angie: prices rose sharply in korea. inflation remains below the official target of 2%. at least two foreign banks have been banned from cross-border trading in chinese currency.

the news comes as the currency fell to a five-year low but then recovered. chairman of china telecom has quit after an official investigation. he will be replaced temporarily by the chief operating officer. authorities say chong was questioned about severe violations of discipline. that is code for corruption. shanghai are being warned to stay indoors. the air is heavily polluted today. the particularys its were 10 times above the internationally safe level. here is a quick check of the asian markets.

>> i'm cory johnson in for emily chang. you are watching "bloomberg west." failure which companies are best prepared for the digital future. how hollywood smashed the sales record for all time. apple is paying $348 million to settle an italian tax bill. apple had been accused of evading taxes over the span of five years by booking italian sales through its irish subsidiary. more favorable corporate tax rates.

each country where they do business. explain this tax practice that that these yahoos at apple have followed. mark: they structure some of their sales through the irish subsidiary which is not an insignificant operation for apple. so they pay on ireland's corporate tax rate which is lower than italy or some of the other european countries.

cory: and they got caught. mark: they got caught decades ago. this is an issue they have been under pressure for not just in italy but england and many other countries. it has finally come to a head, where they have made a settlement at least within italy. cory: so they were just trying to reduce their taxes, but you could argue they also have a role in helping to structure tax code in a certain way. >> these are companies whose job it is to make money and profits. every opportunity you get to structure something to your advantage, you're going to do it. this is $350 million which may be a lot for italy's economy. but for apple it is really not a significant use of capital at this time. also they may end up getting their money back from ireland if italy is claiming these are -- cory: it might not be $350 million after all. >> it's an issue for a lot of people. why would you bring it back just

to pay taxes on it if you didn't have to? that's not the role of a corporation. it might be the right thing to do for someone who loves america and who is thinking about what is best for the american economy, but at the end of the day their job is to maximize value for shareholders. >> there have been a lot of stories about the way they structure their tax deal to try to avoid paying taxes here in the united states where they do most of their business. >> you made a good point about what type of impact it has to apple. $350 million is not even one day's worth of iphone sales. italy in particular, this is not going to break the bank for apple, but they disclosed earlier this year to investors that other countries could step up and force their hand in the same kind of way, and that would add up to a material impact for

the company. cory: let's talk about what is going on at yahoo! in terms of what the business looks like. you are responsible for the alibaba acquisition. they have done a number of stakes, they have a lot of nice little businesses. are there really nice assets sitting there at yahoo! that are being ignored because of the value of alibaba? >> people are claiming it is worthless, whereas you have new media companies like business insider or buzzfeed who are doing phenomenally well, but collectively the revenue is less than $400 million. they are being valued collectively at over $3 million. there is clearly a mismatch between what yahoo! is worth and what investors are saying it's worth.

most of that has to do with the fact that you have current investors in the company that are paying attention to the return of capital from the alibaba investment and they are not focusing on and won't be around when it comes time to think about investing in the core business. cory: i wonder if part of the concern is that -- let me speak english. they make money on the stuff they've got, but so much is on the desktop and not on mobile, that with the collapse of desktop pricing that they are withering assets. >> it's true that if you are investing money in the desktop, five or 10 years from now that is not a good investment. even though facebook says only 25% or 30% of their revenue comes from the desktop, that is

still a large amount of revenue. my point is, yahoo! has reached a value and a brand. it still has a billion users which makes it the third or fourth largest site on the internet. there is a lot of value inherent in what they build and what can be done with it. the question is, can they make the transition successfully to mobile? it is not like they cannot make it. cory: is there a certain point where you can reasonably say, i have not proven i can make one of those reverse flips, but because i haven't done it yet, you cannot assume i will not do it in a year or so. >> i would like to see you try it. [laughter] i do think, first of all, and i've said this before, but it's worth repeating.

in the last nine years since i left the company, you've had six ceos, three board turnovers, and an unfavorable tax ruling. three flips to the board. it's been very difficult to focus on getting the core business executed the way i still believe it is possible and i believe they believe it is possible. i think it is fair to question whether or not is going to get done. this is a company that could benefit from fewer distractions, maybe be a private company, and choose to make big, bold bets on the future. if you look at silicon valley, the only companies that last are the ones that constantly invest and reinvest and make multiple bets and have some of them fall. it is difficult under the circumstances to do that. cory: you would expect bidders to emerge as that's what they are looking at doing with this company. >> we did a story on how tumblr has become a symbol for yahoo's struggles. >> about the same price that was paid for instagram. >> instagram has been a phenomenal investment for facebook.

compare that with tumblr, they've done very little with it. they haven't even turned it into this sort of advertising business they promised when they bought it. there are so many stories like that within yahoo! and now they are getting ready to sell some physical property to try to generate some cash. cory: everyone in silicon valley seems to be rooting for yahoo!, i cannot say you have many people i meet with who say -- you had your obligatory nine months with yahoo!. >> we took the company from 200 million users to 500 million and from $700 million revenue to $4.5 billion. i am still a huge fan of the company. it is an iconic property that represents a lot of the good that came out of silicon valley, a lot of the original innovation and people taking risk. two very lovable founders. plus there are 10,000 people who work there. we want people to have jobs.

i do think that if they can get focused, get rid of the asian assets, distribute the capital and keep enough to invest in the company, it's not like the internet is over. you saw the successful transition of adobe, a turnaround of a stock that went from 47 to 19 to 95. then focusing on two significant assets and splitting them.

so we know this is possible, and i think we should continue to root for its success. cory: thank you as well for your time. dan will stay with us a little longer. the number of users of mobile phones topping one billion in india. the only other across that market is china. it's also the only other country that has a billion people. more than a dozen phone operators are fighting for customers and driving down prices. it's been a tough year for media stocks. everyone starting to raise the white flag. and star wars, pushing this year's box office record to a massive number we have never seen before. that story next on "bloomberg west." ♪

cory: a record year at the box office thanks to blockbusters. beating the record set in 2013. walt disney and comcast and universal pictures were the big winners, sharing almost half of the year's spoils.

universal had $2.55 billion according to box office mojo. real consequences of cord cutting. we're joined by bloomberg media reporter jerry smith. a terrific story today at bloomberg.com. talk to me about what we found in this year of fear of the cord being cut. >> a lot of the fear started around early august. disney had an earnings call where ceo bob iger talked about how he's seen some subscriber losses at espn, and investors got really concerned about his comments, because the thinking is that if there are problems at espn, if they are losing subscribers, what does that say about the television industry as a whole? in early august there was sort of a media stock meltdown and some of the companies recovered some of those losses. disney actually ended up at the end of the year up a little bit. it really started in august and a lot of the companies never fully recovered.

cory: there's some irony with that, disney was the only company that was up despite that hiccup they took. >> i don't think it will be overblown. my company focuses on the college market. 50% of all college students, we survey them all the time. the fact of the matter is they don't think they need to get cable television. the generation after that and after that are not accustomed to buying cable. when cable started, we all did it for a clear visual of being able to watch a show without fuzz on it. then it became about programming, and we were demanding programming. a lot of people made a lot of money.

then what ended up happening was they ended up packaging things you don't want and requiring you to pay for it in order to get the things you do want. cory: in other words, time warner said if you want cnn you have to carry all this other stuff we've got. >> and for the consumer, if you want to buy the sports bundle, you have to get cnn and 17 other things. that stuff does not work with people who don't care about the time of day or specific programming. the internet is broken down to two categories, "i'm busy," or "i'm bored." remember what it started with.

we are in a situation where this generation will not be thinking they need to be paying this high a price for content. cory: let me explain why jerry is wrong. if you want to watch a football game, you're going to get espn. you're going to want to have the things that live tv still does. >> that's why we saw looking back at media stocks, disney ended up doing ok whereas a company like viacom was the worst performing stock of the s&p media stocks. viacom does not have live sports. in an age where we are in an on-demand world, people want to watch what they want to watch whenever. having live sports is critical to getting the audience and the advertisers that a lot of these companies want. cory: i think you just explained why i was wrong. >> live sports may decide they want to sell it directly and could make more money. cory: we have seen a lot of those networks fail.

>> things are changing pretty dramatically, though. the cost structure has to come down on these things. i'm not saying it's the end of cable. the issue is, if you don't have high quality content that people are willing to pay for directly, you could be in trouble. i don't think people are going to continue to pay for things they don't want just to get the things they do want. live sports may be the exception. cory: most old people start off as younger people, i think about 100%. >> we know what they are doing in music, education, music, and politics. it is a generation that is not changing. they have always grown up with it.

they only know the iphone, netflix, hulu, and youtube. that is their world. i have a 22-year-old daughter, rachel, who now has a job in new york city and is about to move into her first apartment. i'm like, you've got to get a home phone and cable. she is like -- why, and no. i'm saying to you that this generation does not see the world the way we do. we need to really be aware of that. content will always be king and high-quality content will always be paid for. cory: my eight-year-old and 10-year-old daughters don't know how to use the cable guide, but they know how to find everything they want. coming up, a new king is crowned, the world's richest larry, and it's not the cable guy.

cory: elon musk is hoping to make space travel cheaper. russia's deputy prime minister said the main goal is to make space cheap. competitors are stepping on our toes like elon musk is doing with his projects. that spacex state and his position in tesla makes him one of the richest men in the world. 400 billionaires make up the bloomberg billionaires index. the first annual decline since we launched the index in 2012. high-tech entrepreneurs are well represented in the index. bill gates saw his net worth take a $2 billion hit this year. joining me now is tom metcalf

and dan, my guest host for the hour. tech is seen as a place where great wealth is represented. does that represent the change in the index or the members of the index? >> tech stands out from all the other industries. you mentioned the index as a whole was down near $19 billion. startups by valuation can push a few guys on to the list but the top tech billionaires, as you said are bezos, gates, and zuckerberg. there are two larry's in the list. >> i would like to be adopted by either one of them right now.

cory: do people in silicon valley care about this? dan: i care. do they care? i'm very fortunate to know many of these people and work with many of these people. the fact of the matter is these people look at wealth not as a scorecard but as an asset. i think larry, probably yes. you're talking about the more recent ones like mark zuckerberg and those people. they would say wealth is an asset to be used toward something they believe in.

cory: thank you very much. you're watching "bloomberg west." stay with me, we have a lot more to come. ♪

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cory: we're looking back at highlights from the show from last year. emily chang traveled to dell world just after it announced its merger with emc. here for your viewing pleasure is our bloomberg west stocking stuffer. >> i wanted to understand what they were doing and why they were doing it.

when we understood that the intent is basically to drive the platform, as i call it the icebreaker strategy, and push into new territory, and then we come in with a product that is more affordable and we can sell 100 times more, that works. emily: so we are seeing dell make the biggest tech deal in history. microsoft, on the other hand, has done a lot of smaller deals. why not a bigger deal? is it too risky? >> this is the stuff she lives for. i don't start by thinking, michael did a deal last week, i should do a big deal tomorrow. that's not the way i think. emily: is it something you would consider, and under what circumstances?

>> we have a clear vision of what we're trying to get done. i want to stay true to that. the biggest that we have is organic, always. on top of that, we will look at any opportunity that fits with wherever you want to get to. if there is anything i ask myself each day, it is, i don't want to be every part of the tech industry. microsoft has a unique contribution to make. that sense of purpose and identity is what makes a company successful, not just doing everything. to me, that is what will drive whatever we do organically and in organically. emily: we've been talking a lot

in silicon valley about the unicorn and these valuations which are going up and up and up. what do you see there? >> there are some different things going on. clearly when i.t. moves just from the realm of making companies more efficient at doing the old things, into this visual transformation, it is a game changer or new industries. they see these new companies being created. are all the valuations making sense? are they all going to work out? probably not. but there are some fabulous new companies that are being created, so i would not overlook that. emily: say there are 150 unicorn's that are overvaluation. how many of them are real? >> both sides of this argument have their points. there is a book that i read. the author has written a fantastic book around the natural financial cycles that fund technology. it has been true from the

industrial revolution to today. you have these booms and busts. during the boom, because nobody wants to be left out, there is over funding. the beauty of over funding is lots of ideas get to flourish. out of that, there will have to eventually be a correction, but out of 150, there will be 10 or 15, who knows, very successful companies. that is what is great about the american entrepreneurial system and the competitiveness of this country. i think we should celebrate that. investors have to have caution, because you have to really make sure that you know there is a boom and there is a bust in these cycles. that's always going to be true in our economy. emily: and where are we now? >> if i could time that, i would not be sitting here now. cory: the tech world is fired up about virtual reality, but there is a problem.

few people own the hardware needed to support these systems. there are 13 million personal computers that have the graphic capabilities to run them, less than 1% of all the pcs out there. one stock we are watching, gamestop. bad times are ahead, 46% of the shares are shorted as they try to adapt to a digital era. the stock has slumped 38% so the short has paid off. the highlight of my day has been watching seals out the window next to my desk. there is a giant seal out in front of our office right now. it's a cool thing to watch. i will take one for a walk later, maybe. ♪

cory: tomorrow, michael holland, one of our favorite investors, will join us at 6:00 p.m. eastern time. actually that is 6:00 a.m. eastern time. we're looking back at the best and brightest moments on bloomberg. sitting down with some of the top names in technology including stewart butterfield. emily started by asking her where where slack is focusing its efforts.

>> we have sexy tech companies like airbnb. we have older institutions like dow jones and the wall street journal. we have the department of energy research lab, the general services administration and u.s. department of state. we've been avoiding consumer. we have a pretty large account management team and we hear from customers after they've been successful. emily: there have been concerns that dropbox for example did not start thinking about a sales force soon enough. is that a priority for you? >> there's an empirical question about what would be the best way to grow. my favorite is advertising. it's difficult to lay off 250 salespeople.

a second choice would be other paid marketing. the third choice would be sales. it's much more expensive and much harder to make a change. if you hire 1000 salespeople, that's 1000 people that are employees of your company. like i said, it's an empirical question. we have been growing historically about 20% or 30% of my. that has slowed recently to 15%. emily: it was reported that dropbox may be seeing the beginning of a down round, downgrading the value of the stock. why won't that happened to slack? why won't you fall into that trap? is that something to worry about? >> yes and no. i have to be 95% sure that this is a valuation we can grow into.

people argue that the company is worth this much money right now. can the company grow by 10 at our 20 x? what are the odds and what kind of price are we willing to pay? to a certain extent it is borrowing against future growth. so it is a concern. not something i'm specifically concerned about right now. we have a quarter billion dollars effectively in the checking account waiting to be deployed, so we are in a great position. >> you be happy to know that the bloomberg technology group is now experimenting with slack. is there more he can do to replace e-mail and make sure it's not just part of another kind of collaboration that requires more attention? >> it only works where it replaces or consolidates other means of communication. it will not replace 100% of your e-mail.

that's how meetings like this will get set up for ever. but it's a terrible way to communicate internally. no matter who you are in the organization, you have a tiny little slice and everything else is ok to you. despite the fact that there might've been hundreds of millions of messages. it's only going to work if people are actually communicating. emily: instagram keeps reporting incredible numbers. snapchat is doing well as well. facebook is dominating the market overall.

how do you see this playing out? >> it's impossible for me to answer that. i think it will take a couple of decades to figure out how to best deal with this stuff. everyone has a camera with them all the time. it's been around for people like us a little longer but for people in the mainstream, some people only got their first iphone 4 or five years ago. it's a new capability and it will take a long time to figure it out. emily: it's jared leto, everybody. what are you investing in right now? jared: my best investment, i kid you not, is in slack.

i'm a proud investor and a proud user of the product. it has made my company more efficient and has made me happy. emily: wow. cory: dan, you know stewart quite well because you bought flickr from him when you are running yahoo! what is he really good at? i think he's a really impressive guy. he is sharp, he is humble. >> i think he is judicious with his capital. he is a very bright guy. also everything you said, humble, and smart and creative. he plays for the long game.

what has been fascinating about flickr and slack, both those companies were originally started as companies that did something very different. before it was flickr, it was a gaming company and it became photo sharing. this is a guy that can see the future and then build a team and get the necessary investment behind it. the confidence he got from the success of flickr enabled him to go on to a much bigger game here. cory: i want to talk about what's going on with education technology. i went to the gnc conference that focused on education technology. i was amazed at how many startups there were. you acquired a bunch of companies this year. i wonder what you see going on in that industry.

>> just think five years from now. this is what we do. do you think there will be more people trying to learn, or fewer? will there be more people are less people learning online? do you think the proliferation of mobility will break down the importance of geographical locality? i think what you are seeing is the early stages of people saying we can do this better, less expensive, and deliberate over the internet. we are only now able to get people like kleiner perkins who are willing to fund tech companies. these are now becoming more consumer-based companies, going directly to the student, the parent, the learner, and the internet lets you do that. what we do is help students get into the right colleges, by getting colleges to help recruit them.

we do that with the data and matching. we help you pick your classes and get you the required learning material for less. then we can match you for homework help or live, online, on-demand tutoring. then the logical internships and then ultimately, to careers. this is the kind of thing we think that a student who is more self-directed, as opposed to one who is being directed by institution, will benefit rum. cory: you have grown this from a textbook renting business and building are a lot of other ideas to build a much bigger business. i wonder if we will see a handful of monster companies, out of this ed tech focus. >> i think you will see some breakout companies, and our goal is to be one of them.

we have access to 75% of all high school students who intend to go to college in the united states. we have 4 million paying customers and over 40% of them are paying for digital service. over 70% don't even use print textbooks. the momentum is moving in our direction. i think we are likely to be one of the breakout companies. you either need to own the content or on the distribution. it is not unlike netflix, they own some of both. we own probably the most popular homework help product. we see more and more of this in writing and math and tutoring and many more subjects. we are just launching our first interactive test prep. we are still thinking about the princeton review.

these students don't know what the princeton review is. whether it's video or text, we are building those things. others are building those things by having the biggest brand and the biggest reach, we want to distribute them. the future is enormous in the tech space but it's literally just getting started. cory: stay with us for a little bit. we appreciate your time with us. coming up, ending on a down note. ♪

cory: startups don't always go so well in the early days. one of the pioneering rides announcing it will suspend ridesharing. what would have been probably the biggest day of all, new year's eve. i was a taxi driver once upon a time, which you may not know, and new years he was the day in new york when we made the most money. to see these guys shut down on the biggest day. >> it felt like a long time coming. sidecar was an early player but only raised $39 million and uber had more than $10 million. in terms of the amount of money, sidecar was far behind and had not been able to keep up. dan: the internet is all about scale.

if you're not number one or number two, you're not likely to survive. you cannot do these things unless you can scale. cory: particularly marketplace businesses. i liken it to ebay or alibaba you need more buyers to get more sailors and you need more sellers to get more buyers. maybe there's room for lyft and uber but maybe not for three. >> it's a winner take all monopoly business. will there be a number two if number three is now gone? and what does it mean to uber when their competing against the dominant international player? >> there's one company that i think will win globally in almost every country, and that's airbnb. it is a marketplace where they can bring people from around the

world. cory: thank you so much for your time today. always good to see you. thank you for watching "bloomberg west." it's a big show tomorrow, you do not want to miss it. we will see you then. ♪

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