emily: i'm emily chang in san francisco. coming up in the next hour, amazon reporting third-quarter results and shares are reacting to a miss. jeff bezos says the company is not slowing down. we will break down the numbers. plus, alphabet missed on revenue. i talked to the cfo. problems don't then

there, a bombshell report from the new york times claims they tod and re--- andy reubens quietly go away after claims of sexual misconduct. amazon has reported third-quarter earnings and investors are reacting to a top when this. shares are declining in late trading. amazon sales came well and are -- well under expectations. of $3.7 billion in the third quarter exceeds the street and amazon's own guidance. their fourth-quarter guidance is a bit light. goingr, the company is between 10 and 20% growth. baker. us now is darren also with us is a reporter of bloomberg intelligence to covers amazon for us. >> if you look at the revenue

miss, especially on the guidance side of things, it was a big number. the spending number we were not worried about because we expected pressure across the board and the weight --hike issue -- which hike issue was one of the issues. tubing areas we see weakness and expectations is whole foods and that is one area. that is where maybe the physical push is not growing as prices we expected. the second area is international growth which slow down materially. there was a change in the holiday season for india which pushed out sales, but before headwinds, that becomes a worry as well. if you take those tubing things out of the equation, the advertising -- two things out of the equation, the advertising section did well. what they are

seeing -- what they are think so far, these are the tubing areas -- two areas. emily: what do you make of this? darren: i think we are seeing strong growth. jeff bezos has nothing to be worried about. we saw some products grow 22% year-over-year and especially in some of the non-commodity products, amazon basics is there but he myth that sells cell phone chargers and batteries. we saw 60% year-over-year growth in non-commodity products. we also saw a huge growth in advertising revenue. up to 10% of all of the products search on amazon come from a sponsored search of 3% in january of 2017. emily: let's talk about that. alphabet and facebook have dominated the ad markets. amazon is a distant third but could catch up. had tol hear what ruth

say about this in the next segment, but can amazon really get there? jitendra: retail is a big segment for google. now, we see larger brands warming up to amazon lot more given the prime members. the sales shift, the ad dollars shipped with it. amazon is targeting two buckets. benefit from the shift that is happening from bigger brands. you are advertising the product and you know exactly how much the sales are worth. the targeting becomes better. the becomes an issue, so google needs to go in the opposite direction over here. we think google should be more aggressive in e-commerce. they should take the cloud stance more aggressively when

amazon is a coaching on them. meantime, amazon is increasing wages across the board and the company is opening hq to creating 50,000 new jobs. how are those costs can impact coming quarters if we are in a state of fight right now. darren: i think they have a ton of room to grow and offset the costs. to piggyback off of what you are saying, over 50% of the product searches online networker on amazon rather than google. the actual e-commerce products, the stuff people want to pay for. those toolsst in and costs go up, they will see a higher spike in returns. emily: talk about what is happening globally. there is a huge turf war in india, but also other parts of the world. that is one uncertainty that we have still yet to figure out. maybe we can get some guidance on the call. it is calling -- causing some of

the guidance to go down. it isrect impact is that a smaller portion of the gmp but there is an indirect impact from sales growth and things like that. we will hopefully get more details on that, but that is a concern. emily: the amazon earnings call is scheduled in about 25 minutes from now. what do you want to hear? darren: i want to hear how the investments they are missing -- making in their advertising is paying off. aere is a lot of room for virginity there and a lot of risk if they do not execute properly. i would love to hear about how they are interacting with the rest of the ecosystem. both retailers and brands are very reticent about what is happening and nervous. they need to figure out how to create more of an equilibrium like google. emily: we have a holiday season coming up, increase postal rates, bar in with the next few weeks -- the next few weeks are

critical every year but maybe this year in particular. jitendra: especially in the guidance. the street will expect more than guiding then -- more than what they are guiding. it boils down to, are they able to manage the costs and capacity and deliver these products and meet the numbers. that created an issue in 14 and 15. amazon used to talk about profits being slow. they were slowing now guidance hikes anding rate skimming logistics to support demand. emily: you think there are regulatory headwinds? deren: i think they are regulatory headwinds internationally. i think there are brandon relationship headwinds.

these categories, where they own 80% of the online market share, there's going to be other competitors that come up and brands that do not want to work with the ball he myth. with: do you think president trump, jeff bezos its ownership of the washington post, could that be a real risk for amazon? jitendra: that is a compliance cost from a data perspective to what we have seen from facebook and google. issues, are antitrust which analysts feel the risks are low, they increase going into new markets. they increase as we get more data from third-party sellers. so that is a real risk. standpoint,bility based on what analysts feel realistically, the probability is low at the moment. emily: thank you so much.

it was a good day for semiconductors. analysts anday investors with third-quarter results beating estimates for revenue in the current quarter. intel reported $19.2 billion in revenue compared to projections of $18.12 billion. the world's second-biggest semiconductor reported revenue from their pc centric business rose 16% this coming amidst a stockip stock as the exchange hit correction territory earlier this week. coming up, alphabet's third-quarter numbers are in and it is a mess in revenue -- miss in revenue. we speak to ruth about what cap those figures down. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪ his is bloomberg. ♪

emily:'s shares best emily: alphabet slumping after hours. shares have fallen as much as 7% that they missed on revenues. squeezed by payouts to partners for distributing its web browser and search engine. but get straight to it with the director of equity research in new york. got off the phone with the alphabet ceo who is on call.rnings

she talked about hardware, ai, cloud, mobile, and global. believe -- billy -- bouying the results. what do you see? for having me. what i would start with is i don't think it is a commit -- go incident they see a lot of these services company's missing on the revenue line. a lot of that is due to currency where the dollar strengthened pretty significantly over the course of a quarter. i think when you look at the mess, it was by a hair. granted, it was a mess but it was a small miss. the way we look at it is that it was a good quarter. it is amazing to me how very few people seem to be also focusing on the earnings beat which was substantial aided by lower tax

rates, for example. overall, this was a solid quarter above 20%. were intact trends for the company to be successful for a number of quarters to come. emily: that said, there is concern about amazon. they are on google and facebook's tale. from what we are seeing, many dollars are from trade promotion another budgets that have not been -- share. that makes a lot of sense in terms of where they are trying to go. especially with all of the things they are doing with youtube and other content they available.g she mentioned some of the are in the costs were higher they have r&d costs-- rmb --

were higher than they have. to get the service is out and hence these acquisition costs are going up. that's an issue like the other gentleman said, it hit it but barely missed. the opportunities moving forward are still very strong. the concern is the regulatory environment and what will happen there. there is a lot of clout hanging and those are concerned people have to think about long-term. about fakes talk news, not testifying before congress, all of these things are very concerning and i asked her if the privacy concerns were having an impact and she did not answer that question. she also asked -- i also asked about china and google's plan to reignite a search engine in china.

she told me we continue to butst to help chinese users we are not close to launching a search product in china. and given the sheer scale of the market, we are focused on making sure we do the right things for the long-term. what do you make of that? scott: the way we have thought about this is, it would be great in the number of respects from an operational perspective for google to reenter china. the reality is, especially given growing tensions between the two countries and their governments, we see that as a long shot. particularly over the intermediate term. why is one of the reasons over the last day or two, we upgraded shares of baidu because we think that has been an overhang for that company and its stock. we do not think that is really viable at this point for google to reenter china.

i think they have far more priorities elsewhere. think just the political pressure and complexity and costs and risk of failure are so substantial. continuing to invest in what has been working and things like waymo, that is the way google and alphabet should be investing right now. emily: do you think google should of not dropped project maven and continued its work with the dod? i asked ruth about that and she talked about how they look forward to continue working with the military. and you talk to amazon, amazon, they said our country needs to be defended so they will work with the dod and the government. scott: my opinion on that is i think they should continue to talk to the government about the contract. we are talking about a $10 billion opportunity which

would have been tremendous for google in the cloud business. that would really have been a game changer and i am not really clear about what exactly the opposition was in terms of moving forward with the contract . you point out good rationales that other companies have articulated. i think that was a mistake to walk away from that contract. particularly at this stage. also hasb, google business being done in europe. they are facing the $5 billion -- forr antitrust issues the android issues i should say. how that willt play out. how must you think that will hurt them? bob: there are very few alternatives and google could make more money. the phone makers will have to pay google for services they

gave away because they have to be offered as an alternative. in a weird way, it helps them. long-term, the financial impact is small. controversies, in the near-term, will not have a big influence on them. gdprigger question is, as gets enforced and the u.s. develops what equivalent it will create, as other countries around the world do this, how does that fundamentally impact the business model of what google does around customize, advertising, and personal data tracking. none of these things will impact right away but those are issues long-term that have to be addressed. scott,all right bob and thank you. before you go, scott, you downgraded twitter, why? scott: i did. the results were good in a lot of respects, but the 29% revenue growth and the margin expansion were encouraging, but the

reality is some of the reasons sequentiallyecline and we see a pre-evaluation and a lot of competition. ,he reality is that the stock notwithstanding to recent decline, is overvalued here. we have a 12 month target price of $27. we have a negative and positive on twitter over the years. this we think is the time to be more skeptical rather than optimistic. emily: glad we got john the record about that. cfo laterth twitter's in the show. coming up, alphabet earnings come amid scandal. they are responding to rumors of executive sexual misconduct. and "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪ this is bloomberg. ♪

emily: as we mentioned earlier, alphabet beat estimates for the third-quarter earnings but missed on revenue. this coming a missed a bombshell review by the new york times saying google gave andy rubin a massive payout package despite allegations of sexual misconduct . in $90 million payout to leave. then, google cap it quiet. for ruben hastive denied the claims and google said 48 people have been fired for sexual harassment in recent years and no one got an exit package. i want to bring in an engineer for alphabet who has been increasingly vocal about how her current employer is handling harassment. what is your reaction to this report? is this anything you could have foreseen? >> i'm not surprised. what i'm surprised about is that

this has finally come to light. there has been rumors -- have been rumors that directors have been shielded about this that they have been shielded. now that there may be consequences it's heartening. emily: cinda pichai sent in the mouth a step today saying in recent years, we made a list of changes. got off the phone with one official saying she is super proud of how google is handling these issues today. do you think google has this figure out? liz: i don't think they have it figured out in terms of fixing the culture distrust between employees and hr. emily: what are employees saying right now? thati think many employees

are not women are shocked. many of us who have been following these issues for a stillare merely frustrated with the state of the company and frustrated that we cannot get our complaints of harassment taken seriously. emily: i understand you take a risk when you come on the show and you still work at alphabet. you're been on the show before and spoken out about this. has anyone ever discouraged you about speaking out about this? have you had any talks with your bosses about the decision you have made to be more open about what is happening on the inside? liz: i'm a relatively high-profile employee. it would be challenging for them to discriminate against me or retaliate against me. therefore, i feel like i am in an ok position to speak out on behalf of the people that don't necessarily have that power. a lot of what happens at alphabet depends on your manager team. if they are able to cover you,

that provide you a significant amount of leeway. if they're not, they will look for excuses to push you out. he spoke outt tim, and was fired because his bosses felt they did not value his contributions enough and was not worth keeping around. emily: what you think needs to be done? surprisingk it is that david drummond still works at alphabet in light of the fact that he violated the company's policy and getting into a relationship someone who works for him. that is an example being set from the top so how can we get credibility for the fact that hr is able to investigate him deal with anyone? emily: do you want to hear from lori page -- larry page? liz: yes. right, lizice -- all fong jones.

is the online marketplace reaching a saturation point in the u.s.? third-quarter results point to yes. more ahead. this is bloomberg. ♪ ♪

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♪ emily: this is "bloomberg technology; i am emily chang in san francisco. amazon projects lower revenue in the busy fourth quarter, i report that could suggest a online marketplaces richard a saturation point in the u.s.. slow revenuehowed growth quarter over quarter including online and subscription sales and its fast-growing ad business. still come osha point out, amazon shares are still up 50% this year. job andgaro left his

amazon in january and is now ceo of his new company. he joins us from seattle. also, with me as our bloomberg tech senior executive editor, brent jones. is there a saturation in the market right now? >> know, i don't think so. amazon shares were up 7% during the market, and then they give it back after the earnings. they missed a little bit on the top line, that fourth-quarter guidance was weak, so analysts -- i think investors are a little bit worried about that, but amazon has always been conservative. these categories like aws and advertising are growing at three figure rates. 3%.ws's case, emily: by becoming have unique insights and working with amazon from the outside, is there something bigger here to be concerned about about a broader slowdown? thet: and not at all,

advertising business, which is where i had my experience, is a very large market. particularly the digital point it 220 billion dollar industry, it is really large, and every single brand should be thinking about that as their number one priority for driving prices online. emily: amazon is a distant third behind google and facebook in the digital ad market, but encroaching on their territory. is amazon a real threat to google and facebook, and if so, when? guest: i don't believe there is really going to be a lot of shifting between all of those players, what we are entering now is a completely new era of digital marketing. marketing pointing customers to branson where they are ready to make the purchase. that is where brands have spent the billions of dollars to make

sure they have the right price points at the time of sale, the right amount of product in the shells, and they did that for decades in traditional retail. now, with a platform like amazon, or entity to start shift into doing the symptom of investment to make sure they are winning customers at the point-of-sale. different from making sure they are driving awareness and consideration, which is typically what other platforms do. i believe this is an opportunity for other platforms to keep growing aggressively. echoes, brad, what i was told, which is that the money being spent on amazon, she believes that is coming from different ad budgets that were going bash that were not going to digital as before, like trade groups. would you echo that? brad: what a smart about what bobby helps to greeted amazon, is that non-it can advertisers find customers right at the point-of-sale, amazon can then turn around and tell advertisers

if the advertisement resulted in a sale. or a lot of other websites retail locations can do that. i recently went and put in a search for a refrigerator and right at the top, there was kenmore. somehow, seer's lives, but every brand either wants to be in the top spot -- somehow, sears lives, but every brand other was to be in the top spot. emily: bobby, your company just raised $300 million. bobby: i think there is tremendous opportunity, brands being present at the point-of-sale periodic customers tend to purchase the products that they find, and what we are building a my company is machine learning the the information to optimize a presence for the brand. there is not one person you can talk to to secure the placement or that presence when you are

working with amazon, as you did with traditional physical retail stores. so it is really the work of machines and algorithms that bel help brands successful. and that was in opportunity i saw in building our company. emily: whole foods, amazon prime, prime video, what about them? brad: for the first time, revenue is down slightly from the previous quarter. from whole foods come i think they have to figure are some stuff in the stores. what the category doesn't show is how i think home food -- whole foods is grabbing on my shipments of groceries from amazon, they are in about 16 cities now, where you can order online from whole foods and have it delivered. so whole foods is paying off in other ways, but physical stores slowdown in revenue. it is curious because obviously, they have been adding bookstores. prime, the cfo talked a little about how they were changing how they organize the revenue for

prime, they are amortizing it differently. it used to be weighted more toward the back half of the year but now it is weighted throughout the year. that will affect numbers right away, but clearly, the law of large numbers is kicking in for amazon. emily: bobby, holiday season is coming up, always huge for amazon. what is a trend you will be watching for that we will be seeing come out when it comes to what amazon is showing us in advertising and -- we will be seeing when it comes to what amazon is showing us in advertising and consumer behavior? more: is more and purchases move online, i think a brand for me to be very best they need to reach rain and use new tools to take advantage of those trends. it will be interesting to see a a lot of the new direction consumer brands really utilizing platforms like amazon to start encroaching on income it brands. they are doing this --

encroaching on incumbent brands. you need tothat embrace the tools, you need to embrace tech knowledge it, you need to learn about what the digital point-of-sale marketing is about to be able to take a advantage of the fourth quarter. emily: another happy holiday, will it be one for amazon? 3.4% -- 3-4% of overall retail, there is such a long runway, and i think all the tailwinds are working on amazon's behalf. emily: thank you, brad stone and bobby figaro or. thank you all for stopping by. still ahead, it looks like snapchat is on the decline. it reported the number of daily users fell for a second consecutive quarter. ahead.k it all down

meantime, alphabets call just wrapped, the cfo talked about the state of global business. listen. >> we actually feel pretty good about the strength of globally, which i noted in opening comments across the board, 20% growth in the u.s. on a $15 billion base. on we noted what is going with aipac, 30% year on year growth, over $5 billion revenue sustainedand we have quarter after quarter growth at % area, so i feel good about that.

♪ emily: twitter surged the most in a months, sales blew past forecasts, but despite the strong financial numbers, monthly average users decreased by 9 million from the second quarter. meaning the social network

averages 226 million users. this coming as a twitter continues to purge fake accounts. ceo? with down with the >> we are challenging a time more than we used to, so the 9 different fromis what we give to congress in a november. we are becoming sophisticated create people use and fake accounts. so that we can stop them after they have been created. how many get through, really depends on how many of them should get through. we test far more accounts than and it helps us understand their behavior because just because an account is created on the web browser on a sun country with a certain ip address doesn't necessarily mean it should be on the platform, the way it is. so there is a lot that goes into it. emily: as a result of this, monthly users will continue to decline. how far with a decline?

guest: we said that they were decline in the single digit of millions in the fourth quarter because of the gdpr, our ongoing health work and other issues of carriers. we wanted to share it with people. when we step back and think about our health more broadly, we don't want to be constrained by metrics, we want to prioritize health above all else because it is a critical growth factor for the company to make sure twitter is a safe place for you and me,, and for the people who should be on the platform, and that is removing spamming and suspicious behavior. when weecond quarter removed tens of millions of accounts and there were largely inactive, it doesn't affect metrics as much. emily: let us talk about health. tweet yesterday promoting fake bomb scares, hashtags filled with conspiracy

theories. how is this still happening? guest: we still have work to do to improve the health of the conversation on twitter. us toare many ways for adjust these challenges as people get sophisticated in how they create the bad behavior on twitter. one of the great things about twitter that we are it would to benefit from just because it is public and open and real time, is we often find things, but often, things are corrected by the platform itself, but other people on twitter who will say, that is not true. i you may believe that, but believe something different and i want to tell you what i believe. is fact that the platform open, allows us to take a different approach around policies and enforcement than others may. emily: we are in a. period of externally divisive politics. there was a tree from the wesident saying -- out -- received a tweet from the president saying that fake news

has gotten so hurtful that it is beyond description. media must clean up its act, fast. i know that in the past you said that the president is a newsmaker, and influential person. is he getting a pass as to what is true or not, what incites violence or not, because he is the president? twitter being public and real-time and open, those are things that allow people to see what a public figure is going to say regardless of their party affiliation or where they are in the world. they can learn from it, respond to it, observe how others respond to it, and i believe that allows for a healthy conversation, that allows people to have more information on they otherwise might, whether it is around here in the united states, or the brazilian or mexican elections, and important what of our purpose is to serve a public conversation.

emily: twitter has been clear about the need to do more about this. how many people are you hiring and dedicated to this particular problem? guest: health is our number one party. health, growing our number of products and sales. i don't expect that to change much next year, and i think that because of our nature, we are able to leverage those characteristics and still up still accomplish a lot serve machine learning, that we use to amplify our policies in the twitter services team. emily: are you hoping to add more people? guest: we have been adding more people. we will grow our headcount up to 50% this year. i would expect us to continue to grow headcount, but it is not against anyone priority, it is for all those priorities, to really be able to grow the business and execute opportunities we see. emily: that was a twitter cfo.

getting us now to discuss, deborah a how williamson. , what do you make of these numbers? advertisers are obviously coming back and spending more, but monthly active users keep going down. in some ways, it can be difficult to see the progress, even though twitter said that there are challenging millions of accounts every week? guest: absolutely. and siegel just talked a lot about health. my viewpoint is, if you will get healthy, you will lose some weight and in the case of twitter, losing weight is losing a few million users. over all i think it is a positive step, i think twitter's focus on the daily active user number is something that is important and needs to be done, and i think the steps it has taken to make its products better, terry prove itself to itselfsers -- to reprove

to advertisers is paying off. i think we will see twitter rejuvenate and advertisers come right along. reporttwitter does not daily active users and you do wonder why. : absolutely, the fact that they don't report it is something that they are not comfortable with. thereed did report that is a lot of room for growth. something that was concerning in this quarter was that dau actually went single-digit for the first time, which means they're healthy clean up efforts, the reduction of spam is actually hitting daily active users, the number that really matters to advertisers and is showing true engagement. saso at one point, they have to show that these cleaning efforts are going to draw more users to the platform. emily: the question is whether

they will. efforts are incredibly important. what is happening on twitter is driving the national and international conversation, but once twitter gets back together, are they actually going to add a significant number of new users, 300 million users, could this be it for twitter? debra: it is hard to say whether this is it or not, but what we are seeing is twitter finally coming to terms with what it really is. it is not a social network that will be the size of instagram or facebook, it is a platform for real-time news and engagement. to the extent it can continue to promote that uniqueness from the other social platforms, i think that will draw users back. i think this constant back-and-forth of how many people does twitter have, they just need to embrace many people they have. if it is 300 million or 500

million, if trader embraces that, advertises will embrace it as well. emily: would twitter accept that , they will never be the size of instagram or face look at this point? selina: i think the ceo is focused on making a better experience for the users they have come out of think he is trying to get to one billion plus users, like facebook. and to echo deborah's point, i think investors are coming to terms with the size come about because of the stock jumped, they are clearly happy with the fact that they are able to monetize and get more money out of the same base of users. the fact that users went down did not impact the revenue or profit they make, they were able to target advertisers and twitter is starting to offer something that snapchat and facebook, and other competitors cannot, which is the real, real-time conversation, generate conversation around the base of

users. emily: and to reiterate, shares closed up more than 15% today, shares are also up over 40% over the course of the year. now, snapchat reported numbers and all eyes were on user growth. the social media company reported that the number of daily users fell to 186 million, almost exactly in line with analyst estimates. the company forecasts that trend will continue and gave a weaker-than-expected revenue forecast. they have been unable to fend off facebook's instagram. debra, can snap reversed the trend? debra: that is a big question. both snapchat and twitter are in a similar position in many ways, they have both seen users decline this quarter, however, better than expected revenue. that is a positive thing, but i think similar to twitter, we have a situation with snapchat daily active users and

in the case of twitter, monthly active users, and in the case of snapchat, daily active users have declined, and this is concerning to advertisers. the fact that snapchat has been able to monetize those users to extent isn-expected good, but i do not think it will continue forever, i think we will have to see snapchat do more to restart the user growth. emily: how could they do that? debra: one of those things could be finally figuring out android. a thornoid app has been in snapchat's side for a long time now. i think once snapchat figures it out and relaunches is solid outperforming android app, they will get naturally, more users who use android phones. especially in markets outside the united states, where android is really popular. hopefully, they will figure that out. standing is kind of a

that these many years into its existence, snap has not figured out android, which is the biggest mobile operating system in the world. why haven't they been able to do this? debra: that is unfortunately not something i can comment specifically on, i don't know the inner workings of the android issue they have, except that to agree with you, you are absolutely right. tos is something they needed get fixed a long time ago. hopefully it will work miracles for them when and if they do get it fixed. emily: thank you both for joining us tonight and weighing in on twitter and snap. coming up, it was a wild day, to say the least, in tech earnings. we wrap up all the news. this is bloomberg. ♪

emily: the tech bump looks like it could be short-lived after amazon and alphabet earnings. i'm as an reported earnings that missed estimates, and shares have been done on the news even the revenue jumped. also but came up with a narrow numbers being pointed this fingers being pointed about how much they pay partners who

utilizes search engine. this comes on the is that they pay ladder employees $90 million to leave after he was accused of sexual misconduct. but intel had good news, growth is up. lifted, computer market and $6 billion more than it was predicted at the beginning of the year. tc-centricm its business also rose to $10.2 billion. and, snap is on the decline, reporting that the number of millioners file to 186 -- daily users fell to 186 million. that does it for this edition of "bloomberg technology." tomorrow, we talk to intel's interim ceo, and the expedia ceo about their financial results. this is bloomberg. ♪

con michalakis robert o'donnell haid haidi: welcome to "deborah daybreak australia, i am haidi start was? shery: we're counting down to the asian open. ♪ haidi: these other top stories we are covering, u.s. equities strummed back from a global selloff with the nasdaq seeing its best daily performance since march.