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cory: mrs. bloomberg technology. coming up, hewlett-packard revenue taken a 10% dive and of the stock with it. we will break down the first quarter earnings results. explaining why he is putting money into pin drop. and square hits its stride after a record fourth quarter. our interview with the ceo. but first, a 10% fall in revenue for hewlett-packard. and shares down to about 6%. the revenue at $11.4 billion and it probably up $267 million, unchanged from a year ago after loads of acquisitions. now the company offering a week profit forecast for the current quarter and fiscal year.

we have our guest host for the hour, as well as the chief research officer at idc. what happened? >> what you are seeing is this is a company that has really cut and cut. and is extremely lean in terms of overall expenses, so as the top line goes, you will see that right away on the bottom line. now, the company experienced some dynamics in the quarter. they are suffering from the impact of fx and currency fluctuations. commodity prices took a spike. so that flows to the bottom line. and do not forget, you talked about acquisitions. i would say those are not that impactful yet. cory: obviously. crawford: fair point. they named a new head of services, a new head of sales,

and a new head of the channel. and i think that, from an execution standpoint they did have issues. and you see that in the results. and where the top line goes, right away you -- there is no way for the company to maneuver when they have a shortfall in the top line. cory: i want to bring up a chart of the free cash flow numbers. this is the number i look out for a lot of companies and it is important for hp but i will give them a break. with $2.4 billion decline in free cash flow, i think it was related, there was a footnote and i do not want to read too much into it, but a footnote saying they were moving liability to the joint venture they created in the quarter. crawford: there is going to be a significant amount of puts and takes in terms of what the history of the company has

been. make no mistake, it was a weak free cash flow quarter. strata. cory: let me ask you from a bigger picture level, i will not make you model the company. i think it is interesting to see this change in computing, when we see the results, i do not care if it is from ibm or anywhere, even cisco, because you see we are going from a world of selling servers and computer equipment to every company selling it to three of them, microsoft and google and -- >> all the coveted brands we grew up with -- company brand we grew up with are going to be less relevant. you see it in the numbers. highly correlated with hp and none of the companies know how to get on the new wave. keith: and they are just mining

the cash flow that is left in the companies for the next five years, but there is not a core growth strategy. unless they get lucky and acquire something that has momentum and rocket power behind it. those are hard acquisitions, because that company would know they have momentum. and the founders of those companies do not want to sell them. they have a structural problem fundamentally and the world has changed and when you have three buyers, they have pricing power. at the end of the day -- cory: so the start up companies, the buyers of amazon and big partners. keith: when there are only three of them you are selling to, you do not have a lot and that is a structural problem with these companies. cory: i want, crawford, the server business at ibm, i mean hewlett-packard enterprises, the software is down, the services down. the servers business looks

alarming because you always wonder who they were serving in the first place, as more turned to microsoft, amazon, google, to provide the computing. crawford: be careful with it, there was another issue in the quarter which i'm sure will come out, which is that one very large service provider put in order out. and to that point from keith, that has an impact on these companies. these guys are operating in, they need to be incredibly efficient and when you see one of those hyper scale companies pushing the datacenter build out and upgrade out, it has a huge impact. you want to get underneath hp, they have the largest channel of any manufacturer of service and that is weakness -- server and that is a weakness, and going to the cloud hop feels -- hp fails that and it makes it even more important may not have the orders push to a large-scale service provider like microsoft and other hosters and cloud

service providers around the world. cory: the hard question. meg whitman, this was her decision and this is going to be the growth company. and hpe is going to be where we grow and my thing that i will put my stamp on. so warren buffett would say if you take a manager with a great reputation, it will survive. is this her fault? or is it the industry's fault? keith: probably both. i am not sure this business has a long-term viability or future in the way that people are going to do their computing. cory: so where is meg whitman as a leader? keith: she has a significant challenge and this is probably a role for a technologist. they need to jump a generation

ahead and it is not a business role, that is technology. cory: thank you for taking the tough question. i will not look for that christmas card from meg anytime soon. keith: i am already off that list. cory: there are so many people that have worked hard at hewlett-packard. we certainly want them to do better. and also working hard, we will check back with you guys later in the show. ok, coming up, john chambers betting his own money on a company providing that fighting voice fraud. and remember all episodes are live streaming on twitter, check it out weekdays at 5:00 on the east coast, 2:00 on the west coast. this is bloomberg.

cory: we will take a look at the call center business, billions of phone calls and trillions of dollars with bank transfers and product purchases. and one of the fastest growing forms of cybercrime, hackers getting information from the data hacks, and take the information and call the call centers for information and get your money. and pindrop has a big investor behind it, we spoke with john chambers and the ceo of pindrop. >> the business, asking you questions to identify yourself, it is a bad idea. it is frustrating you, it does not catch very much fraud. in the u.s., they are losing $10 billion to voice fraud and even more -- >> $10 billion a year? >> yes, because every single

call -- when we started, one in every 2000 calls coming in was far, now it is -- a fraud, now it is one in every 900 be brutal -- every 900. there are so many calls coming into these call centers. as people secure their online and physical site, it is the easiest thing to pick up the phone and get a call center agent to do your bidding. they are not catching the fraud. what is happening, all these questions are translating to in addition. billion, asking people -- asking people stupid questions. >> john chambers come how big is this business? john: it is big in terms of opportunity. you think about $22 billion spent either in fraud or fraud prevention. and it upsets customers. it will become a digital world, 500 billion devices connected, the surprise to me is voice is

not the past, it is the future. it the platform for the future. this is the company that is going to lead in security and authentication. it is not how do you prevent the fraud, they detect 80% of the calls with less than 1% false positives. almost every major secret breach you read about, 69% of them start with a voice call into the company. cory: i imagine your job is creating jobs at pindrop, but taking jobs away from the call center. >> what our technology does is it empowers agents to do their job better. they are treating everybody that comes to them like a criminal so now for 99% of the calls they can treat you with the wonderful customer experience and for the 1% that is not good, treat them -- what happens is, if you have a wonderful customer experience, you will call the organization with your echo, smartphone, with your standard phone. and when you make those calls,

because you make them when you are really in need of something . by giving people the great customer experience, you get them to come back to you over and over again. that means more jobs. cory: how many times have you been to the white house? john: probably 30-40. cory: that is what i figured. you know how that plays works better than any other ceo. i wonder what you make of what is happening right now in the white house with the trump administration and their approach to business. john: let me first say when you set a goal of 4% gdp growth it is attainable and you set it at 25 million jobs for the next decade, also attainable. oddly enough, the role models are india. focusing on using one million jobs a month, growing at 7% gdp and he thinks he can grow it at 10%, that doubles it every six years.

france, the last place in the world to start a business, we focused on it in cisco and they aligned and digitized the country. guess what the top venture capitalist investment in europe was last year? france. so startups are where the jobs will be created. the large companies will shed jobs around the world. so all of our job growth will be from the startups and instead of doing 90 on the nasdaq this past year and 35 on the new york stock exchange, we need to do 3-5 times that to get the growth we need. that is why these copies are creating jobs. i fell in love with the company. it is a job creator for the future and a great investor when it goes public. cory: maybe when we think about creating jobs, we should not talk about ford and united technologies, but maybe looking forward to looking at jobs and bigger ways. john: it is important to retain the jobs we have and the a

administration is doing a good job on that, but the new jobs will be startups. i am talking about the young presidents collaboration that once a year, they have their meeting, and it will be all about job growth. when you look at startups, when you are growing at 100% the number of people per year, that is what we need to do on a large magnitude. it is very doable. we set an audacious goal. what is fun for me being an , advisor to vj and watching the growth industry where they should leave their industry in terms of being the top security player, anything you have a question on voice. but also, their ability to go through the transitions p. now you are talking about voice going digital and what this company has positioned itself to do with authentication is exciting. cory: what is your notion of whether you want to be public or not? >> it is an important thing to

go public, because it affords two things. it affords liquidity, and it allows you to attract good talent. if i am going to offer you stock, how much is the value? are you going to take my word for the public market? it is definitely a great event. the thing is, we need to make it easier for companies to go public. right now, there is a stigma associated with going public. you want to grow the way you want to grow, and that is one of the things we just need to make it easier to go public. last year, 90 companies went public. that is not what you want. you want more companies going public. more people investing in startups and seeing liquidity for their investments. cory: that was the ceo of pindrop and john chambers the executive chairman of cisco. that calling -- bitcoin hitting a record today, it was up 178%

over the last year. as you can see, and investors could be hedging bets with the new policies, or speculation that the administration could relax regulations on the digital currency. coming up, how close to the edge we want to go. what elon musk would say. we will focus on him leading the company next. this is bloomberg. ♪

cory: time warner is clearing their way to purchase at&t. the cable behemoth, it is interesting -- in atlanta is being purchased, that price tag $70 million. the station is -- was an important part of that merger because it was the only way that

the fcc could relate that deal. and tesla shares sliding on thursday after investors digested the earnings reports showing the company with their cash burn at a tremendous rate and continuing for the first half of the year. and the cfo is quitting. yet, tesla, shares trading closer to their all-time high. big believers in elon musk. considered part of the paypal mafia, which seems like, you know, it is not a real mafia. no whacking involved. tell me about him. how long did you work with him? keith: he had already been displaced when i joined the company. cory: so the online banking company, he briefly becomes the ceo at paypal and then departs, but not in gloriously. keith: i believe he is the largest shareholder at ipo, so

it was a successful investment. we merged in 2000 and the market collapsed a couple days later. and he took over as ceo and stayed through august and then thiel came in, 2000 and september 5, really fixed the covenant. cory: what is he good at? keith: he shares of skills with steve jobs, being able to understand the business equation in a complicated area. and very few people can do that. there is basically very well that yields success and you have to be able to tweak the right variable the right. that is the key to building a complicated company. cory: there are so few critics of tesla, so i have taken the role of being one. it is a fascinating company with a cool product and horrible

financials. so how do you look at the business? keith: the future of auto is based on software and batteries. and tesla is well-positioned in software compared to all the other people in the world, and probably well positioned in batteries. two fundamental drivers of the future, plus design. cory: the batteries are panasonic's invention. keith: i do not think it will be commoditized over the long-term. there is a lot going on with batteries. -- propel thee no industry forward and i think that they are well situated to capture the innovation in batteries. batteries are pushing the envelope in theoretical physics and chemistry, so innovation is extremely difficult. we have invested in battery companies because we believe they are so important to the future of transportation and to the future of mobile phones.

i think tesla understands that and will capture most of the innovation. cory: it is a place where there are a lot of investor bodies there. i remember, one day i said, i will short any coming with the word battery and we had a short all of them. and they all collapsed. keith: that was before innovation in the mobile devices, so the reason these are so large and it is difficult to make them thin, it is with the battery. so as they become more capable and smaller, they allow better consumer electronics as well as better automotive innovations. cory: so, even though my they have about $3 billion cash left and they are accelerating the cap that before july. that is not enough -- keith: it is not the business for most ceos. it is complicated making this

work. that said, i think on the vectors of competition over the next decade, they are well positioned. i am not taken a position on the valuation of tesla, you could argue that you believe it will be the future but the valuation is off, that is a reasonable place. cory: the same kind of thing when people look at the snap chat ipo. it could be an important business -- keith: or twitter. it has more influence than facebook but it could be overvalued as a business. cory: ok, you are sticking with us. thanks for being here. i enjoy these conversations. coming up, square reaching a record high and we sit down with the cfo, next. and a feature i would like to bring your attention. and tv on the bloomberg terminal, you can see what we just did and all the interviews, whether they are live or old and you can get involved in the conversation. instant bloomberg message. you can't distract me. try it.

this is bloomberg. ♪

shery: 1:30 p.m., i'm shery ahn. reachedl premium income $22 billion with a profit at more than $4 billion. they are said to be among the visitors -- bidders. >> the under mental -- fundamental drivers of our business do not change. globalization. these factors are strong. what we said this morning is we have had a strong start to 2017

as well. we saw 2016 been very strong. 2017,17, also strong -- also strong. ery: the chinese search giant reported revenue of 265 monthly million monthly users. its chipims to split business by april first. toshiba once to raise $9 billion. silver delivering the best return this year among the 22 raw materials on the bloomberg commodities index. usually outperforms when

precious metals rise on demand. news, you areal watching bloomberg. let's get your check on the markets. asia-pacific. here is julia. julia: i'm going to show you three of the stocks. they are from three different markets. they show you the risk appetite we are seeing. samsung in korea, down almost three. onatonin -- bhp billiton also under pressure. the afx 200, closing down 0.8%. a stronger yen wayne on the nikkei. despite the resilience we are still seeing, you are also seeing the index down by 0.7%.

interestingly, a lot of these players showing a lot of support. we are going to be live from london at the top of the hour. this is bloomberg. ♪ -- cory: this is "bloomberg technology." i'm cory johnson. hewlett-packard enterprise out with results for their fiscal first-quarter. 10.5% fall in revenue. sluggish demand for, i don't know, servers, storage, software, services. crawford del prete, idc. tell me something happy about hewlett-packard. crawford: there are some bright spots. when you get under the covers, they made an acquisition a number of years ago, that's up very strong. strong double digits. there was a conversation we had earlier questioning the

relevance of hp. i believe it will be relevant long-term. the way people think about infrastructure will change. they bought aruba. when you have two or three devices per person coming into an enterprise, you have to upgrade your wi-fi. you have to do that all around the world. aruba is showing nice -- over 20% growth. the problem is they have these legacy products as well that, in some cases they are divesting, in some cases they are just older products that are now being retired. they are not moving into these new areas. those new areas are not contributing enough. the other area you want to look at with hp is technology services. that's one of their highest margin growth areas. it grew 4% in the quarter. it's a renewable revenue stream over time. i think it's an area that can contribute to margins going forward.

cory: kind of like santa claus. you can always count on hp to give us restructuring, going all the way back to the year of 2000. crawford del prete at idc. thank you very much. another company we are looking at is square. shares surging, record high on trading. ceo jack hersey, it's a part-time job -- jack dorsey, it's a part-time job for him. the payment volume up 34% year-over-year. how long can it grow like this? selina wang sat down with the ceo. >> i think it's been great to see the company go from the first problem we saw for sellers was how to take a payment. that has evolved to a pretty complex managed payment solution. it has become a point of sales solution. we started to build new products on top that really played to our unique advantages. this place to the cap -- fact that we have access to data that allows us to manage risk.

that is just one part of the cohort of products, that, as you said, now comprise 1/4 of our adjusted revenue. i think we can continue to grow core. i think we will continue to move upmarket. we are starting to shift from off-line and online for our platform. we can take all of that and go global. a lot of white space in front of us. exciting to see how that will drive our growth. selina: investors are excited about the newer lines of business and the white space that show more profitability. we saw a huge jump in ebitda margin from -6 to 16%. how much higher cannot number grow, and where would most of that -- how much higher can that number grow? where would most of that come from? sarah: we want to grow in a way that continues to expand margins. we think about a mid-single-digit margin expansion pace is good for here. that's the right balance of being able to take back into the business the other prophets that

we are throwing off and invest them -- other profits that we are throwing off and invest them back in to the company. just like this quarter where we beat the top and by the guide -- of the guidance by $7 billion -- we want to get more efficient in our operating expenses. we did a big build as we went public. now we are reaping the benefits of that. we don't need to keep building at that same place. jack talked a lot on the call yesterday about automation, which is important for our sellers. we want to put that in the products they use. it's very important internally, too, to utilize automation to make ourselves more efficient. examples would be using machine learning or risk. lots of opportunity there. i think that will continue to help grow the margin profile. selina: you mentioned global expansion as a key point. you are currently in japan, australia, u.s., and canada, but

it is still largely domestic business. the vast majority of revenue comes from the u.s. what can we expect the pace of global expansion to look like? sarah: for us, there has been huge opportunity here in the u.s. when you are a business that goes after commerce, following gdp's clearly a good route to take. that said, i think a huge stride forward foursquare in 2016 -- it happened at the end of 2015 -- was getting our hardware platform to a point where we could globally accept payments. being able to take both chips and contactless transactions. the u.s. has been the slow country in making that transition. we didn't have to have it here in order to be able to take electronic payments. now that we have shifted over to a world of chips and, more important, getting the u.s. to contactless, we have created hardware that unlocks the rest of the world. my hope is that will help us move faster now.

selina: as you are evaluating opportunities for international expansion, how much of that is going into your consideration for accelerating expansion? from an m&a perspective. sarah: we have historically been a company that does not do a lot of m&a. when we have done it, it's usually been to drive a product beyond where the current roadmap is. we have a roadmap for how to provide a commerce platform for restaurants. delivery will bring more sales. other times we've done m&a, it's been more about adding talent into the mix, very typical what silicon valley companies will do. i think it will be more of the same for us. i don't want to say that we would not use m&a to do something really big. we are always looking. if something serendipitously came our way, we would absolutely do it.

right now, i don't see something of that scale on the horizon. selina: square was one of the many tech companies to sign a legal document condemning president trump's executive order. how do you foresee developing legislation impacting your sellers, which are very diverse? sarah: the amicus brief on immigration was important for us to sign. we feel strongly that immigrants have brought a lot to this country. in particular to our sellers. these are the people who have found businesses, who worked at the businesses. small businesses are the lifeline of an economy. they have shown tremendous growth in the u.s. we want to make sure we stand for inclusion. that's true of our company, for the employees of square, but also true to stand in front of our sellers as well and help the -- be an aggregated voice for them. you can kind of act as a

powerful voice for what they care for and really be heard at our scale. that was why it was important for us to take a stand there. cory: that was the cfo of square. her name is sarah friar, just like the great bloomberg reporter, also named sarah frier. google is working on self driving cars. waymo is suing google for patent infringement. i want to go back to square and talk about their earnings report and the business. sarah friar is impressive as cfo. you brought her into that company. what was interesting about the quarter was that 1/4 of the revenues were from new things the company created in the last two years, and it was a really strong quarter on the revenue front. this is when he seems to know how to make stuff. >> it's almost $100 billion

stand-alone business now. which is really impressive. i could see $100 billion company just on the new businesses. square is a much better business. cory: agreed. >> you want to buy some shares? square's fundamental business attracts smb of scale. small and medium-sized businesses. square is catching up to into it in terms of -- to intuit in terms of its size and relationships. people will see that square can be the same platform that intuit is. intuit has not innovated in a decade, but it is still worth $30 billion. it's kind of an autoscaling business model, which is really unique. selina: you said they are able to get bigger and bigger

businesses and be seen very steady growth -- be seeing very steady growth. the starbucks relationship did not really work out. do you think they will be able to attract a business at that scale again while maintaining transaction revenues? >> starbucks is a very large business, fifth or sixth largest on the planet. there's a difference from going from an individual coffee shop to starbucks. there's a lot of room in between those. businesses of that scale can do a lot of things for themselves that most people don't want. they don't want to build their own i.t. group, security group, risk group, etc. as you get to a large enough is -- enough business, you can justify some of those costs yourself. you get all the reports, information, data, analytics, everything. there's a lot of demand for that, but that's not for everybody. walmart is not going to run on square in the short-term.

cory: when they going to get target, starbucks, walmart? maybe that's not the game. >> i don't think that's the best way to look at the market either. providing service to enterprise or big brands is usually not the target. it can undermine hp's market cap. selling to other businesses can be a much better business model longtail. selina: they've only penetrated a few million business -- small businesses in the u.s. they have much more runway to go, in addition to europe. cory: selina wang, keith rabois, we appreciate it very much. coming up, how trump's visa changes could attract billions of dollars to the biotech industry. this is bloomberg. ♪

cory: the companies that power the more than $300 billion biotech industry in the u.s. >> to crank out discoveries, u.s. biotech companies rely on the world's best scientists and researchers. >> there is confusion right now and there's uncertainty. confusion and uncertainty are never good. >> he is the cofounder of a biotech incubator in cambridge, massachusetts. >> i came here from germany. i'm a green card holder. about 73% of the companies here at lab central were founded or cofounded by immigrants. >> the 28,000 square foot

facility was designed as a launchpad for startups. >> they work on new technologies in life sciences, also new drugs to cure diseases or medical devices or tools for use in the laboratory. >> technology he fears is threatened by the administration's controversial immigration policies, including possible changes to visa programs. pres. trump: i will direct the department of justice to investigate all programs that undercut american workers. >> the program allows tens of thousands to work in specialty positions in the u.s. more than 20,000 visas were granted in health and medicine/life sciences.

he is developing vaccines at a company based out of lab central. >> there's a significant population of immigrants who are in the biotech industry. having all these additional stumbling blocks would really take them back and really put a stop to some of these key, important talents that we need to bring here, that would accelerate some of this life-saving medicine. >> for many, it's personal. an employee at lab central, british citizen, and the daughter of a pakistani immigrant -- >> we have four children. we do worry about them and worry about their future within the u.s., with all that's happening at the minute. it's just an immigration ban, but where does it end? how far is this going to go? >> u.s. bioscience firms employ 1.7 million people. according to an industry backed study, including a rising number of foreigners.

a draft executive order seen by bloomberg reads, "our visa programs should be administered in a manner that prioritizes the protection of american workers." >> i think it's really a sign that you're going elsewhere to try and recruit somebody, because you cannot find someone to fill this job at your company with the pool that is readily available in this country. i don't think it is a real risk that this will be used to undercut wages in this country at all. >> chief executives of global drug companies with u.s. operations criticized further restrictions. astros in a capacity told bloomberg, "science doesn't have borders. anything that gets in the way of science exchange does not help." >> this has been a big driver for our success in the past. it's important that we maintain that.

cory: our bloomberg news reporter, doni bloomfield. waymo suing uber. we will dig into that story next. this is bloomberg. ♪

cory: breaking story. alphabet's self driving unit, waymo, and how it is suing uber. we have help right now. bloomberg news legal reporter joining us now as well as keith rabois from coastal ventures. tell me what this is about. you've got the suit. >> waymo claims that uber has taken their technology for self driving cars, and that's led to about half $1 billion in profits -- in revenue. they claim that a former executive from waymo stole about

14,000 confidential files from their server and took it over to uber, where they are building a similar program. cory: we've heard these stories before. i can't think of how many companies. that sounds like the fitbit jawbone lawsuit, where an employee moves over, fitbit claims, we didn't know they even had it. these suits can sometimes be really serious. >> these suits are different from patent infringement. there is an ethos against patent infringement in silicon valley. i would have been shocked if they sued uber directly for violating ip. i think that's unacceptable and a line that alphabet will enforce. cory: what do you mean "ethos against patent infringement"? >> it's unacceptable to use patents offensively in most to

silicon valley companies. there is that kind of outrage against using patents offensively in silicon valley. cory: we have seen a lot of suits like this. >> we have. as you mentioned, the jawbone-fitbit. this is sort of the first suit we've seen come out of google, where they are really taking the offensive, as you said. how this shakes out is going to be a huge question. there's a lot of tech and money at stake. cory: we see so many companies and the limited pool of talent resources, just in silicon valley, they hire hundreds of people in silicon valley. you've got google, tesla, apple, uber, all right here, all trying to go after people who know how to make self driving cars. >> i think there's a difference between what you might have in your brain, which is hard to see

and enforce, versus taking copies of documents. i think there is a pretty bright line there. i think those who violate that line should be fired. it's perfectly proper to pursue their employer for using any of that information. that would obviously be a problem if uber had awareness of that. cory: you're saying uber, if uber knew of an employee they hide from google, came with documents, bloomberg should fire the person. >> i know of many companies who have done that, where they found an employee took information from a prior job, especially if the employee tried to hide it, it is absolutely a firing offense. cory: deflategate all over again. thank you very much. keith, good to see you. keith rabois from khosla ventures. friday, we will dig into the

drone industry. some really cool stuff going on there. check it out. this is bloomberg. ♪

>> top global financial firms meet about the french far right's plan for a euro exit. brexit battle. torys hit back after austria eas -- austria's chancellor says the u.k. has a $50 billion euro -- has a 50 billion euro bill to settle. and we break down numbers with the c.f.o. at 7:00 a.m.