emily: -- selena: this is "bloomberg technology." hour, up in the next tesla has been subpoenaed by the u.s. regarding elon musk's efforts to take the company private. jd.com's very bad day. missed second-quarter

financials. and hacking the midterms. the report of a candidate being hacked. how secure are u.s. election systems? to our top story, the sk'sstigation into mu tweets about taking tesla private. the electric carmaker has received a subpoena from the sec. he tweeted last week he had funding and had arranged for a buyout. all this controversy has taken the spotlight, but where does the pace of production for the tesla model 3 stand? we visited a car factory. waycompany is well on its to building three electric cars per week.

but production may be up to 7% to low. craig andiscuss is alex. i want to discuss the bizarre turn of events. how significant is this new data about the reporting? aig: it would be significant ercore is on point. one of the many questions we have, one that may have been is how is the company doing amid this huge distraction of maybe going private? it looks like they have been able to maintain production and they see a clear path to a level of manufacturing for the model 3 that would enable the company to hit production targets. the company has talked about

getting to positive cash flow. if musk is going to pull off to beambit, it is going important he is able to execute on what he says the company is going to do. emily: what about this sec subpoena? investigations can take months and sometimes lead to no action. what is the potential impacts this could have? reporters in washington had a great story about the idea that an inquiry along these yearscan take up to two .even if it looks to us or other outside observers that this is not ok thethere was a violation, sec needs to dot its i's. -- seen pushseen

back against what the sec has wanted to claim, you see the ordeal that played out with mark cuban, where they tried to allege violations and mark cuban's audit to the ateneo, it was a long battle. emily: there is a lot of scrutiny right now. alex: they are working under how this dealon progresses. you have the initial tweet saying funding is secured, and the tweet about goldman working with elon musk. we reported that goldman had not received a formal mandate. next steps are going to be to figure out whether they can ifse the funds, $80 billion, all shareholders decide to take

this company private. goldman sachs have been there for elon musk four years. they have worked with him and tesla through all the additional share sales and given money to the man himself. they are willing to back him in these efforts. emily: goldman and must have relationship. how much money has goldman made off of musk and how much more could they make if this private deal goes through? helped lead of about $200 billion worth of share sales. the deals to take this private are significantly higher, $30 million-$50 million. made from they equity market share sale. it does seem like they have had this guy's back for a while. there was also a sanford

bernstein note about the odds of a successful private deal are less than 50%. raig: it does feel like it is a difficult thing to do, to give odds. within the last few days, a venture company has put the odds greater than 50%. it is a guessing game. so, despite the fact that we are nine or 10 days in since this initial tweet. a formalt sent proposal to his board. there was the impression with his initial post that this was just around the corner. it has been clear that is far from the truth, we have a lot to learn about how he is going to

make this happen and whether he can. emily: there has been so much speculation about who the investors are. do we have more clarity about who is involved? he has had conversations with the saudi investment fund. that did not mean a signed agreement. s on behalf of elon musk have reached out to a bunch of shareholders. he does not want control focused on one major shareholder. dell took the company private and had a large share of control, with silver lake, the private equity that helped him. elon musk seems to be avoiding that kind of situation. takee is suggesting to this company private. he says it will be a perfect vehicle, where all the shareholders could remain.

it is a question of how many will decide to tender if this option becomes viable. it is a question of how much money is needed, who is willing to back this company, and whether shares will be less liquid. have been told that elon musk does not want to lose control. you had a story about the outside leverage that the saudi arabian fund has. will elon musk be forcing control in order to get the money he needs? craig: that is an important question. the blog that elon musk put out put thethis week, that saudi fund in a position of having to answer to that, and handed them some leverage. if the saudi's came out and said, we don't have the funding , it puts elon musk in a

position of real trouble with the sec. if they come to him with a significant amount of money, it could mean that they would have a huge shareholder that would be able to have sway over the company, and the whole reason for this deal is for him to not have to answer to the pesky short-sellers, and be able to run the company in the way he thinks is best. emily: we will have to wait and see. alex and craig, thanks. about to go into the brick and mortar part of the movie industry. the world's largest internet retailer is in the mining to -- running to buy landmark theaters. the company already owns a film and television studio. landmark has a chain of 50

theaters, backed by billionaire mark cuban. jd.com takes a major hit in the second quarter. just how big of a lost did this e-commerce company incur? that is next. on the radio. you can listen on the bloomberg out, bloomberg.com, and on and sirius xm. this is bloomberg. ♪ ♪ emily: on wednesday, tencent

reported its first profit drop in a decade. chinese tech giant came in at two disappointing earnings. the secondsses in

quarter surged to $319 million, eight times what analysts were expecting. have lost a third of their value as it faces competition from alibaba and amazon. the tech sector in china has been under pressure. library, youthe can see the value of chinese techs are slipping compared to u.s. counterparts. to get more insight, we spoke with the managing director and founder of the chinese market research group. >> j.d. is in trouble. this is because of increasing competition. rise ofseen the companies in the last six months that are starting to take away share from jd. its business model is kind of outmoded. a lot of technical innovation and e-commerce in china --

people talk with their friends online and have to convince others to buy the same products. if they do so, they gets bigger discounts. the biggest problem is competition. emily: are those same competitors eating into alibaba's market share as well? shaun: alibaba is a lot stronger. they have been able to adjust. which we have found is the rise televisionaming shows. i interviewed a 40-year-old woman in beijing who has been shopping every day on alibaba because she finds the shows are quite interesting. you have individuals opening up shops, kind of like a home shopping network, and they are selling their own products. alibaba is quite strong. jd is weaker. there is a big consumer market,

with the u.s.-china trade war affecting consumer confidence. will not buymers because they are more expensive and target the upper middle class. how are you seeing this trade standoff impact consumer confidence? are there particular companies getting hurt the most? shau president trumpn is: correct to criticize china. there are a lot of unfair trading practices in the country. good luck if you are an internet company trying to expand in china. facebook and twitter are banned here. the trade war is not the way to go. china is offsetting some of the tariffs from the united states, by sourcing from india or s oril, soybeans or pecan

other products. you are not yet seen the hit on the numbers in china. if i were a starbucks or apple, i would be concerned because it is likely the chinese consumer is going to start to protest or boycott those kind of american brands. it is a deeply unsettling time if you are an american iconic brand. we seen that type of political risk for american brands? thisrt has just done partnership with jd. is that enough to shield them from concerns? not shield them completely. when south korea tried to install and missile defense system, china went after south korea. number ofd the

chinese tourists visiting south korea. numbers dropped 40% year on year in april 2017. we have not yet seen that against american companies. has beense government very measured. they have been protesting against trump's's policies, but not against american companies. when you start to get nationalism involved, and get that mixed with a weak economy, all bets are off and american companies can get into a lot of trouble. emily: j.d. is not the only company to have had a difficult earnings season. tencent also had terrible earnings. what is going on? is this regulatory freeze because of a pure craddock shakeup? is the chinese government trying to assert its authority? shaun: there is a lot of

political risk in the country today, not just the trade war. a lot of chinese companies are starting to get more regulatory approval problems from the chinese government. is gaining more power and trying to import his ideological views on the country. that is starting to impact areas like gaming. tencent was hit by some of the bureaucratic issues. great company and very close to the government. i expect there to be a good rebound over the next six months. to buy tencente on the cheap. i would not buy j.d. on the cheap. they have been hit by regulatory issues, rather than just the changing competitive environment. would why in this case

china be willing to put one of its national champions at risk, given the national economic picture, which is looking a little bit shaky? is looking to create five national champions in the internet space. they want to control them. they are saying, if you listen to us, we will let you have great opportunities. they will punish them once in a while to remind them, if you don't do what we want, we will end your business. if you do what we want, you can make tens of billions of dollars. tencent is working with global governments to improve its official public administration system, whether that is booking a doctor's visit or paying your bills online. everything is going through tencent. conversationas our

with shaun of the china market group. walmart has rapidly built upon its digital strategy in the last few years to compete with amazon. it seems to be paying off. we will discuss more. this is bloomberg. ♪ ♪

itsy: walmart has amazon in sights. the company reported earnings results. business is humming along at its stores and online. its e-commerce business is a focus point for investors. it delivered a solid 40% gain in sales. ,, they had a strongest -- the

strongest grocery sales, the most in nine years. they have been working to incorporate fresh food in their grocery offerings. a really good post for comparative sales. walmart has seen sales up over 4.5 percent. analysts have hailed this as a banner quarter. they have been aggressively defending themselves against amazon and whole foods. walmart has a bigger share of the grocery aisle. amazon does not even make the top five of u.s. grosses. they have been refreshing their and they have, been interested on online orders

you can pick up in the store. they are aggressively pursuing that strategy. announcedy recently they would be offering that service in some of their whole foods stores. selena: walmart has clearly been very aggressive. how does this compare to amazon offerings? emma: we are still waiting to hear more about -- what amazon is going to be doing with whole foods. when amazon reported earnings earlier, whole foods was not really mentioned. when it comes to walmart and you mentioned they saw e-commerce growth of 40% last quarter. compared to second quarter of last year, walmart saw e-commerce growth of more than

60%. they have returned to 40% on a bigger basis, suggesting a more impressive results. the walton family is the wealthiest family in america. they just became a lot 12 year. anay's stock move has put additional $11.6 billion into well for the waltons. selena: any discussion around tariffs or changing consumer sentiment? emma: they are concerned because it creates uncertainty. there is not a massive effect on consumer products right now. one of the things walmart is transportation and labor costs are pushing up the prices of household items.

walmart is known for low prices. they don't want to have to impart increased costs to their customers. that would create another opportunity for amazon to try and beat them on price. thank you to emma chandra. hacking any election. new reports of candidates been targets of phishing attacks. isnd bloomberg technology livestreaming on twitter. @tictoc.ow us on this is bloomberg. ♪ selina: this is "bloomberg

technology." i am selina wang in san francisco in for emily chang. a democratic senator from missouri confirm she was targeted by cyber attacks. the alleged culprit, the russian intelligence blamed for meddling in the 2016 election. her comments were confirmed that russians have infiltrated the election systems of certain counties. a democrat running in california's june primary was

the target of cyber attacks. they are being investigated why the fbi. to continue a look at just how vulnerable american election systems are, i would like to welcome general earl matthews -- he served three decades in the air force, where he directed cyber investigations across the globe. i would also like to welcome our bloomberg cybersecurity reporter. these escalating cyber attacks we are hearing about, and 11-year-old was able to hack into a simulation of the florida state election website in under 10 minutes at a conference. what does that say about the security of our election right now? atthews: it is wonderful we are highlighting this problem. was thepened at defcon

penetration of the website the state would have up that would have the tally of what was happening through the electoral aice -- process, and not penetration into the databases that were counting votes. the 2016 exposed a whole host of vulnerabilities. are we any more secure than we were two years ago? >> thanks for having me. 2016,ms of security from until now, there is more awareness. $380 millioncated to shore up their in election infrastructure. theerms of the lead up to midterms, much of the tactics highly resemble what we saw in 2016. attempts, using

attempts like those used in 2016, as well as coordinated campaigns that appear to be happening on facebook. facebook announced they have removed dozens of accounts that appear to be engaged in this kind of activity. despite increasing warnings about these vulnerabilities, it seems like progress has been slow. we still need to have voting machines with paper trails that can be audited. why? we aren. matthews: what dealing with here is like what we are dealing with incorporate industry -- in corporate industry. voting software in most states is more than 10 years old. they were not designed to withstand a cyber-type of attack. we knew that voting machines were vulnerable, but to many of them were proprietary. we lacked transparency into the device and the software

independent and into the quality assurance of that. electionve to remind officials is that the cyber landscape will continually change. be the what would technological infrastructure that would protect us from the sort of attacks? -- these sort of attacks? maj. gen. matthews: something innovative came out of west virginia. blockchain allows you to have a ptographic voting process in which the voter identity is proven through a biometric. your vote is encrypted and you can have a public transparent ledger that can be audited to make sure no one tries to influence that particular vote. beena: my team has reporting on what technology

companies are doing to protect themselves from this manipulation. been successfully partnering with washington, d.c. to make sure this doesn't happen again? alyza: two weeks ago, intelligence teams gathered at the vice cap -- white house to sound the alarm on possibilities for election hacking. the director of the mbf -- of the fbi emphasized the importance of public-private partnership to solve this problem. but there are still questions as to whether we can effectively secure the social media landscape. selina: i want to talk to you about what future of voting might look like. being a. matthews: former military member, i am excited about this. i am stationed globally throbbed the world, but i am not always able to vote back home without getting my paperwork in in time. beile voting by 2020 will

here. it gives us transparency to vote anytime, anyplace. what we continually struggle with as we move towards convenience is that we generally sacrificed security. in which wearea cannot sacrifice that, because it underpins our entire democracy on how we vote. selina: depressing voter turnout very successful potential tactic. have we seen this use before and do we expect to see it implemented in coming elections? alyza: there was concerned about voter registration rules -- conc ern about voter registration rules. voterere seeing scans of registration systems that were altered. it is unclear what the upshot of this is. if an adversary wanted to escalate tactics, moving from

coordinated campaigns on social media, targeted weeks in disclosures, attacks on various wouldates, the next step be to make it more difficult for some people to vote, creating delays and lines at some polling places, while other voters could vote as normal. selina: how do you think an attacker would be looking at the landscape over the next few years? are they saving sophisticated tactics for the upcoming presidential election, and we will not -- we won't see them for the midterms? maj. gen. matthews: i believe that. we have to look at the system holistically. it is not just the voter database, but also the way the chain of custody works. the voting process is simple. one voter and one vote, kept it secret. we can audit when we want. we will see attackers,

especially nation-states, target swing states and counties to influence us in an election. the probability of influence in a presidential election, will be hard. at the county or state level in a congressional election, will be easy. we need to make sure we don't shore up the voting process. selina: thank you both for joining. there is a report that starboard has taken a stake in computer security company symantec's and wants to make changes. nominated five directors to the eu level in person board. -- to the eleven person board. coming up, our next job series highlights their careers of the future life. how one african nation is using tech to save lives in isolated areas. later, our conversation with

chuck robins. this is bloomberg. ♪ selina: time for the latest

installment in our next job series. on and off that are causing a buzz with their drum deliveries -- amazon and a lphabet are causing a buzz with their drone deliveries. one company is delivering blood to remote wanton hospitals by drone since 2016. we tell the remarkable story. ♪ >> this is wanda -- rwanda.

nestled between these plantations and village homes and meandering mountain roads is a patch of land no bigger than a football field. drones carrying blood of two doctors racing to save patients' lives. operator.drone for aor: abdul works startup called zipline. you, this isnt of where we launched the drums. narrator: zipline is headquartered in california. that thet of kigali company has launched one of the world's first drone delivery services. abdul: it is beautiful. >> does it ever get old?

>> no. abdul and his coworkers are tackling a deadly problem. rwanda is among the poorest countries in the world and much of it is connected by dirk roads that get washed out in the rainy season -- dirt roads that get washed out in the rainy season. it makes it incredibly difficult for regional hospitals to procure blood in an emergency, leaving doctors unable to perform life-saving operations. abdul: you will have to drive for three or four hours to kigali, gets blood, come back. -- get blood, come back. it is complicated. it gives people access to the system. narrator: when a hospital ask for blood -- asks for blood, zipline gets moving.

abdul: you package, launch it. you wait for the next order. narrator: guided by gps and other sensors, the drone flies itself to one of the hospitals. it reaches its destination and drops off its payload. hospital staff retrieve the supply and be -- the drone gets back to base. abdul is doing pretty well for himself. he has a job he was and he is studying for grad school. all of that success today comes from unimaginable tragedy. rwandanwas three, the government steps up -- stepped up its decades long assault on the tutsi minority, ordering everyone in the hutu majority to kill all tutsis.

in 100 days, 800,000 people were slaughtered by neighbors and friends. abdul: my father was asking, where is the rest of the family? narrator: abdul survived. his two siblings and parents didn't. his grandma found him and took him in. [speaking foreign language] years the first couple of of school was really hard. >> you were dealing with the

trauma. abdul: i found myself again. i said okay, if i get my education, i am happy. i feel like i got another chance to live. making an impact on other people's lives make sense -- makes sense for me. ofina: an incredible story blood being delivered by drone in rwanda. joining the onset to discuss her toerience -- me on set discuss her experience is our bloomberg digital editor. it took you more than 30 hours to get to the country and you spent about a week there. what did you learn about how this nation has become a hub for drone delivery? >> it is a strange confluence of what is happening in the country today. zipline founders approached a

number of african governments with this idea of doing drone deliveries. government was the most enthusiastic and willing to change regulations to make this possible. drone: abdul is this delivery operator. how big can this career become in the future? aki: it is promising. zip line is not the only company trying to make this happen. amazon and google are all trying to make this happen. governments around the world need to deregulate the skies to make this possible. in the united states, you need to have all drones within eyesight of the pilot. there are trials right now, but the rules would need to change for nationwide delivery service to happen here. ahead of thepline

game compared to what google is trying to do, amazon? aki: i would say so when it comes to running the day-to-day service. zipline has already made 8000 flights, caring about 15,000 units of blood. it is hard to beat that. selina: abdul has such a moving story. what is next for him and the company he is working for incredibly talented guy and very ambitious. he is heading for grad school and potentially going into robotics. is zipline, the next thing they are waiting to hear back from the rwanda civil aviation authority to start a new distribution center that would allow them to deliver to more hospitals.

they have agreements with other african governments as well. selina: thank you for bringing us that fascinating story. a new vc form has been formed by partners that have quit social capital. it is starting its investment with cryptocurrency. a $22.7 billion round of funding was started. but social capital is also leading the round. one of the founders of tried capital will take a place on the board -- tribe capital will take a place on the board. posted higher-than-expected quarterly profits. our conversation with the ceo, next. this is bloomberg. ♪ ♪ selina: cisco appears confident

an overhaul of its computer networking products will boost

corporate demand. the company gave bullish forecasts that the estimates. it also posted higher-than-expected quarterly profit and sales that rose for the third straight quarter. we spoke to its ceo following that report. chuck: we had a good quarter. our strategy is working. it is being well received. we saw growth very balanced across all of our technology. this business model work we have been doing continues to take hold, with our software transcription business continuing to grow. we have a lot of things happening around us right now. when you look at our performance, we have clearly driven a significant amount of innovation in our portfolio. at the same time, we have had a strong global macro-economic

environment to operate in. we have had dynamics with the rising dollar, some uncertainty in some of the emerging countries, trade dynamics. those are things we don't necessarily control. but right now, things feel pretty good. >> we should talk about the transition. you bring up the u.s. dollar. is this something you have hedged, or do you let it rip and worry about it another time? through thise gone at various times over the years. our teams know how to manage it. we have had a set of processes teams deploy when this begins to occur. then we come out the other side. something -- is something we have dealt with over time and we will do it again.

our teams know how to handle it. jonathan: i want to understand the pickup we are seeing. is this related to rising business confidence, or something else? is this due to the monetization of legacy elements? there is clearly a lot of business confidence and economic tailwinds right now. the launch we did last year in our intent-based networking portfolio, the work our teams have done in our collaboration and security portfolios, those things have resonated with our customers. 9000 we look at the have launched, the fastest-growing product in the history of the company, there is deep innovation there and that is being bolstered by great

economic conditions. we will take them where we can get them. give me some insight on what your customers are investing into. what are the areas of global priority for them at the moment? chuck: customers are undergoing a fundamental shift. historically, they have run their applications in private data centers. consuming other applications, services with public cloud providers. their networks and how their traffic is flowing is changing, and how they need to -- to deploy security is fundamentally changing. they are having to rethink their entire infrastructure and security. we are at the heart of how they think about that. ceona: that was the cisco

with jonathan ferro. celebrities that push products online face a u.k. investigation into whether they are failing to declare they are getting paid for posts that can influence millions of shoppers. an investigation is being looked -- is being conducted into a range of celebrities that promote consumer brands. there is the debate as to whether they should clearly state whether they are paid to promote a product. that does it for this edition of "bloomberg technology." from san francisco, this is bloomberg. ♪

>> u.s. stocks rally for a decade and increasing optimism about trade talks next week. the white house isn't quite convinced. president trump said china will have to offer a lot more to get a deal done. the li rmp arch climbs a third day. and they are warning of additional sanctions. and the perth mint said it lost its shine because