mark: this is bloomberg west -- let's check your first word news ful. an uproar on day one of the republican national convention, delegates opposed to donald trump tried unsuccessfully to horse a rollcall vote on the convention rule. the motion was defeated. reince priebus acknowledged what he called "troubling times" in the nation. tonight's theme is make america safe again. poll shows donald trump trailing hillary clinton by just three points. last month, the survey showed mrs. clinton with a six-point advantage. white house press secretary jost

ernest says president obama hasn't called president or to one since friday's failed coup. he says the u.s. is cooperating with turkey to identify accomplices, but is urging the government to show restraint. some 6000 suspects are being detained. french officials confirmed today the attack in nice was premeditated and "terrorist." six people are detained, one of them allegedly receiving a text from the man who drove into a crowd of people. officials say he searched for information about the attack in orlando. from bloomberg world headquarters, i'm mark crumpton. "bloomberg west" his next.

emily: i am emily chang, and this is "bloomberg west." investors are dumping netflix shares after reporting its lowest subscriber growth in years. can it recover? we will break it down. softbank throws down its biggest gauntlet yet, a bid for arm. what the deal means for semiconductors. chuck robbins speaks to us about brexit, m and a, and whether or not he is backing donald trump. netflix plunging after hours, down 15% on disappointing earnings. subscriber growth dropped with only 1.7 million new subscribers this quarter. reed hastings says it is due to price increases, not market saturation. >> with new members, we have not seen any effects. we changed our prices last october. we have had a couple quarters of great growth.

this is around change resistance. whatever the price is for something, people do not like it to go up. but the new pricing is working great. emily: netflix is seeing sales and profit growth from fast-growing international markets. what are investors looking for? i want to bring in cory johnson and paul dergarabedian of comscore. they do not believe this is due to market saturation. it is simply because netflix raised their prices. these new prices are kicking in. is that the reason? cory: i wish i could just listen to reed. look, here is what we know. they lowered the cost of marketing at the same time they raised the prices last quarter. we can see that u.s. subscriber growth fell to 0.3%.

i think it is the lowest they have ever reported. they added fewer subscribers and spent money marketing. international was not terrible in terms of growth. but here they are, spending so much, being forced to raise prices because content costs are getting out of control. $12 billion in off-balance sheet costs, and subscriber growth is falling. maybe they cannot afford the hits like they used to. it is a competitive world. they acknowledged that. but even if the numbers of people watching content are not substantial, it is certainly hurting them on the content cost side, causing them to raise prices. that is causing subscriber growth to slow. emily: on the other hand, when it comes to international growth, that is incredibly varied. how much can we expect netflix

to grow internationally? >> the international component is key for netflix. the deal for the star trek series to be shown on netflix internationally within 24 hours of airing is part of the strategy. churn is the big deal. a little price increase can turn a lot of people away. when you have so much competition for entertainment, i worked a lot on the movie side, we see this all the time. getting audiences in the theater takes a lot of work in terms of the marketing that you do for these movies. you have to have compelling content. when your competition is netflix, hulu, amazon, all these entertainment platforms are vying for the hearts and minds and dollars of the consumer. it is rough seas.

a one or two dollar increase can turn away subscribers. that is their challenge. they were predicting 2.5 million subscribers. it came in at 1.7 million. it is all about the content, price, and competition. all of those are in play for netflix. emily: what about the price on making original content? they are spending $13.2 billion to make original content. we ask this every quarter. is that going to pay off? >> well, that is the hope for netflix and every content creator. by the way, netflix has terrific content, but that comes with a price. we, as the consumer, expect the price is never going to go up for us. we want that great content and leave it up to the creators like netflix to do that however they need to do it.

i just want to keep my prices the same and get great content. it is not necessarily the most fair model for the consumer to have, but the pressure is not on us to make the stock price go up. the pressure is on companies like netflix to provide content, a model that makes them profitable, and make some of this great content possible to deliver to the consumer. it is a tough business on all sides, no question. emily: they announced a deal to stream cbs's new star trek series, the first deal with a streaming competitor internationally. but i guess the question is, from a content perspective, can they keep up momentum with amazon and everyone else making original shows? cory: what are you watching? emily: bloodlines. game of thrones is over. it is a bad world. cory: i do not know if they have

follow-up hits like they had with house of cards and orange is the new black. i tried daredevil and could not stick with it. while they advertise costs, growth margins will be a trailing indicator of rising prices and content. we know that prices are rising. we know that amazon and netflix and hulu and hbo and everyone else, content prices are rising. we see the growth margins coming down at netflix. we have to look at how expensive it is getting for them. when netflix was brand-new, they could feel legitimately, who knows how big this can be? maybe now they know. maybe it is not infinite. emily: cory johnson, paul dergarabedian, thank you so much

for breaking it down. yahoo! investors are waiting for news of the company's pending sale. revenue was down, and profits missed at nine cents a share. joining me now, jitendra waral. they missed on some of these numbers. what are your takeaways? >> the numbers do not matter as much. we see investor focus on the sale. obviously, the deadline for bids was today as well. core business is not showing any signs of reversal. it shows marissa was focused on making the business easier to sell. emily: talk to us about the sale and the latest updates.

today, as we understand it, final bids are due. what is the latest? >> we have a couple bidders, entities like verizon at the top of the list. today, they are going to receive final bids. hopefully they get a number that justifies a move forward and they act on it. it is the same story repeated quarter after quarter. it is all about how quickly they can get this done. emily: what about marissa mayer's future? do we know yet? >> after the sale, it is kind of doubtful she would stay on board. whoever comes in might want their own management team. there are different pockets of assets that bidders are

strategically positioning for. it is very dicey. emily: all right. we are going to continue to follow that, of course. if final bids came in, we are expecting movement in the next eight weeks. jitendra, thank you so much. yahoo!'s reports almost coincides with marissa mayer's four-year anniversary on the job. we decided to take a look at mayer in 2012 when she stepped in the role. here she is after becoming ceo. >> we know that the next pintrest, spotify, or facebook is in the audience. i am thrilled to be here with yahoo! as a sponsor. i would like to give a shout-out to the designers and engineers that we are hiring. [laughter] [applause] emily: now she has done a lot of hiring and firing as ceo of

yahoo!. what else was going on in the valley four years ago? let's take a look. it has been four years since marissa mayer walked into yahoo!. we called it the silicon valley surprise. she had been running google's search group as one of its first employees. wall street knew she faced an almost impossible task. yahoo! had seen four ceo's in five years and was becoming notorious for poor management. stock was at $15.65. let's bring this into perspective. search accounted for 36% of yahoo!'s business. facebook have been public for three months. twitter was a private company. google did not have an alphabet umbrella. its market cap was $289 billion. flash forward four years. the acquisition, tumblr.

the switch to mobile, which brings yahoo! $1 billion in ad revenue. but top line continues to decline. breakup from verizon and at&t on the table. the new owners will have to decide who takes up her mantle next. coming up, ibm reported a 17th straight quarter of revenue decline. why is stock rising? sprint shares dropped 5% monday on fears softbank's purchase of arm could leave the carrier cash-starved. this is bloomberg. ♪

emily: ibm beat estimates despite a 17th straight quarter of revenue decline. the bet on watson may be paying off. shares are up in after-hours trading. anand, why are shares up if revenue is down? >> this has been a "meh" quarter for ibm. the group that includes watson, cyber security, all posted growth. one of the interesting parts,

revenue growth of this particular group has been declining year on year. something to watch over the last four quarters and into the future as well. the other segments continue to post weak numbers on a cost to currency basis and as reported. the hardware sector continues to be a thorn in ibm's back. bloomberg intelligence's view on this is that it is a "meh" quarter. emily: ibm is undergoing a major transformation in business. how does that go aside from topline numbers? >> this is a large, strategic transformation. it is not one they can undergo easily. a substantial cost relocation, substantial function morphing of the company to change from what used to be traditional systems services to this cloud company. so the workforce has to be substantially different both in

size as well as in focus. it is not an easy transformation. progress is slow. one of the things that concerns us is that growth in the strategic comparative section is slowing relative to what it was three or four quarters ago. emily: how would you rate your confidence in the ceo, ginni rometty? >> it has to be adjusted for the size of the task at hand. our services analyst will tell you that other companies are doing a better job. if you look at the size and scope of the transformation ibm is going through and continues to go through, on a size-adjusted basis, it is above average performance. the final scorecard remains to be told. emily: stay with me. i want to get to another major story in the chip industry. u.k. based arm is surging after

softbank agreed to by the designer for $32 billion. it is the biggest takeover since the country voted to leave the european union. selina wang joins us along with anand srinivasan. did brexit has something to do with this? >> they have been talking to arm on and off for a few years. he says it is not because of brexit. it has more to do with the timing of sales in stakes in certain companies. because most of arm's customers are in the u.s. and asia, they were not really affected. that said, the pound did drop.

a 42% premium is high. emily: what does this mean for arm and the rest of the chip industry as we go through this broader shift in computing to mobile and internet of things? >> the fact this is an intellectual property company, this is not a chipmaker, they provide the intellectual property that chips can be made from. if a chipmaker or hardware company were to acquire the deal, there would be substantial revenue loss from arm. this was two steps removed, customer to carrier. in a sense, this deal makes a lot of sense. it makes sense that a third-party, two steps removed, has acquired the company. downstream, they should not see change unless softbank tries to get involved and change the

scope of supply or who it supplies to. on paper, nothing should change. emily: what about the price tag? $32 billion. is that worth it? >> a high price tag, but arm is acquiring a slice in every single mobile computing device on the planet and the future internet of things devices. for them, this is a company with a lot of i.p. it has low hardware costs and very high margins, north of 95%. this is a big bet on a lucrative business and the internet of things. emily: what about sprint? what does the acquisition actually mean for sprint? >> sprint stock actually fell

after the announcement. investors are worried this means softbank employees have less time and resources to dedicate to sprint. it means less resources to help with the turnaround effort. even though masa yoshi says he has confidence in sprint, investors clearly do not agree with that perspective. emily: big deals have a history of not working out. are you more optimistic about this deal than others? even though they have a checkered past, we are seeing microsoft buying linked in, dell, these massive deals, we have yet to know how they play out. >> this deal is different. as large as it is, the scope of this deal is different. this is birds of a slightly different feather, not two companies trying to benefit from a strategic play. one plus one makes three.

not that kind of deal. we think arm makes sense. not messing with arm's management, hiring plans, makes sense. it makes sense that the buyer in this case, softbank, are outside of the scope of the chip industry, particularly handset chips and hardware in general. the fact that the buyer is from japan adds another twist in detail. all in all, we are optimistic on the execution of this deal. emily: anand, selina, we will be watching. thank you very much. meantime, ceva is enjoying a nice pop off the tie up, rising to its highs level in four years on speculation it could be softbank's next target.

they envision software for car safety. next, we kicked off our weeklong series in food tech. we sit down with beyond meat ceo mark brown on bloomberg west. ♪

emily: the doors are revolving at lending club. they have a new chief capital officer, patrick dunn, previously in charge of blackrock's san francisco operations. lending club is trying to win back bond buyers after the ceo stepped down in may. coming up, our exclusive interview with cisco ceo chuck robbins on the presidential election and how everything in our world will be connected in the next decade.

if you like bloomberg news, listen on the bloomberg radio app, and on sirius xm. ♪

>>. stories this hour, that he -- the kiwi dollar bank says it will cut ranks. they moved to curb speculation the housing market by tightening lending restrictions. the central-bank will require investors to have 40% rather than the current 30%. intbank had its biggest rout four years after its takeover of arm holdings. it's the biggest ever japanese acquisition in europe in the biggest asian takeover of the u.k. company. the softbank founder says it's an investment in the coming internet of things. caps thed trump

first night of his nominating convention by introducing his wife to take the stage with him. melania's message of unity cable on a day marked by dissent and destruction, factions trying to stop trump his nomination noisily disrupted the vote on the convention rules. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. this is bloomberg. let's get the latest on the markets, back to haidi. haidi: japan coming back online, and it is leading some of these modest gains and has turned into a mixed to lower market. we have a little bit of a filter in terms of sentiment, asian stocks coming off a three month high. chinese companies listed here in hong kong, snapping a six-day gain. hang seng down, valuations

hitting the highest all year. there is some pressure when it comes to some of these listings. the shanghai is also extending losses down by 7/10 of 1%, australia up by 1/4 of 1%. rba suggesting all options in terms of future easing are on the table. selling coming through from southeast asia, the nikkei two to five in the afternoon session at the start up by 6/10 of 1%. regionally we are off by 1/4 of 1%, although ig is saying that they're likely to be shallow, and you should be buying because the rally still has legs, provided we get the onslaught of positive earnings. a quick look at the movers, nintendo continuing to search. this stock is up 106% over the past eight sessions, ever since pokemon go was released. it's now larger than sony. japan also getting a little bit

of coco pokemania. it was up by 23%, the biggest surge since it listed back into thousand one. so far. emily: we are nearing the one-year mark since chuck robbins stepped in as ceo of cisco. the company has made 15 acquisitions and reorganized the management team. robbins promises he does not have his head stuck in the sand when it comes to new technology. we spoke with him in an interview in san jose and asked about his strategy for cisco on m and a. >> our strategy is, first and foremost, to look at where the market is going and what our customers need. we look at what is our capability and where we need to leverage m and a.

we look at where we need to leverage new partnerships. what we have found is that the speed at which we need to move, we have had a greater affinity for smaller, very aligned acquisitions. emily: will we see more of those? >> we will always be opportunistic when companies line up with strategic direction. emily: what areas are you targeting? >> i.o.t. is important for us right now. the jasper acquisition was a core one. we have been active in securities. over the last 15 months, they are areas of cloud, securities, analytics. those are the key areas going forward. expect we will continue to align around those areas. emily: some say that cisco's security offerings are not integrated enough to implement. is that an area you will push on? >> go back five years, that was

definitely the feedback we got. david and the team have done a great job of building architecture and delivering internalization and acquisitions. they have given the significant integration of those two capabilities. if you look at i.o.t., we will operate in this massively distributed world. the network has to play a huge role in security. that is one of the announcements we made last week. machine learning analytics capability that begins at the edge of the network. that is fundamentally what he will have to do from a security perspective. emily: you guys are a huge business. you have an office in turkey. there have been events unfolding. what does instability like that mean for your business? >> i stood on stage three years ago and told our team we were writing a different roller coaster every week.

that is the world we are living in. whether it is the constantly changing geopolitical landscape, technology transitions, these are things we have to deal with. there is certainly a tremendous loss of life, which is the real issue. we see so much tragedy around the world right now. it is disheartening. we take all the things that are going on geopolitically, from a global economic perspective, and focus on the things we can control. then we move on. emily: what about brexit? what does that mean for your global outlook? >> first of all, i think brexit was unfortunate for the european union. they were moving towards continuing to create a single market. they created a single trading market. effectively creating a digital market going forward.

that has the potential to set them back. for us, we do not have operations in the u.k. we necessarily used to do business across europe. for us, the global or macro implications are probably similar to what other countries would see. obviously, the currency situation creates challenges. we will navigate our way through. emily: i know you normally vote republican. other republicans say donald trump is not someone i can get behind. can you? >> what we care about are the policies that the candidates represent. we are going to focus on the policies regardless of who gets elected. our customers, our employees, our business, there are things that are important. inclusion, tax reform, immigration reform, patent reform.

all these things matter. when i spent time in washington with either side of the aisle, those of the things we focus on. emily: that is not a yes or no. why not? >> well, i think that, fundamentally in this country and around the world, there is so much divisiveness. i think it is more important to focus on what we can do together to bring people back together. that is the most important thing to me. focusing on policy and not contribute into divisiveness is where i am going to say. emily: others have said donald trump is not good for innovation or silicon valley. >> i think that once we get through the election, driving job growth and innovation in this country, focusing on trade, 75% of the gdp and 95% of people do not live in the united states. trade is important. all those things will get at the issue that needs to be dealt

with in the country, which is driving more growth. that is how we are going to lift the middle class. those are the areas we're going to focus on helping the next president drive. emily: cisco is a large organization. do you think it is not your place to take a side publicly? >> i think what our employees expect is that we are going to work on the things they care about. every individual, every person, has the right to feel the way they feel about the candidate they are going to support. across cisco, employees support either candidate. i think our job is to represent the bigger issues that are important to our employee base, our business. that is what we will stay focused on. emily: cisco ceo chuck robbins. we will keep the conversation going. what he had to say about the management turnover we have seen in the last year coming up. groupon is jumping the most in three months on the back of an upgrade from piper jaffray.

shares jumped 11% monday. this is bloomberg. ♪

emily: we are back with more of our exclusive interview with chuck robbins as we near the one-year anniversary since he took over from john chambers. as the world shifts to mobile and the cloud, robbins says he is not in denial. >> there are so many transitions going on. you have to fundamentally look

at them through the lens of what opportunity they provide for you. you cannot be in denial. i told our team that denial is the first step to death. you have to take a look at these transitions, understand the implications. what matters to the customer? you cannot get so locked up on the technology itself that you lose sight of what the business issue is that the customers focused on. that is what they are trying to solve. we will remain agnostic. we support cloud-based models, software-based models, hardware-based models. emily: meg whitman in particular has been critical of the dell deal. doesn't this combination become more of a competitor than a partner for you? >> i spent a lot of time talking to mike. we had a tremendous relationship with emc. we have customers that enjoy the integrations of our solutions. back to that customer.

the customer does not want to see us have a battle in the middle of what they're trying to achieve. we believe that, if you look at our portfolio today, with the exception of the systems that have been there for a couple years, we think there is an opportunity to continue to deliver integrated solutions to customers. emily: you have lost a lot of business in china in particular. you have been reporting improvement. sales are increasing fast. when does that market get to the size it should be in cisco's portfolio? >> china has been a great market for 20 years. we clearly had challenging times through the snowden timeframe. our employees have been fantastic. we had great relationships with customers there over the last two decades. the key for companies to be

successful in china is to go in and make sure you're focused on a win-win situation. i know that sounds cliche. ensuring that you are doing things that are good for your business, but you also have to be focused on things that are good for the community. helping china achieve some of its objectives around innovation. if you do those and understand those, i think you will be successful going forward. emily: how to get your sales to change from a one-time big buy to this recurring sales structure? >> well, it is an issue for us to work through for the entire company. but the great thing about cisco is we, for some reason, thrive on change. john did a great job of continuing to evolve the company based on transitions in the market.

that is what allowed us to stay relevant to this day. our sales force is, in many ways, pushing us. they are hearing it directly from the customer. all the classic things you do with a sales organization around compensation and motivation. but based on how the customer feedback comes directly to them, i think it will be easy to move them. emily: there has been a lot of turnover in management ranks. a lot of john's top lieutenants are gone now. why was that housecleaning necessary? >> we had to move forward. the thing we do not write articles about our the people who are still here. john developed and the leadership team built a tremendous bench. we went through this discussion when i took the job. there are many individuals. i asked, can you commit for three years?

many had aspirations to become ceo's and have become ceo's. the bench allowed us to create a leadership team that put us in a position to really execute more effectively in the future. if you just look at the innovation that we have built in-house and announced even in the last four or five weeks, it is a sign of what you will see from us in the future. emily: you talk about self driving cars. you are going beyond, talking about smart manufacturing and cities. what sort of i.o.t. applications are missing? >> early applications, manufacturing is on fire. we announced a partnership where we helped connect robots in a manufacturing facility, delivering analytics. smart cities are something we have been working on for a decade.

the opportunity to do that at scale is now really here. connected spaces. if you walk around our facility, the horizontal use of connected spaces is tremendous. the connected vehicles, on the jasper platform, there are 8 million vehicles connected. in q1 this calendar year, there were more cars connected to the internet than mobile phones for the first time ever. we are in a major transition right now. you will see everything connected in the next decade. emily: our exclusive with cisco ceo, chuck robbins, one year in. we will kick off a deep dive into the food tech industry and breakdown which areas investors are pouring money into. that is next. tomorrow, do not miss our interview with dominic caruso, johnson and johnson cfo. ♪

emily: food tech is ripe for the picking according to eric schmidt. during the annual alphabet shareholder meeting, schmidt picked food tech as one of the areas ripe for investment. we are kicking off a series on food tech that has investors chomping at the bit. james joaquin and angel investor brian franks join us now. you are investing at the seed stage, and you are looking at a later stage. how would you describe this moment in food today? consumers are interested in their food, making sure it is sustainable, making sure it is healthy. 20 years ago, it was about the microwave and tv dinners. >> it is nothing short of a revolution. consumers are understanding that what they eat is connected to their health and the health of the planet. they are changing preferences, especially millennial consumers.

emily: what are the most exciting trends in food now? >> one of the biggest things we are seeing is alternative proteins and replacement for animal-based products. plant-based dairy and meat is on the rise. we can see that with the purchase of whitewave. emily: maker of the silk almond milk i love. james, how do you define food tech? there is a trend on delivery, instacart, and changing the way food is actually made. >> we have been investing in food and food tech for years. we have been working on this for a while. we think of food tech as applying new technology and intellectual property to creating food. we invest in traditional food companies as well. we do not include delivery

companies like instacart. we think those are operational companies, not really about the creation of a food brand. emily: what about kind bar, which has an innovative manufacturing process but you are not altering proteins? >> we do not consider packaged goods to be in food tech unless there is a huge achievement they have reached. we are looking 10 or 100x improvements. some of those products could have innovations baked in. in a lot of cases, it is just trying to get another product on store shelves. we do not see that as radical improvement. emily: investment in food technology spiked last year and dropped off this year. is that because of the environment or some sort of

skepticism? >> we are seeing a healthy environment in deals at the early stage. brian can speak to this as well. the drop-off in dollars has to do with megarounds that occurred in the last two years. 15 million plus dollars going into an early stage food tech company. investors want to see solid traction and revenue and margins before they write large checks. >> james is right. a lot of money is going into food. e-commerce, which people consider part of the ecosystem. last year, $1.6 billion went into food e-commerce alone. that leaves a lot of open space for investors like myself to invest in the rest, creation to consumption. technologies that can radically improve all the aspects of making food, delivering it. emily: there seem to be conflicting trends. maybe they are not as conflicting is the inside. a return to whole foods, where

my food comes from. there are companies like soylent, where you are drinking a meal in a cup. is soylent the big thing of the future? >> i do not know the company and have not tried the product. i can tell you we are investors in beyond meat. that is a manufactured meat using plants. the company has put a lot of r and d into it. we are investors in urban remedy, which is whole food as medicine. emily: what do you think about soylent? >> it is an interesting product that is attempting to do what a lot of products have done in the past, giving us nutrients we need in a convenient package. i also see the interest in organic, natural foods is growing.

we need to increase production and maintenance. one of the biggest problems we need to tackle is food waste. 40% of edible food is wasted in our system. emily: food tech is different from consumer tech. what are the biggest challenges that food tech companies will face in the next decade? >> biggest challenges? a food tech company, if they are actually a brand and bringing food to market, they are a consumer packaged goods company at the end of the day. their technology helps differentiate them, but they need a team that understands the >> biggest challenges? economics and margins in a consumer packaged goods company. if they treat it like a technology company, that could be a mistake. emily: james, brian, thank you so much for joining us.

that does it for this edition of "bloomberg west." a lot more on food tech later this week. and katie stanton of color genomics. ♪

♪ >> turkeys in central bank will reduce the pace of rate cuts. >> trading review. ankara put on notice. >> cashing out. saudi holdings of u.s. treasuries fall for a fourth straight month. >> the lobby of trumpet makes