he said the moment may be passing for a two state solution. he also says it is in the world's interest to have a relationship with russia. the senate and armed services commission has approved james matters as secretary of defense. tom price testified at his confirmation process. he offered assurances the administration isn't planning a medicare overhaul. scott pruitt says climate change is real. issaid he disagreed that it a hoax created a china. wilbur ross says he is pro union at his hearing today. fights he is qualified to unfair trade. george h.w. bush remains hospitalized in houston. barbara bush has also been

hospitalized. you are watching bloomberg. bloomberg technology is next. emily: this is bloomberg technology. beflix crown jewels estimates again. benioffesforce ceo marc joins us taking down rising competition in the cloud. and why a judge decided not to arrest samsung's heir apparent. first to our lead. netflix shares spiking in after-hours trading.

they added more than 7 million subscribers to finish the year with 94 million members. the company credits the popularity of original content including the crown and gilmore girls in black mirror. a top of all of this is one of investors chief concerns. joining us now, cory johnson. walk us through. pretty record. cory: those are some great numbers here. there were some terrible numbers here. cage, it was interesting to see. that is part of their long-term plan. a change. spending right now is going towards original content including luke cage

where they are thinking it's not just luke cage, but daredevil, iron fist, they will have their own avengers. part of the marvel universe. they are thinking of how they are going to build a mountain of original content. they have spent a fortune on marketing. this is the biggest spin they have ever had. the numbers they put up in terms of marketing spent were not only greater than ever before. it even shows an increase. it is 11.5% of revenue. they just raise a bunch of money in the debt market to buy more content. they are plowing get into marketing. he actually saw not only great success in buying subscribers internationally, also buying subscribers domestically. there was a take-up in the domestic describe her's. -- domestic subscribers. x agree at 4% which i found

positive for the company but that is merely a function of how much you spend. caroline: it is interesting. sales are still up. you are seeing earnings, despite marketing, still beating. it looks as though the market is liking it from a sharing point of view. $6 billion being promised to bring is this going to alarm bells? it is a way to see where the content cost is happening. , gross margins don't show you what they are. it shows what ever what they want to.

there was one number. you can see it trading up. everyone is ignoring me. they spent about $100 for every new subscriber they got. that is not feasible. caroline: if you look at the u.s., 50% of broadband homes. far less if you're looking at the united kingdom. cory: if they can grow that much. increase was interesting to them. a dollar for $.50 for only so long. when is it going to show up for

this company? the cash flow numbers were stunningly bad. we see those numbers and they are positive numbers. raise to spend on that is $7 13 weeks, million a day. how do you do that? all of this content in all of this marketing. they can't do this forever. there is cash flowing out of the door and incredible sizes. they are hoping they can outlast their competitors. i don't know what the plan is. if costs go up, and running out of places to grow and burning through this cash flow it could be a real problem. eventually the piper is going to have to be paid. caroline: we will see how they

trade up tomorrow. cory johnson, editor at large. it has been 10 years since the company made its most are teaching shipped away from dvds -- strategic ship away from dvds into streaming. >> in 2007 netflix announced a bold departure from its dvd rental business. watch instantly allowed users for the first time to stream a library of a thousand movies and tv shows over the internet. the ceo explained the move saying mainstream consumer adoption of online movie watching will take a number of years. the time is right for netflix to take the first step. analysts were skeptical. consumers saw something different and signed on in droves. by the end of 2010 subscribers had grown to 20 million. at the same time, blockbuster

filed for bankruptcy. its sights on a new venture in 2013. netflix spent an estimated 100 million dollars on two seasons of its first original series, house of cards. original kids don't come cheap. producedprevents -- 600 hours of original content at a cost of have billion dollars. they plan to shell up another $6 billion this year. it is on the hook for $14 billion in future payments. cash flow concerns aside, reed hastings bet on streaming video is paying off. millionnow has over 90

global subscribers and makes 94% of its revenue on streaming video. caroline: a story we were watching, alibaba's jack ma commented on a trade war between the u.s. and china. he said a trade war would spell disaster for the world and that he would do anything in his power to prevent it from happening. alibaba has a large part of its business tight the u.s. giving a strong incentive. from devils,m switzerland discusses competition and why he is not worried. ♪

caroline: a lawsuit against oracle america alleging pay discrimination. they pay caucasian male workers more than their counterparts. a spokeswoman for oracle said the complaint is politically motivated based on false allegations. oracle values diversity and inclusion. now to an oracle competitor. it is been a challenging few months. they have slowed growth but the company has seen a strong start to 2017. the forecasting sales will jump 21%.

bloomberg, marc benioff discussed the growth of the company and its competition. >> we had to do what we were doing from the beginning. help them connect with their customers in a new way. that is why so many companies here, using salesforce. there is this sea change going on. topanies are working hard develop that customer intimacy. >> you have a lot of competition. i think it is the size of delaware. other you compete with and to what you invented. great customer of ours. amazon uses salesforce to people.its

we work with a lot of amazing retailers. i have a feeling you know who he is. those guys, those next generate taylor's who are getting slaughtered in the brick-and-mortar world, they need to connect with a new way through retail. are exciting times. i guess everybody is making money, but you have your critics. how are you going to position salesforce with new technology? the fewone of technology guys and happy valley here. how are you going to reposition for the next five years? i can't imagine where the iphone 7 is in five years. it will be the largest segment of enterprise software by 2020.

we are number one in that segment. we are continuing to innovate and look for ways we can become more successful. >> we are going to go through a phone. how do salesforce, your competitors handle the cloud through whichever phone you have in your hand, business or personal. >> that is fascinating. you just made a huge shift in your mind from where we started with personal computers. everybody can have a computer far more powerful than the most powerful macintosh. that is something now in your pocket. now computers are going to disappear. you see things like alexa, google home and others.

we are just talking to our computers, talking to our watch. that is an incredible next-generation of computing. a theme, thee with idea of davos and the uncertainty of the uncertainty. i've never seen so much lack of confidence here in public policy philanthropy. what would be your counsel to mr. trump as he becomes ?resident what is his first to do list? when we were here in 2009 and 2010 -- things were a lot worse. people were pretty dour. they were really worried.

i think they have political anxiety but i don't think they have economic anxiety. that was mark benioff at the world economic forum. netflix shares remaining higher in after-hours trading. ambitions,'s global we will bring you more on netflix earnings throughout the hour. >> international expansion has been remarkably steady. if you don't look at it by the ,uarter, what we have seen europe as a whole has been picking up momentum for us. we are just getting started in asia. ♪

in 2016 we saw a

number of businesses get disrupted by tech giants, get hit by regulators, and responsibility of silicon valley commented question. 2017 debate with the consequences of their leadess? i asked who will the way, regulators or the tech titans like facebook and google? >> the smart businesses, including the ones you mentioned have gotten to where they are because they are forward thinking. they don't want to wait for a regulator to tell them what to do. they want to be ahead of that. not just because they are good people but because that is the smart thing for their business, to ensure the sustainability and longevity of their businesses. >> sometimes a company that is expanding is disrupting and has negative repercussions.

some taxi drivers will be displaced and not have jobs. there is going to be some automation that means those of less skilled will find themselves under employed for what they would wish. does the company's health tackle that? >> you can't be disruptive and not break some eggs. all of these companies are thaning much more value they are destroying. they are creating more opportunities than they are eliminating. there's always going to be some portion of the workforce trained in a specific skill who may not be able to transition to the new skill. the may not be able to make that transition. the vast majority will. not only that, these technologies will attract more people to that job and grow the workforce as well. >> would it be uber's

responsibility to re-skill people? >> i don't think question of responsibility. it's a question of strategy. if your business requires somebody to re-skill a group of people and incur some expense in doing that, your business is not going to grow. we have to build a business that somebody can teach themselves. money in a flexible way. without any kind of specific training or retooling. that is what they are doing. companiest see reevaluate how they talk to their user base. 2017, is that the year for that?

>> we are very excited about what we have in our work folio. we have been doing this for 20 years. many of these businesses have excitinging a very businesses in market positions that are reaching a point where some of them could tap public markets and that would get them to the next stage of their growth and development. >> is the ipo the way to go? how do you feel the market is shaping up? >> the entre knowers we back always think about -- entrepreneurs we know always think about the ipo because it is a step in the path to being the company they want to be, the resources to be able to take on

the whole world with their platform. it is not an end within itself. it is a step along the way. it can come along after an ipo. of a finald transaction. that is something where a team baby. actually sell their the entrepreneurs we work with want to push that off as long as they can. they want to keep building their company. opportunities,nt holdin building up funds. >> we've had a very active quarter. the last quarter of last year. we continue to see exciting opportunities in europe and in the u.s.. what sort of verticals are

you most excited about? >> we continue to invest in consumer propositions. that is always something we have been active then. we continue to see exciting things there. on the deeper technology, enterprise infrastructure side. we are seeing some interesting opportunities. that chairwoman janet yellen spoke wednesday from the commonwealth club here in san francisco on the goals of monetary policy. and block optimism change. .- en bloc chains >> it's promising the technologies we use ourselves in many financial institutions looking at it. it could make a big difference to the way in which transactions and sold inin

the global economy. >> a south korean court has a warrant for the heir apparent. this is bloomberg. ♪

i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business.

strong and secure. good for a door. and a network. comcast business. built for security. built for business. anything with a screen is a tv. stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. >> you are watching "bloomberg technology." hasbritish dream court rule laid down a ruling in the brexit case next tuesday, whether parliament should have the final

say before the u.k. formally begins the process to leave the eu. that process is expected to start in march. the colombian president and noble laureate says the national liberation army rebels have agreed to free a kidnapped politician. the move clears the way for formal peace talks in the country's second-largest rebel group next month. the u.s. consulate is warning americans to follow directives of local authorities in cancun after another day of violence in the mexican caribbean resort area. authorities say gunmen attacked the office of the state prosecutor, killing 4 people. i did earlier -- a day earlier, a shooting at a festival. thousands of tourists are after thembia, president declared a three-month state of emergency as he seeks to stay in power despite losing elections in december. the president-elect vows to be sworn in tomorrow. vice president joe biden and the greek prime minister tsipras

discuss a reunified cyprus over the phone today. brokered byalks are the u.n. started today and will continue until january 20. the country has been split along ethnic lines in turkey since 1974. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. it's just after 9:30 thursday morning and sydney. let's get over to bloomberg's paul allen with a look at the markets. paul: indexes off about 1/5 of 1%. futures indicate a better picture in that japan and here in australia, we are expecting modest gains at the open. here in australia, keeping and eye on woodside, the oil producer, the resources company both will be announcing production numbers today. the significance of this may be lost on u.s. viewers. back in australian

hands. elsewhere, keep an eye on cafe pacific, announcing plans late wednesday for the biggest -- biggest restructuring of the airline. the airline has lost about 30% since the new ceo in 2014. more from "bloomberg technology" next. ♪ next. >> this is "bloomberg technology tilde .'m caroline hyde netflix shares higher in after-hours trading, almost 8%,

posting its biggest quarter ever in terms of net additions to customers. 7 million. that beat analysts' estimates. , 94 million.se a big draw for those new users have been original content. certainly been relatively addicted to the crown as of late. fording a concern investors, about 6 billion is what they are looking to be spending next year. out oneo check particular area of the bloomberg crate analysts recommend nations always check it out on your terminal, go to the stop you are looking at. this shows you how many analysts are saying, by this stock. 60% still say buy. $143 per share. that is trading around 150 times earnings, based on 2017 estimates. you see the price target, 12 target, is actually

lower than the $130 we saw track from yesterday's trading. to see if thosee looking price targets could be matched to raise where the netflix stop currently trades. now, let's get back to one of our other key top tech stories around the globe. a south korean court rejected a request to issue an arrest warrant to samsung's heir apparent. is the investigation completely over? our reporter -- a senior d irector at the korean institute of america joins me. gentlemen, welcome to "bloomberg technology." you first want to ask the key question. as the investigation continues, how much of this has had a damaging effect on samsung within south korea? >> we have to keep in mind that for south koreans, this would not be something out of line. many south korean business leaders, including jay lee's

father, have been convicted of white-collar crimes. the samsung chairman was convicted twice of white-collar crimes. because of his economic benefit for the nation, he was given two twoidential pardons by separate presidents. two separate presidents. he continued his chairmanship throughout his life. his son is preparing to take that chairmanship most likely. he technically is second in command of the empire. troy, elaborate, even if this isn't much of a surprise potentially to those in south korea, how much should international investors and consumers brace and sells for change? change?lveelves for >> initially you won't see much change at samsung.

if they were to face continued legal issues, i think you would see this plan continue. the larger question at least for investors will be, are the prosecutors able to actually tie samsung to the government and coercing it to vote for the merger through the national pension fund. that will be the real key for investors going forward. caroline: how do you react to that, if that is the key question? how much more broadly does this affect conglomerates within south korea? are we going to see a changing of the relationship between the government and these huge conglomerates? >> it's hard to tell at this point. it is very traditional and south korea for businesses to get donations, and sometimes even bribes, two government officials. this is something that goes back into the country's authoritarianism in the past. businesses get favors from the government and the government gives favors to these businesses. that's how the south korean nation was built initially with the nexus of business and

politics. with these allegations, we are seeing this question over whether samsung was coerced into crony,a donation to this or whether samsung willfully went into this trying to get benefits for this merger that was going to happen, trying to get the national pension service to vote for that merger that got jay lee moore power. -- more power. caroline: you actually feel that perhaps this isn't the particular leader to be bashing isht now, because jay lee progressive compared to many within the conglomerates of south korea. interesting thing about this story. if you look at what samsung has done since he is coming to power, he has essentially made it more progressive. he's taken and allowed employees to not necessarily address each other by title. he's asked his own guards not bow to him. he is really tried to loosen the

company up and move it more towards international standards. there is still more to do, that it is something he has pushed forward. he's a much more humble, much more laid-back individual. and so, if he were to be brought down by something that was an old-school korean type of scandal, i think it would actually be very detrimental. one, the question becomes, how would these reforms stay at samsung. two, because of samsung's importance of the broader economy, it is a symbol of the way it should go. a quick glance, jeffrey. how much do you think this will change rivals? will samsung be as important to the economy going forward? >> yes, i think samsung will be. inmates of the south korean economy. akes up a large part

of the south korean economy. if you are apple, some other company and you need to put in an order for parts for displays for semiconductors, samsung is often one of the first choices because they can make things faster than a lot of other companies can, and they make it as high quality. they have a reputation as a fast follower. in hardware, they are often at the leading edge. caroline: i want to see how this story continues to unravel. thank you very much indeed. the at&t ceo remains confident about one of the biggest mergers on the books in 2017. randall stephenson expects confidence that the deal with time warner will go through. the confidence level is fairly high. it is a straightforward business merger,ion, a vertical

which means we don't compete with them. and so this merger closes. today after it closes, the telecom industry looks exactly like it does today. law, thisetter of the is probably a deal that ought to be approved, we think. caroline: coming up, one of you earliest executives opens up about the company's future and the looming $4.8 billion merger, verizon deal. with the former yahoo! president next. this is bloomberg. ♪

onoline: a bloomberg scoop two of the biggest companies in tech. google announced it will purchase a twitter on business that provides a software toolkit for mobile app's and is part of the deal, will google also get a popular tool for tracking

software failures. the company's did not disclose financial terms. week's ahead to this inauguration and the key issues that will impact the future of washington's relationship with silicon valley or, earlier we sat down with susan decker. we started by asking her about trump's approach to technology and the changes that will come with this new administration. susan: the relationship between silicon valley and washington is a very good question and one that i think was due for some conversation this year regardless of whether hillary had one or trump won -- won or trump won. there are some broader economic factors out there. a generation today where our children at the age of 30 are -- fewer than half of them are likely to be making more than their parents in income, which is a big reversal from the trends in america for many years, were each set of parents

to like they wanted their kids to have it better than them. there are many reasons than that. tech does play a role, in the sense that a lot of the great innovations here that have added so much to this economy, in the bay area and other economies, haven't necessarily been shared by all of america. i think the anxiety around that has been bubbling for some time. regardless of who is sitting in the white house, i think it's an issue and it will be a really important issue how those tensions get resolved in the next year. there are different ways to solve them. both silicon valley and washington need each other, in many important ways. it's important that silicon valley not find itself two years from now with the public perception that wall street has with washington. and i think that's a risk, if there isn't some olive branches extended in both directions. caroline: how potentially can silicon valley step up to the

responsibility to ensure the globalization works for the many and not just the few? is it about skills they can provide? how can they ensure they are more inclusive? susan: the skill set is a really good one. ultimately, there has to be some transfer of some of the wealth that is created here, and displaces workers elsewhere to those families. how that transfer happens is not necessarily the responsibility of silicon valley. but they can certainly do things, like try to educate people in certain regions that may be losing jobs in coding. thinkare definitely silicon valley can do. they also may find themselves in more regulated position or taxed in certain ways that help transfer some of that wealth. where ite core issue, would be done right is if

nothing in washington and separates tricking the free flow of labor and capital that is what's creating this innovation, and other forms of regulation that try to keep jobs of allowing foreign challenge workers to stay here and keep the cost of producing low. i think that would be a bad outcome. if we could keep free capital and labor and innovation going with the benefits of that figure out how to help the people who are displaced from self driving cars and that woulders, etc, be important and silicon valley needs to step up and look for ways they can help. caroline: more of our exclusive with susan decker coming up next. bloomberg television will continue its coverage from devils, switzerland, speaking with the goldman sachs chairman and ceo lloyd blankfein. tune in to that conversation at 6:00 a.m. eastern.

"all due respect" will add special episodes all this week on bloomberg television, taking a look at the key issues facing the incoming trump administration. up to bloomberg special coverage of president-elect trump's inauguration on friday. this is bloomberg. ♪

caroline: now back to our exclusive interview with susan decker. in part two of our conversation, i asked her to reflect on her time as president and what she thinks of the $4.8 billion verizon deal. susan: i think based on where yahoo! was in the last year, he was an inevitable outcome that it was supposed to be sold. the fact that it was sold to verizon in some ways is very logical, they own aol and there's probably a good

consolidation opportunity to look at the properties a well has and the ones yahoo! has, which ones overlap, cut some cost. i can see the business logic behind it. caroline: why was it inevitable? susan: because the core issue at yahoo! is that no administration that has been running it has is what the solve, core distinction is in consumers minds and what makes yahoo! rate. in my mind, it was all about content. with yahoo! they are still struggling with what their core identity is because they did not get really great at the thing they had a core identity in. they had gotten sort of mediocre and everything because they were spread so broadly. by the time the last year came along, it needed to be sold. i sort of wish it had been sold to a company that was -- i don't know what verizon will do. i hope they revitalize that

spirit and make it unique again. i think either way it needed to become private or semiprivate. by being in verizon, even though it's a public company, it's a small part and they will be able to take the steps that are hard and long term in nature, but couldn't have been taken when it was a public company because of all the media scrutiny. whether it was a private eye or whether it becomes a subsidiary of a public company, this is a good home in the sense that i think they can probably make some tough decisions. caroline: was some of the media scrutiny unfair on marissa mayer? susan: probably. i think she was dealt a tough hand. some of thereally, seeds of the challenge that yahoo! were sewn very early. company inherit a that's already operating certain ways, it isn't easy to change

it. there are certain things she probably wishes she did differently, just like all of us probably wish we did certain things differently. i think she did the best she could, and unfortunately it wasn't enough. caroline: what about the hacks that seem to have come comedy disclosures much later than the actually occurred. how would that affect the price point with verizon? how much do you think marissa mayer and people at the helm of yahoo! would be taking this on stability for that? how it will't know affect the price, if at all. it is certainly possible there could be a renegotiation to some degree. i don't think it will stop a deal from going through. i think the leadership of the company should always take responsibility when something goes awry on their watch, even though if whatever happened had seats in a previous administration. i don't know anything about the background of that. if the right thing to do to step up when you are leaving a company. caroline: what are you going to

look back on. do you think it was correct to get into alibaba or a chinese company, looking at value abroad and the way they seem to? susan: i do. if you look at the original stake in alibaba, started in 2005, that would be worth $70 a yahoo! share today. it was sold the years, in pieces. today it's worth considerably less than that. but still, if it was the single biggest value creator in yahoo's history. it's a sad sunset for this company. we all had a great love for yahoo. we wish it were different. it did innovate in many ways and create some great value and there are some wonderful leaders who are all over the valley now. caroline: are there many other companies over there at the

moment that you think are excelling or perhaps you are worried about the need to be looking at their strategy? susan: we are in an unusual situation here for silicon valley. we touched on it earlier. you have companies like apple, google, facebook, amazon, microsoft, in the top 10 in market cap in the world. if you and about the top companies -- think about the top companies, silicon valley and north to seattle are a big part of that. it's very important that this relationship with washington gets resolved in an effective way. caroline: a man who has spoken about the way it is divided is warren buffett, a man long -- a menu work alongside of berkshire hathaway. work alongside of berkshire hathaway. is this something you see being returned to investors at any point? possiblewould say it's

. i don't think there's pressure in the next several years to be returning that cash. one of the things that is so remarkable about berkshire hathaway is, it is a collection of businesses that generate a lot of cash. and many of them generate more than they need. quitehers are capital-intensive, like the railroad businesses. you have insurance and consumer businesses that generate cash, and a cash free way to allocate cash to businesses that need them. that's been a wonderful model. but it isn't a model that is even every year. a major acquisition could come up, and it's good to have the resources on the balance sheet to be ready for that kind of acquisition coming up. as long as the core capital allocation proposition is working for investors, taking capital that's not productive and putting it into highly productive uses in a value created way, i think investors

will be tolerant of short periods of time where the cash builds up before the next deal. caroline: that was susan decker, director of berkshire hathaway and former yahoo! president. that does this -- that does it for this edition of "bloomberg technology." on thursday's show, we will be speaking to bret taylor. taylor comes with years of experience in tech as a cocreator of google maps. this is bloomberg. ♪

>> from our studios in new york city, this is "charlie rose." harlie: national security advisor to the president of the united states. are you ready to leave? >> very mixed feelings. it has been an extraordinary privilege to serve our country again, to serve particularly under this president. i love the work i do, i love the team i work with. i'm going to be very sorry to leave that. on the other hand, after eight as national security