all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. matt: hewlett-packard takes a kid from slumping pc sales. what to expect when the business splits later this year. ♪ matt: i'm matt miller in for emily chang, and this is "bloomberg west." live from new york today. coming up, salesforce boosts its profit forecast, and elon musk's hyperloop taking two steps closer to becoming a reality. and we will take you to the world's first solar powered airport. all of that and more on "bloomberg west." first, to the lead. hp shares are sliding as they

issued a profit forecast that missed estimates. the company is being hit hard by a slumping pc business and its revenue in personal systems dropping 13% year-over-year. total revenue declined 8% from this quarter last year. what are we learning about hp as to split in two? cory johnson is here with me and we also have idc chief research officer crawford del prete. crawford, let me start with you. what do you think about hp's results? disappointing, but is there a silver lining? crawford: these results were mixed. if you start digging into these results, you do see some areas where company clearly has issues. they saw a pause in pc demand, particularly on the consumer side, down 22%. we expected that in terms of people waiting for windows 10. however, if you dig into the enterprise group, there they saw

significant improvement, if you will, in storage and steady demand, or improved demand, for their industry-standard servers being up 8%. what jumped out at me is that enterprise services has been a drag for a long time. a lot of the people they have been cutting out of the organization have come from services. to see does margins up at 6%, that basically says there is light of the end of the tunnel and they are starting to improve in that area. obviously, the other area they are getting crushed is in printers. the effect of strong dollar and a weak yen has made their japanese competitors very competitive. meaning they have to drop prices and be really aggressive. match: doesn't it -- matt: the strong dollar must be tough. they have to buy most of their components in asia. cory: and then go across a competitive environment, where you've got competitors willing to sell at single-digit margins. facing a competitive

set -- it's just getting harder and harder for them in the pc business. we've known that for a while, which is why they want to put that off to the side. the rest of the business, as crawford points out, it's not the worst they've ever been, but they are worse than all of the major competitors out there. cisco in particular. this is a company that spent vast fortunes and acquisitions in recent years, over $10 billion in software acquisitions in recent years. software is doing worse. a lot of the investments they made are not only paying off but things are getting worse. -- are not paying off and things are getting worse. they are spending billions to do this. again, the big take away is revenue growth. as the company continues to get smaller across all business units, not just the ones they want to pawn off, it's doing so much worse. pcs down 13% year-over-year. matt: as you point out, that is the bad bank. the good bank is the technology

services. cory: theoretically. matt: but who are the good bank competitors? who will compete against them in technology and services? cory: ibm. they are still talking about doing some sort of cloud service offering. cisco made some sort of nod in that general direction of having both some software and hardware stuff. let me uncouple that word, and maybe crawford can help. one of the biggest developments is a company like facebook, in computing right now apple, google, amazon web services -- they make their own. they go out and buy their chips and specialty disk drives. they buy specialty routing equipment. they buy the very circuit boards to make these things. they are not buying up data centers. : to that point, hp has done some interesting stuff. they partnered with foxconn to

basically develop a set of servers that they can move out a lower margin and into some of the service providers, and they have had some success with that. you are also seeing places like microsoft -- absolute customers on the data center side for hewlett-packard. they are making progress in that area, but to your point, a lot of these guys roll their own. and they will continue to roll their own. i find it interesting that hp was able to grow that business in a world where supposedly everyone is going to the cloud. that says people are building out private clouds as well and hp is holding their own or able to grow the business in a segment of this growing data center space. again, it's across the whole board, but i'm actually pleased with that number. cory: roll your own, grow, space. matt: sounds like he's in california, but he's actually in massachusetts. are they going to need to compete against oracle and sap

as well? cory: they do in small ways. i think this conference call will be interesting. there continues to be questions about how big will the restructuring be going forward? they have one-time restructuring charges for the last decade. 12 consecutive years, i think. and now there is more restructuring to come even after this split where they supposedly have the right businesses in place. but no, at least one of them is going to continue to have restructuring. those questions will come up. matt: crawford, is this the never-ending restructuring story? crawford: i think that there is definitely probably more to come. i think that it is also on the services side, but that is why i'm so focused on the services margin. i think that is an indicator that you will see a meaningful isd to a lot of thes

restructuring going forward. to the first part of our conversation, when these companies split, the whole story will be about growth. can they expand faster? cory: we should know that by these results. matt: crawford del prete, and cory johnson, thanks. it's a pleasure to see you. the stock we are watching his twitter. speaking of a big loser, today's market selloff sending twitter shares below their $26 ipo price. at one point, you can see here the stocks closed at 26% -- $26 even. if you bought the shares and held them when you went on the market in november 2013, you are now dead even. they began sliding three weeks ago when jack dorsey warned it would take a while before the company would be able to recover from the slowdown in user growth. that was their last leg down. they've obviously had issues with that. a story we are watching also, tesla and airbnb teaming up to

of chargingmber stations along the west coast. they are starting with 30 stations at airbnb properties. tesla has donated and installed these stations and plans to add more. now a status update. over the weekend, republican presidential candidate donald trump took aim at the thousands of foreign engineers working at silicon valley. trump's immigration plan would increase the amount paid for h-1b visas. that would potentially make them less attractive to employers over american workers. a group representing mark zuckerberg and bill gates hitting back at his plan. the president of the group forward u.s. wrote in a blog post, "the idea we should radically restrict pathways for highly skilled immigrants to come and stay here is just wrong. the evidence is clear that high -skilled immigrants create american jobs." one reason this is a contentious issue is because the h-1b visa program is hugely popular among

these big u.s. companies. this year, 65,000 slots were killed for these visas within the first week that employers could apply for them. of course, giant technology companies love to employ people from overseas. coming up, the new products behind salesforce's better than expected forecast. plus, yelp gives taxpayers a place to write about how much they love the irs or tsa. stay with us on "bloomberg west." ♪

♪ matt: hot story we are watching on bloomberg west today, california regulators say they have evidence uber failed to screen out 25 drivers with serious criminal records. according to prosecutors, the company's background check failed to prevent them from hiring registered sex offenders, identity thieves, burglars, a kidnapper, and a convicted murderer. a district attorney in l.a. revised an existing lawsuit against uber to fault the company for not giving assurances that their drivers givingiving -- four

assurances that their drivers are safe. salesforce is raising its sales forecast for the third time this year. the ceo pushed to expand into new markets and it seems to be paying off. brent phil is with me, and still with me is cory johnson. brent, let me ask you first -- the stock trended down, down, down all day. now it's getting a nice little bounce in the aftermarket trade. did no one expect this? brent: i think the market is obviously doing its own thing. i think investors continued to be pretty positive about the outlook for salesforce. we've said this multiple times inside the software industry. they are the most innovative company and they have the right pricing model. everyone in the industry, including larry ellison, is chasing salesforce. they are effectively the business model everyone is trying to copy. they are the apple, if you will, of the software industry.

the quarter looked very good. the backlog was up 26%. they had good operating margin improvement. falling on a good q1 operating margin. cash flow growth was up 44% year-to-year. the service cloud leading the charge had the best growth at 40%. a lot of the metrics continue to exceed what the analysts expect, and we believe that the consistency of the results have kept investors in the stock. they've really continuously delivered on the numbers. matt: microsoft reportedly $55 billion for salesforce and now microsoft is becoming a real competitive threat. you mentioned there are a lot of other companies trying to get into this cloud space. maybe they are copycats, but

some of them are doing pretty well. cory: we don't even know the terms of the offer or the price of the offer. it could have been far below the market cap of the company. it could have been all stock. it could have been a merger not attractive to them. matt: reportedly $55 billion -- even if it was the whole company and you have to leave, marketing -- cory: was it cash? was it microsoft stock? do you want $55 billion in microsoft stock? matt: i would take it. cory: the board looked at that and said we don't want that deal. whatever it is, that offer is off the table right now. microsoft has made offers in the past. they made a -- an offer for yahoo! at $35 per share. matt: they should have taken that. cory: they should. all of the value of yahoo! is alibaba. microsoft is not going to come back to the table. i don't think we should imagine that there is another offer that was once there that will come back. matt: there is so much talk about -- you said larry ellison is after them, and i think you meant in a competitive way.

but his oracle also after them to purchase? who is out there that wants to buy salesforce.com, because it is constantly talked about as an acquisition target. branch: everybody wants to buy salesforce, but it is expensive. the reality is salesforce does not need anyone. they can do this on their own. they're growing 25% with enormous operating margin improvement. everyone thinks the eta blessed margins are good -- aws margins are good. i think they can double. i don't think salesforce needs anyone. it's that everyone else needs salesforce because they have the right model. cory: anybody who acquires salesforce, with the exception of microsoft, would be deluded. it would hurt their earnings to do this deal. as a momentum stock that was once growing at 38%, now we are

at revenue growth of 24% gap revenue growth. we have billings growth just about the same. if it is slower than the growth of revenue,it's kind of like putting less gas into the tank, but trying to go a little bit further. this thing is getting stretched. they've done $1 billion in acquisitions, and yet revenue growth is slowing. ae massive growth story couple of years ago -- it ain't anymore. matt: unfortunately, we don't have time. brent thill, managing director at ubs, thanks for joining us as well. now, if you have a beef with the irs or the tsa, you can go to yelp to air your grievances. it's a partnership between the consumer review site and the u.s. government to let taxpayers rates government services, like the bathroom at yellowstone national park, or the line at

the dmv, or any because they are all horrible. it is an effort to tackle the government's customer service program. a march gallup poll found americans' biggest problem was dissatisfaction with government , ranking worse than terrorism or unemployment. among the first to take advantage was former hp ceo and republican president candidate carly fiorina. she gave the tsa a one star rating. she wrote that the tsa has been spending your tax dollars on body scanners that have a 96% failure rate. coming up, we've got the scoop on the hyperloop. i will sit down with the ceo, dirk aalborg. ♪

♪ matt: time now for the daily byte. 46,150. this is how many solar panels are powering india's kochi airport, the first airport to run entirely on solar power. it has 45 acres of land and a peak capacity of 12 megawatts. save the samed to amount of carbon as planting 3 million trees, or not driving 750 million miles in my truck. india already has four gigawatts of solar capacity. prime minister narendra modi wants to increase that by 100 gigawatts in 2022. status update -- hyperloop, the project to revolutionize the way we travel, has unveiled some heavyweight partners as it repairs to build a test track for a superfast capsule that

might one day carry passengers at speeds of 760 miles per hour. they have partnered with a pioneer in vacuum technology, oerlikon, as well as the world's largest engineering construction company, aecom, in exchange for equity. a team of 400 people are working on a test track in the central valley. has hyperloop is taken a big step closer to a reality? i'm speaking now with hyperloop ceo dirk ahlborn. dirk, thanks for joining us. i have to admit, until today, i was not clear whether hyperloop was an actual possibility or just a pipe dream. it seems like a lot of people are still skeptical it can ever happen. do you have all of the realistic components to genuinely make this work? dirk: of course. we finished our feasibility study at the end of the year. right after basically we went

ahead -- there's different solutions you can use for certain problems -- so we did the final decision to to move forward and announced we would start to build in the central valley of california the first demonstration track. we are in the permitting process right now. construction is supposed to start at the beginning of next year. matt: i think i read in "wired" that an executive said they have tackled far more difficult problems as far as the physical building issues are concerned. the only issues here are to some extent power usage and the cost. is that the biggest problem -- getting cost under control? >> no. the exciting part about this project is actually that -- you can imagine the rail industry as

a dinosaur industry. there is no passenger railway right now that is profitable. they are all getting subsidies from governments all over the world. the hyperloop concept is actually able to be profitable within eight years. we are creating far more energy than we are using, and therefore operating costs are very low. you can imagine how large of a market it is. all the numbers we have been looking at in terms of construction of the pylon tubes, solar, everything combined is looking very good. it's not about the amount of money, but how fast you can recover this. it's a really exciting business opportunity. matt: from what i understand, you will have solar panels on the tubes, windmills set up along the route at certain points and that is why you're saying it will be energy positive, right? it goes 760 miles per hour, which is 2-3 times faster than

an i.c.e. train. when will people be able to ride on such a thing? dirk: we are starting construction the beginning of next year. we expect by 2018 or 2019 to open to the public. matt: as far as the test track? do you have plans already to -- dirk: it is not a text track. it's actually a local hyperloop. it will be five miles long. it will be full scale and will be moving more than 10 million people. it's a newly developed community with a large entertainment district. so we will have several resorts and a theme park. obviously, plenty of people will be able to ride the hyperloop. it is important for us to be able to optimize passenger boarding, capsule handling. it actually will be the first. matt: hopefully you are not going full speed because it will take you about 20 seconds to get

from one end to the other. let me ask you about the possibility of an ipo. you have an interesting ownership structure. boeing, nasa, spacex all have engineers that work with you. i noticed that you want to do an ipo maybe by the end of this quarter. is that still the plan? dirk: the companies that you just mentioned are not part of our company. we have people, our engineers , that are working on the project have backgrounds working for these companies, but they are not involved in the project. in terms of the public offering, the reason behind that is our structure is very unique. it's really important for us. -- it's important for us that the community that has helped build this project has the opportunity to be in very early on. we are looking at a lot of different possibilities and opportunities to make that happen. obviously, the public offering is unfortunately needed. matt: got it.

dirk, thanks. unfortunately, we have to wrap. hyperloop ceo. ♪

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