>> it's 1:00 p.m. here in hong kong. donald trump has promised to unify america when he moves into the white house. on the eve of his inauguration, the president-elect said the country has voted for real vowed to carryas out all his campaign pledges. he told supporters he will secure american voters and build up the military. 6.8% from a year earlier, beating estimates. 6.7% was expansion of right in the official target range but also the slowest pace since 1990.

the 5 trillion dollar equities crass, china is said to be ready to relax on stocking the futures trading. bloomberg has learned the china futures exchange will lower arjun requirements and double the number of new positions allowed. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you're watching bloomberg. let's get a check of the markets. afternoon trading just getting underway in hong kong and china. were seeing the hang seng index falling for a second consecutive session while the shanghai composite is rebounding after a day of losses. some string for the japanese equity market that some string for the end as well. ♪ caroline: i'm caroline hyde.

this is "bloomberg technology." coming up big blue out with , earnings, the stock dropped over 19 quarters. we will break down the earnings scorecard. plus we will hear from a silicon valley veteran. twitter board member ceo joins bret taylor us with his outlook on the industry as donald trump takes office. alibaba goes for gold. how it scored the biggest sponsorship deal in olympic history. but first, to our lead. shares of ibm lower on the back of the company's fourth-quarter earnings. the bloomberg terminal is showing how the trading after-hours is off by more than two percentage points. the company announced quarterly earnings that beat analyst estimates and the full-year outlook for 2017 was better than forecast. things like computer hardware and software systems have been

steadily eroding and investors are waiting for those declines to be offset by growth to newer businesses like cloud computing and artificial intelligence. let's bring in our guest, joining us on skype along with cory johnson, right here in the studio. go through these numbers for us. what a stretch of losses. cory: 20 quarters is hard to do. 20 quarters ago they had a 0.2% rise in revenues. this is an incredibly shrinking company. the number to ignore is earnings per share. with all the share buybacks, they been able to reduce the number of shares but quarterly sales are a much more important thing to pay attention to. the master plan was to shrink revenue but to be and more profitable sectors like artificial intelligence and software. it resulted in not just

shrinking revenues but shrinking profits. this is a much smaller business, not just in terms of sales, but in terms of profit. the earnings-per-share number is important. the gap in the income number is what is important here. a little better on a year on year basis but after so many quarters of shrinkage, it's hard to look at. caroline: are there any silver linings amidst the clouds for ibm? >> i'm always amazed is a 30 year ibm watcher at some of the perspectives on ibm. they differ so often. my perspective is, we see a large portion of the i.t. market, all of us see cloud market, social, robotics, growing at 13% year and becoming part of every consumer market. ibm is turning its battleship,

slowly, yes, which is boring, i suppose. it now has 41% of its revenue squarely in that high-growth part of the market. that's the future of industry and consumers. five years ago it was about 10%-15%. i see it as a company that is making a lot of progress. yes, like most companies they are trying to keep shareholders happy. they are doing a good job of engineering around earnings, but behind that, they are making a lot of investments in terms of acquisitions, new hires of people. a company that, like microsoft, has been going through a major transition to a totally new model and positioning itself for growth. i see good results in those numbers. 41% new technologies and growth in that part of 13%, which is right on the market.

cory: i hear that anecdotally from businesses that are using ibm to solve some problems than they are finding valuable solutions there. a 41%, i am a glass half empty guy. this has become a considerable expense. look at how much money to have spent on acquisitions. this is quarterly. $5.4 billion. 2.6 billion dollars. these are billions and billions of dollars being spent to get this company pointed in a different direction. look at the numbers again. you have these huge expenditures of billions and billions of dollars year after year to try to get the minute better

position. as the revenues are shrinking and the prophets are shrinking, cash is flying out the door to make these acquisitions and to do share buybacks and it puts them in a precarious situation. caroline: how long do investors need to give ibm therefore? not until the second half of 2019 do analyst see revenue picking up again. >> i think it is likely to be before that. when they get to 45%-50% of revenue coming from strategic initiatives, the revenue growth will be positive. i don't really see that as far out, but to me, the more important question, again, people are looking at the long-term future of ibm. i run our cloud research. ibm is number three in the cloud market. the cloud is the foundation of the entire i.t. industry. caroline: how do they get to number one? frank: if you look at how much money amazon and google and

microsoft are spending, it is an expensive business, but it is an investment and leadership position. they grew their cloud revenues by about 60%. amazon grew there's at the end of third quarter by 55%. so amazon's bigger in the cloud, but i would say ibm's growth, they are definitely in that pack of leadership in the most strategic part of the future of the i.t. industry. i look at it more as how our customers investing in strategic vendor partners? who are they going to pick? it's not a long list, and ibm is on that list. cory: being number three in technology is almost as bad as being number two in technology. the way technology goes, number one can be five or 10 times bigger than number two and

number three. who is number three in search engines, or you name it? it's a tough spot to bn in, and ibm certainly knows that. frank: when it comes to technology, ibm is number one in the a.i. part of it. they are in the game. to me, a company with that long a history, to be in the game and on the rise, that is a good story. caroline: we love a debate on this program. frank gens, thank you so much for your time. tesla shares more than 2% higher in thursday trading on two stories. first, the u.s. department officially closed its investigation into tesla accidents last year, one in which the driver was killed while using the autopilot function. they found no indication of a safety problem with the feature.

meantime, morgan stanley upgraded the shares of tesla and raised its price target. one reason, ceo elon musk's new role as strategic advisor to president elect donald trump. uber has agreed to pay $20 million to settle an ftc lawsuit over driver compensation. the suit alleged the company made false and misleading claims that cost drivers millions of dollars. in a gmail statement, uber said it's made many improvements over the last year. coming up, more moments from the world economic forum in davos. michael dell talks about his outlook for trade and jobs under the trump administration. this is bloomberg. ♪

caroline: twitter has released that's on the level of diversity among its employees. saying 30% of those in leadership positions were women and 9% were made up of underrepresented minorities, still quite low. twitter is facing scrutiny to increase diversity within its workforce. all this week our colleagues in davos have been bringing in top rate interviews from the world economic forum, including the dell ceo, michael dell. >> what we see is a new administration that is talking about growth and talking about infrastructure spending, tax

reform, and things like repatriation, things that are pro growth, so we like that. >> do have a lot of profits overseas? >> about half our business is outside the united states. certainly there are profits in those businesses. we invest $4.5 billion a year in r&d, most of that in the united states, but we will certainly understand what the new rules are and figure out how we continue to grow our business. >> a better way of phrasing the question is to ask you, if they were to change the tax policy on repatriating these overseas profits, if it were a de minimis amount, or if there were a holiday entirely, how much would you bring back to the u.s. from overseas?

michael dell: i think you will see companies like ours across all industries bring capital back onto the balance sheet of the united states, which is likely to be a good thing, and we are very supportive of that. >> what donald trump has said about trade, what would have the greatest impact on your business? michael dell: again, -- from other things, to rewriting the rules of nafta, all of these things. michael dell: 96% of the world's population does not live in the united states, so those are all potential customers to us. we deftly want to have access to those markets. we don't know what the rules are going to be, so we will have to wait and see. but generally a pro growth administration is going to be

quite positive. >> ceos i've spoken to here say they believe there is a real possibility and probability -- not probability but possibility of a trade war with china. to what degree does that concern you? michael dell: i think any kind of trade war would be mutual destruction. there may be some resetting of the relationship in whatever form that takes, but that interdependence of economies with respect to supply chain and other aspects is quite high. the u.s. has had no industrial policy with respect to the feedstock for our industry. while we have some plants in the u.s., without the key ingredients, the semiconductors and displays and batteries, which takes a long time and a lot of capital to build those industries, there's a lot to do here.

>> it sounds like you're giving it some thought. you mentioned manufacturing is something in addition to trade, another thing that the incoming president feels very strongly about. you do some manufacturing in the united states. how many people do employ, and could you bring more jobs back to america? michael dell: building a final assembly plant in the united states is actually quite easy, but that's not really the point. the point is that without the feedstock industries, the components, it would be uncompetitive. and so we need to have a thoughtful approach to those feedstock industries. it's also true that if you go in one of our modern manufacturing plants, whether it's in the united states or anywhere in the world, there are not as many people in those factories because of automation and

productivity, which all of our customers are also applying across their businesses. caroline: that was dell chairman and ceo michael dell. goldman sachs ceo lloyd blankfein also discussed automation and its impact on the global economy. >> i think in our industry and every other industry, in the short term, technology costs jobs. value is created across the board. if you have taxis circling idly and then you come up with a method of making it more efficient so they are never idle, they are showing up places always carrying a passenger, so you need fewer circulating, that means there will be fewer jobs. the value of the company that creates that opportunity, that efficiency is coming out of labor and is going over to capital. the investors in the company

that make that system are enjoying the benefit of value creation that's coming out of having to pay lower cost and fewer jobs. that's only in the first brush. then you think of new services and new things to do in those create more jobs in the future. caroline: coming up, it's the biggest deal in olympic history. alibaba joins the ranks of coca-cola and samsung, but at a steep price. this is bloomberg. ♪

caroline: the latest selfie at has skyrocketed. it's been a hot commodity since 2008 with 6 billion photos created a month. now it has about 400 already million users outside of china. it rose in rank to 68 on wednesday. it's a one touch shot for

putting the finishing touches to your photos. sticking with china and the olympic games, they just got a new lead sponsor. alibaba will become one of the top olympic partners in 2028. the idea is to help it gain exposure to a global audience and promote its cloud computing business am a but it did not come at a cheap rice. the sponsorship is said to be worth $800 million. covering this great story, what did they get for $800 million? >> it is a steep price and it is unprecedented. it's the biggest one the international olympic committee has ever been a part of, but it's worth more than the monetary price alibaba is going to be paying for it. it puts them in the same tier that brands like coca-cola and samsung are part of. this is important for alibaba to

build credibility and to be a global online commerce, to be the cloud provider for a really big event on a global stage. caroline: so clearly this fits into their global expansion strategy. how does it help individual businesses? >> jack ma has said over and over they won't have the revenue to come from abroad. they need to combat a lot of their credibility issues. they've been hit really hard by the counterfeit problem. this puts some trust to global consumers that this is a company like coca-cola and samsung and mcdonald's that you can trust and give your money to, buy tickets and merchandise from. it's still too early to say what the revenue impact will be, but we can assume they will get some type of percentage cut from the merchandise and down the line it could lead to deeper

integration, probably also getting money from the cloud services and all the attic commerce from brands that potentially will want to join the platform as a result of this global partnership. caroline: the olympics are competitive, is it competitive to get these deals with the olympics? >> the cmo said it is quite competitive and there are a number of contenders that want to work with the ioc. we don't know who the other players were, but i spoke with an analyst who said you can assume their other bigger players like amazon and microsoft. if we look at the three big players, the advantage to alibaba is they also have a commerce platform and an aggressive local message, but let's not forget the potential political pressures, the upcoming 2022 games will be in beijing and it's good for the

ioc to have a partner in the home country and be able to promote it throughout asia. caroline: so do we think the fact that it's a chinese company, does that play into a political way that jack ma has been trying to talk to donald trump and keep the dialogue open with the rest of the world? >> at think it is a good sign. it's unrelated to the donald trump-jack ma debate. this has apparently been in the works for a while. our sources told us that the talks began last year at davos and came full circle this year. it is a great way for alibaba to keep their name in the global sphere and is jack ma said yesterday at davos, he will do anything in his power to prevent global trade war from happening. caroline: thank you very much indeed. another story we are watching,

amazon and apple have scrapped their exclusivity deal that required apple's eye to store to sell audiobooks only from amazon's audible unit. germany's federal court said it has closed its probe into the deal. coming up, he has one of the most impressive cv's in silicon valley. we talk about the company's latest acquisition and the outlook under the trump administration. this is bloomberg. ♪

>> it's 1:30 p.m. here in hong kong. donald trump has promised to unify a america when he becomes president. on the eve of his inauguration, he said the country has voted for real change and out to carry it out. he told supporters he would secure america's borders and build up the armed forces. again backedhas gradual rate hikes. she argued the fed is not behind it cannotbut admitted let the economy run too hot. was one fiscal policy uncertainty clouding outlook. toi consider it prudent

adjust the stance of monetary policy gradually over time. the strategy should improve the prospects that the economy will achieve sustainable growth with the labor market operating at full employment and inflation running at about 2%. china's growth accelerated for the first time in two years. gdp increased at 6.8% from year earlier, beating estimates. 6.7%,ear expansion of with the range the slowest since 1990. reportedith the biggest sponsorship in the game's history. we're told it's worth up to $800 million and will run route 2028. alibaba will offer online services and data analytics. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

you're watching bloomberg. of marketse check across the asia-pacific, here is juliet. c seems to be the order of the day. some upside coming through from china and japan but elsewhere there has been weakness generally across the asia pac region. the nikkei getting a boost as we did see safe haven assets dumped earlier in the session even though the guinness getting back a little bit against the nikkei. the shanghai composite rallying the most in two weeks after the fourth order gdp data beat estimates coming in at 6.8%. so we've seen some strong upside on that market. hong kong giving back after a pretty good day yesterday. property stocks looking quite good along with energy, crude oil holding at around $81. a little bit of weakness in southeast asia and india not

having a great day, off by .4%. we are live from london at the top of the hour here on bloomberg television. this is bloomberg. ♪ caroline: this is "bloomberg technology." shares lower in extended trading after posting its nineteenths straight quarter of declining sales -- sales. metric of the companies overall health. >> there were some macro challenges in the quarter in certain countries like brazil, the u.k., and germany, as well as the impact of a stronger dollar. caroline: he went on to say the company is on track to reach $40 billion in strategic sales by 2018.

meanwhile, word processing app quip, how will the company august on product design take it to the next level? who better to discuss it is the ceo of quip? he also sits on the board of twitter. thanks for joining me today. tell us what the three musketeers will bring. bret taylor: i worked with all three of these designers at facebook. they design products you have probably used. one of the trends i have always been interested in that really resonated with me, it's the influence of consumer software on enterprise software. it is near and dear to our hearts at salesforce. we looked at how it's impacting the consumer world with alexa and siri.

our mission is similar. we want to take the productivity software and enable companies to move from email and file attachments that we've been living in for the past decades. i love the idea of ringing in people with a consumer product assignment talent he to see how we can improve our work life. caroline: it such a hot competitive space. who do you see as competition and friendly fire and helping push your vision? who do you really admire? bret taylor: those are great examples. they have a similar mission, can we be productive without email? you probably do not email your spouse anymore, you text. everyone under the age of 25 probably has four or five messaging apps on their phone.

i believe there's a better way of doing things and i really think we are on a mission together to prove to the world that this is a mainstream trend. we are going to move on from email in the traditional office to something better. i look at us is trying to show businesses through results that there is a better way of being productive. caroline: do companies such as yours have to be bought up by bigger players that can ease concerns about new startups coming in? bret taylor: i don't know if you were here when dream force happened. people are not buying a product, they are entering a partnership. the iphone was invented less than a decade ago.

ai is transforming technology now. it is intimidating because every year there is a new technology trend. they view salesforce as a partner to help them strategize. now at quip, we are part of the ecosystem that a lot of companies are starting to depend on. people look to salesforce as the leader, and that's helped open the door. there are companies talking to us now that would've not talked to us before. we are little premature to say consolidation is happening. we are still in the innovation stage. i don't know if there is one clear winner yet, but i'm excited to participate in defining what that looks like. caroline: let's talk about unity and variety. you're sort of bringing the band back together, as one of our producers said.

what do you think about your old life at facebook? facebook has come up against a wall of criticism surrounding fake news. are the algorithms to blame? could the algorithms be better? bret taylor: this is a nuanced problem. i look at things like fate news abuse. you cannot just slap on an algorithm and salt human problems. fake news is obvious, and then there is really biased news, and where is the line drawn? it is not a black and white line. it's just indicative of the influence of the special platforms on our lives. if you look at the american election that does happen, it was really defined by twitter and facebook. the companies are just grappling with what that means. what combination can we apply to make sure people are better informed?

and how do you adopt the social element of that? it is a social network, there are humans involved. there needs to be accommodation a policy and technological changes. is going to be really complicated because a lot of these things are great areas. it is easy to hold a black and white examples and trivialize what is a very complex problem. caroline: we have the administration coming in on friday with the inauguration. are you glass half full or half empty about the new administration? bret taylor: we are just trying to remain optimistic and focus on the things that are shared, as our policies and priorities of the government. there's a huge number of federal agencies that want to move off their legacy solutions to the cloud. that was happening during the obama administration and will happen during trump's.

we want to help contribute to making our government more efficient. caroline: it's fascinating, the way in which the president-elect uses social media to communicate with the world. are you optimistic are pessimistic about twitter as a business at the moment? bret taylor: i'm on the board, so i am really loyal to it. i really believe, the company has gone through well-documented struggles in the past. you see the influence it's had on culture and our society with the past election. it demonstrates the potential energy that the company has. i think the company is really focused, and being in the place to be up-to-date, to see what's going on right now. twitter is unique in that respect and it is an important tool in our society. caroline: you talk about that focus, and we saw jack dorsey

saying he's tackling abuse, editing, as well as driving conversation. can he do that while he still has two jobs? bret taylor: i can't speak to the internal management of the company, but what i appreciate about what we've talked about as a company, is focusing on what we do great and what twitter is great at, which is being in the know, being part of the conversation. i think that focus will follow through with a great user experience, which means the business will follow. caroline: you've hired a company because you thought talent was there. how is talent in san francisco for companies such as yourself and twitter? can they get back the level of talent or do they have to start buying other companies again? bret taylor: when an engineer or

designer is choosing where to work, there are a few factors, money and stock options, but there's also a mission. how do i derive satisfaction in what i do every day? salesforce and twitter are very mission driven companies. i think that is why those types of companies are able to attract such high quality employees. twitter will be able to endure some hardship and still retain great talent is their mission and product are so important. caroline: it's been great having you here. thank you for your time, bret taylor, ceo of quip. u.s. companies and government agencies suffered a record number of data breaches in 2016. the group saw over 1000 attacks, 40% more than in 2015 and comes despite more aggressive cyber security spending.

it's likely to approach $19 billion in 2018. coming up, we will dig into productivity apps. a ceo joins us next. this is bloomberg. ♪

caroline: netflix hitting an all-time high during thursday's trading, rising the most since december 6. the company capped his first year as an online tv service by setting up a record number of it customers.

it added more than 7 million subscribers in the fourth quarter and more than 5 million of those were outside the u.s. the newly minted unicorn video company startup is gaining users. usage grew 67%, according to a new report on the identity cloud management company. joining us is the ceo, todd mckinnon. who else is in the news? todd mckinnon: the last time this kind of -- slack along with zoom continues to do very well. another surprising growth story this time was cisco umbrella, which is helping customers be

more secure in deploying these applications. caroline: some of the old kids on the block are catching up with the new kids. who are the players being pushed down the ranks this time around? todd mckinnon: there is a lot of growth across the board. we're seeing these new solutions like skype replacing traditional collaboration tools like yammer. the usage of yammer has steadily declined over the last three years and being replaced by more modern alternative. caroline: is microsoft suppressing yammer purposely? todd mckinnon: the number one app is office 365. microsoft is going to the world and basically saying move your email to the cloud. that is having very interesting effects, not only leading to the success of office 365, but the data shows the companies that use office 365 use a constellation of cloud apps around that. using that best-of-breed is very

prevalent. caroline: but not as much as if you had google suite in set of microsoft cloud. todd mckinnon: the data shows if you use google as your email core, you're more likely to use a broader array of cloud applications. there are some things included with office 365 that some companies use as a default. but companies that use google are more best-of-breed. they are used to the innovation google delivers and they want to have the best tools around that, to complement that and make it more innovative and productive for their users. caroline: it seems to be a burgeoning area, the enterprise area of technology. are you seeing with the likes of cisco, perhaps the older players are playing catch-up, or will they be buying up some of these smaller, individual startups? todd mckinnon: everyone realizes the transitions happening in the

cloud and how they can transform their organizations in digital companies, how they can build better websites and reach their users. it is a tremendous opportunity for every organization to transform themselves into a digital company, reaching new users and grow their market share. they realize cloud technology is at the core of it. because it is a huge transition, all of the vendors, whether it's new or traditional vendors, they are in the game and being aggressive about trying to provide value to customers. we think it is great, because we think there is room for everyone. people like to use a lot of different services. the days of one salesperson selling you everything you need to run your company are over. companies and users have choices to use the best solution to drive their organization forward. caroline: and that is where you come in, concern about all these

different vendors and personal applications. this is where you bring security around it. todd mckinnon: exactly. we build the identity cloud. you need a cloud for your identity data. keep track of all the people that access your technology, whether users, employees, customers. it makes sure you are securely connecting all those people to the technology. because of that, we can see in aggregate the trends of who is adopting what in what is taking off in what is waning and how companies can be successful from these technologies. caroline: talking about a lot of unicorns, your investor base is phenomenal. are they pushing for an exit? do you want to ipo or sell your business?

todd mckinnon: whatever we need to do to grow the business and make customer successful, that is what they have been behind forever. these firms are not new kids on the block. they have seen that if their companies focus on the customer and make them successful, the returns will be there long-term. caroline: you'll have to come back. thank you very much indeed, todd mckinnon, great to have you on the show. steven mnuchin faced heated questions from senators. what he had to say about tech giant apple, next. let's check in on ibm, shares still trading lower in the after-hours. the cfo said the company salt macro challenges in the you cake -- in the u.k., brazil and

, brazil but growth elsewhere. this is bloomberg. >> china grew double digits in the fourth quarter. the strength was in the banking sector. our largest clients are upgrading to our latest technology to continue to run their infrastructure. ♪

caroline: ahead of the presidential inauguration, a number of cabinet hearings took place on capitol hill. donald trump's pick to lead the treasury department was in the hot seat. he faced sharp questioning on future tax reforms. he singled out apple. >> the fact that we have companies like apple that have hundreds of billions of dollars offshore because of the differential in tax rates and they are being penalized to bring back money. one of the things i think we all agree on, and i've talked to the president-elect, and he believes we can bring trillions of

dollars back on shore so that that money is invested in american businesses and creating jobs. caroline: another confirmation hearing on thursday, donald's pick for a department of energy, former texas governor rick perry. back in 2011 he wanted to eliminate three agencies. at the time, he could only named two of them. the department of energy was the third. >> if confirmed, my desire is to lead this agency and a thoughtful manner, surrounding myself with the expertise on the core functions of the department. my past statements, made over five years ago about abolishing the department of energy do not reflect my current thinking. in fact, after being briefed on so many of the vital functions of the department of energy, i regret recommending its elimination. caroline: and a quick programming note, with all due respect continues its special

coverage on bloomberg television. they will look at the key issues facing the incoming trump administration. do tune in. bloomberg will have special coverage of the inauguration on friday. it all begins at 10:00 p.m. eastern and 3:00 p.m. in london. that does it for this edition of "bloomberg technology." due to special coverage of the inauguration friday, "bloomberg technology" will be an hour later. we will speak with the managing director and founder of greycroft. he will join us for the hour. check us out on twitter. that's all for now. this is bloomberg. ♪

>> inauguration day, president-elect donald trump will be sworn in as the 45th president of the united states later today. we take a look at what to expect from his first days in the white house. >> janet yellen backs a strategy for a gradual rise in interest rates and seeks -- sees risks in an overheated economy. the dollar drops after the fed chair's comments. >> ending on a high note. china's economy accelerated in the last yarder of 2016. g.d.p. rose 6.8% but what price growth? >> and live from the economic forum in switzerland, doom