i'm emily chang and this is "bloomberg west." reports of mixed quarter with some warning signs a hand -- ahead. a multibillion-dollar buyout. twitter hearts changed but existing users, not so much. we talked to a former board member about jack dorsey's latest move. first let's get caught up with our bloomberg first work news. u.s. stocks extended a rally today with the s&p 500 hitting a three month high. gained asd son mobile crude oil climbed to a three week high. the energy group has rebounded 22% from an august low. visa and apple helped send the

nasdaq 100 to an all-time record, topping its previous record from march 2000 during the dot-com bubble. volkswagen said approach indicates an additional 800,000 cars showed your regular emissions output. the german carmaker said the to --ic risk amounts volkswagen may be liable for fines of as high as 18 million dollars in faces further cost from lawsuits in the u.s. and europe. the u.s. government is finding airbag maker to contact for -- takat for lapses in the way it handled airbaga recalls. they may add up to $130 million to the penalty if takata doesn't obey the terms of a five-year agreement. explode spewing

shrapnel into drivers. jon stewart is teaming up with hbo. they have agreed to an exclusive for your production deal that includes a first look option for shortnd tv ventures and form digital content. he hosted the daily show for 16 years. now to the lead, tesla shares rising in extended trading as the electric carmaker narrowed its forecast for for your cell's volume and named a new cfo. jason moore takes the job after 13 years at google where he was most recently vp of finance. tesla reported $1.2 billion in sales, 32% increase, but saw a 32 many dollar loss.

the company will need to deliver 16,820 cars this quarter to reach the low end of its full-year target of 50,000. ceo elon musk had some big news, a more affordable model three. he said we will see it in early 2016. with me to discuss is the author of the book, elon musk. also our editor at large, cory johnson. what is standing out to you? obviously it is significant that they are saying yes, we can deliver those 50,000 cars this year. big drop-offot a in the sedan sales. it's been on the market for three years. i think everybody has been looking to see if the car is going to saturate the market. there are only so many wealthy people who can afford this ring. ir that number to stay that i

think would be what is pleasing investors. corey: it's an interesting quarter for tesla. it would it one point be 55,000, then they said 50,000. now they are saying 50,000-52,000. the mid range is falling on that number. it's also interesting to see what they are doing in terms of delivery. in the quarter they delivered the most cars they've ever made before, but that's not the most by a long shot. if you look at the 11,600 number butat is a good number, it's less than 100 more cars than the previous quarter. it's a 1% increase over the previous quarter. so that is the lowest increase the country -- the company has seen. what do you make of what

cory is pointing out? what they are saying they can deliver is gradually going down. >> cory is totally right, they have moved the target around a bunch of times. cory: around could be up or down. they have only moved in one direction. gett has been struggling to this manufacturing operation down for a long time now. we see with the new car that six came out, they put out at the launch. we have not heard much about how many will be delivered week. they still have supply chain issues and it had to start building the middle row of seats in house because they could not a good supplier for that. 2012, so this is an issue that had a lot of time to fix and they just seem to be able to fix some of these core things that are stopping them. get thehey cannot

second row, enough of them delivered so they're just going to make them themselves. cory: he is a very tall guy, i have sympathy for him in that respect. what jumped out at me with these results, here they are making the most amount of cars they had made out of that factory. margins were, the more you make, the more efficient thing should become and the better the gross margins should be. , the gross margin should be getting better. on a year-to-year basis, gross margins fell compared to 3% the previous year. you've seen sequential growth the busyecline with factories. it should be just the opposite.

they are losing money on every sale and not making it up. they have now set the model three will be revealed in march of next year. a lot of people are saying this will be key, this will determine whether tesla can become a mainstream car manufacturer. true, that will be the first time we see if it can be a mainstream carmaker. we are supposed to see what it looks like in march. the big problem of course is they are saying it will be delivered in 2017, and tesla's track record of delivering products on time is pretty abysmal. they need to get this car out quickly to address a lot of things cory is saying. they have to show they can act like a proper carmaker and they need the volume to back that up. huge questions, but i think people really are excited about the model three.

, erin the new cfo wheeler, any comments on him? >> he has been one of elon musk's most trusted hands for a long time. tesla has been your bankruptcy several times and he's had to suffer through that and take tesla to better days. elon, he hasss for a small group of confidants and he was definitely in that group. moving to another car bill ford was at the web summit in dublin and he said he's happy to see tech companies entering into the auto world. self driving cars are awesome. we talked about how quickly technology is advancing. x when you get on a technology

path, the time frame becomes very truncated. if i thought something was going to happen 20 years from now, it's probably going to happen in seven or eight years. there is so much development happening. and so much money being thrown at solutions. the executive chairman of four there. activision shells out $18 a share to the maker of candy crushed. but is it buying a one-hit wonder? we will discuss if it's worth the price, next. plus a changing of the guard at zynga. pushing the release of two expected games. ♪

zynga, the maker of "words with friends" is up slightly after posting third-quarter results it be estimates. officer isinancial stepping down, but they did not give a reason for the departure. outgames that won't come until next year. gamers will have to wait longer for them. staying with gaming, i want to turn to the video that is rocking the industry today. activision blizzard is paying $5.9 billion for the maker of candy crushed. king digital. it gives activision a foothold where it previously had none in the mobile gaming market. areace were revenues expected to grow by more than 50% in the next four years. but wall street has not been

kind to king over the years as it tried to duplicate the success of candy crushed. so does the deal makes sense? is the chairman of patriarch private equity and investor in activision. last time you were on the show, activision needs to make a mobile play. is this kind of deal you were looking for? >> it's clear that activision watches bloomberg. who knows what i'm going to say later, they may buy it next. this is a smart move, i said it before. they had less than 10% in the mobile space and they were getting decimated in mobile. they are now actually going to be a player. it is a premium of 16-20% but a good move overall. close to 33% of all their revenues now in

mobile, which they need to do. is this the deal you would have done if you were running activision? >> it's a story of a traditional game publisher not having a share of the largest growing portion of the game market right now. i think it is a yes. right now growth in the game will not come from the tens of millions of next generation consoles are the hundreds of millions of pcs out there. it will come from touchscreens. a company like activision must have a significant share. there are not that many players that you can acquire to get 300 million playing these games. but these are very casual gamers, which is different from act visions core market. emily: eric, what do you think about the price here?

it still slightly above the current market cap. this is a company that still has to prove they can make more than one hit. >> at think the price is fairly relative. if you were to go to some of the companies right now that our private, you would pay an even bigger premium. somewhere between nine and 11 times earnings. it gives them a huge base which is significant. they can try to move over some of their intellectual property. it is female driven. a lot of women are playing these games, which gives them access to all these women where they can sell some of the other games . i think it makes strategic sense. this will not be their last big acquisition. i think you're going to see more. emily: what is next? say it on bloomberg so we can take credit for something else.

>> it's possible that you could see something like kabam or even would make that kind of acquisition to make themselves an even bigger player. these are smart guys they get the fact that there are not that many be gaming companies that are good at mobile. the ones i named are pretty darn good. they have really done a smart move but there are other good ones also. emily: what do you think? >> i would be a little more cautious. mobile gaming scene itself is changing very rapidly. the revenue streams have been flat for a very long time.

hundreds of million people who will get exposed to candy crushed have never seen it before. emily: does king have the talent to create another hit? >> to have wonderful studios. the audience maybe moving toward more touchscreen gaming. to me it's really about execution. can they work together in order to build core franchises for touchscreens? execution, dos of you have any advice? ? >> make sure your games work. hero live.e, guitar i downloaded it and tried it. it was three or four days it was down on the ipad and iphone. it's frustrating. it's not a good user experience. they need to make sure that

organically -- this is one of the reasons they bought this company. block andto get the tackling down. they will. they are smart guys and i'm sure they will figure it out. when it actually works, it's a great game. the games are good but they have to get the fundamental components down and make sure mobile is a greater part of their dna organically as well as through future acquisitions. emily: we will be watching for the execution. thanks so much. the company that upended the book industry is going back to basics. amazon opening its very own bookstore in seattle. onwill carry books based customer rating, preorders, and online sales. customers can testdrive other amazon products at the store. prices in store will be the same as those on its website.

reports mixed she third-quarter results. investors wondering if the company can continue to thrive with amazon in its backyard. ♪

emily: groupon has a new ceo. rich williams was promoted to thetop job, replacing cofounder who had been in the position since 2013 after andrew mason was ousted. at sea, the -- etsy is out with third-quarter results. says sales total

$65.7 million, less than $66.4 million which wall street was expecting. the growth of total sales for the platform continued to slow. the company said gross 22%, downe sales grew from 25% a quarter before. is the ceo and founder of shop kick. all, how optimistic are you about the future of etsy in general? but itit as a consumer, is difficult to search for things and you cannot rely on shipping times. x we should not get distracted by one or two quarters of bad news. main question is whether there is enough demand -- demand drives everything. if people love it, like you just said, then they will keep coming

back. but the question is, why should they love it? you have to get into why is etsy so unique that over time it will continue to actually keep growing, even in the face of big competition with amazon. emily: how seriously would you take amazon? amazon asthink about a place where you go and buy handmade goods. >> basically what consumers want is a mix of authenticity and simplicity and convenience. focused on the handmade part only. be handng has to manufactured, not just hand designs. are designings the goods and then manufacturing. you might be waiting for four weeks so someone can actually goinghem, while etsy is

the opposite direction saying we will help you produce them once you design them. the people really want only handmade stuff did not like it. but you cannot have it both ways. you can't say you need to grow them tobut not allow scale. both need to happen at the same time. emily: what would you be doing if you were running etsy right now? >> i think the strategy is right to have the handmade design be combined with professional production. that means you don't have to wait for four weeks. helpday delivery does not reduction -- production. i had a halloween nightmare where pieces of the costume arrived well after halloween. >> the second thing is discoverability. if you're searching for a first year birthday card for a little baby, you will get 1250 choices. the only thing can sort by is

price over relevance. what is relevant? blue, andrson it's for another it is red. there needs to be better discoverability. they're starting to do more in local, but making it my own personal experience, a similar marketplace in sweden is now letting the owner of the online store help you by text message while you are selecting stuff in the app. that makes it really personal. talkingt the same time about amazon opening a brick-and-mortar store in seattle. >> i find it to be fascinating. the future of shopping is not all online. it's an integration of online and off-line. or driven inles

the store. the future of shopping is a combination of a beautiful shopping experience. the steve jobs apple style store, and knowing what people want and what they like and don't like. amazon is not great at a beautiful shopping experience. emily: i am curious to see how that is going to work. a correction from yesterday, gross merchandise sales were down in the second quarter 2015. sales were 24.6% down from the previous quarter. ♪

emily: this is "bloomberg west." time for global tech business flash.

help thetions struggling wireless carrier with new customers? the second-quarter loss was more than twice analyst estimates. a four kerry is struggling with -- the numberorts four carrier is struggling with turnaround efforts. the money it pays to other carriers to handle calls outside the reach of its network. investing $250 million in north africa. it will branch out to new cities in saudi arabia and egypt and inter-pakistan for the first time. uber says the investment will go toward paying drivers, expanding staff and enhancing its mobile app. the middle east and north africa region include some of the fastest-growing markets. it began service in the middle east two years ago.

accusing alibaba limiting competition. the company says alibaba is asking merchants to shine other e-commerce platforms on november 11. alibaba's jim wilkinson said date he is panicking because they are losing. they cannot match alibaba's customer and merchant experience. last year alibaba had more than $9 billion in sales during its one-day promotion. twitter stars are now hearts. they changed its star or favorite icon which allowed users to favorite tweets. take a listen to our interview on studio 1.0. >> even if you don't do a lot of work are going to find between you want and follow the tweets related to the day -- debate are the game.

want a heart instead of a star? >> it makes you feel really good. favorite, that word is like, is it really one of my favorite post? most people won't do it. emily: now it's official, twitter is doing it. we ask about whether he is a heart or a star dive. >> i love it, no pun intended. i think it is great. i love the heart. ,hey have been testing it clearly they have gotten feedback that is working. limitedvailable to a

number of users of until now. i think it just makes sense. obvious, youvery should know i love it. it's being rolled out and it's a lot of fun. you can see hearts in your timeline. i think jack is doing a great job. emily: the question is, is twitter making big enough innovations with the product? about not talking anything major, really. do you think twitter is really making the big innovations that need to be made? >> this is a refinement. clearly the big change was twitter moments that was rolled out in the last few weeks. it just keeps getting better and better. that was a big one and it just keeps getting better. the first thing i do in the morning is check twitter moments. that is the big move the company is making and i am inspired.

emily: what do you think the main challenges are going forward for twitter? >> there has been a lot of scrutiny and attention on the company. they have 300 million users around the world. the brand is exceptional and jack is back. the brand is exceptional, but they need to show they can grow again and the community it bigger. they have to put the big numbers on the board. i am completely a believer. emily: you were on the board for many years, and so the story goes, you were one of the people that told jack to move on, essentially. now he is back. that?o you think about he is back in the role of ceo when a few years ago, you guys didn't think he could do the job. >> i know that three of us thought it was time to make a run thend have ev

company. that was many moons ago. dick costolo did an amazing job with twitter. he took the company public and built the business model. all the senior executives in the company today, dick higher. it's a great team in there. between jack's vision and leadership as the founder, that's why i'm so excited to see people coming back to the company. i think it's really great. and is much more mature experience that he was in 2008. he still has all the passion and vision plus all the maturity of an experienced ceo. emily: do you ever think, what if you hadn't kicked him out, if he had remained ceo? >> of course i do. was the other cofounder and was the biggest shareholder

in the company. he really want to run the company and we believed that was the right thing to do. it's hard to look back, given that the company is a success, it's a $20 billion company today. becauseabout it only i'm human, but it's hard to say that we really get the wrong thing. you obviously know the company better than a lot of people out there. you know this is a tough job. do you think he can do both jobs? >> it's really hard. there are people that do it. he will be the first person running to public companies. >> the key thing is that the senior team at twitter has been there for a while. they work well together and they trust each other. they respect jack clearly. adam was reported -- was promoted to ceo. if the team was not so intact,

it would make jack's life a lot harder. but you have all these aims happening. it's an immense challenge, but given all those things i mentioned, i think it is doable. emily: given that you're making investments across the spectrum, how do you see the future of twitter with respect to facebook and snapchat and instagram? >> of all these things, i think twitter is still unique. it's the only place to have public real-time conversations. will it convince my mom to join? follows twitter moments every day. emily: it is complicated for some people. >> i think she should try twitter again. it has gotten better. that is the challenge.

it's not going to be overnight. it is a tall order, but i think they can do it. three offices, san francisco, new york, and austin. what are the main trend areas catching her i in this environment? >> we are excited about virtual reality. very bullish in the area. games companies, next-generation film and video, content. .ports, broadcasting it's going to be a whole new world and i'm really excited about it. we are also looking at robotics very heavily, especially in the san francisco bay area. we invested in a company that's working on self driving car technology. we think it is the best out there. were looking at other companies with flying cameras, robots that

deliver things to your door. bubble?re we in a -- there ishey are a lot of exuberance. 150 companiesave in next year maybe we have 200 and the year after we have 300. let's say we have a big correction and most of the companies did not work out in one way or another. many of themf work. then we have unicorns we've never had before that are durable, amazing companies. i think 20% is optimistic. it may be wishful thinking but even at 10%, that is extraordinary. no previous tech cycle has produced that many extraordinary companies in that short a time.

these companies are building real technology and scalable business models. not all of them, but a meaningful subset. that is the exciting part. emily: how protected our late stage investments in this environment? going to haveis trouble and needs to be more selective in picking them. , what is good for our industry, and if you really have built durable companies, that is excellent. what do you think about the ratchets and liquidation preference is being built into some of these? deals raising valuations that may not be sustainable. >> those are unfortunate, frankly. it's not authentic. it's not good for shareholders and employees who may not know about all these bells and

whistles. i don't love that. that level of complexity is not the right thing for management boards to be doing. emily: how do you see this playing out? optimisticssen is about the future. others were saying there is going to be paying, there could be catastrophic events. camp,m more in the paying but i don't say that as a gloom and doom thing. i still believe the number of extraordinary companies is still the amazing thing that we should be celebrating. emily: so if you are in pain, how does that play out? seeing a completely different situation than we've ever seen before, fair valuations on the public side and high on the other side. >> in the last bubble in the

late 1990's, those companies were going public with zero revenue. the ittflix went public, had nothing revenue wise. yahoo! went public with very low revenue. robust business models that were scaling, they were promising. now you have business models that are big and scale. criticism,r all its will do a few billion dollars in revenue. that is a real company. i feel it is genuinely different this time. but there will be a correction. emily: so when there is pain, what does that involve? how does that play out? >> there will be many companies that raise a lot of money that cannot deliver on those expectations. you will have companies that will downsize, some will be sold

at a loss. some will go under. we're still going to see extraordinary companies come out of all this. coming up, were heading to the west coast of europe. as we had to break, i want you to watch, groupon shares are plummeting after hours. revenue fell short. the stock was halted after announcing the new ceo and trading just resumed. ♪

emily: your week is -- your wait is over. i sit down with the father of the ipod and current ceo to discuss his time at apple, working alongside steve jobs, and the future of the connected home. do not miss the interview at 6:00 p.m. pacific, 9:00 p.m. eastern right here on bloomberg television. it has a golden bridge, cable cars, great surfing and will be to host of next year's web summit. totravel to lisbon, hoping position itself as europe's san francisco. >> more than 40,000 delegates have descended on dublin for the last europe the web summit in the irish capital. the capital of

portugal has won the right to host the mega event in technology. surfing, cable cars, and golden bridge is. >> it's pretty common every week to go surfing every morning. a surf hour in the morning before work. >> in lisbon, the portuguese capital looks a lot like san francisco and is starting to act like it. i worked in san francisco and i see lisbon as a beginning of that. i see a lot of similarities, the inner yet the people in both. >> tech startups are expanding quickly, raising millions, and shared workspaces are adding to the growing business.

>> a lot of people are coming to portugal from other countries. we are seeing all the infrastructure thrive in the center of lisbon to accommodate that. tiny when compared to its american idol. a tremendous gap in maturity and these two hubs. i do believe lisbon can be one of the channels bridging europe to the u.s. >> next year, international tech lovers will descend on the city for web summit 2016. going thatestment is way. >> even compared with the u.k.,

it's pretty rare. >> the wave of excitement is clear and young portuguese it.epreneurs are riding >> for now attention remains on the deals that can be done in dublin and how ireland can go out in style in the last web summit. caroline hyde, bloomberg, dublin. moving now to go pro, the makers of the tiny camera could be facing a big lawsuit. gopro is being sued by the makers of polaroid q. polaroid is not actually connected to the camera in any way except by name. the actual manufacturer claims it infringes on the design patent. gopro claims they have been cube camera since

long before the polaroid cube was released and they have their own patent application to prove it. coming up, a new technology startup is trying to end voter apathy here in the united states with an app. i sit down with the companies ceo. ♪

emily: it is election day across the country and there are a few issues for voters to consider including the airbnb initiative right here in san francisco and the push to legalize pot and ohio. voter turnout is expected to be very low. one company is trying to change that, a startup backed by names like john parker. the company has designed an app that allows voters to find information about local and

national issues and connect with other interested people. the last time i talked to you, you were at causes with a similar mission. what is the goal here? >> the goal is to help people fill out a certain identity online. and -- feel disenfranchised by the political system. emily: big thing today in san francisco is the airbnb initiative. a lot of critics are saying airbnb is taking away from in therm housing rentals city. what are your predictions? chris it's hard for us to predict. we will find out what happens in the election.

well so tested in manchester, new hampshire today. it breaks down the ballot into really simple questions of opinions, of what you think about the housing crisis, homelessness, and affordability yours, and based on opinions we will match it to organizations across the political spectrum and make smart recommendations. emily: how do you guys make money? >> it is still really early. we are only four months into this. we are still just starting to get the user experience right and figuring out what will engage and retain users. emily: political ads? >> i think something closer to .he bloomberg terminal doing if what you are works, that would be great.

as a voter, it's still really difficult to figure out what and who i want to vote for, and understand all the issues in the depth i would need to make a smart decision. you mobilizen people to spend their time doing that? >> our bet is that you can if you make it really social. return it into a way to interact with your friend and family and neighbors. is sean parker involved in the day to day? involved in product strategy and brings an incredible wealth of knowledge to what we do. we have a great team in san francisco. we have about 30 engineers and we are proud of what we have rolled out today. what i've seen for the last 48 hours are a ton of notifications , creating a lot of social pressure for me to get in my ballot. be on by next

election day for donald trump versus hillary, how about that? thanks for joining us. we will watch for the results later this evening. that does it for this edition of "bloomberg west." tomorrow, all the details of facebook's latest earnings report. that is it from san francisco. ♪

>> from our studios in new york city, this is "charlie rose." one of the biggest scandals in the history of the catholic church. the boston globe exposed coverups in 2002. the series won the pulitzer prize and led to the disclosure of similar scandals worldwide. it was the work of the investigative unit.