of money buying a bond with a 4% coupon unless the credit is going to improve, and i think that is still a tough bet. you can be right on the credit in proving, and interest rates move. i don't like income as a category, particularly at today's interest rate. stephanie: we have somebody walking by. does the timing on the fed action mean anything to you? bill: not really. we focus on a few companies. we are not trading the market. stephanie: what is your most important thing? bill: integrity, doing the right thing. making sure the right management team is in place, the company is making smart decisions about the way they run their business and allocate capital. those are the things that matter to us, and finding the next idea. we will have something to talk about maybe in the next couple of months. stephanie: what are you going to

do with that place? $100 million on an apartment? bill: it was an investment. i think it may be the best department in the world. stephanie: you think $100 million was a good price? bill: it was not $100 million. maybe it was $90 million. they are selling at $10,000 per square food, -- for square foot, and i am already at 50% of the money. stephanie: do you ever plan to live there? bill: no, i have a nice family life. stephanie: on the brokerage fee, on wondered million dollars, you have to be able to negotiate that down. bill: i am sure you can. emily: we will see you later.

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