impending release took him completely by surprise. he said it was so intense, he poppedlow prisoners only champagne after they were sure they had left iranian and space. the white house is appointing a health and human services apartment official to lead federal efforts to help the city of flint, michigan, deal with its devastating water crisis. the flint mayor arrived in washington today. the supreme court has agreed to review president obama's immigration plan. a federal appeals court that he overstepped his authority by deferring deportation for millions of undocumented immigrants. the high court also refused to take up a new constitutional challenge to obama care. in politics, ben carson has suspended his presidential campaign for the day. it comes after three volunteers and a staff member were involve in a van crash in iowa. ae campaign said the car hit

patch of ice, flipped over, and was hit by another vehicle. it could be a blow for ted cruz and a boost for ted trump, sarah palin will endorse donald trump for the presidency. she is expected to join donald trump for an appearance in iowa. i'm emily chang and this is "bloomberg west." star billing for netflix on wall street. shares popping after the company reports a surge in international subscribers. shares of ibm headed the other way. the stock sliding, despite a better than earnings -- better than expected earnings report. a top day for twitter yet again -- a tough day for twitter yet again after system problems shut out millions of users.

winlix reporting a huge with better than expected subscriber growth in the fourth quarter. shares spiking over 9% in after-hours trading. added more than 5.5 million subscriptions worldwide, beating analyst expectations. sales grew to $1.82 billion, of $1.83of projections billion. what is next for the world's largest paid online tv network? here with me is on trace wants and from new york, with a company that analyzes video streaming data. l.a., our netflix reporter is here. let's dig into the numbers a little bit. is international subscriber growth going to be enough to offset domestic growth going forward? is.etflix says it last quarter we had a similar situation where they exceeded

expectations overseas but underperformed in the united states. this time they missed a little bit in the u.s., but i think the number that has investors excited is the forecast for the next quarter showing international growth will keep ticking up. to expectid considerable growth outside of the u.s. for the foreseeable future. netflix quickly, places like singapore should swarm the service. others will be a slower go but they have a lot of room to grow. there are some hiccups they have not encountered in other places so far and international growth should be steady. emily: reed hastings talking about their progress. listen to what he had to say just moments ago.

record forbe a netflix and we are super excited about that. what is amazing is we are seeing new shows like making of murder at only huge here in the u.s. but emerging as a big hit around the world for us. still netflix is spending billions of dollars on this original programming. andre, the company analyzes video streaming data. shows,ular are these even though netflix doesn't release any of this information? what is your methodology and what shows are doing well? andre: five for the largest source of downloading content is peer-to-peer sharing. in terms of sharing of this media, what we have seen is that netflix original content that

was pretty much irrelevant or agoon the radar two years is now the most demented content in 30 much every major market in the world. it's a huge opportunity to drive subscriptions. emily: netflix is big almost everywhere but china. they could beid growing too much, too fast. what do you think? paul: china is obviously a big part of the story. the point about growing too much, too fast, is kind of intriguing to me. netflix gets thrown in a basket with a lot of tech stocks. the thing it is interesting is not really a tech stock at all. it's the idea of kind of a positive network externality. as you grow, there is something that grows in your business that makes your business even more

viable faster than the growth of the company. that is not really what is happening at netflix. it's not like it's getting cheaper on a per subscriber basis. in fact we are seeing the opposite. the profits from the business are not doing as well as the subscriber growth. it's kind of a negative network externality, which is worrisome. why should we expect the business to become a bigger generator of cash in the future? it's not clear to me that it will. emily: at the same time, netflix is seeing more competition from companies like amazon and google. maintaincan netflix the nice head start that it has? on how long it keeps spending the amount of money it is spending. there was a tour for television

critics over the weekend where they talked about upcoming shows. executive said he loses out on some shows because netflix is willing to spend more than they are. you also hear from creative people in los angeles that netflix spends more than amazon and google. if netflix is able to keep spending at this rate, they will probably keep apace of or ahead of these other people. if at a certain point they have to rain that in, then it becomes more challenging. data do you, what have around these competitors? how many people are watching amazon video-on-demand, hulu, and how does it compare to hbo? andre: in terms of looking at how people are sharing hbo content versus netflix and amazon, not just in the united

states but also internationally, it doesn't matter if amazon is getting a lot of accolades. it is not shared very much. people don't want to even pirate your content, that means the likelihood of them paying for it is low. with netflix, people were already downloading house of cards and orange is the new black. that bodes well for them as they are now making those services available to new markets. isly: maybe it is hbo that the real long-term competitor for netflix. can they out produce hbo? this now is you for all of is what has happened to espn. there is a winner's curse that kicks in. you can win for a while but being the player with the deepest pockets.

you have a subscription service that let you do it, but eventually that becomes the owner's curse. by definition, everyone in the market thinks it is worse less. if you are netflix you have a subscription series that you have owned for a long time. that's where it going to go, but history tells us that doesn't go very well. paul kedrosky is here, thank you both. another day of big swings among tech stocks but it was a particularly bad day for jack dorsey. of the gains made since the november ipo. on friday, rival first data announce new technology catering to small businesses, which make up foremost -- which make up

most of square's customers. twitter hitting an all-time low among a string of outages since friday. services including search and news stream were unavailable for several hours, shutting out aliens of users. all this coming at a time when twitter is working to prove its value to millions. dorsey about it on the day of the square ipo. recruitingstantly and making sure we are building the experience that people love. that is all that matters. emily: speaking of twitter, it's former ceo has a new gig. dick costolo is founding a new startup focused on personal fitness and motivating users to work out. he shared the news through twitter, of course.

we developed a system that works within this evolving landscape. that's not the only job he has lined up. he will also be a partner with a venture capital firm. coming up, ibm reports fourth-quarter earnings that beat the street but a warning is sending the stock lower. one chipmaker reporting of fit weight -- straight quarter of revenue decline of more than 20%. the company has been struggling after a slowdown in pc sales. ♪

emily: a developing story we are watching, the $8 billion semiconductor chip maker has buy atmel,al to ending a bidding war. this is microchips latest acquisition. l manufactures devices for networking gear and industrial equipment. shares of ibm sliding lower after the company warned on this year's earnings. the company expecting full-year earnings of $13.50 a share versus estimates of $15 a share. ibm after the close,

released what appeared to be a positive fourth-quarter earnings ofort compared to estimates $4.81. but big blue also saying 15thues dropped for the consecutive quarter and that it missed estimates on fourth-quarter margins. total revenues from the cloud up from 17 billion in 2014. back with me as paul kedrosky. they've been trying to transform the company into something different but the turnaround has been painful. how much longer is the pain going to last? paul: at current rates of change, a lot longer. the problem you alluded to already is you have two very different businesses wedded together. cloud, social, mobile and analytic side of the ibm business is growing reasonably

well, and the rest of the business that most people want to ignore and pretend doesn't exist. as the transition has happened over the last three years, the company has shed something like 116 billion dollars in market capitalization as the transition happened. it's really a horrific mess terms of managing the transition across it. the things that could have been done with the equivalent amount of capital had they chosen to go the growth route rather than selling off assets. like 35% of the business is those four pieces, cloud, mobile, social, and analytics. you still have 65% of the business that is everything else that are declining businesses that probably should have been sold off some time ago. pieces that are 35% of the business are growing 25%

year, which is slower than market growth. it's hard to get excited about any of that. emily: you are never one to mince words. the ibmen listening to call, talking about the margin myth. let's take a listen. >> are margin performance reflects higher levels of investment and a mix of contracts and resource shifts in our servicing business but also reflects unique items in the fourth quarter of last year including a $1.4 billion a from the sale of server business. we have interviewed a number of high-ranking executives from ibm here on "bloomberg west." they are super optimistic about watson as the future of the business. is that really a future that we can bet on? paul: watson has nothing to do with future of ibm.

it's an interesting project and a lovely thing, but it's not going to generate meaningful revenue or change the fortune of the business. it's a shiny object that is a distraction, trying to get people to focus on that rather than the root problem. is of this giant business growing slower than market and is not putting up a lot of profits yet you still have to support the 65% of business that is contributing to the decline 15 consecutive quarters. that is staggering. to think back to a large-cap tech company that has done that without collapsing. the cloud business is facing a real challenge from amazon. how do you see the cloud playing that it's notiven

just amazon but microsoft and other big tech companies that all want to own the cloud? right, pressure is immense on the entire cloud business. in terms of the host, we have people hosting private clouds in their own internal businesses. while the growth in that single piece of the four-legged chair we talked about is doing quite not going to produce the kind of profits that will offset the declines in the rest of the business. as result we will see continued pricing pressure in cloud services. that will not be the thing that saves ibm. they will face this continued pressure into the future. they all see that as the place they want to be and it is central to their businesses. paul kedrosky, r

bloomberg contributing editor, always giving it to us straight. europe's biggest startup factory , rocket internet, has just raised $420 million in unused lined that will allow rocket to keep -- in a new fund. at onerose more than 4% point on this news. the ceo told reporters it's an enormous competitive advantage to have a fund in doubt like the biggest u.s. fund. he said rocket will focus on rather thanstartup pursuing large deals this year and next. coming up, why are coder leaving their cushys jobs at top silicon valley companies? we will discuss, next. ♪

the company saying it will not be introducing

will-party ads, instead it test ways to monetize nearly one billion customers by allowing businesses to communicate with users. back in bought whatsapp 2014. silicon valley's war for talent is reaching epic proportions but s aretalented coder quitting their jobs to freelance and making a lot more money doing it. joining us is our tech reporter. you tell this amazing story about a 27 year old who quit his cushy job at google to freelance. why? >> it does seem like an unorthodox career move. who would ditch that amazing view and all that great food? but it actually makes sense because the talent shortage for

people with technical skills has gotten so bad they can actually make more money freelancing. doing it to make more money. he is making twice as much. quick it's not just about the money, though. he said he felt a profound unhappiness at google. the matter what he did he wasn't going to make that big of a difference. now as a freelancer he's brought in to do mission-critical tasks and he feels like he's playing a key role in product of element. he is changing jobs every few months. who doesn't want to work in their pajamas every once in a while? there are so many benefits that come with this. not only are they making better pay but they are doing more exciting work, from many of these freelance coders i have been talking to. emily: you said people are

getting paid $1000 an hour. how bad has the talent shortage become? past has mushroomed in the be years. every company has become a software company. everybody needs software developers. demand for software developers is set to grow by 20% over the next decade. if you look at this chart, you can see that by 2020, there will thanmillion more i.t. jobs computer science students in the u.s., so that is not looking very pretty. emily: what are some of the innovations that have come out to mitigate the supply and demand? to make are many ways money from the supply and demand balance. 10 x-men is one of the freelance network. they call themselves a hollywood style agency. they say they are geniuses on

demand. they say they are the tom the software industry. highwill perform at a very level. less than 3% of applicants and the have thousands of freelancers in their network. there are all these middlemen that have realized companies are willing to pay top dollar. emily: thank you for spotting that trend for us. coming up, we will talk about cisco and their new cyber security. we will be right back. ♪

and thisam emily chang is bloomberg west. it is 330 tuesday and 7:30 wednesday morning where we are joined by shery ahn to look at the stories making headlines in

asia. the eve of the world economic forum in. posts -- in davos, ceos are turning more pessimistic on global growth. a new survey shows that just 27% expect improvement this year. meanwhile, one in four say that the economic outlook will worsen . two thirds of respondents have a see more threats facing the company's in three years ago. bhp has cut its four -- full year iron ore guidance. production into june is now forecast to come in at 237 million tons, down 10 million on the previous estimates. the mine has been halted.

it's being described as the country's worst environmental disaster ever. leaders will meet today for a five-year debate on the environment at home and abroad. the discussion will the divided between those who want to reserve ties with china and moved to the u.s.. the central committee will nominate his successor and other political posts which cart parliament will discuss in the summer. groups hope of becoming a semiconductor powerhouse could be facing a setback. he says that plans to acquire the world after second-largest chipmaker are being challenged by u.s. regulators and the chances of it happening are slim. speaking of the world economic forum he said he still wants to cooperate with them or other

firms in the pursuit of breakthroughs in memory chips or integrated circuits. of things arend we talking about here. >> they say an option could be setting up a joint venture. it's not surprising that china is pushing for other ways. this deal listed as a huge step. they say they will continue to make or receive acquisitions in areas including to grated circuits, environmental and new materials this year. acquired a already $1 billion stake in these electronics. emily: shery ahn in hong kong. thank you. to major cyber security attacks

and what companies can do to protect them. >> according to a new report, cyber attacks are getting stronger and confidence to defend against them is dropping. the report finds it only 45% as mrs. worldwide are confident in their ability to prevent an attack and deal with the damage afterward. 59% of global businesses say their security infrastructure is up to snuff. so how can companies keep up with the increasing specification and frequency of cyber attacks? joining us is the chief security and trust officer. a very important responsibility have it cisco. were companies overconfident before? >> i don't ticket was that. there is a natural -- i don't think it was like that. the good news for us, in that

same set of data is that the response is clicking in. more and more businesses are taking it to a board level business strategy and making increased investment. emily: what are the key threats to watch out for this year? >> there is a threat we just call cyber security that there is crime, disruption, espionage, attacks -- you can see it. on a personal level, it is all about being scanned. you get a know about malicious food and you click on it. at the business level it is about the corporate level you are in and how they attack differently. oil and gas is not the same as electrical or tech. it is a natural way to look at your own business and save these are the threats we are facing myself. emily: what should companies be focusing on this year? >> part of what the survey and data told us is what they are focusing on is around integrated threat defense, making it

simpler and more complete. it has not always been true. sometimes it is just buy 50 different companies trying to stitch it together. that strategy is not working. the other part of the business is companies are becoming more aware and making it part of their strategy as a corporation. it turns out it can be a differentiation in the market. emily: one of the things the report talks about is the human factor. you and i might be the weakest links. are we the just risk? >> i don't think so. it's not as though we cannot betray it. it has been proven time and time again that we can be one of the risks. in truth, it can be defended against with the right design. emily: what about social media? in oure pointed out

report, we saw how many scans are being brought to both of us. a facebook friend request is the new way to deliver what we used to get as an e-mail inbox request. a couple examples around making sure you become part of the verify beforeand clicking. it's not just can we be the problem, can we also be the answer? emily: when it comes to cyber attacks, the hackers and the spies are always one step ahead. companies get better at preventing them, will the attackers just get better and better? key proud one of the moments for cisco. it is to be 50 hours before even we could see an attack. then you pull it apart figure out how to defend against it. we have taken it down to 17 hours. in most statistics, most

corporations on their own might be hundred days to 200 days before they know it is happening. the work we do in our company is how fast can we make that new attack irrelevant. it's that kind of approach have been committed to for a number of years. >> the number one piece of advice for companies. >> take it all the way to the board room, get ready. make sure it is not just the technology discussion and take it right to the way that you deliver value. emily: turning now to the world economic forum, switzerland, of the 2500 delegates in the spotlight including facebook's cheryl sandberg is a south korean robot called hugo. you may remember this humanoid as the winner of the darpa competition last year. he is there to represent a challenge looming over the

conference. how to harness advances in ai and robotics in a way that stimulates the world economy rather than replacing human jobs. oxford university researchers suggest almost half of officers are at risk of being audited but hugo is on hand to show the good things robots bring to the table . ♪ >> his name is hugo. he is the latest version of the hugo series. it's a very dangerous place. can open doors and also drive this by himself. sensora camera and data

can't -- scan all the 3-d data and he can recognize everything. you can imagine that we cannot go inside so a robot can go through -- this is the very beginning. everything.can do expecting to make this a very fancy robot. that is the south korean robot at the world economic forum. when we return, we speak to the ceo for an exclusive interview. how his company differs from airbnb. tomorrow there is full coverage on the ground with some of the biggest names in business. levy. miss maurice

and later we have another guest at 8:00 a.m. et.

♪

emily: the human rights group amnesty international has put apple in its crosshairs. in report, the group says that apple and some of the other phone makers may be getting the cobalt they rely on from child labor. says theyternational are buying cobalt from the democratic republic of congo but are not fully checking their suppliers for labor violations. apple, donald trump

says he will force the company to manufacture in the united states if elected president. mr. trump: make america great again, i think we can say now that we will get things coming. we'll get apple to build their them computers and things in this country instead of other cut countries. emily: during the speech he also claimed is to support free trade but insisted he would impose a 35% tax on businesses producing goods overseas. in november, expedia purchased a vacation rental site helping the world's second-largest travel company push further into accommodations. cory johnson cut away with home away and began what asking -- began by asking what life is like after the deal. >> expedia has been a great cultural fit so far. they are very respectful of the

strategy that we started to execute last year. they're running it mainly as an independent company that are offering to help in lots of different ways. one of the ways we are hard at work on is to figure out how to best expose our inventory on their sites. that will be one of the biggest contributions they will be about to make this year. >> the conversation seems to be dominated by airbnb. how do you take great efforts to differentiate yourself? >> we did launch a new campaign this week. it is our biggest integrated marketing campaign ever. this year onng up our brand related investments. part of the reason we are doing that is to make sure that people understand the differences between homeaway and other sharing economies and companies

as well as hotels. homeaway is quite different from airbnb. the majority of their inventory comes from primary homes. these are people who live in homes and apartments and choose to share them for a few nights a week and either move out or stay in the home in some cases. whereas homeaway is on most exclusively second-home owners. it's the traditional vacation rental market that when carl sheppard and i started the company in 2015 was already a $100 billion business we were just the company that brought it online. >> you are doing about half a billion in revenue this calendar year. business. fantastic we think this will be an extraordinary growth year for us . it's a very big marketplace. we estimate that homeaway last

and $17 between 16 billion in booking. we're the biggest in the vacation rental category but we still only have about 15% of the overall basis of their is a lot of room for growth going forward. >> our philosophy has always been that the way that we grow inventory is to keep our suppliers happy by burning travelers in the door. our marketing is a most exclusively targeted at travelers. the feeling at homeaway and has been true since we started the company is if the owners on our platform are doing a lot of bookings with us and making good revenue, they tend to live in neighborhoods where there are other vacation rentals. our services for friends and neighbors and generally the inventory takes care of itself. >> it is an interesting approach

to a marketplace kind of business. do you feel that is what this is? like an ebay am a you will have more sellers because you have more buyers and you will dominate this business? >> internally, that is how we have always looked at it. it is a marketplace business. you have two customers, on the supply side and the demand-side. you have to choose to focus on one or the others because if you focus on demand, you will find that the supply begins to come online to do in -- online to meet that demand. one of the things we spent an extraordinary amount of time thinking about was keeping our various marketplaces in balance from a supply demand perspective. there have been lots of companies in the last 10 years that have through nice venture capital funding have tried to rise up and get into the business. they will typically focus heavily on the supply side and

get as many homes as they can. if they do not have the demand to meet that, quickly those homeowners get disenfranchised with the company. they tend to leave and go somewhere else. ceo speakingay exclusively with cory johnson. opentable ofalled beauty appointments announced plans to buy beauty booked. i spoke to melanie mccluskey ahead of the acquisition and asked why she decided to target the high end of the market. >> high-end is an incredibly lucrative market. we're previously supported independent professionals. we are very excited today to move further on our path to truly support the entire salon and spa.

emily: this partnership will add about a thousand salons. coming up, chinese economy may be cooling off. vc funding is still hot we will the likes ofer startups are living up to -- we will look at whether startups are living up to skyhigh valuations.

emily: just two weeks after general motors took a $500 theyon stake in lyft,

invested in a competitor. they acquire sidecar assets. gm and ford have both said their working on their own right sharing services. services.aring communist leadership continues to grapple with the transition to a consumer-led economy. this is due in part to a boom in private funding. 37 billioncord dollars into chinese startups last year, more than double the previous year's tally. bloomberg now are news's managers of tech companies in asia. peter l stremme. -- peter elstrom. china will be more innovative than silicon valley.

is china really emerging as a legitimate challenger to silicon valley. >> it certainly is coming up with a lot of innovative companies. year.as a very strong venture investments tripled that year from the year before. investing venture really took off. the china situation was much different at the beginning of last year than it is now. the economy was quite strong and alibaba had just gone public. ipo, the shares went up. they thought china was the place to be looking. emily: that leads me to my next question, you have company's like xiaomi with a $45 billion

valuation. our some of them overhyped just like we are seeing in the united states? >> that is a very good question. we saw the numbers in the fourth quarter that went down sharply from the third quarter. hardly because people were spooked by the chinese economy and certain sectors were overfunded. xiaomi was seen as the next alibaba, but they came up short in terms of hitting their numbers. that was a problem for them and there will be some pressure on that valuation. ride hailing app. a lot of money has gone into peer-to-peer, and online to

off-line companies, including massages you can get on demand, chefs, or car washes. we could see a shakeout in those sectors. on-demand economy is exploding here as well. drop going sharp into the last quarter. scrutiny forter smoothies startups -- for some of these startups? is overig debate whether this is a normal downturn or something exceptional. china has not seen this kind of trump, partly because they have never seen a venture boom what this before. peer-to-peer venture capital money is getting tougher to come by so it will be difficult to see how these companies fair in the year ahead. emily: if the economy keeps

struggling, do you see venture capitalists pulling back? they are certainly pulling back to a certain extent. the vc's who have been there a long time say that this is normal. the economy is slowing down and there are tons of opportunities that they see. feel that there are big companies to be built in these sectors and they will be determined to continue to invest in them. emily: we will keep watching our bloomberg news managing editor in asia, peter elstrom, thank you for joining us. witht miss my conversation the ceo and what they are doing to keep amazon on its toes.

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is one: joaquin guzman of the world's most famous druglords. for months, the mexican government struggled to locate him. kate l castillo -- kate del castillo was in contact with him. she range of meeting between el chapo, herself and sean penn. penn wrote a 10,000 word account in "rolling