>> at 1:00 p.m. here in hong kong. toshiba shares are reversing earlier losses after the company said it spinning off its chip business. is march 31, following an extraordinary shareholders meeting. it says plans are still undecided at the moment. the company will hold a press conference at about 2.5 hours time. hastrump administration touted a 20% import tax to pay for the wall, but stop short of explaining how it might impact consumers or how it fulfills his

pledge to make mexico foot the bill. an iron ore mine in brazil might collapse capnce a 15 people 19 months ago. the company cannot completed in environmental study. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. let's have a look at how the currency markets are doing. dollar-yen, the dollar peso 2133. ♪

>> i'm caroline hyde. you're watching "bloomberg technology." coming up, a packed hour of earnings ahead. we'll fill you in on the rosy outlook and the big misses. plus creating the biggest power couple and wireless space. we will break down the secret and thewith it ceos consolidation race in the industry. and after the private equity explosion in silicon valley, will get the lay of the land for 2017. first, to the lead. profits trailed estimates. extendingping in trading. earnings-per-share fall short of expectations. it's up from 5% last year. however there were a few bright spots. the company continues its

stronghold on advertising, beating analyst expectations on paid clicks. joining me to break down all the of ars is the president research firm. welcome to the show. us an overview because there's a lot to wade through, operating income and revenue both of 20%. >> you have to take a step back. here's a company that makes massive amounts of money, has massive levels of growth and yet lowle are finding those areas. the problem is always about expectations and obviously we will talk more about that. the ad ratio to click numbers, the amount per click is clearly a challenge for them. what is good is we are seeing them spending money on some of these other bets that i think will pay off in the long run. i think the have a number of

interesting opportunities. google recognizes they have to extend alphabet, has to extend beyond the advertising business model, and these bets slowly but surely are going to start to pay off. i think we are seeing some of those signs of spending in those areas that we will see later. caroline: let's dig into the advertising revenue elements. i'm seeing cost per click falling. but, they are still managing to lure and more people to buy those adverts. is it a worry -- >> to a decree, -- degree, the declining cost per click is part of the trend we would expect as people moved to mobile. conversion rates are still lower on mobile devices, so the advertisers marketing those businesses are less inclined to pay up for clicks that happen on mobile devices. that is more or less to be expected. the bigger question is around

the click metric in general. we are hearing that our customers are starting to question how valuable are clicks are overall. caroline: you don't have to click on ads anymore. >> obviously the search engine is google's cash cow and has been for quite some time. the default behavior for an ad on a search is to click it and click all those blue links. on youtube, it's very different. you are viewing an ad. your opening up to a whole new range of use cases, michael new range of different verticals. you don't tend to click convert to buy laundry soap, for example, unless you are shopping on amazon. that can open up a cbg category. the whole click metric will end up getting a lot of noise, the bigger and the more important youtube. caroline: interesting. we are hearing from the ceo of google. he is saying that key trends powering, machine learning, three biggest bets, youtube their first one. cloud, and hardware. let's stick with you about the

cloud and hardware. cloud, they say, the fastest growing area of the business. >> microsoft also showed big growth in their azure business. it's a very large area and there's a lot of opportunity for everybody. this is definitely a case of raise all boats kind of thing. we will see google to. continue to expand the cloud business as we can start to leverage some of their machine learning, ai capabilities, integrate that into their cloud offering, that offers a great way for them to differentiate somewhat from what microsoft and amazon are doing. both lowe's companies are doing that as well, but each one hasits own special sauce and flavor. this is a company that is heartily dependent on one area. for a lot of people, it does raise some concerns long term, how long can they possibly

sustain that? they spent a lot of money advertising the pixel. as part of the reason why those costs were so high. we've all seen the ads. google home looks like a nice piece of hardware. they had they dream on the vr side. there are interesting areas they are starting on. they're clearly laying a foundation to do some nice growth in hardware and additional services on top of that hardware. caroline: back to the youtube element of the business, you think this will become the powerhouse? when does it start to show its dominance? >> i think it's a huge opportunity, and i think where people get it somewhat wrong or diminish the opportunity is thinking of it as tv dollars moving to online video, and that's not all it is. it is growing the pie scenario. there are all sorts of businesses where the owner maybe has an iphone 7 and can create a quick video and then promote that on youtube and facebook, for example. that's an example of an

advertiser who never would have bought a tv ad. all those tv ads are likely going to move towards digital overtime where consumers are's running time on youtube. it opens up a whole new set of demand because of the lower friction and lower barrier to entry. caroline: it's been great having you. another story we are watching, shares popped in trading. bloomberg news reporting that the verizon ceo approach the chief executive of liberty media. verizon close down over 1% on the news. t-mobile and sprint edged up. coming up, our coverage of the major tech earnings rolling on with microsoft. we'll break it all down. caroline: welcome back. the chinese financial technology >> the boost its receiving.

we will break it all down. ♪

caroline: welcome back. the chinese financial technology company controlled by billionaire jack ma is buying u.s. money transfer service moneygram international or a whopping $880 million. the deal comes at an opportune time for moneygram. a white house spokesman told reporters thursday that president trump may call for a 20% tax on imports from mexico. the announcement calls after mexico's president, enrique peña nieto, reaffirmed they will not

pay for a border wall. trump previously said he would consider halting money transfers from mexico, which accounts for 10% of money gram's transactions . microsoft's second-quarter sales and profit exceeded analyst' projections. shares up in extended trading, when you are looking at the bloomberg. it's the first earnings report for microsoft since the company completed its $26 billion purchase of linkedin. joining me is kerry johnson, -- cory johnson, and still with us is bob o'donnell. relatively across-the-board -- >> the azure business continues to grow for them. nearly doubled. there's no sign of that slowing down. there's a huge opportunity out there, as we discussed briefly before, amazon, google, and

microsoft all driving this business. a lot of interest there, and we are seeing each of these vendors and microsoft in particular trying to focus on adding interesting artificial intelligence, speech recognition capabilities, so that other developers can take advantage of this on if i'm going to use microsoft's cloud services. we will see a lot more exciting developments in that area. the office tree 65 business is interesting as well -- 365 business is interesting as well. in the long run, that has some nice financial benefits. we are starting to see some of the opportunities they are deriving from that as well. interestingly enough, even those windows. this did ok. caroline: that old chestnut. >> that old chestnut still has some opportunity. they were heavily involved with gaming. there nicely positioned as we move forward. caroline: something the ceo put into play. what about the acquisition, linkedin?

did we get any hints as to how that will start be adding to -- cory: they are separate businesses now. the question is how long will that be the case, microsoft almost more than any other company that has survived as screwed up merger after merger going back decades. can this one be any different? they hope so. this is a separately operated company. the results in the first quarter that is consolidated is going to be separate the question is how much linkedin will be in the future. >> with office 365, there is a very interesting mix between some of the linkedin capabilities with office, as you tie contact information from outlook and other things into linkedin, that seems like a reasonable mix. caroline: potential there. what about intel? i know you've been all over these earnings today. cory: intel is really interesting. with all the companies we are

talking about today, microsoft, alphabet, intel, we are talking about the seismic change in computing of moving from companies buy lots of equipment to companies borrowing equipment and doing it over the counter. you see intel tried to wrestle with that issue, where they have that fantastically profitable business. as the pc business is contracting, their server business very profitable, trying to move into a lower margin environment where they will have the internet of things, more modem, more memory. what he had to say to us about the pc market was interesting. intel summarizing sales. as we enter the year we have a somewhat cautious view for the pc tam, total addressable market. they expect pc's to continue to contract. at the same time, they think their data center business might be strong.

when a look at how can they guide towards flat margins and growth, still growing, that is by selling better stuff and try to keep those margins together on the other side. we expect the average selling price to be better for all their products. they bring new products for the data center business. at the same time, we are looking higher growth for low memory products -- margin products, which will hurt their high-margin business. caroline: what we saw with alphabet, having to sell yet more adverts. weigh in here. intel could do rather well. cory: adverts are ads, translating. bob: i did get that, but thank you. modem opportunity for intel is clearly there. intel is kind of like google anyway, in the sense that cory said, they have been focused on a profitable business.

they've had to deal with the other bets business much earlier than the other folks have. they have data center but they have made big investments in automotive now, making big investments in iot, and i'll tara with fpga's. even in pc's, the interesting thing is, yes, people are buying less of them, but the ones that people are buying are more expensive. cory: it puts him in a different place in the world of networking. i talked about distributing computing on the cloud. networking is so important. bob: we are seeing this evolution of the data center from a semiconductor perspective, and intel's recognizing we can just sell the cpu, we have to have these other pieces. that is what they are starting to bring in. some of those pieces play nicely in automotive, in iot, and other areas where there's a lot of excitement.

that is why i see them becoming much broader company as well. caroline: thus far trading after-hours, they are completely flat. thank you for bringing it to life, both of you. coming up, verizon targets charter communications. could this help verizon keep pace with rival at&t? this is bloomberg. ♪

caroline: the verizon ceo approach liberty media ceo greg macey about a possible combination. that is according to people familiar with the matter. the entity would create the largest internet provider in the u.s. let's take a look at the possible deal. >> the combination of verizon and charter wouldn't be a

merger, he would be a megamerger. it's not the first one we've seen recently, like at&t's bid for time warner and charters's recent move. those acquisitions may charter the second largest cable operator in the u.s. currently, verizon is the number one mobile carrier and number two telecommunications provider. the company has been facing a slowdown in its core line of business. the proposed deal would bring together thousands of miles of -- fiber-optic capacity. the industry gets more saturated when consumers cut the cord. caroline: quite a bit of information to go through on this potential tie-up. joining me, our guest who covers the telecom and tech sector. thank you for your time. verizon numbers as we saw this week worth looking too pretty in terms of the earnings. with this tie-up be helpful?

>> the tie-up with charter would not cure the ills of the wireless business which is having issues. competitors are offering unlimited plans and verizon resisted that probably because they have 100 million customers. buying charter, and people talked about some of the fiber they have, that is in a section of the market. it's unclear how high-quality the assets are the charter has that would enable 5g versus perhaps comcast, who has much better fiber investments have been made historically. it doesn't really shore of anything, it adds a different business and when the generates its own free cash flow. caroline: we are starting to see perhaps a division in the ranks of what the best tactic is for the future. at&t and time warner saying content is king. here we seem to see a deal that

once the infrastructure. >> for a while the ceo of verizon, strategy was go all wireless. they were shutting a lot of this fixed stuff. all of a sudden you have this issue where maybe wireless is not the best issue or only thing for them to do. there's a lot of pressure on the company to make some type of changing transaction for them. bloomberg's alex sherman talked about them looking at 10 companies. that makes a lot of sense to us. they have issues in the wireless business. as a host of companies they are, looking at. with the new administration there tends to be this anything goes mentality where you can really person -- proceed with any type of transaction. caroline: maybe not an at&t-time warner one. what about the 10 other companies that verizon could be looking at? who would be a good fit in your point of view? >> if they are interested in fiber, if they want to actually fix the wireless business or have capacity, and hurt t-mobile's ability to get capacity, they should by dish.

if they want to get content, maybe they should look at disney. if they want to diversify the slowing business they have and get more slowing businesses, maybe they should look at vodafone. there are so many different options that verizon can look at going forward here. the fact that they are talking to charter, i think it's interesting. it's not really surprising given the challenges they face. the bigger question for comcast, if we are in an anything goes environment, why shouldn't comcast also be looking at charter? maybe this will conversation with liberty's liberty saying to comcast, why don't you guys come and take a look at us before the spectrum auction is over and all these deals start together some pace? caroline: regulatory hurdles, are you seeing fewer, amid this new administration, or is a land not clear yet? >> doj should have major issues

with the sprint-t-mobile transaction, yet the market seems to think with great confidence that that transaction can get done. on the fcc side of things, i think the perception is probably rightly that there's not going to be as much problem with transactions of the fcc using the power they have evaluate these things based on the public interest. the doj is a methodical type of organization. we are skeptical if sprint-t-mobile tried it that they would be successful. if we are wrong and the market is right, why shouldn't comcast be looking at charter right now? caroline: is there -- if there's one bit to be placed on it, it is the growing excitement of m&a, telecoms, and media. is that the way it will go? >> 2017, it seems like these companies are gearing up. the one company that seems to benefit in all of this is t-mobile. t-mobile is unaffiliated. they are controlled by deutsche telekom.

there are a variety of bidders who would be interesting in that t-mobile assets. if t-mobile got bought, that would have positive implications for dish, because dish has a lot of that spectrum. a growth trajectory that is unmatched in the world is for his revenue growth. no one is growing faster than t-mobile right now. caroline: thank you so much for your time. coming up, alphabet shares plunging nearly 3% in after-hours trading. we will talk about what's working and what's not. ♪

x i have an update of the top stories. cpi was down .2% from a year back. the weaker yen rose as higher oil prices drive up inflation. worries remain over wage growth and consumer spending. a hong kong developer reported a 45% junk and underlying profit with revenue almost doubling. says the lack of available land to buy was one of the company's biggest challenges. >> one of the root causes of hong kong's ills is housing that

you mentioned. the root cause is the lack of supply of land. the present administration tried to do a lot, but there is limits to what he can do. quite apocalypse now, but it might be of apocalypse near. the doomsday clock has been moved closer to midnight with scientists saying there's a growing disregard for expertise that puts humanity's greatest. for over half a century. at its worst since 1953. havee that happens, we global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's look at how markets are trading across the region. bit of aeeing a little

mixed picture across asia. a lot of markets closed for the lunar new year holiday. we are seeing a lot of trading volume as well. the nasdaq and s&p slightly lower but the dow still holding onto that 20,000 high. the nikkei gaining for a third consecutive session, up .2% in weakensde as the yen against the dollar for a second consecutive session. the topics on track for its first weekly gain in around three weeks. worth noting that the regional indexes holding at highs we have not seen for around a year and a half. hong kong closed out pretty flat and head of the lunar new year break and malaysia closing down .4%. a good session in australia which closed out the week higher by .8% today. are watching is toshiba. it will update the market after the close of trade in japan,

confirming plans to spin off its to raise allowing it much-needed cash. we will be live from london at the top of the hour. this is bloomberg. >> you are watching "bloomberg technology." take earnings up, microsoft and intel reporting earnings after the close. profit missed analyst estimates after the internet giant work to market a slate of new hardware. telling investors early indications are encouraging. happy customers we saw in the

holiday season. google home was a popular present that many people opened on christmas morning. we have committed to this for the long-term, creating a google seamless experience for the consumer. you can expect to see us expand our offerings. caroline: let's bring in someone who knows the company inside and out. , the a google veteran chief officer of google europe and u.k.. thank you for joining us. the numbers as you see them, do you think these are positive steps that will have rewards eventually? >> of their spending money on a lot of stuff. they talked about marketing of hardware, but there is another part of our bet, and that is losing $4 billion a year. that's from a fiber, driverless cars, sciences.

analysts and investors are wondering which will pay off and when. if none of them do, they are losing $4 billion a year. caroline: cloud it showing significant growth, where do you think it could go? >> youtube will be the biggest driver of alphabet's revenue and profits for the next two to three years. clearly, a good state. it is digital video, and as tv audiences decline and advertisers want to interact with consumers through video, youtube is in a good spot. firstly, it is dramatically underpriced. when we look at pricing of youtuber versus tv, youtube is half the price. even with how it is now. on top of that, they are growing their inventory, the number of people watching videos. they should be planning to launch new ad units and

opportunities, which will drive volume up. they have signed a deal with cbs and a talking about other deals to bring live nfl games to youtube. it you add that together, youtube is fighting for a large share of the global advertising market. if google could get a 20% share, that could make it a $40 billion business in the next few years. caroline: we had a guest on earlier, adam berke, who said maybe we should not be looking at costs per click as a metric anymore. down 15% for google, overall. more people are buying ads for google. should they, if youtube will be so big? >> it cannot be a red herring forever. there are three drivers of the drop in click. none of them are worrying.

there is a move from a desktop to mobile, and in categories where google makes a lot of money like insurance or e-commerce, conversion rates on mobile are lower and therefore clicks are lower. another two big reasons for cpc's to drop, lower in certain countries, and clicks on branded queries. people searching for a brand, and the clicks are cheaper. there are three drivers of cheaper cost per click, and two of the three are red herrings. when it comes to desktop versus mobile, google does have a potential issue, they need to make money with mobile. facebook has worked it out and google should be able to. facebook is higher than google prices. they have a roadmap of what they have done to get there. google should, to a large extent, copy facebook. caroline: i want to talk with facebook -- about facebook with you.

facebook today had news they hired -- to do the vr and ar element. this is the next big platform, major computing platform, vr and ar, do you agree? >> i am on the fence. if i had to pick one or the other i would say it is a red herring. they make lots of interesting bets that may not pay off. i will not say never, but when i think about the potential uses for training for all sorts of things, but not to be a massive parts of people's lives, it could shift the needle in terms of revenue. can vr and ar make a meaning all -- meaningful contribution to the revenue? i am not sure.

caroline: international relations taken on the twitter platform to mexico and the united states. how are your clients looking to engage with twitter at the moment? is donald trump accessing his client, his user base in the right way? what is the future, in your view? >> advertising thoughts around twitter are pragmatic. twitter has a large origin, they have good targeting. there are few advertisers stopping twitter. they are defining who they are in a world of social networks up-and-coming. what we stand for, who are we, and getting their mojo back. it is easy for new advertisers to not get around to spending on twitter because there is always a newer, shinier object like snapchat, interest, or instagram. twitter still has an identity

crisis. but advertisers are not running away. a good audience means good revenue. caroline: ceo of adparlor, thank you for joining us. back to the top story in tech, verizon is eyeing charter. it would lead to the u.s.'s biggest internet writer. president trump has criticized at&t and time warner. he said to much power would be in too few hands. at&t and time warner do not compete with one another. verizon and charter do. one called it a pipe dream, literally. a great story. talk to us about why this is indeed a pipe dream from a regulatory perspective? >> from a regulatory perspective, if you look at at&t

and time warner, obviously donald trump has managed that merger many time on twitter and in speeches. he said the power would be in too few hands. but they do not compete with each other. you have a verizon and charter reportedly considering a merger. they play in the same sandbox. that would potentially be problematic from a regulatory perspective under a new situation. these are abnormal times and we do not know what to expect. the media industry in telecom, believe republicans and job administration will be more open to letting the companies get bigger and stronger if it does

not involve job losses. i do not know if it would be the case with verizon and charter, but people perceive this administration is more open to the idea. if they think that deal can go through, certainly you would think at&t-time warner could go through. it throws a wrench and what he has been saying to read a lot of that is not necessarily because he thinks the at&t-time warner would be bad for consumers. it has to do with the politics of it because time warner owns cnn and he is not a fan of the media right now. caroline: we are seeing the shared pop in communications. you're saying potentially what consumers might or might not get out of it, what about shareholders? >> when we look at these megamergers, the mass does not work right away. if you run numbers on time warner and charter they would be diluted. it would hurt their earnings because it is such a big, expensive deal. you have to rely on synergies like cost cuts. that happens and the deals get tougher to justify. then they run into problems. it is hard to look at it and say it will be good for shareholders. on the other hand, when it is

hard to come by growth and companies do not have a lot of options and everyone is merging, it makes sense to do it. maybe the scale of it, they can offer packages for customers like a bundling wireline and wireless assets. down the road he could create value. i go back to the numbers and it is hard to make it work. it will be interesting to see if this does come together. if it does it'll be interesting to see how the terms play out and if they can get to that point. even looking at stock prices today, charter trades at a much higher multiple than verizon does. that is tricky when the buyer has a higher stock than the target. caroline: fascinating piece, great analysis. thank you for your time. a story we are watching. profits for the first time in the second half of 2016,

according to people close to the company. they believe they won't remain profitable in 2017. coming up, we will speak with panera. where the firm is looking to invest. ♪

caroline: it is about to get cheaper, the number two u.s. ride hailing company will cut prices to attract customers and increase the amount of cities it covers from 300 to 200.

lyft competes for drivers. while the tech market has slowed down, according to a report from sketchbook, the technology industry got more support from private equity firms. $159.8 billion were completed. what about 2017? i am joined by brian ruder of permira. he owns two of the largest private companies in silicon valley. thank you for joining us. i know you well from our european days. if 2016 was so hot, competition fears, have your tactics for growth, is that changing? >> it is not. we are pursuing the same

as strategy for the last 30 years, which is twofold. we pursue wonderful growth companies, tech is a core part of that. not all of our competitors pursue that strategy. many pursue a cut costs, a great way to make money. the other is to look for international businesses. we were headquartered in europe and are early days and headquartered there today. we expanded global operations the a 14 investing offices around the world. 25 professionals come from different nationalities. we are in the local markets in which we play. a lot of what you are saying in terms of increasing competitiveness you have seen in the u.s. market, for sure, has been driven by a number of factors. that includes availability and leverage, evaluations on the rise. but the tech and software is the core part of where we invested, has been such a successful area over the last 15 years. it went from almost no deployments in early 2000. people used to think you could not do a software company.

to being one of the most successful areas in capital deployment and in returns. we expect that to keep going and more and more companies are falling within the lens of acquire ability for the private equity industry. we think it will continue to accelerate. caroline: i want to focus on one of your deals. it was not just a private equity-led real. you got tech giants to come in, microsoft joined you. how is it working with other tech giants when you are growing such a business? and how is the market grown? >> i cannot speak for salesforce partners and microsoft. we think it is a great sign a private equity can coexist collaboratively with the tech titans. informatica is a great leader and has pioneered the space in the last 15 years. it is a growth investment.

they are joining us in investment, a sign they believe that the company will be an exciting growth for some time to come. caroline: when you look at growth, by the levels you felt you would not get in unless you could drive it up by a certain percentage, doubling or tripling it? >> there is a good arranged for us, above market by a significant majority. but, below the range were the ipo market becomes exciting. that is in the 10% to 20% growth range. it is not exciting for a public market, it is way too expensive for the private equity players looking to pay single digit multiples for everything. 10% to 20% is good for us. caroline: what about charter and verizon? verizon is looking at yahoo!, time warner.

if these emerge they may have to release parts of the business. is this rich pickings? >> of this is an area of rich pickings. when you see a period of large corporate consolidation, it is a great time to go after transactions. we saw that in 2012, genesis was one of the largest companies in the valley. they were previously owned. post those commendations, there are high-quality businesses. it works in reverse. we bought a company in magento in 2015 that fell off of ebay. anytime there are periods of corporate consolidation, you find you do not need the strategic agenda. caroline: some of that

consolidation is down to the trump administration. they may need an easier regulatory environment. what else have they brought to you? anything that changes about the way you will invest? >> it is hard to say, too early to tell. we will watch the next several months carefully. caroline: very quickly, exit strategy. you want to move away when ipo is not too exciting. is that something you will see more of? >> i hope we do. it is exciting cisco acquired one of our companies several years ago. they had filed to go public and then cisco swooped in. it has been a playbook that has been used before.

cisco being a software buyer is an exciting thing to see. it is great to see strategic buyers back in. will they become petition for us on new transactions? sure they will, but -- it is not a problem for growth folks alike ourselves. caroline: thank you very much. still ahead, tesla topped 40%. what is behind the trump? this is bloomberg. ♪

caroline: tesla has sued the former pilot of its team. they have taken confidential information to try to recruit a dozen former colleagues. they also alleged they had been collaborating with the former head of the google self driving car project. tesla seeking a court order barring him. finally, through much of 2016,

elon musk faced scrutiny about whether he can pull off his ambitious goals for the company. but since musk has become an ally and advisor of president trump, things have changed. check out my bloomberg. musk and trump, their friendliness is paying off. 40% to gains it since december 1. that is the share price. we are now at 252. this is an important line of communications to donald trump. many people factoring in that maybe this allegiance we are seeing in the administration is paying off. tesla benefiting by making things in america. excitement for the model three. that is pumping out factories. a lot to be said for the euphoria in the stock price. how much is down to the relationship with donald trump?

we will see how much that continues over the last two trading days. that does it for this edition of "bloomberg technology." ♪

anna: trade war rooms on the border. canceledan president his trip to washington after donald trump promises to rewrite nafta and make mexico pay for the wall. theresa may meets with president trump today. the u.k. prime minister hopes to lay the groundwork or a post-brexit trade deal. flattening the curve. the boj buys out more bonds to keep yields low sending the yen into its biggest decline in a week. the swiss banks profit more than triples in the fourth quarter. we break down the numbers later this hour. ♪