with and addressing the south korean parliament. back the --ying you mohammed saying they know what they are doing it we're told the crackdown has snared $33

billion. economy, governor philip lowe said it was the makers are optimistic, but bill remain concerned about the path of household spending and debt. global news 24 hours a day powered by more than 2700 journalists and analysts in more , markets inntries australia shipping -- closing up shop today. ice level in 2008 at doing very well. 29,000.ying, just short a picture of the other markets in the region. ♪

cory: i'm cory johnson in for emily chang and this is "bloomberg technology." broadcom and qualcomm brace for a battle. a $105 billion offer hangs in the balance. -- the biggest deal in the history of tech is turning hostile. the telecom match made in heaven is no more. what went wrong for america's fourth-largest wireless character. the massive document leak. it shows how apple sidestepped billions in taxes. multiple documents in the so-called paradise papers. we will look at apple's involvement in offshore financing. first, more details about the bid by broadcom to buy qualcomm. broadcom has made a $105 billion offer. the qualcomm closing price before bloomberg broke this deal -- now, broadcom is saying it is ready for a hostile takeover if qualcomm's board doesn't play ball.

if the deal goes through, it would make broadcom the world's third-largest chipmaker behind only intel in samsung. columnist brooks sullivan, let me start with you. >> it is a little crazy to think about. we've seen a time of really big m&a deals in the past few weeks. i think what is going to be interesting here is that broadcom is contemplating taking this hostile. we haven't really seen a big hostile m&a situation -- emily: we just had this same conversation on bloomberg radio. let me ask you. help us understand what is

different about the chips that qualcomm makes and the products that broadcom makes. >> the overlap is in the phone. if you connect to a cellular network, you are using a qualcomm chip. if you connect to your home internet using wi-fi, you are probably using a broadcom chip. obviously, some similarities but not quite the exact same thing. broadcom is very big in what is called switches, little chips that send information around data centers between computers. cory: it sounds like broadcom's emphasis on moving information

from mobile phones and qualcomm more on the receipt of that information and the processing. ian: that's a good way to look at it. what is important here is how that is going to factor in to the considerations that regulators are going to put on this. if you talk to broadcom, not going to be a problem. i spoke with the ceo earlier today. we think we can see this through the regulatory process. cory: there's a tantalizing clue you just left us with. as it relates to m&a activity and this white house, we saw the broadcom ceo say that he moved the company to the u.s. that was sort of a head fake because they already had facilities in california. this would concentrate a lot of power in one company and shirley

put them in a better position to raise prices. brooke: i think that you are going to have one company controlling a very significant part of the market. this deal would have been impossible if you didn't have broadcom trying to become a u.s. company. it is still trying to buy brocade communications. cory: that is important because it controls chips that are involved in storage. so you will have one company controlling what happens in storage and the management of information whenever it comes off a desk. then you have the management networks, then qualcomm chips in the phones. you would really have from stem to stern, except for cpus, have broadcom sitting in the middle of all of that. brooke: then you would have chips that are used in the automotive industry. this would really be a behemoth.

it does sort of make you wonder, what were the behind-the-scenes machinations going on here and this decision to relocate to the u.s.? cory: over a week or over a month. brooke: it really was just a few days, sort of whiplash. cory: one of the reasons that qualcomm is so cheap right now is that it is not getting along with its biggest customer, apple, and that apple is threatening -- it shows that apple might say, we don't need you, we are developing our own devices. it sounds like the broadcom ceo has worked that out. broadcom thinks they can get a better relationship with apple

off the bat. ian: when you are asking these questions, you are basically asking, do you think i haven't thought about this? they are kind of famous in the semiconductor industry, dancing the dances. qualcomm is getting into processes this year, into pcs and servers. that's a lot of questions that are going to be asked come a lot of potential customers are going to be asked to weigh in. for him to be this confident would indicate that they have done work behind the scenes to kind of grease the wheels. cory: i don't think he lacks confidence. maybe that helps the deal get done because qualcomm could argue, if we are bigger and stronger, we can finally offer a processor competitor to intel.

ian: that is certainly a part of it although our understanding at the moment is that qualcomm did not like this deal. they think this is a real lowball effort and they think the regulatory hurdles would be massive or at least very time-consuming. we don't think they are going to embrace this one and they will have to go to their shareholders and convince them this is in their best interest if they want to get this completed. cory: thanks for joining me here in the studio. coming up, sprint and t-mobile call it quits with merger talks. "bloomberg technology" is live streaming right now on twitter. check us out weekdays 5:00 in new york, 2:00 on the west coast. ♪

cory: now, a story we are watching. disney is set to hold talks to buy 21st century fox's movie studio and other assets. according to a person familiar, the companies are no longer discussing the deal but fox and disney shares both rose on the news and both declined to comment. shares have plunged today after last-minute -- sprint hasn't had a profitable year in a decade, servicing $38 billion in debt. it would have turned sprint into a competitor big enough perhaps to challenge at&t and verizon. the chairman tried to calm the

nerves of investors. >> the sprint share dropped after merger talks with t-mobile fell apart, but we can buy more sprint shares at a cheaper price. we would like to buy them to our limit. cory: i don't think that was his real voice. nonetheless, joining us, crayton harrison. this is a huge deal to me because it means so much for so many companies in technology. sticking with telephones, what does it mean for number three and number four two not come together? >> it means more competition, more deal, lower profit margin. whenever you have a market with

four carriers go to three carriers, competition kind of slows down a little bit, things get a little more relaxed in the wireless industry. when you have four competitors, things stay pretty competitive. unfortunately for sprint, number four, losing money and not being able to hold onto subscribers, that means they have got to get their act together. cory: what has happened with t-mobile the last four or five

years is really remarkable, at least to me. they've gone from being a pretty weak player to a very strong one, not just gaining market share and fixing their own finances and their own business models, but they've had a dramatic effect on at&t and verizon, and they didn't do it from a position of market strength. crayton: you talk about some of the things that now are sort of universal in the industry, like paying for your device separately if you want to, not as part of your contract, unlimited plans. a lot of this stuff, t-mobile was the originator, at least the popularizer of in the industry. when t-mobile started doing that stuff, it was number four. you will see sprint try to innovate in the same way while t-mobile continues to push the envelope. cory: i always think one of the

most important, least reported numbers in all of technology is the capital spending of verizon, at&t, and t-mobile and sprint. t-mobile and sprint will spend a lot more money on the technology infrastructure which has to be good news for the tower companies, the networking companies, every bulldozer out there hoping to dig a ditch. this is good news because they will be spending a lot more money. crayton: i think those are among the happiest people today. if you've got shares in a tower company, this is your day. they live for network infrastructure in the wireless market. cory: i want to switch gears a little bit as you are there in los angeles. you are right down the block from the fox studios. who could have imagined disney coming down from burbank, making a play at those fox studios? m crayton: it's a bit of a surprise. it's one of those deals where, when it first comes out, you start to scratch your head.

one thing that fox has going for it is this international business. obviously, disney is everywhere around the world, but they don't have the level of penetration that fox does in some of the markets in europe and india. another thing that is talked about more and more is distribution, wanting to get closer to the consumer, which is why they are doing some of these streaming services over the next few years. but, fox has a sizable stake in the sky in europe, one of the largest pay-tv providers. maybe disney is starting to look for a more direct relationship with consumers through distribution. cory: it seems like it is such an acquisition. we know the talks are over now. but it would be zigging while the rest of the industry seems

to zag. they would be acquiring cable assets that are part of the fox empire at the same time that everyone else is saying, cut your losses on cable, cut your cords on cable, bill flores skinny bundle. it seems like disney would be doubling down where they already are with espn. crayton: i understand what you are saying. but, if you think about it in terms of content assets, in terms of brands, it becomes kind of a different story. fox, the studio itself, has things like the x-men, a marvel property. this is the sort of thing that disney might want to take a look at. cory: thank you for joining us. coming up, and outgoing interview with the cisco executive chairman, outgoing. he's going to share the lessons with us, next.

cory: big bad cisco has always been about startups. the company acquired dozens and dozens of startups, seeing sales grow from $1 billion to over $40 billion during his years at the helm. we talked to him about startups and what the government can do to encourage startups. john: i think we are viewing this as transactions, not part of a bigger picture. today, we are not at all. in the first five years of this decade, we all grew our startup community by 12% over five years. our peers like australia, france, india grew by 60% comedy chinese grew by 100%.

we are not entitled. we have to disrupt or get disrupted. you are now seeing companies such as france, which was the last place you and i would have done business three or four years ago, become the startup nation of europe. they don't do it by transactions, they do it by combining the whole picture together. gdp growth, startups, how does that tie into your tax plan your education system, your security? the u.s. is the only company in the world that does not have a national digital policy. we are behind. while tax policy changes important, we are lacking the rest of the world in areas we must lead. i think these were a good first step that they were a step we should have done five, 10, 15

years ago. how startups will be the job creation engine. 40% will go away. if we're going to get jobs, it has to come from a startup community. we are in last place and we don't have a cohesive plan to tie it all together. cory: even as silicon valley seems to be the empty of the world, everyone i talked to says we are creating the silicon valley of the sand, of the ocean, of boston, israel. it seems that silicon valley is still held up as a model. what is missing? what needs to happen? john: we talk about silicon

valley being the example of the rest of the world, then boston 128 two decades ago. you've got to disrupt as opposed to be disrupted. it's got to be across all 50 states, not just in silicon valley. i would argue silicon valley is out of touch with the rest of america in how we create jobs. as we go around the world, modi is looking at creating silicon valley is in india. he is talking about gdp growth of 7% to 10%. jpmorgan came out saying they predict india will grow at 10% per year. india is growing because of modi's digital agenda, job creation. france set a pace to do this across the entire country. we need to do it in every city in our country.

we have to bring education with us so young people can participate in the future. cory: is there something that can be done with cash repatriation that can encourage startups? the last time, it went into dividends, not necessarily hiring, r&d. it went into shareholders pockets. if the goal is to encourage investment, what needs to be attached to a repatriation tax policy? john: you have had both the opportunity but also the challenge. we have to think of how we solve a problem. we need a much more competitive tax system. dropping the corporate tax rate for startups to 20% is a great

start. we've been got to combine two, when we repatriate money, will this create a chance for startups? we will see a market where startups see an exit that are as well. there is no golden single solution. you get to say, how do you combine this in a policy that combines start of engines with tax policy, with education, looking at a national startup mentality, and how do we catch the imagination of republicans, not to argue about tax policy, but talk about the future in terms of the opportunity. right now, throughout the central part of the nation and southeast, they don't believe they will have a better life than their parents.

france's changing their whole education system around startups and digitization, partnering with cisco. they will do it first with pilots, then across the whole country. why doesn't the u.s. talk about changing the education system which is broke? we are moving too slow, we don't have a national policy. this should be something democrats and republicans are all over. repatriation and tax policy is just one element. you need to say, how do we change the future? cory: moore with cisco's john chambers coming up next.

reporter: here's an update of your top stories. president trump has arrived in south korea, trade and the the secondeats on leg of his five nation tour of asia including a joint press -- press reading to the south korean parliament. kong,share index in hong the biggest rise in 13 months. this has been going on in saudi arabia. inmp says he has confidence

the anticorruption drives saying they know what they are doing. new zealand says the country remains opens for business but she wants a change of emphasis. saying the economy would benefit from the tpp. >> absolutely new zealand is an outward looking economy. economy rather than an overinflated housing market. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's get a check of how markets are trading. part of this trading session over to juliet in singapore. juliette: pretty good. -- asxs november 2000 7

the firstg high area time it has closed above that level since 2008. a solid session by 1.6%. closing at 1992 highs. it has been holding on for some time. 113.98 you very positive across the board. energy players rallying on the back of what we are seeing in saudi arabia and pick players loosening the index. enhancing up by 1.3%. $.10, up by 3%. index points, it is the front runner in the region and a number of other players including the apple suppliers in

taipei. the australian market coming back in singapore after being sold off yesterday. live in london for the top of the hour for the break europe. -- daybreak: europe. ♪ >> microsoft has long been a dominant software company that it's one great hardware is xbox. -- there's a line outside the microsoft store at -- the xbox one x. there are also increasing developments. joining me is microsoft's head of gaming. this is a change for you guys. why the change? >> gaming is a huge business globally, growing double digits.

microsoft has some unique aspects with xbox live, minecraft, the products that we build. this is a category want to invest in. cory: minecraft as an acquisition -- my daughters are obsessed with microsoft's minecraft. on their phones, wherever they are, they take the games everywhere. it seems to me that is a vision of a modern success. a game came out of nowhere. it got to be successful because the gameplay is great. not pretty but wonderful, modern legos or something. >> you hit on a part about players playing games across devices. your family can play minecraft. somebody can be on nintendo switch playing with somebody on an iphone. they didn't buy a device from us but they are using xbox live. for us, the console is an important part which is why we invest in xbox one x.

cory: which brings us back to the launch of the device. why spend presumably hundreds of millions, if not more, developing a new xbox console? >> you want to reach gamers on every screen. the television screen is an important place. cory: the most important? >> no. the customers the most important. none of the devices are the most important. we have, with xbox, a unique capability. xbox one x, 4k console. xbox one f, great value in gaming. when somebody goes on to a phone and wants to stay connected with their friends, we can bring those services to the gamers. cory: how important is market share? >> the two metrics i look at,

engagement of players, how many monthly players you have across any device, and what does your software and service revenue look like for those players? boxes aren't the big part of the business. the margin of the boxes is minimal. we subsidize the boxes to get them out there in many cases. if someone has a phone, we still want them to play our games. services like video distribution, xbox live, minecraft. we think come on the television, there's a unique capability, it's a great communal atmosphere. that's an important part of the gaming ecosystem, but there are one billion gamers on the planet. cory: it seems that xbox live and the like have been very important to your success. i still know about kids who have speakerphones out instead of using live. what does that say about the way games are designed?

>> xbox live is on android, ios, and we see millions of customers on those devices that we never see on other devices. you want to fit the customer and device with the right scenario, whether voice, text, watching gameplay, or playing games. you hit it. make sure you focus on the customer and the device they want to use. cory: what does development cost for a serious console right now? >> it is from $1 million -- you talk about the ecosystem. you are talking about people starting games now with an idea. today, you can put an idea out there and grow with the community. we had a game preview program that allows people to get feedback from the community and grow. on number 12, player battlegrounds, one of the

hottest games. it ships early. it is kind of in a pre-beta phase, and there are millions of players. cory: i'm not a big gamer. i love me some forza. >> there are very expensive games with the highest production value, rivaling what you see in television today. cory: what is the top-of-the-line development cost for the biggest games? >> you could easily build a game for over $100 million. there's no asymptotic growth. when you have games like a minecraft or like gta that have been played for years, you want to give them more content. if you can continue to give them content and they had a great experience, that's awesome as a business. cory: i don't want to downplay this hardware device, but it is iterative compared to some other

devices. do you think we will see more iterative releases going forward or are we at a special time where the market is ready for this kind of thing? >> uh, the customer will tell us. xbox one x is compatible with anything you purchased on xbox one. it plays all the games but gives you a capability on a 4k television that no other product can give you. if people react to it well, we will continue. cory: lines down the block already for this device. a lot of great stuff. thanks for coming in from seattle. we appreciate it. phil spencer, microsoft's head of gaming. coming up, the second part of our interview with john chambers. he will talk about the startups

that caught his eye, where he's putting his money, and why. ♪

cory: back to our conversation with cisco's john chambers. he has long focused on market transitions. in part to our interview, how market transitions affect his view of the landscape. john: i have a lot of limitations but i'm usually good on market transitions, from the way internet played in the future, voice becoming free. startups, the big picture is simple. that is where all the job creation is from. i'm going to invest in 10-12 startups, spread pretty evenly in the united states and around the world.

they will vary from a drone startup to a defensive drone startup to transparency and open government, to social media and how that would change the customer experience, to security around phones, to a company like pin drop that we talked about in february of this year, moving from avoiding fraud detection to voice identification, all the way to our next source of protein which will be from crickets and insects. you will consume the majority of your protein 15-20 years from now from crickets. cory: i think the problem is so interesting. protein is so expensive, the most expensive part of every meal around the world. it is also the most time-consuming thing to create. it takes three years to raise a cow, for example. it also has a big impact on the environment. talk to me about this cricket investment.

john: when i ran into mohammed at the clinton global initiative, the last thing i was going to do was invest in the next food supply. basically, crickets can be the most safe form of protein, raised at 1% of the space -- we are running out of space to have the amount of meat proteins and agricultural proteins. it does 1/7 the environmental impacts. crickets will be a staple, in my opinion, 15 to 20 years from now. it's a leap of faith but it really talks about getting the transition, the internet of things, robotic cricket farming, capturing the cloud data capability to raise these faster than before. cory: where are you talking about in terms of markets.

john: first, i think it can solve world hunger. you will see it go everywhere. the atlanta hawks already put in their stadiums, one of the top restaurant is putting it into their restaurants. they are a michelin three-star restaurant in san francisco. you will see it play a huge role in global hunger. where else can you make a difference in every impact of our lives on this new source of protein for the future? cory: fascinating. it's got to be fun to do this stuff. i imagine it is part of your learning process to go through this with all of the companies

cisco has acquired, to see a market transition happen while a product transition happens as well. john: i couldn't talk about it the last time we were on your show with a brilliant young ceo there. that is the common theme you see across our startups, a great ceo. when he got started, it was about fraud detection, eight out of 10 of the largest banks. they are now doing voice authentication. instead of you and i being treated almost like a critical when we call into our bank or credit card, mother's maiden name, date of birth, all this information, they will use our biometrics and change this from a negative experience to a very positive experience.

you are seeing a transition there. you are seeing the same transition in terms of government transparency with a company called opengov. basically, they provide transparency in the budgeting process and allow government leaders and citizens to see what you are doing and how you are spending your money. it sounds basic but nobody does it. the state of ohio is probably the lead here. they have moved from number 46 in the nation in two years to number one in terms of financial transparency. i tried to get these transitions right in every category. cory: the drone startups are so interesting.

john: the drones will change productivity in areas such as insurance or areas such as mining. but also defense drones. you will see, i hope i'm wrong, in the next 18-24 months, a bad guy come to a coliseum or government building and drop munitions on that location. you saw it already with mexican organized crime. you side with unauthorized drones flying over military sites. defensive drones will be as important as offensive use. a startup called d-drone may be one of the most exciting things for the future. cory: coming up, tim cook going back on his word? major revelations about apple's use of offshore tax havens.

♪ cory: apple's forward-looking financial planning has never been in clear focus then today. apple sold $7 billion in bonds today, not waiting for tax reforms. today, we saw documents obtained by the international consortium

for investigative journalists showing another approach to taxes from apple, the company shifting billions of dollars in offshore tax holdings to the small island of jersey, the smallest of the channel islands between england and france. apple chose jersey to avoid a 2013 crackdown on ireland's controversial tax incentives. apple ceo tim cook said, "there's no truth behind it." joining me to discuss is alex webb, who covers apple for us. this issue of taxes for apple is a big one because it is the biggest company in the world. this pile of cash, nothing has ever been seen like this by any company ever. alex: one of the graphics that was in the story published by bbc, and other publications in the international consortium of investigative journalists to show apple has more offshore cash than the u.k. or the u.s..

cory: tell us about jersey. how likely a financial center is this? alex: jersey is well known as having a disproportionate number of banks, law firms dealing with this sort of stuff, a lot of private equity funds, venture capital funds are domiciled in jersey because of these incredibly low tax rates. our editor over here is from jersey. if you have, for example, a foreign use card from a british bank, often that is routed through jersey. cory: it had the ability to protect themselves on some foreign taxes and crackdowns by the eu. apple said, "apple believes every company has a responsibility to pay its taxes. as the largest taxpayer in the

world, apple pay's every dollar it owes around the world. nonetheless, apple wants to only pay when it owes and pay as little as possible. i think this clearly demonstrates this. alex: apple has managed to route many of its foreign profits through ireland and reduce its tax exposure through various complicated means there. when ireland cracked down on some of these roles -- this is what senator carl levin accused apple of doing, that essentially they were not domiciled anywhere. if they were managed from outside ireland, they didn't oh any tax in ireland, but if they weren't domiciled in the u.s., they didn't pay tax there either. ireland said you had to be domiciled somewhere. apple did some fishing around, looked to see where it might be possible to pay taxes, and one answer was jersey. they found this -- at the center

of this allegation and reporting, they placed the management of the company, in theory, in jersey and therefore, they were unable to avoid some of the tax. cory: their cash management business is headquartered not in high tax california but in nearby nevada which has infinitesimal taxes compared to california. we showed tim cook opening the doors excitedly. hopefully we will see repatriation, like a brinks truck roll in. maybe they don't need a tax repatriation as much as other companies because they've been able to go through all these machinations to set themselves up for the current tax environment, not a fancy tax environment. alex: also, the huge beneficiary of the fact that interest rates are so low. they are still able to reward shareholders and keep the stocks up, and they have done so by

issuing billions of dollars in debt. they still have vast debt offerings in order to reward their stockholders. cory: $116 billion in debt. about $259 billion in cash. as much as they borrow money, they are minting money even faster. alex: if you look at the rate their deaths have increased compared to their cash position, there have been whisperings among some of the analysts, people like movies, about the concern over that pace. and whether the lines will cross. that won't happen the immediate

future but if there is no tax reform, that will become an issue for some of these analyst. cory: they may want to keep the near-death experience of apple in the past in mind. alex: if you look at the trajectory of stocks of the past year, a lot is due to the iphone x, but some is attributable to the cash position. it is also a reason for people to want to bet on apple for the phone. apple has all this cash they can return to shareholders. cory: 58% rise in the stock in the past 12 months. something pretty amazing. that doesn't for this edition of "bloomberg technology." this is bloomberg. ♪ who knew that phones would start doing everything?

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anna: trump in korea. the u.s. president arrives in seoul with trade and tensions over pyongyang set to dominate discussions. we are live on the ground. manus: backing the saudi crackdown. trump endorses the kingdom's anticorruption purge. dating senior two-year high. anna: succession planning. william dudley announces an early departure next year. he sees an easy move from yellen to powell. >> i think it can be a very smooth transition. i think governor powell and chair yellen are well aligned. i think it will be very evil is very. manus: and labour's business