we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. emily: we will look at where mark zuckerberg is investing. ♪ this is "bloomberg west." coming up, jack dorsey has a sobering effect on other companies challenges as stocks crumble. we will look at the long game or twitter. tom leighton here. when does he see the next breakthrough in streaming video? all of that, coming up. microsoft rolls out windows 10.

how do they and to expand their empire? first, we are covering facebook shares falling as social network spending jumps with revenue up 39% to $4 billion, estimates. betting big on mobile apps with 76% of ad revenue coming from mobile. user growth was slightly below estimates this quarter. facebook reported daily active users hit 968 million, just under the 900 70 million that they affected. what is driving this spending spike? joining me now, the manager at sprinkler, who helps brands like dell, zynga, designing your advertising strategy. we have got brand targeting and david kirkpatrick, the author of "the facebook effect." first i want to bring in julie hyman, our senior markets correspondent who has been digging through the numbers. everyone seems to zero again on the spending number and the fact

that user engagement seems to be relatively flat. julie: the effects that we have seen in after-hours trading is interesting. you can see it on the chart behind me. the intraday moving and the after-hours, there was a hit down by about 6%. right now we are down by 2%. the stock is coming back to some extent and it seems that spending is one of the focuses. it is interesting that the daily active user number that you were talking about was such a marginal miss, but even mind that the stock has performed very well this year, up 24% going into the room or, trading near a record. versus twitter where expectations were very low, you have got high hopes going into this facebook report. one of the other numbers i wanted to out, when you talk

about spending and engagement, even though it was unknown known -- even though it was a known known, the facebook effect, many of these companies being hurt of a stronger dollar. they said they took down advertising revenue growth, off about 43%. growth rate would have been 55% were it not for currency exchange rates. emily: i want to bring david in. at a certain point you have a law of large numbers area companies got some growing in terms of users. do these user numbers actually matter? if not, what should we focus on? david: the fact that they raise the revenue by $1 billion in one year is something to focus on user numbers going up because growth is the engine of the stock. however, i think that we can continue to say that this is the medium probably all media on the lannett -- planet that is still

seen by the advertising is re-as most are missing. as mobile advertisements are slightly higher than anticipated -- i think they were looking at 75% and came in at 76%, it is a hugely successful thing at a time when we know that mobile is where the users are on a global basis. global, global, global whenever you talk about facebook. their growth is all over the world. emily: we saw that number go from zero to as you said, 70%. mitchell, what do you think about this spending number? where is mark zuckerberg spending? are these investments going to pay off? mitchell: they certainly could pay off. we are talking about the lack of a bit that lack of ability to add billions of users to

facebook. you have some huge audiences there that cannot be monetized maybe not as easily as facebook is when you look at messenger, your talking about a medium that is not as natural for advertising to flourish within. it's not like there are beautiful big pages where you can insert native advertising. but there are certainly opportunities to expand the reach of the advertising for sure. emily: facebook has been making big advances when it comes to video, rivaling youtube and shaking up how they do business with advertisers. what are you seeing? what are the trends? >> advertising dollars follow the eyeballs.

views per day now are about 4 billion. youtube is at 7 billion, but facebook as -- is catching them very quickly. the follow-up they have as you scroll through is beautiful and effective. it is definitely one of the hottest areas for our clients and paid advertisers looking to reach people in that traditional way like television. emily: david, when you look at what mark zuckerberg has been spending money on, what clues are you looking for to determine whether these are smart invest? david: there is a real controversy and how he is spending money. extreme amounts are going to internet.org, an effort to bring more people, the poorest in many cases, around the world. they don't break out how much they spend on that -- at all and i think they would prefer that we have no idea. that is a very long-term bet.

but zuckerberg is a very, very long-term anchor and that will be something that rubs wall street the wrong way. i'm sure that if he knew the numbers, they would not be happy. emily: right. david: if you look at the incredible growth of instagram or messenger, they are adding features like commerce capabilities, particularly in messenger that will make a big difference for the long term. you will see a lot of revenue implications there. emily: they have been experimenting with buy buttons on faith -- facebook. we will be listening to the call later today. david, you are staying with me. simon, mitchell, thank you both. microsoft's low-key launch of windows 10 did not fall celebrity endorsements for ringing the bell at the nasdaq but they see this is crucial to its future. they want one billion devices to

be powered by windows 10 in the next three years. here is the vice president of microsoft on why the goal is attainable. joe: there are a lot of pc's, phones, x boxes. when you put those together and offer an upgrade for great features, we believe a lot of people will jump on that bandwagon. there will really be one billion devices. emily: this is a big test for him, who is hoping that windows 10 will restore os growth. operating systems growth is one of his top three priorities aside from cloud cap -- platforms and microsoft office. coming up, will solar city be able to retain its spot? we will be talking about that next as well as twitter. ♪

emily: the company we are solar city, has lost lu in the second quarter as the ceo fends off rivals by increasing spending. chris, you cover solar city. break it down for us. what stands out to you? chris: it stands -- it comes down to how many customers they can add. 40,000 in the second order bringing the total to over 260,000. these customers represent recurring payments. each customer that is their bill each month adds to the amount that solar city hopes to

collect. in this case they have got over $7 billion worth of payments that they expect over the next 40 years from these payments -- customers they just added. emily: the core market is residential rooftop, but how is it doing in other areas, like commercial? chris: it is playing a bit of catch up to its life -- larger rivals. one of the largest commercial and industrial rooftop developers. just last week they bought the company that is solar city's main rival, the number two installer. emily: we will be looking to see if and when those investments pay off. chris, thank you so much. chris: thank you. emily: now to twitter. seeing its stock tumble today. the interim ceo told investors not to get too excited about the better-than-expected sort -- second quarter revenue. last night she said that the twitter announcements have not yet had meaningful impact on growing the audience and that the company has not "done a

great job at aligning the entire company around its strategy." and a lifestream conference call by's -- via periscope he said this. >> i have spent the last few weeks really considering what is in front of us and what the present state is, and the future. it is really around execution and service, making sure we are communicating the why of the service more. we are communicating that to a broad base. we think that twitter and everything found within has mainstream appeal. not in targeting particular demographic. emily: joining me now to discuss, simon, sarah -- who has been covering this story and spoke to jack dorsey. sarah, yesterday first of all

there was no clarity on the phone. is he going to become the permanent ceo of twitter or square? what did he tell you, exactly? sarah: he said he is not focused on being ceo of twitter, he is just focused on bringing execution. i asked if he wants to remain ceo of square. he said, again, "i just want to do whatever will be best for both companies." he dodged both questions. he did not say he would stay at where. emily: david, what do you think about this? from "the new york times," they sent a tweet -- facebook has about five times the twitter users. where does twitter fall and the landscape? david: -- in the landscape?

david: investor should be happy that they are taking a realistic look at its own situation. here is a company with extraordinary visibility on a global scale. as much as any tech product. and yet it does not really have a formula to make a good as this area jack is absolutely right. especially about simplifying the product and communicating the benefits more. but they cannot really communicate the benefits without simplifying the product. they have an extraordinary opportunity that remains big but to be honest valuation has been out of sync with reality since the ipo. to see the stock go down in preparation for long-term road after they repair the company makes sense to me. -- growth after they repair the company makes sense to me. emily: what does this mean for your clients, who are spending ad dollars on twitter? simon: i have had positive experiences working with

twitter, especially around live events. friends who want to be seen as more current, more human. the fact that they have been honest and care about what they need to do to fix their problems on the user growth side to grow that further and give advertisers more opportunity to engage with a larger user base twitter and periscope, which they demonstrated, i think the advertisers will be excited about that. we want to spend more on the platform. emily: david, i would love to get your thoughts on this. i know the you know jack dorsey, mark zuckerberg, and i note we talked about the moral authority of a founder to set the vision for a company. do you think that jack dorsey should be the permanent ceo of twitter given these publications? or should it be someone like adam bain? david: you can even tell from what sarah said about his responses, he does not know himself.

he has two companies, he loves them both. no one should try to be ceo of two companies like that. i think that he would even acknowledge that. my own feeling is that if possibly twitter were to be really reconceived, it would have bigger long-term opportunities than square. if i were him i would probably rather be ceo of twitter than square. i think he has a lot of public currency as one of the cofounders and to some extent a real inventor of the product. what it is a real tough answer. i cannot say that i really know. twitter is the tough one. square is a tough one at the moment as well. it has a great opportunity but it is not a clear pathway. emily: this is the most riveting soap opera going on in silicon valley right now and we are all watching to see how it plays out. david, scion, -- simon, sara thank you. time for our latest "bloomberg west series," "bioengineering senses."

today we meet organ novo, a company that found a way to 3-d skin. take a look at what it's doing for the beauty industry and how it could impact patient care. ♪ >> think that you know all about 3-d printing? take a look at this company 3-d printing skin. they are targeting the beauty industry, supplying beauty industry -- beauty products to l'oreal. >> they build the layers into a full. it is a layered tissue but it has things like layered tissue inside that. you can put it inside to create those structures. >> organovo says that it takes 30 minutes to print a layer of skin. the technology, developed out of

the research at the university of missouri, funded by a national grant in 2004 and 2005. now a public company with a $300 million market cap, organovo is focusing on the beauty industry. there are hopes that its work may one day be used for patient care. it could be used to heal diabetic alters or treat victims. they are also working on other tissues, like liver and creepy. >> what about a patch that could replace the function. full organ transplant is quite a ways off. >> for now, organovo is staying focused on skin. >> full thickness 3-d printed skin, that would be a first. emily: we will have our next

story on this bioengineering series tomorrow. up next, a windfall is waited for. one company ceo tells us why he is betting on rivals taking down netflix. and we leave you with footage of oculus story, "henry," it premiered at a private event in beverly hills, created to give hollywood a glimpse at the future of filmmaking. ♪

emily: it is time now for the daily bite, one number that tells a whole lot.

a significant chunk of the money that goes into funding data centers in the middle east japan, and europe, coming out of an e-commerce giant that is trying to step up its game and level the playing field with amazon. amazon web services reported second quarter revenue of $1.8 billion. alibaba pot ceo says that the investment is just a beginning and that he hopes to match or outperform amazon within three years to four years. time now for akamai. the company set sales growth to slow next quarter. shares have since recovered. the future hinges on competitors for netflix. today do the behind-the-scenes -- they do the behind the scenes work to make sure the content is delivered quickly. joining me now in the studio tom leighton. great to have you back your on the show.

you guys have been building out your capability to support these web tv services, they just that have not happened yet. one of them namely is apple. when do you think the windfall is coming? tom: it is not a windfall. you are bringing video content online. i think the users out there are demanding it. they want to watch video not just in the living room, but on mobile devices or wherever they are areas conditions are now ripe. we can deliver the column -- quality that you need for broadcast online. it will not be re-buffering all the time. and at the cost point. those conditions make it right to bring a lot of broadcast body content over the top. emily: if web tv gets delayed again, does that worry you? tom: broadcasters are very interested in getting their content over the top.

a variety are interested in aggregating this content. it is hard to know when the important offerings will hit the market. it will be interesting to see what subscribers do. large-scale adoption? how much do they use it? next year is a real possibility for a breakout. emily: the other thing that is happening is that some of these networks are creating their own content delivery. what if they try to cut out the middleman, akamai, entirely? tom: i do not view occam i as a -- occam i -- akamai as a middleman. they do this at a very affordable price point. this is much harder to do than people think. emily: and you got 15% to 30% of all web traffic. you really are huge. i wonder, when a thing like windows 10 comes out, did you

see a spike today? what did you see? akamai big software releases -- tom: big software do -- software releases are obviously beneficial to akamai. this is where we provide value to other customers. we deliver content way past congested points. if you use akamai on a day where the internet gets congested with a big software release, you are in good shape. if not you get clogged in those congestion points. emily: all right, we will continue to watch you guys. tom leighton, thank for stopping by. that does it for this edition of "bloomberg west." tomorrow we have full coverage of numbers from linkedin and more. we will be speaking to the mobile cfo tomorrow on "bloomberg west." ♪

♪ >> from our studios in new york city, this is "charlie rose." charlie: we turn to the nfl and a decision by roger goodell to uphold tom brady's suspension for his role in deflategate. the quarterback is set to sit out the first four games of the season for the improper inflation of game balls lassies and. they cited new evidence that tom brady may have destroyed a cell phone related to the scandal. it supported a finding he