emily: tesla names a new cfo. higher after hours despite weaker than estimated third quarter results. i'm emily chang and this is "bloomberg west." etsy reports of mixed quarter with some warning signs 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. chevron gained as 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 economic risk amounts to -- volkswagen may be liable for fines of as high as 18 million dollars and faces further cost

from lawsuits in the u.s. and europe. the u.s. government is fining airbag maker takata for lapses in the way it handled airbag recalls. they may add up to $130 million to the penalty if takata doesn't obey the terms of a five-year agreement. they can 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 film and tv ventures and short form digital content. stewart 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 wheeler 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 $230 million 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. joining 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. >> there is not a big drop-off 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. for that number to stay that i i think would be what is pleasing investors. corey: it's an interesting quarter for tesla. they said at one point it would 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, that is a good number, but 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 company has seen. emily: 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. >> it has been struggling to get this manufacturing operation down for a long time now. we see with the new car that

just came out, they put out six 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. i saw that in 2012, so this is an issue that had a lot of time to fix and they just don't seem to be able to fix some of these core things that are stopping them. emily: they cannot get the 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.waffict

thing should become and the better the gross margins should be. add to that, 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 margins decline with the busy factories. it should be just the opposite. they are losing money on every sale and not making it up. emily: they have now said 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. >> that is 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. emily: the new cfo, erin 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. it's a big loss for elon, he has a small group of confidants and he was definitely in that group.

emily: moving to another car company, bill ford was at the web summit in dublin and he said he's happy to see tech companies entering into the auto world. he said self driving cars are awesome. we talked about how quickly technology is advancing. >> 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. emily: the executive chairman of ford there. activision shells out $18 a share to the maker of candy

crush. 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. ♪

emily: zynga, the maker of "words with friends" is up slightly after posting third-quarter results it be estimates. its chief financial officer is stepping down, but they did not give a reason for the departure. two games that won't come out 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 crush. king digital. it gives activision a foothold where it previously had none in the mobile gaming market. a space were revenues are 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? our guest is the chairman of patriarch private equity and investor in activision. last time you were on the show, you said 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. it will get them close to 33% of all their revenues now in mobile, which they need to do. emily: 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 industry 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. these are very casual gamers, which is different from activisions 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. >> i think the price is fairly relative. if you were to go to some of the companies right now that our are 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 k2, where they would make that kind of acquisition to make themselves an even bigger player. these are smart guys who 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. the 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 crush have never seen it before. emily: does king have the talent to create another hit? >> they 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?

emily: in terms of execution, do you have any advice? >> make sure your games work. for instance, guitar hero live. 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. they need to get the block and 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. it will carry books based on 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. coming up, etsy reports mixed 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 the top job, replacing the cofounder who had been in the position since 2013 after andrew mason was ousted. etsy is out with third-quarter results. the company 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 merchandise sales grew 22%, down from 25% a quarter before. joining us is the ceo and founder of shop kick. first of all, how optimistic are

you about the future of etsy in general? i love it as a consumer, but it is difficult to search for things and you cannot rely on shipping times. >> we should not get distracted by one or two quarters of bad news. the main question is whether there is enough 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? you don't think about amazon as a place where you go and buy handmade goods. >> basically what consumers want is a mix of authenticity and simplicity and convenience.

amazon is fully focused on the handmade part only. everything has to be hand manufactured, not just hand designs. so the artisans are designing the goods and then manufacturing. you might be waiting for four weeks so someone can actually make them, while etsy is going 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 revenue but not allow them to 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.

same day delivery does not help production. emily: 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 or relevance. what is relevant? for one person it's blue, and 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. emily: at the same time talking 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. 92% of all sales or driven in 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, etsy's 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. can promotions help the struggling wireless carrier with new customers? the second-quarter loss was more than twice analyst estimates. the number for carrier is struggling with turnaround efforts. the money it pays to other carriers to handle calls outside the reach of its network.

uber is investing $250 million in north africa. it will branch out to new cities in saudi arabia and egypt and enter 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 of limiting competition. the company says alibaba is asking merchants to shun 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 debate or the game. >> you 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 posts? 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. they have been testing it, clearly they have gotten feedback that is working. it was available to a limited number of users of until now. i think it just makes sense. the heart is very obvious, you 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? we are not talking about 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. 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. what do you think about that? 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 change and have ev run the 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 hired. 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.

jack is much more mature and 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. but ev was the other cofounder and was the biggest shareholder in the company. he really wanted 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. i think about it only because i'm human, but it's hard to say that we really get the wrong thing. emily: 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. emily: he will be the first person running two 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 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.

emily: will it convince my mom to join? >> i hope she 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. emily: you have three offices, san francisco, new york, and austin. what are the main trend areas catching your eye in this environment? >> we are excited about virtual reality. we are very bullish in the area. games companies, next-generation film and video, content.

sports, 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 a self driving car technology. we think it is the best out there. we're looking at other companies with flying cameras, robots that deliver things to your door. emily: are we in a bubble? >> clearly there is a lot of exuberance. right now we have 150 companies 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. but imagine if many of them 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 are late stage investments in this environment? >> late stage is going to have trouble and needs to be more selective in picking them. but as a whole, what is good for our industry, and if you really have built durable companies, that is excellent.

emily: what do you think about the ratchets and liquidation preferences 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? mark andreessen is optimistic about the future. others were saying there is going to be pain, there could be catastrophic events. >> i am more in the paying camp, 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? we are 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. when netscape went public, the it had nothing revenue wise. yahoo! went public with very low revenue. these were not robust business models that were scaling, they were promising. now you have business models that are big and scale. twitter, for all its criticism, 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. but we're still going to see extraordinary companies come out of all this. emily: coming up, we're 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 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. we travel to lisbon, hoping to position itself as europe's san francisco. >> more than 40,000 delegates have descended on dublin for the last year of the web summit in the irish capital. next year, 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. you can get 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 energy of 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. >> it's still tiny when compared to its american idol. >> there is 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. already investment is going that way. >> even compared with the u.k., it's pretty rare. >> the wave of excitement is clear and young portuguese entrepreneurs are riding it. 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. emily: 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 that it infringes on the design patent. gopro claims they have been working on a 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 company's 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. most voters 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 long-term housing rentals in the city. what are your predictions? chris: it's hard for us to predict. we will find out what happens in the election. we 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 issues, and based on your 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 the bloomberg terminal. emily: if what you are doing 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. that said, can you mobilize people to spend their time doing that? >> our bet is that you can if you make it really social. turn it into a way to interact with your friend and family and neighbors. emily: is sean parker involved in the day to day?

>> he is 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. emily: i will 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. ♪

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