>> i'm mark crumpton. you're watching "bloomberg west." hillary clinton campaigned in cleveland ohio today. one of the topics, gun control. she tried to reassure gun owners that if she becomes president, the second amendment will not come under attack. >> i'm not at all advocating any program that would in any way take peoples guns away. here's what i'm advocating. i want to help use they alive so that nobody who shouldn't have a gun in the first place gets one in hertz you or other people. mark: she also dismissed the shakeup and donald trump's campaign, saying that he has shown us who he is.

donald trump received his first national intelligence briefing. the associated press reports the briefing took place in a secure room in an fbi office here in new york city. trump said that over the past 10 years, u.s. intelligence services have made, in his words, such bad decisions, it has been catastrophic. the international boxing association in real has removed an undisclosed number of reps and judges after determining they had not met standards of competence. it comes after series of complaints and disputed decisions that has drawn global scrutiny. i'm mark crumpton. ♪ emily: i'm emily chang and this

is "bloomberg west." job cuts at cisco. we dive into the latest earnings report and see how the legacy tech company is weathering the changing wind of the networking industry. plus he's the godfather of the internet. we'll talk about who should regulate the web. and my republican lawmakers are putting up a fight. and another blockbuster quarter, will look at whether china is the content king. first, to the lead, cisco shares dipping in after hours on news it will cut 5500 jobs, about 7% of the workforce. it underscores the company struggled to adapt as the networking industry shifts toward software-based systems and undercuts sales growth. the company's fourth-quarter profits beat estimates at $.62 a share.

joining me is cory johnson and on the phone, brian white of drexel hamilton. corey, i will start with you. cisco has had a lot of job cuts over the years. what do you make of these additional numbers? cory: it's one of the worst things anyone can ever go through, losing a job. in terms of what it means for cisco's business, they've cut a couple thousand workers every one of the last three years. this is the way they are doing things right now, sort of bloodletting, which is horrible for the people involved. it's more about focusing on places they want to be focused and not in places where they have been in the past. emily: brian, would you agreed with that? how should we make sense of this? >> i think war he is exactly right. cisco has to evolve with the times. more business is shifting into the cloud.

they are making a big push into security. if you have workers that are focused on legacy products, there's not much work for them. look at their switching or routing businesses, they are declining or slightly growing. there's not much growth there anymore. the newer areas they are investing in, they just got into analytics a couple of months ago. those are examples. emily: when you look at legacy product growth, how fast our sales up there legacy products? cory: overall the revenue numbers are down 2%. if you look at their video business which they got rid of a

year ago, sales were up 2%. all the existing product lines on average were up 2%. the switching business is up 3% year over year. the security business was up 16% on a year-over-year business, so terrific growth insecurity. it's worth thinking about in this time in which the cutting edge technology of switches is a software defined network. choosing one switch or router and using software to do the job of many routers. in an era when software defined networks are letting it get more out of individual switches and routers, these numbers really are not that bad. emily: they gone through a big leadership change over the last year. i sat down with the new ceo couple of weeks ago who took over for john chambers. he still the executive chairman.

there has been a lot of management turnover at the top of cisco. i asked why is that happening. listen to what he had to say. >> we had to move forward and the thing we don't write articles about are all the people who are still here. john developed a tremendous bench and we went through this discussion when i first took the job. any of those individuals and what i asked them for was to commit to three years. several had aspirations to become ceos, and many have become ceos, which on very happy about. but the bench that was created allowed us to build the next-generation leadership team that has put us in a position to execute more effectively in the future. emily: brian, how would you rate the job that chuck robbins is doing so far in terms of filling john chambers legendary shoes? brian: he's done a great job. he is an operations master.

if you look at their operating margins is quarter at 31.4%, it was the highest since the second quarter of fiscal 2006. that's what he is known for. great margin numbers this quarter. cory: gross margins for this largely hardware making company or of around 65%. in five of the last seven quarters, gross margins have risen on a year-over-year basis. that shows operational strength and the benefit these layoffs have provided for cisco. emily: do you think these new businesses they are investing in will actually be able to pick up the slack? brian: definitely. if you look at recurring revenue, it's up from 25% a year ago. if you look at deferred revenue and software and subscriptions it was up 33% year over year. margins should go up over time

for sure. emily: cisco was a bellwether of the technology industry and its loss that iconic status, but what do you see as the place for cisco in the broader picture now? why is cisco still important? cory: it's hardware is less important in the era of the cloud. they're using amazon web services, and yet when you look at what cisco has been able to do, cisco has remained relevant when its competitors have not. when hewlett-packard, dell, ibm are falling apart, i think it's worth noting that cisco is selling hardware in addition to software insecurity, it's succeeding where its competitors have not. emily: we don't want to harp on the stock price but 1999-2000 is when cisco really peaked, and the shares have not moved much in the past decade and a half. brian: the stock can be re-rated

here. they've got this great dividend yield, 3.4%. people can look at margins and say they are going higher, not lower, which is very strange for web people, it's becoming more and more software. a good example of this, this company has grown 7% euro the past five years. if you look at some of these sugar water and detergent companies, they've grown 2% your for the past five years. they trade at 22 times earnings.

cisco is becoming so important to the i.t. world and has a great dividend now, people are going to give it a better multiple. cory: he is going to be on bloomberg radio with carol massar at 10:00 west coast -- 10:00 east coast. emily: don't miss chuck robbins on bloomberg tomorrow and bloomberg radio with cory johnson. is uber actually worth its monster valuation? one expert says no. he crunched the numbers and says they should be valued at south of $30 billion, less than half of the 62 $.5 billion valuation it currently has. the main reason he says is profit. he says disruption is easy but making money off disruption is difficult.

ridesharing company still have not figured out a way to convert revenues into profit. he said that other big public market players could still jump in as challengers to the company. the google evaluation is higher than 80% of the company's in the s&p 500, higher than gm and ford. coming up, a long simmering but highly controversial question, whose job should it be to govern the internet? we will discuss with one of the web's founding fathers, next. this is bloomberg. ♪

emily: who controls the internet? until now the job has largely belong to the u.s. government, specifically, the commerce department. the obama administration organized a long planned move to shift it to a stakeholder market on october 1. facebook, amazon, and microsoft are among the big tech companies supporting the move but others are putting up a fight. i sat down with the so-called godfather of the internet and ask them to explain why this transfer of power is so important. >> in fact it was planned to do this. in 1998 when we were created to form the function, the plan was to turn over all responsibility to those functions within two or three years. it's now 18 years later.

the organization has performed well. the internet has not collapsed. its functions have taken care of the domain names system, parameters of the internet protocol. it's time to show that the internet does not require government oversight. what it requires is operation by the private sector together with all the other entities. that is why a multi-stakeholder operation is important. emily: opponents say it could hurt businesses and put national security at risk. could hurt u.s. businesses or google? >> i don't think so. if anything, this is the right thing to do. under the current circumstances where the government has a small but visible oversight role, other governments look at that and asked why should the u.s. government have this special position? it's not necessary anymore, not after all these years. it's reformed itself several times and at this stage of the

game is more harmful to persist in the special relationship than to show that a multi-stakeholder system, including all the governments, not just the united states, is the way forward. emily: what harm could there be if the u.s. government does continue to oversee it as is? >> it has a very severe impact because other governments that feel the u.s. should not have this particularly special position are going to work very hard to fragment the internet, to insist that they control more of it than they do today. governments today have a lot of control on what goes on in the internet inside of their international jurisdictions. what they don't have control of

its what happens to everybody else's pieces of the internet. the other governments will feel the need to increase their control one way or another. so i think by stepping away from this finally, we actually remove a lot of that pressure to make it much more egalitarian. emily: assuming this does happen as planned, what will be different? will individual users even notice the difference? >> absolutely not. the current role that the u.s. government has is to verify that the changes to the root zone of the domain name system have been properly catered for in the processes that lead up to those changes. a router needs to be pointed to a different ip address, and the u.s. government's role is merely to check that it's been performed with due diligence, that's all.

when they step away from that particular function, all the mechanics are exactly the same, except we won't go through this loop, otherwise it is exactly the same. emily: as one of the fathers of the internet, i know that's what you're considered to be. had he think oversight of the internet has played out over the last couple of decades and how do you expect it to play out over the next few decades? >> for those who are watching and listening, the u.s. government was the origin of this project. it started in the defense department, and i'm very proud not only of the defense department but other parts of the u.s. government, including the national science foundation, for persistently stepping away from control over the system and turning it over to a multi-stakeholder operation. when we were in the defense department, we basically made the primary decisions and policy on what happened to the internet that expanded to multiple parts of the u.s. government, including nasa and msf as well as the department of energy.

step by step, the government has withdrawn from its control oversight, and this is the last step. emily: there has been talk that the internet has become too big. is it possible for the internet to become too big, to run out of ip addresses and domain names? >> we certainly won't run out of domain names. we have authorized the creation of some 2000 domain names, in addition to the seven we started with act in the mid-1980's. emily: that was the vice president of google and former icann chairman. the silicon valley super unicorn is trying to win big at the olympics as well. this is bloomberg. ♪ emily: are online travel agency

spending enough to stay alive? data shows that customers make more and more bookings on smart phones and tablets, but companies like expedia and trip advisor overwhelmingly target their ads toward pcs. one region where that is shifting is china. forecasting that 60% of bookings will be made the a mobile device. it may require more advertising expense from mobile travel companies, which could put short-term pressure on firms like priceline and expedia. one startup is on track for gold in rio. airbnb is investing heavily in brazil, working directly with the olympic organizing committee

encouraging residents to open their homes to visitors. so far it is paying off. more than the 66,000 guests originally expected by airbnb. i sat down with the manager of airbnb brazil and ask about the company's economic impact on real. >> the impact where generating for rio, 1.5 weeks into the game confirmed arrivals have increased to 81,000. that is great news for everyone because that means also it's high economic impact for the city of rio. emily: so you are saying the numbers are even better than you expected? >> the numbers are very, very positive. more important is how we are helping not only the real estate economy, but also to attract

tourists to the city of rio, and you can see already for the 81,000 guest arrivals that it's really a very great experience here with the local community in rio. emily: airbnb is the official alternative, rock accommodations provider for the olympics. in london you had some people renting out properties and facing fines. how early did you start talking with the ioc in brazil about making this happen? >> the partnership with rio 2016 is a consequence of a very important chapter since 2015 during the work up. we receive guests from all over the world and a very positive way. airbnb is a great solution for cities that want to increase their capacity. the conversation happened

nationally and in 2016 we signed a partnership to ensure that everyone wanting to come to rio for the games has a place to stay. emily: you were up against a couple of other local accommodation providers and there's no actual history of there being an official accommodations alternative. what did it take to close that deal with brazil? >> i think the city of rio is the city that presented an opportunity for alternative accommodations because there are so many people already interested in coming to the game. without additional capacity, you would not have been able to have those people here for the games. so that's why we signed up for participation in rio 2016, to assure that everyone who wanted

to come had a place to stay. one year later, here we are with very positive numbers and making history. one of the key legacy is for the first time we are bringing a shared economy to the olympics. emily: that was the manager of airbnb brazil. uber is suing london's transport regulator overrules it says fingered its business, specifically fighting rules requiring drivers from non-english countries to pass in english language exam. it would force them to notify of any changes made to its phone app. there also waiting for a ruling in an employment dispute with drivers. he helped build dropbox from the

inside. now he's on the other side is a venture investor. he joins us next. check us out on the radio and on sirius xm in the u.s.. ♪ [ clock ticking ]

time. you only have so much. that's why we want to make sure you won't have to wait on hold. and you won't have to guess when we'll turn up. because after all we should fit into your life. not the other way around. ♪ everything is cool when you're watching a screen ♪ ♪ everything is awesome, ♪ when you're sharing a meme ♪ ♪ a voice remote, "show me angry kings" ♪ ♪ you know what's awesome? everything! ♪ ♪ apps that please, more selfies, ♪

♪ endless hours of the best tvs ♪ ♪ brand new apps, shows to go, ♪ ♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. >> it surged after a 47% jump in quarterly profit. it is a 26% from the february low. the opposite story in tokyo. mostese exports fell the since july down for a 10th straight month. they retreated slightly ahead of a regular meeting of financial

policymakers. .hinese home prices gained new home prices gained in 51 cities last month. tightening measures are having an effect in shanghai. day.l news 24 hours a this is bloomberg. back to the latest on the market. about.t to talk 30 minutes left to the bright. mixed markets. let's wait for this to really get underway. above 100.e yen

investors have been turned off. hong kong of force -- of course. earnings get $.10. earnings were out yesterday. following,s we are fx markets. broadly speaking yesterday and today that minutes are here. we opened lower. have a look at these bond yields in japan.

we could be looking at a cutoff price. that is what we're talking about. >> crossing over to investing in a start up. he joined dropbox early on and now he is a partner at index ventures, a venture capital firm that has backed a range of success stories. thank you so much for joining us, great to have you back here on the show. first of all, it's been a year now at index. what has the transition been like and how has your experience at dropbox impacted your style

of investing? >> it's been an incredible year. we've had about 10 investment so far, which has been reporting for me across the board. the biggest things i think about are twofold, as an investor the most important thing is identifying great opportunities. having been at dropbox and seen the problems companies like dropbox face, being a network of great innovators, you're working through a lot of problems. we become customers of slack and i've seen the potential. in the case of intercom, what are the things that was interesting to me is the way in which companies communicate with their customers is fundamentally very different and broken because of the infrastructure that's in place today.

it was a clear opportunity where i must invest, for me. i'd seen all these things and known that companies i want to be an investor in when i came out of dropbox. emily: we were talking about cisco, which is a legacy enterprise player. think with enterprise companies, there's always a struggle between giving customers what they should want and what they think. how are you advising them to make sure they're giving customers what they don't know they want yet? >> i had the opportunity at dropbox to go from 50 to 1500 people. rather than being prescriptive in saying we did things this way and you should do them that way, i think the right thing for me

to do as an investor is help people do a few things. one is look around the corners. when we went from 50 to 150 to 500 to 1000 people, these are the problems we encountered and these are the frameworks we used to think about things. every six months, you should evaluate the organizational structure because you will be going really crazy. when you move from all being in one room to all being in different rooms in different offices, you really have to invest in communication. if these things that you see on the journey that you can then translate. companies that are successful, that are growing that fast, they need to take decades of knowledge and compress them in two years or months. i seeing things ourselves and what other companies do in transferring that knowledge effectively is how we help.

emily: is dropbox exploring and ipo? >> i don't know what the exact plans for the company are. you seem that the company has made incredible progress in terms of cutting costs and moving up to web services on the infrastructure side. the business is growing like nicely with over 200,000 paying business customers. it just reported being cash flow positive. all the metrics are there. it's up to them to decide when to do it but certainly the external markets are quite positive today. emily: there is concern that the file share market is not as big as people thought it was an dropbox needs to increase its addressable market. what do you think it needs to do? >> they do have a lot of opportunity. you're asking how do we help. one of the things is really understanding what you should focus on at a given time. if you look at the history of

technology, companies like microsoft have become these giants with full product suites. dropbox is an incredible opportunity to go into business have the technical know-how to do that, and use that as an opportunity to move into productivity. they just launched a product called paper which is phenomenal. i think they will see more and more opportunities like that on top of a foundational business that's generating a lot of cash. emily: there's a dry spell in ipo's and the trend for technology is to stay private as long as possible. what are you telling your portfolio companies right now about being ipo ready?

mark andreessen said he was coaching all of his companies to be ipo ready. >> i think this has been driven a lot by market conditions, being continuously ready not just for ipo readiness but from a fundamentals of the business perspective. folks are becoming a lot more thoughtful about profitability, about growing headcount, thinking about what to focus on as a business. we are encouraging her companies to continuously do that. it is just generally good hygiene. you want to maintain profitability and be in a position of strength. you want to be thoughtful about how you scale things, especially on the cost side. emily: the secondary market would allow employees to see some sort of return on their investment, those have really

shut down. some companies are experimenting with ways to give shares to employees before they have some sort of acquisition or an ipo. what is your philosophy around that? >> talent and people are the lifeblood of companies. that's what makes company successful at every stage. doing right by your employees and making sure they lie into the mission goals of the company is the most important thing. the financial reward is a big component but also just understanding and personal -- personal growth and development. we encourage our companies to focus on both of those. liquidity is good for early employees. you want to be thoughtful about how you do it. you don't want to overdo it. you want to make sure that later employees feel good as well

about things. certainly few you can help someone pay down the mortgage on their house and if there's a good opportunity to do it in a controlled way, that is a positive thing. but it's not just about the financial, it's also about personal growth and development. emily: thank you so much for joining us. >> thank you for having me. emily: tomorrow, a conversation on the future of the euro with a nobel prize-winning economist, joseph stiglitz, at 6:00 a.m. new york time. tune in this weekend, this saturday catch our conversation with one of europe's most well-known economists. this is bloomberg. ♪

emily: women may make up half the population, but they hold just 12% of engineering roles in the united states. one company is aiming to change that for future generations by creating toys intended to get girls into coding. the recently launched a mobile app. i sat down with the ceo and founder and asked her about the mission. >> were exposing girls and boys to these basic skills. the simple machines that make up the world around us, wheels and axles and pulleys and joints. these are the parts that make up the whole world. and were teaching basic usual commands and how to sequence and debug. kids start tinkering and playing with it and were making it fun. it's like we are sneaking the broccoli into the mac & cheese.

we've noticed that kids start to see their world in a different way. there saying mom, don't throw away that tape dispenser, i can use it as a part for my latest invention. emily: some girls as young as four can start to learn coding. what is your differentiating factor? >> my team downloaded and played with every single coding at on the market. our designer is incredible. we asked her what can we do that is unique? what is going to really resonate? the insight we had is that storytelling matters. girls love storytelling that engages with characters. it's like why am i coding, what is the point? we tell a story of goldie and

her friend ruby who need to solve problems and deliver cupcakes to figure out whose birthday it is. it sounds really simple, but it's a simple premise where girls want to get engaged because they have to solve this problem. emily: the colors are pink and purple and pastel. in some ways do you worry about reinforcing some of these girl stereotypes? >> we worked really hard on that. she fails again and again, she is not a genius. she's more like a quirky pippi longstocking. boys think she is cool, too. they want to be her friend. we look for every opportunity to put a twist on things. one of the characters is actually a boy, he is goldie's next-door neighbor.

we are really being inclusive. it's not girls only, it is for everybody. emily: do you plan to make toys for boys? >> we keep hearing over and over again that boys love playing with goldieblox, and we are excited about that. we want everybody to play. i am actually pregnant and due with a son in october. how great would it be for him to grow up thinking this is cool and that girls should be engineers too. emily: you won a super bowl competition and you guys are part of a movement in the broader toy industry. target has gotten rid of girls and boys toys aisles. amazon has done the same.

what more does the industry need to do? >> we've come a long way. when i first launched, i almost got laughed out of the toy fair because everyone thought girls would not like building, that girls only wanted to be princesses. the concept went viral so quickly, and it proved to the industry that girls and boys are changing. it's not the same 1950's stereotypes. people don't want that anymore. a lot has happened, like you said, and there is still a lot of work to do. emily: check out shares of sharp, up 50% in the last week. the rally fueled by news the stock will be added to them may see those are often used by the industrial investors.

the deal was agreed back in april. despite the recent recovery, sharp shares are still at less than half their 2014 high. coming up, the big bet on content acquisition. we will head to tokyo to break down the latest report for one of asia's biggest internet giants, next. this is bloomberg. ♪

emily: still holding out hope for a sprint t-mobile tie up. the billionaire telecom magnate would still like them to merge. he had considered buying t-mobile but abandoned the idea after regulators were not in favor.

now he may see a new opening. people say you might try again. we'll pick up this theme tomorrow when we hear from the t-mobile ceo. from game of thrones to nba broadcast, the company has defied the effects of the slowing chinese economy. second quarter sales and profits beat estimates. ad revenue swelled 60%. joining me from tokyo is our tech editor. with all this with alibaba as well. is the take away that the chinese economy is better than everyone thinks it is? >> i'm not sure the overall economy is better than people think it is. you've seen the two biggest internet companies in china both beat expectations pretty handily.

seeing these two companies have figured out how to bring in the chinese consumer and get them to spend on certain kinds of things. there are very different models, of course. amazon is primarily an e-commerce company. they've done well with the premium content, as you mention. they've invested in game of thrones and bringing nba games into china. in addition to that, they just bought control of super cell, the maker of clash of plans and they been able to do well as well. it's led to a big increase in advertising revenue. based on all of that, where do you think 10 sent spending will go from here? will they pull back or continue to ramp up? >> they laid out a pretty good plan for expansion. these are not that well understood outside of the

country. it's a social networking service, payment platform that lets you do all sorts of things. when tencent wants to market new shows or games they have a great platform to reach evil in china and they been able to capitalize on that to drive their consumer business. emily: we talk about the door being shut essentially and the same thing has happened for chinese technology companies. they've not had much success expanding into the united states. do you think we are seeing a changing of the tides, where that's not necessarily going to be their ambition in the future,

and they really will be focused on the market in china? >> there is bifurcation certainly between inside china and outside of china, for many different reasons. alibaba has been more aggressive about trying to expand outside of china. they're determined to get more than 50% of their revenue outside of china even though there far away from that right now. for tencent, they been focused on china and they've been able to do very well. they did not make the acquisition of super cell which signals that they do have mobile ambitions. they are making lots of investments in small start up so they may be old to do that in the future. they're still primarily focused

on the chinese consumer. emily: our asia editor joining us from tokyo, thank you so much for that update. one story that's trending, apple is funding a documentary with cash money records, when the world's most successful hip-hop labels. apple has wanted to expand its content, with a spin off of the popular carpool karaoke. we will bring you more details as we have it. that does it for this edition of "bloomberg west." don't miss our weekly special on venture capital trends, focused on the business of entertainment. that's all for now from san francisco. this is bloomberg. ♪

>> brent crude consolidates. close to $50 as the former opec president said a production freeze will be agreed next month. in japan, exports down for a 10th straight month. the yen adding to the mood. saudi arabia and the u.a.e. expected to provide funding to egypt as it tries to finalize a loan from the i.