mark: i'm mark crumpton. you are watching "bloomberg technology." let's get a check on first word news. a new associated press poll has hillary clinton leading donald trump nationally by a staggering percentage point. percentageng 14 points. the poll has clinton at 51% and trump at 37%. the poll attributed to solid democratic turnout in early voting. an earthquake shook central italy on wednesday. a powerful aftershock closed a major highway. historic buildings were damaged. two months ago, an earthquake destroyed nearby villages, killing 300 people.

for the first time in 25 years, the u.s. has abstained from a u.n. resolution criticizing the embargo against cuba. for more than 50 years, the u.s. had a policy of isolating cuba. >> abstaining on this resolution not mean we support all the policies and practices of the cuban government. we are profoundly concerned by the human rights violations the cuban government continues to commit. mark: republican lawmakers support the embargo despite the resumption of full diplomatic relationships with havana. i'm mark crumpton. "bloomberg technology" is next.

emily: i'm emily chang. this is "bloomberg technology to ." tesla shares jump and the car company reports a rare quarterly profit. plus we will dig into big blue's that on watson and a new partnership with gm. and a conversation with steve ballmer. he weighs in on twitter's future. he is a big twitter investor. tesla shares take off after the company posts a rare profitable quarter, et seq. second its second as tesla as a company. adjusted revenue also beat but beyond the financials, investors are listening closely to the call. with more plans on combining with solar city.

shareholders get to vote on a plan in just a couple of weeks. anding us ed niedermayer dan johnson. earlier this year, we got our hands on an e-mail from elon musk to employees saying "it would be awesome to throw a high in the face of all the naysayers on wall street who keep insisting tesla will always be a money loser." is this a pie in the face of wall street and is it just one pie or will there be more pie? guest: it is clearly a pie in the face of wall street but how many more pies he has left is unclear. one of the things that was important in pushing them over the line where these credits from california. those are essentially going away. it not clear how they are going to repeat this in the fourth quarter, though he is saying they will repeat it. emily: they did boost production.

they made 25,000 cars, which is almost double what they did last year. is that sustainable? guest: they have to keep ramping up production. i believe they can up to a given point. i've done research in the factory and i believe there's a limit in the short-term and potentially the longer term when they file for new environmental permits, but that is higher than where they are now. it's more like 250,000 units. up until that point, i think they are good. emily: investors are also excited about free cash flow. why is that? guest: because it hasn't happened before. [laughter] yeah, it is an important thing. you look at the valuation of the company and if this is what a profitable quarter looks like, how much cash are they going to return to investors? manufacturing is a lowball business. this is a huge accomplishment and i think they pulled out a lot of stops to make it happen and they got over the line, but not like they are generating

huge amounts of cash. you have to wonder if they are going to reach a point where they are going to throw off a lot of cash. emily: you cover solar city and solar city shares are up. does it mean shareholders are more likely to approve a merger? guest: i think shareholders have always been likely to approve a merger. if you look at the details, it doesn't make sense. the core concept of his bill is you are going to marry rooftop technology with battery technology but the whole plan find rooftop solar technology is the ability to access net metering, storing your power in the grid. if you ring in the battery, you eliminate that dynamic. so the merger doesn't make sense in that perspective. talk about quickly of tesla's results, keep in mind we saw the 140 credits but there's a 35% lease rate on the street. that was a big benefit in the quarter and we know there was big discounting.

i don't know if these are repeatable. the merits of the deal never made sense and one thing that is worth noting is when you had ever quarter do the valuation, they didn't have solar city or tesla's financials before they gave it be ok. it's like they were in the dark. there were three other bidders who did not match tesla's bad -- tesla's bid for solar city. elon musk takes a machiavellian approach, you want him to laying around but you don't want him doing it with your money. emily: you are smiling and nodding. guest: one of the things he didn't mention is that capex is reduced. as a start building up the model three launch, a lot of investors assumed that a lot of that ramping has already started happening. they are behind on that, yet there's no impact to model three production which is a really aggressive schedule.

emily: we are expecting tesla to unveil its solar roof product. what impact are you expecting on a potential merger? guest: i don't think it's going to be a big impact. we're looking at applications for net metering and rooftop solar. there's no doubt the u.s. market has taken a nosedive this year. the average selling price in the u.s. was $.65. there has been a big drop. the solar rooftop market is suffering as utilities are winning the net metering battle and that's going to weigh on all of them, including solar city. i have to question your sanity -- you are following elon musk into the void. and we think that's what it's going to be, a void of cash flow. i don't get it. emily: i spoke to someone who had the -- you drove the self driving car and is excited about

the new generation of tesla cars that are going to be fully autonomous. but there are questions around the existing autopilot feature. you wrote a column where you talk about the number of guests related to autopilot and there some contention. clarify what you were trying to say. guest: i wrote in the column that several people have died. and i had to correct that to two. and that's the number of deaths tesla does not contest. there have been a number of debts and there are some question about what the owner says and what the data says are in conflict. tesla does not provide owners with copies of the data. in the u.s. come you are supposed to and they say the data collection system doesn't

meet the definition of this. they don't provide a commercially available tool, so none of test was claims have been verified by third parties. so as someone who writes these columns, i'm open to corrections and third-party verification, i just wish tesla played by the same rules. emily: thank you both. staying on the earnings front, the groupon shares sliding after hours, after they announced they were buying livingsocial. groupon says the amount of the purchases not material and the transaction should close next month. it was once valued at $6 billion. groupon posted a loss but met analyst estimates. coming up, the ibm chairman and ceo joins me live from the world of watson conference in las vegas.

herb rignet on watson, head. ahead.big bet on watson and steve ballmer, known for sounding off says twitter is the best way to do it. he will make the case later this hour. this is bloomberg. ♪

emily: twitter will report third-quarter earnings on thursday, but the company has bumped up its release time to before the bell, departing from its usual time after u.s. markets closed. based on our scoop that twitter plans to fire 8% of its workforce as the struggling social media company prepares to go it alone, we caught up with steve omar, the former ceo of -- we caught up with steve ballmer, the former ceo of

microsoft and got his take on the company's road ahead. very important, given that he is an investor in twitter and microsoft. take a listen to what he had to say. steve: twitter is an air reproducible asset. think of what goes on -- donald trump tweeting what goes on late at night. there's not any vehicle that lets you speak broadly to amass an audience better than twitter. could the product be easier to use? of course. that's an important area. could the product benefit from additional innovation that takes it in surrounding areas? yes. the cost structure, there are rumors that they are working on it. but i see a lot of potential in twitter. emily: do you see twitter having a future as an independent company? steve: i think twitter would be great as an independent company and there are acquisitions that would make sense for the company and shareholders. emily: everything -- anything

you have heard about? steve: i read what everyone else reads in the paper. see. emily: what about going private? steve: i think the company would be better served putting effort into innovation that all the work of a take to go private. emily: we have heard rumors about you being interested in buying the company of various silicon valley heavyweights getting together. any truth to that? steve: no truth to my interest in buying the company. nobody has reached out to me. emily: what about jack dorsey having his two jobs? steve: it's easy to question. people like me like more out of twitter. the ceo is clearly divided and the way jack spends his time, it would be reassuring if he was

entirely focused on twitter for top emily: is it possible to be the ceo of two public companies and do a good job? these: it's not possible for me to comment on it. emily: has he ever called you and ask for advice? steve: i do speak to the management team once a quarter after earnings and i share the opinions i have as they come up. i wouldn't say they solicite advice. emily: what do you talk about? steve: product innovation, real opportunities, costs structure, do they have it where they want it to be. emily: as one of their biggest investors, what would you like to see? would you like to see them they

independent or sell themselves? what would you like to see? steve: i would like to see them work on the things they need to do on a product and cost structure standpoint and be always open to opportunities to be independent and make a sale of that teams of orton. -- that seems appropriate. emily: how excited are you about the live streaming asset? steve: i think it proves the power of twitter. how it works out as a business model perspective, we all learn. but it shows the power of the brand and the asset. emily: my conversation with steve balmer, former ceo of microsoft. tune in for my full conversation on "studio 1.0." he's also the owner of the l.a. clippers. always full of controversial things to say. you don't want to miss it. coming up, we had back to las vegas and ibm's world of watson

conference and speak to stewart butterfield. ♪

emily: the secretive silicon valley startup may be heading toward an ipo. palantir technologies. the company is well-positioned to go public. they were previously valued at $20 billion. lately, they had seen increased affections overcompensation -- increased employee defections , backlash andion its reluctance to go public. turning to another major tech exit -- snapchat trying to raise as much as $4 billion. that could value the company at

$25 billion to $35 billion . snapchat is going for it? guest: they are going for it after this year of ipo drought. they are going to kick off 2017 with a bang. $4 billion on the high-end is what they are looking to raise. this is ambitious, given that last time, they were in about the $18 billion range. they are looking at a company optimistic about its evolution. this is the company that as this fun, and disappearing text that got used for sex sting -- sexting, it has evolved and it's becoming much more of a media platform and much more useful to marketers. they are innovating and creating new types of advertising tools

you can use. you can add filters. politicians have glommed onto snap chat as a way of getting their message out. clinton is on there, trump is on there. they realize it is important and marketers see the same thing. and snapchat is moving into other areas like video. glasses. they are taking your video clips and compiling them into this rough draft video of events around the world. it has been a big evolution for snapchat. emily: and it is filled with exclusive content. from any number of media organizations, you have to be on snap chat to see the content and if you don't, it goes away. that said, so much of this is so new full what makes snapchat seem like they are in a rush? maybe that's because everyone else is moving so slowly when it

comes to the road to ipo's. guest: the impetus to stay private for so long is not going away for top uber -- is not going away. uber has dragged this along as humanly possible. at some point, the venture capitalists putting money into these companies are looking for an exit. i'm not privy to the conversations between snapchat's vcs and banks. summary of my investments are staying private for a lot longer. i want an exit somewhere. i want somebody to get out there. and don't forget employees -- the cost of living in san francisco and the bay area is really high. they want to buy a house and start their kids in private school, so employees are looking for exit and management is looking for a way to unlock some

of the value they have been sitting on. emily: some early ventures in snapchat like benchmark partners are also investors in uber. it's ironic that they are businesses that are valued much more highly, yet they are still waiting in the wings. guest: exactly. something to bear in mind, by some measures, snapchat is doing better than twitter. a company that has been publicly traded for a long time. just in terms of pure numbers and some measures of engagement. it's at the point where they are looking at revenue of $350 million and you start to think about them as a more mature company, a company is ready to get out there and take in a lot of money. there's a lot of snapping that can happen using $4 billion. emily: i want to ask you a question about apple.

shares down after they reported earlier this week. some thought they should have done better in light of samsung's massive note 7 recall. analysts explain the stock reaction. >> what investors have been asking of tim cook is to make apple grow again. that is what we finally saw in this outlook. it wasn't a model. it was not in our estimates and the outlook in termsf revenue for the december quarter is excellent. >> as investors think about their confidence in the business, it should have been boosted last night. i think the reason the stock is down is expectations ran up over the last two weeks. bank of america was out with a call that they would guide to 71 and a guided above the street

the below some of those whisper numbers. our perspective is look at the big picture. the iphone franchise is going to return to growth and will stay there for about the next seven quarters. >> it is clear that apple is no longer a growth company. we look at it as a value company. we look at the intrinsic value of apple and it has a very loyal customer base which is growing, not at the pace we would like, but they remain loyal and to spend more money with apple on a bunch of different products. emily: i did speak with the apple cfo yesterday and asked about the samsung issue and said they could not tell how much this has impacted them. only a week or two weeks of the actual quarter. what he said is we've been seeing so many android switchers to the ios platform.

presumably they will have more information by the end of next quarter. what is your take? guest: there was a little disappointment that they are not making more hey. apple can always surprise us. this could be a great holiday season for them. this is a projection. they don't know if that revenue is going to be $78 billion. it could be higher than that. the thing you have to remember is samsung is going to come back with a vengeance as soon as they can get the 8 out. in china, they have to deal with a lot of low-cost competitors. that's an area of great concern that you have to take into consideration. emily: revenue in china down 32% year over year. thank you so much for stopping by.

coming up, ginni rometty joins us live from the world watson conference in las vegas. her big bet on watson, just ahead. this is bloomberg. ♪ [ emily kaldwin ] when you stole the throne, witch,

you took away my strongest ally -- my father. but you didn't know me. ♪ you never thought i'd fight back. you don't know me. but you will. ♪ so it begins [ male announcer ] rated "m" for "mature."

hidi: samsung in the news. promising changes to quality control to regain consumer confidence following the note 7 debacle. this is after third-quarter profits fell 17%. taking a chance xiao worldwide -- cheil worldwide.

abruptly removed on monday, he says he was given no chance to defend himself against claims of nonperformance. onres extended declines monday. ipo.ss has passed its it is set to make its trading debut on friday. the money raised is the most by a chinese company in new york since ali baba. a string of companies have chosen to abandon u.s. markets and head home. this is bloomberg. sheri: asian stocks have fallen for a second consecutive day. we have seen the shanghai

composite down. declines.gas leading cnooc reported-- declines. manufacturing data shows that the recovery is fragile. but the earnings season is now gathering pace for chinese and hong kong stocks you keep an eye on these stocks today. down 1.2%on banks ahead of earnings. break inck to me lunch the japanese markets, the nick a fell in the morning session. it is currently down 3/10 of 1%. extending declines. japanese yen come after weakening for three consecutive sessions, has strengthened slightly to hold at 104. right now, one of the biggest losers in asia is the korean wan. -- korean

we had samsung earnings out of south korea today, which is helping boost the market and isy cost a -- the kospi gaining. that is the view from asia today. emily: this is "bloomberg technology." i'm emily chang. ibm has placed a huge bet on watson being a big part of the companies future. it's all coming out of the world of watson conference in less vegas where ceo ginni rometty joins us now. great to have you. ginni: thank you. nice to be here. emily: you are announcing several new order ships today. partnerships today.

how many more people will watson touch as a result of these partnerships? ginni: we just had a great conference. over 20,000 people. i just told the crowd that right now watson touches hundreds of millions of consumers and by the end of next year, we are on the path to be a lien. -- to be a billion. you just mentioned some of the customers we are ordering with. general motors coming out in the 2017 the a goals and onstar go, a partnership with watson about using your time in your vehicle in a personalized but safe way. largestthe world's manufacturer. what we are doing making the whole process and the delivery of drugs different with watson. we just announced last week the work out and available quest diagnostics, which does make precision medicine available to

almost everyone in the united states. emily: let's start with the gm partnership. bringing watson to the road. give us an example of how watson will be powering a new driver experience. >> keep it simple -- it is interactive and gm has got in about 1.5 billion uses of pieces of information from connection and you individually permission in what happens. the car gets to know you. you have a prescription to pick up, tell you where to get off early and went to get it, to pre-ordering and paying for your coffee to you are going to run out of gas, getting you to the right place and paying ahead at the pump. this is just the beginning and there are a number of partners. it's part of this first round coming.

you've got mastercard and a whole group being added on. but in a very permissive way. it changes that experience because people on average spend 37,000 hours in their car. emily: tech companies are vying for control of the car. what makes you think watson and ibm have something special other companies cannot replicate? ginni: in this case, using watson and artificial intelligence can't replicate it. therefore, gm has data that cannot be replicated either. by the way, others have data of their own that they can use. i see us playing a role across many different parts and auto. whether it's daimler car to go or work we have done with honda, this kind of cognitive intelligence will come into play and it's not just autonomous driving. we anticipate autonomous driving with substance in the car.

it's opportunity that is out there and it's all different forms, your own car, and there will be a wide variety of ways you will participate for top -- you will participate. emily: you say watson is differentiated because every client gets their own individual version of it. if i understand it, ibm will not own or use that data. why is that important and what advantage does that give you over other companies pushing hard on ai? ginni: as you know, we have been building watson for quite some time. we have really made some strategic decisions that make watson the ai platform for business and knowing what matters to business. in every business, you have accumulated a lot of business

-- accumulated a lot of information and it is yours. so should be the competitive advantage. we've made the choice of an architecture where we will bring data and watson and algorithm and you bring that to the client. they don't train the base form and you make choices on that. to a client, that's extremely important. there's not a client in any industry that isn't going to have the basis of their competitive advantage be the base of that information for this is in my mind one of the most important decisions we made. emily: you have been hard at work transforming ibm and watson is a huge part of that for -- part of that. how will you evaluate your progress so far given that transformations are not easy. ginni: and you know we are 105.

we are the only ones that have made it through multiple transformations and multiple euros of technology. the work of 400,000 at ibm, you've seen the strategic imperative. 15% growth, 40% of ibm and watson is a silver thread not only through those, but you will you in many parts of our base system. much of what they are doing is porting clients to the cloud and watson is a piece of that. emily: ibm has several legacy businesses. investors still seem to be focused on these legacy businesses. how do we see them over the short-term and long-term? ginni: i don't think of them as legacy businesses. we thought we were commoditizing and better with others but the businesses we have our orton for the franchises we run.

if you look at our technology services business, these have been modernized many times. they may not be in growing markets, but modernized whether block chain, mobility come a security and have watson be part of them. so they are really an important piece. from running the banks of the world to airlines of the world, they work together. the announcement at was a good part of that. that served as a platform as we moved into onstar go with watson. so, they are related together and there are two different markets and two different growth rates. businesses that are building a new and now clearly at scale and the other businesses are core franchises, while they may not be growing, they are profitable, solid businesses together.

emily: you have ramped up a lot of acquisitions to hold that data and boost the power of watson. is that a strategy we should expect to see continue? ginni: yes. we've done a good number of acquisitions. how we look at them is an example for watson health. that's an industry that would benefit tremendously from data. you have seen ways to train watson, so that is all for watson health. which is the world most expert group in financial services. he will be training watson as we launch watson financial services. you are really changing industry than changing processes.

you need those skills and information as well as the technology itself and that is an important differentiator for what we do. emily: ibm ceo and chairman, ginni rometty. live from the world of watson conference in las vegas. thank you for joining us. we are also going to be catching up with stuart utter field -- stewart butterfield coming up next. after announcing this big partnership with ibm. this is bloomberg. ♪

emily: back to the ibm a world of watson conference where slack and ibm are teaming up to bring watson to global developers and enterprise users. developers will be able to create more lots and

-- more bots and conversational interfaces. joining us now is the slack ceo, stewart butterfield. every time we talk about lots, if you like we are new words to the dictionary. tell us how this partnership with ibm changes the user experience for slack users. stewart: i would love to. there are a couple of civil ways. one of the ways we are going to be integrating watson technologies in a very direct way is to increase the capabilities of slack. which helps users answer questions. that's just scratching the surface. there are thousands of developers creating applications for slack for customers to use to interact with systems for business workloads and things like submitting an expense report or setting up a meeting time. a lot of those are very dumb. they are useful, but very.

-- but dumb. to the extent we can help developers leverage the technology to make the applications smart and understand what kind of things can be shuffled around and do a better job. approaching human level intelligence these very simple applications. emily: if you are using ibm ai, then what is slack building how do you decide what to build in-house versus what to bring in from outside? stewart: i don't know if we want to categorize them as intelligent technologies, it is very broad. there's still a lot of value, so we are working on that and improving the technology and working on things that are particular to people's use of slack, so things like recommendations on channels people should join or channels people should leave. i think there's an intersection where we can collaborate with the ibm team are on things like

information you missed while you are out or, if you mention a capable, intelligent chief of staff is able to read all of your messages and distillate down to the things that really matter, maybe make some proactive recommendations. i'm lucky enough to have someone like that but even she is not capable of reading every single message. watson power bot is theoretically capable of that and we have a good expectations for the future. emily: slack seems to be a target these days with everyone from microsoft and facebook trying to do what you do. microsoft has tools in place like yammer, office and skype. do you have any concerns about that? stewart: we welcome the

opportunity to compete. this is a brand-new category and not everyone knows about it. microsoft giving it the seal of approval will help us quite a bit. if you ask our customers what you used for slack, 80% of our customers say nothing. you can imagine what kind of approval will help us quite a bit. challenge that is when we come to brand-new companies when people have no idea what they would actually use is for. -- use this for. i believe in our ability to produce a product people truly love and people list slack as a job description. here at ibm, we start off with 5000 people and ended up with 30,000. that's because people of the love the product and find genuine utility. so i think they will have to compete on that basis. emily: you have similar feelings about facebook's new product? they are touting ai and facebook does a lot of things as well.

but they're still facebook. stewart: i don't know if you've ever seen the photo of 1977 era microsoft and nobody thought they could take ibm in the operating system. ibm is still a very successful company and they went against google on being and put a lot of money and effort in two competing on search. microsoft was not able to catch them on search. then you have everyone trying to take down facebook on the social side. they weren't able to catch facebook on social and now you have facebook going up against snapchat. if you are a large incumbent, you have many lines of his this -- lines of business and you're going up against a small and capable startup with a lot of traction, it is very difficult for you to compete.

emily: i hope you are taking lots of pictures for posterity. oftentimes, the traction is about individual teams. how do you overcome the challenge? if not everyone at the company is using it, you are not singly full power of using the product. -- you are not seeing the full power of using your product. stewart: we will move to the enterprise product, which comes out next year. we are starting to see the benefit come from the whole company, but it has always been a product for a team. that is still at the core of it. a team can be five people or 50 people. when you get to 50,000 people, it's a loose metaphor. so we want to move on to something different, the ability to have multiple overlapping teams and there can be shared channels and you can create any kind of organizational structure you want. but there's a huge amount of value for a team of people.

it could be a functional area to be using slack just within their team. emily: stewart butterfield joining us from las vegas. we will be right back. this is bloomberg. ♪

emily: microsoft kick off its surface 2016 event, announcing an all in one pc called surface studio that may be aiming to take on apple's imac. they've also announced a new computer that focuses on creative features. joining me to break it down is my guest. what you say highlights are?

guest: clearly the belle of the ball was surface studio. they are going after the imac 5k. it is a pricey vice. it's going to be somewhere around $4000 depending on the features. but they are leveraging touch, which is something apple is not willing to do. having said that, what microsoft is also doing is leveraging premium hardware. they are starting to integrate features only available on the surface, which is a trick we have seen out of apple and google. now, they have surface dial, which is a way for creators to navigate quickly which only works on the surface devices. so you are starting to see microsoft leverage the power of the surface to give you that experience. emily: talk about how what they are doing fits into the broader context of the market. guest: i think the pc market is

at an important inflection point. we see demand in commercial starting to recover a bit. what microsoft is doing is they are going to leverage their ecosystem. the leverage insider program, bringing 3-d paint, away to experience and scan 3-d devices to windows will allow a broad range of users to start experiencing 3-d. what they are also starting to do is they are going to integrate that ability into office. we believe by 2021, augmented reality will be used in 35% of connected meetings in a new -- in an enterprise environment to help people collaborate in a new way. we believe this is the beginning of that trend in microsoft is taking the power of office and integrating 3-d. the next phase is integrating

augmented reality, which they announced today. from pc leaders like hewitt packard and lenovo. you are starting to see that hardware and new kinds of experiences around augmented reality. emily: apple is expected to unveil a new line of lap tops tomorrow. will any of these things change direction of the pc market? guest: yes. the short answer is that pc is relevant. it's not going away. it's the number one creation tool. it's about refreshing the platform and that's what we are seeing. emily: great to have you here. thank you for stopping by. that does it for this edition of "bloomberg technology tomorrow is a big day for earnings. all episodes of "bloomberg tech" are streaming on twitter. check us out. that's all for now from san

francisco. this is bloomberg. ♪

there are cuts and figures say the production curves would barely dent the global stockpiles. a debacle takes a big chunk out of profit last quarter. >> freshman they success with the international bond debut, diversifying with islamic debt.