emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up, what a week it was for big take earnings. the breakdown the highlights and low lights. close plus, truly historic is how elon musk is describing tesla's third quarter. can they do it again and again? softbank was a no-show in the desert, and what this means for the future of

ties to saudi arabia. it was a huge week in tech. it started with a surprise third-quarter report from tesla. to kick things off with amazon after the bell. revenue, look at the notspending part we are worried about much. we expected spending pressure across the board. the biggest hike issue is one of the uncertainties. from the business perspective .here two areas for weakness one is whole foods physical stores. and there is one area where may be the physical push is not growing as fast as we expected. the second is international growth. that slowed down materially, not

to mention a change in the holiday season for india that pushed out sales, but that becomes a worry as well. if you take those 2 things out of the equation, they did fine. there was slight growth rate decline for the last couple of quarters, but in what we are seeing so far, these are the 2 areas. >> what do you make of this? >> we are seeing strong growth. i don't think jeff bezos has anything to worry about in areas like private label model x were amazon is placing a lot of value. commodity products. amazon basics is their behemoth. we saw 60% year over year growth in non-commodity amazon private label products and huge growth in advertising revenue.

up to 10% of all product searches in amazon come from a sponsored search. in januaryfrom 3% 2017. there is huge room for growth. is a distant third, but could catch up. can amazon really get there? >> retail is a big segment for google. brands are seeing larger warming up to amazon more. plus million prime members is too big to ignore. amazon is targeting 2 buckets, the search bucket and the trade promotions bucket. they get to benefit from that shift that is happening from digger brands. they can deliver.

you are advertising the product and you know how much becomeso the targeting better. google needs to go the opposite direction. commerce.ps with we think google should be more aggressive in e-commerce and take the cloud stance more aggressively when amazon is encroaching on them from an advertising standpoint. emily: amazon is increasing wages and opening hq to. 2. how that impact coming quarters? >> i think they have a ton of rim to grow and offset those .osts to piggyback off of what you were saying, 50% of product searches occur on amazon, not google. toolsy invest in those

and costs go up, they will see a much higher spike in the return. what is happening globally. there's a tariff war in india in turf warr, but -- in india in particular, -- tariff war in india in particular, but also other parts of the world. >> there is an indirect impact sellers and what it means for third-party sales growth. we will hopefully get more details on that, but that is definitely a concern. emily: what do you want to hear? >> how the investments they are making in their advertising platform are paying off. international growth, i agree there is a lot of room for opportunity and a lot of risk if they don't execute properly. i would love to hear more about how they are interacting with

the rest of the ecosystem. retailers and brands are probably very reticent about what is happening in very nervous. they need to create more of an equilibrium my google has done in that market. >> we have a holiday season, increased postal rates, sparring with the president, the next few weeks are critical for amazon every year, but maybe this year in particular. wall street doesn't expect more than what they are guiding, especially with so many more prime members versus what they had last year. what it boils down to is are they able to manage the cost in terms of capacity to deliver these products and meet those numbers? we did see that created an issue . amazon used to talk about profits will ebb and flow. they were flowing.

now guidance is suggesting there might be some ebb because of rate hikes, postal rate hikes. ceo tim cook touting the importance of privacy and legislation to protect it. speaking in brussels, cook slammed tech companies that monetize their business by collecting user data, facebook and google. mark zuckerberg defending his ad-based business model saying he is aware facebook needs to do more to protect user privacy. tesla investors chilled their best -- cheer their best ever quarter. wall street is not ready to drop yet.aution stance just can elon musk keep delivering? check us out on the radio, listen to us on the bloomberg app, bloomberg.com, and sirius xm. this is bloomberg. ♪

emily: tesla shares soared.

weeksusually gives two notice when earnings will drop, but this time the company gave barely two days. elon musk hinted tesla has made money. the net income was $312 million. get this, positive cash flow of 880 one million dollars. tesla made an average of 4300 model threes a week with 455,000 people expressing interest. if elon musk can keep selling that production, big revenue and real profits. we break it all down. is obviouslying they are profitable. the first time they have been profitable since the third quarter of 2016. their third profitable quarter ever. demand is really strong. that is the surprise. they pulled out all of the stops

in 03 and they would be no more demand was the theory, but the 900sit number is still million in deposits. doly: the question is, can i this again and again? will it become routine? what we are watching for. there is a lot of speculation these numbers might be frontloaded, but this was huge. ben said, we expect to profitable going forward. if they can repeat this going forward, it is a huge win for tesla and shows the power of the brand. emily: normally tesla gives a significant amount of notice for earnings. this happened in less than two days. on monday we found out tesla would be reporting today. is there anything unusual about that? be fair, tesla always

reports earnings on a wednesday. stay was halloween. we were asking, could you please not do it on halloween, some of us have kids. stay or possibly november? , they had a good story to tell so they pushed forward. emily: let's take a deeper dive into the numbers. we are always looking at the model 3. when you look at the actual delivery numbers, are you liking what you see? >> yeah. one of the big things is model were alls, and model x strong. we haven't even seen the base model 3. 3 comes base model

out, a lot of consumers will want this at the lowest price. there's plenty of demand for tesla. it is a brand that has so much power. it is almost a lifestyle thing like google or apple. emily: after hours trading up 14%. this is after a very tumultuous quarter. elon musk's run-in with the sec after he said he had funding teslad to take private. they have been fined $40 million and he is stepping down as chairman will stop what are the outstanding issues? a judge approved it, but we are waiting to see who will become chair. >> then the board has to of point 2 new independent directors b. the board has been mum about the search process.

it is unclear if they're leaving it internally or contacted a search firm, but that will change the dynamics of the board. emily: they're supposed to be monitoring his communication? >> that obviously has not kicked in yet. curious if you remain concerned about a london mosque's other behavior -- about elon musk's other behavior? >> tesla has a lot of leeway as a brand when it comes to consumer perception. a lot of consumers do see this as elon is different. as long as he doesn't do anything egregious, we can take that as long as he is building these beautiful cars. the brand does have some leeway. tesla also got a boost research,from citroen

one of the most outspoken short-sellers. on tuesday, he is now long on the company this quarter writing "like a magic trick when everyone is focused on elon smoking weed, he is quietly smoking the whole auto industry. last year they sued tesla and musk from market manipulation. we caught up and asked what changed. has made such a side of himself people start to forget about the underlying business. all of the headlines about musk said this on that, then you read about the car. as a short seller i am always rechecking my thesis. a few weeks ago i was short. ago, i reject and this car is dominating. is dominating.

they are completely smoking the competition. can they make money? i started to go deeper. i realized, for all of these reallyi didn't understand the type of story. bull, but i tesla have been short going into this quarter knowing that he made earnings a week earlier right on top of ford's earnings, and knowing the company is finally hitting stride with production of model 3. i looked at short interest, that is just wrong. the new date for earnings as a positive sign, where are they going for capital needs for tesla? there is worried they may have to up supplies. are you not worried about that anymore? >> we will know in about 26-27 hours? see how much they generate free cash flow?

musk.ars, i have doubted there are so many things that tesla said they were going to do that i laughed. i think the guy is the quickest settlement ever with the sec. he got them to work on a saturday. when he said they would be cash flow positive this quarter, i won't doubt, i will wait and see. >> we need to put tesla in the context of the bigger automotive picture. auto sales have plateaued. 2017peaked in september of . would tesla be subject to the same industry headwinds, cyclical headwinds? no. that is what surprised me. not only is tesla eating from toyota.audi, but also people pay more money to drive the tesla. it is a revolution i underestimated, the way people

are buying these cars. the numbers you are talking for other0% true for automakers, not for tesla. it is what it is. this is where it gets tricky. the real question, as a short seller i say at the end of the day it is a car company. we are basing estimates on old-school manufacturers. by note you lead you see having as many parts with dealer networks and unions, where does this model take you? you don't know. sayssociates out of detroit they can do over 30% gross margins on the model 3. i'm sure they will do more on a crossover. that is where it has become a black box. ofly: that was andrew left citroen research. the main takeaways from alphabet

out thursday. twitter surged the most in eight months as they blew past their forecast. why advertisers are spending more. this is bloomberg. ♪

emily: let's get back to this main headline in tech, earnings. alphabet results after the bell and i spoke to the alphabet ceo. take a listen. don'tould start with, i think it is a coincidence that you see a lot of big cap technology and communication services missing on the revenue line. a lot is due to currency with the dollar strengthened significantly over the course of a quarter. i think that when you look at miss, it was by a hare. it was a mess, but a very small miss. if you round, it was not really miss.

it was a good quarter. it is amazing to me how very few people seem to also be focusing beat, which was substantial, aided by a lower tax rate, for example. it was a solid quarter over 20% growth again. it seems the trends are intact for the company to be successful or number of quarters to come. emily: there is concern about on google and facebook's tale when it comes to digital advertising. i asked if she thought about amazon as a threat. she said whenever new technology is created it creates interest. would we are seeing is that it from not -- do you buy that? >> that makes a lot of sense and

where they are trying to go, especially with all of the things around youtube and content. the other thing, she mentioned briefly some of the r&d costs were higher. they have investments in hardware and youtube services, for example. those are interesting opportunities moving forward. it is expensive ticket to the right people, to get the services out, hence the acquisition costs are going up. like the gentleman said, it hit it, but barely missed. the opportunities going forward are still very strong. the concern is the regulatory environment. what will happen? there are a lot of clouds over google/alphabet and those are the concerns we have to think about long-term.

emily: privacy, fake news, being called to testify before congress and not showing up, all of these are concerning. i asked if privacy concerns are having an impact on advertising, and she did not answer. i also asked about china and google's plans to reignite its search engine in china. she told me, we continue to help and support chinese users from google apps and google translate. we are not close to launching a search product in china. given the scale of the market, we are making sure we are doing the right things for the long-term. what you make of that? wouldn'tught of this, it be great in the number of respect from an operational and financial perspective for google to reenter china? the reality is, especially given the growing tensions between the two countries and their governments, we see that as a long shot. particularly over the near to intermediate term. it is one of the reasons why we upgraded shares of buying new.

for thaten an overhang company and its stock. we don't think that is viable at this point for google to reenter china. i think they have far more priorities elsewhere. i think just the political pressure and complexity, cost, and risk of failure are so substantial i think continuing to invest in things that are working are the way that google and off of that should be investing now. emily: do you think that google should have not dropped project may then and continue to work with the dod? she talked about how they believe it is important to work with the military and laid out the ways they are doing so. when you talk to jeff bezos and microsoft, they are saying our

country needs to be defended, so we are going to work with the department of defense. >> my opinion is they should have continued to talk with the government about the contract. opportunity that would have been tremendous for google and its cloud business. that would really possibly have been a game changer. i'm not really clear on what the opposition was in terms of moving forward with that contract. you pointed out good rationales that other companies have articulated. i think it was a mistake to walk away from that contract, particularly at this stage. also has some business being done in europe and facing the $5 billion record fine for antitrust issues and android issues will stop she talked about how it remains to be seen how that will play out. how much do you think that will

hurt them? >> not much financially, because alternatives. in some ways google can make more money because the phone makers will have to pay google for services they gave away because they have to be offered as an alternative. them.k it actually helped the financial impact i think is small. most of these controversies in the near term will not have a big influence on them. as gdpr gets enforced, as the u.s. develops whatever equivalent it will create, as other countries do this, how does that fundamentally impact the business model of what google does around customized advertising and data tracking? none of this will impact right away, but longer-term they are issues that have to be addressed. by thecoming up, softbank ceo dropped out of the

saudi conference and what it means for the future of their vision fund. you can check us out at technology and follow our breaking network tictoc on twitter. this is bloomberg. ♪

emily: welcome back to the best of "bloomberg technology." the killing of journalist jamal khasoggi caused plenty of big names to pull out of the saudi arabian investment conference this week, that includes masayoshi son of softbank. the move came after saudi officials admitted to killing him inside their istanbul consulate. son met privately with crown prince mohammed bin salman on monday, his withdrawal from the conference added to the list of high-profile exits that included the softbank coo. saudi arabia is one of their biggest backers. they have committed $45 billion to the first fund.

they promised another $45 billion to future funds. we talked about this with the founder of constellation research. >> they dropped out in a much more gentle way it to some of -- compared to some of the other business leaders who left. it was a compromise. they met on the sidelines of the conference, but did not go to the conference itself. a lot of softbank executives remained at the conference. >> we've seen many stay away from the conference. they have continued business relationships with saudi arabia. do you think that the turn of events could change the relationship between foreign businesses and saudi arabia? will it eventually be business as usual? >> the money is too hard for people to turn away. when it didn't blow over and it got worse, people got scared. a a lot of startups have a

progressive viewpoint. to have this money impact their perspective of what is going on is a challenge. for saudi arabia to progress, they have to make these investments. there are going to be a lot of difficult decisions for startup entrepreneurs and investors. >> given the scrutiny, what are the chances softbank will go somewhere else for the $45 billion? >> it's hard to say if this point. it will be interesting to see if an argument gets made, much as -- much has happened with china that softbank can influence saudi arabia from within help it -- and help it become more progressive in certain ways. i think a lot of people will be starting to tell a different story about saudi arabia. >> it's worth mentioning that saudi arabia has a long track record of investing in

technology and it has a long record of human rights violations. is this going to cause startups to look more critically and at where their money is coming from, especially saudi arabia? >> we're going to see a transformation long-term in saudi arabia. this is a lesson that learned -- a lesson learned for the saudi government to recognize their actions have a huge impact around the world. investors will take note to see see what reforms take place in terms of how their actions affect their investment pieces, but how those actions affect perceptions of doing business in saudi arabia. >> what are you getting from venture capitalists? is there any instance of a start up turning away money? >> i have heard there is a startup currently weighing a term sheet from softbank because of these allegations.

a term sheet they probably would have accepted without much thought they are wondering , whether to take the money or not. they are going to start asking more questions about the investors, their own venture capital investors. that had not been the case previously. >> employees have more influence over their employers. google did not renew a defense contract. might we see a revolt within companies that used to take money from certain sources that are deemed unethical? >> we see that. bay, the top conversation was do we accept money from countries that might not have the same values or views on human rights or ethics, there was a big discussion today about what happened. there are a couple of companies, they are looking at the term sheet.

they are wondering if they can take that money, if they can put some conditions on behavior as to what to do with the money. i think we will see that. the other piece we may see with softbank, if they use that vision fund, that $15 billion. they might say that's just excess expense and not recognize that revenue for that fund. actions like that might soften the blow. emily: coming up, twitter surges. the social media platform brings in a strong third quarter. how is it doing that when fewer people are using the platform? that's next. this is bloomberg. ♪

♪ emily: twitter surged the most in eight months, sales blew past forecasts.

despite the numbers, monthly average users decreased by 9 million. that means they average 326 million mau's. this comes as they continue to purge fake accounts. we sat down to talk about the third quarter results. ned: we are challenging more than we used to so the 9 million number is something jack talked about in front of congress. we've become more sophisticated in our understanding of how people create suspicious account so we can detect and prevent their creation or stop them after they've been created. how many get through depends on how many of them should get through. we test far more accounts that are suspicious and we understand the behavior. just because an account is created on a web browser in a certain country doesn't necessarily mean it shouldn't be on the platform.

there's a lot that goes into it. emily: you have said monthly active users will decline. how much? ned: we said that would continue in the fourth quarter because of decisions we might make around sms contracts we have with carriers. we don't forecast mau. we have done that the last few quarters because we could see a decline coming. we wanted to share that with people. when we talked about it more broadly, we will don't want to be constrained. we want to prioritize health because it's a critical growth factor for the company to make sure that twitter is a safe place for the people that should be on the platform. we are removing suspicious behavior whenever we can. sometimes it affects disclose metrics. sometimes, they were largely

inactive. it doesn't affect the matrix is as much. emily: yesterday, we saw tweets promoting fake bomb scares, fake bombs, conspiracy theories. how is this still happening? ned: we still have work to do. there are so many ways for us to address these challenges and how they create bad behavior on twitter. one of the great things about twitter is we can benefit from is because it's public and open and in real-time we find things that are corrected by the platform itself, other people on twitter who say that's not true. you may believe that but i believe something different and i want to tell you what i believe. that the platform is open makes it different and allows us to take a different approach around policy and enforcement. emily: we are in a time of

divisive politics. the president tweeted the anger we see is caused by the false reporting of the mainstream media. it has gotten so bad and hateful that it is beyond description. mainstream media must clean up its act. in the past, you've said he is an influential person, is the president getting a pass when it comes to what is true and false, what is hateful and not, what incites violence because he is the president? ned: twitter is public and open and real-time. that allows people to see what a public figure will say regardless of their party affiliation, where they are in the world. they can respond to it, they can observe how others respond to it. we believe that allows for a healthy public conversation where people have more

information than they otherwise might, whether it's in the united states or brazilian and mexican elections. it's an important part of our purpose, to serve the public conversation. emily: twitter has been clear about the need to do more. jack dorsey has been clear. how many more people are you dedicating to this problem? ned: health is our number one priority. we think about health, and growing our audience and the sales. i don't expect those to change much as we move into next year. because twitter is public and open and real-time in nature, we can leverage those characteristics and accomplish a lot through our services team and machine learning.

we amplify our policies and the twitter services team. we have been adding more people. we are growing 15% as we invest. i would expect this to continue. it's not against anyone priority, we want to be able to grow the business and execute the opportunities we see. emily: join us now to discuss this is selina wang. deborah. what do you make of these numbers? advertisers are coming back and spending more. monthly active users keeps going down. it's difficult to see the progress. it we are challenging every week. >> he just talked a lot about health. if you're going to get healthy, you need to lose some weight. twitter, it's losing a few million users. that is a positive step.

i think the focus on the daily active user number is important and needs to be done. the steps that they are taking to make its products better, to reprove itself to advertisers are starting to pay off. once this weight loss is gotten done we will see users rejuvenate again. we will see advertisers come right along. emily: twitter does not report daily active users. you wonder why. >> the fact that they don't report it means there is something they are not comfortable with. ned did repeat that it's below half of what the mau is. there is a lot of room for growth. something that was concerning, dau went single digits for the first time in several consecutive quarters. that means the cleanup efforts is hitting their daily active users. that really matters to advertisers.

at some point, they need to show that these cleanup efforts are not going to let them monetize better and drop more users to the platform. emily: the cleanup efforts are incredibly important. what is happening on twitter is driving the national and international conversation. once twitter gets its act together, are they going to add a significant number of new users? is this the size of twitter? is this it? 300 million users. >> it's hard to say if this is it or not. what we see now is twitter finally coming to terms with what it really is. it's not a social network that will be the size of instagram or facebook. it's a platform for real-time news and engagement. to the extent that it can promote that uniqueness from the

other platforms, that will draw users back. this constant back-and-forth of how many people does twitter have, they just need to embrace what they are. if it's 400 million, advertisers are going to embrace that as well. emily: snap reported numbers and all eyes were on user growth. they reported the number of daily users fell for a second consecutive quarter. 186 million -- almost exactly in line with estimates. forecasting trend continuing and weaker revenue of $355 million estimate. this coming as they are struggling to fend off facebook and instagram. the story feature has become the preferred for millennials. can they reverse the trend? >> that's a big question. both snapchat and twitter are in

a similar position. they have seen user decline. better-than-expected revenue, that's a positive thing. similar to twitter, we've got a situation with snapchat where the daily active users have declined yet again for another quarter. this is concerning to advertisers. the fact that snapchat has been able to monetize those users to better expected extent is good. that is probably not going to continue for ever. we will see them do more to restart that user growth. emily: how will they do that? >> they could figure out android. the android app has been a thorn in their side for a long time now. once they figure that out and relaunches a solid well performing android app, they

will get more users who use android phones, especially markets outside the united states were android is really popular. hopefully they will figure that out. it remains to be seen how quickly. emily: still ahead, women in the workplace. women are underrepresented at every level. why the movement seems to be stagnating. this is bloomberg. ♪

♪ emily: spacex is looking to goldman sachs. the space travel company is seeking a half billion dollar leveraged loan. goldman is leading talks with investors this week. the evaluation has climbed to $28 billion as it has launched and landed rockets for reuse,

reducing the cost of space travel. it's the third most viable venture backed startup in the u.s. after uber and airbnb. year after year, companies the -- companies continue to declare they are committed to gender diversity. according to a new study, progress is it just slow, it has stalled. compiling data from over 400 companies with 20 million employees, the report showed 2018 women continue to be underrepresented at every level. more and more women are earning bachelor degrees in asking for promotions and stay longer in the workforce, only one in five senior leaders is a woman and only one in 25 is a woman of color. we discussed this. >> companies need to lean in now. women getting college degrees,

at higher rates than men for years women are asking for more, , asking for promotions and raises as often as men. they are not leaving the workplace. companies need to do more and they need to treat diversity as a business priority. what do you do when you want to hit a goal? you have a compelling case, you set goals, you report progress. you hold leaders accountable and too few companies are doing all of those. emily: you've been working on this since 2012. what is different this year? there is no difference? stalled.ies are what we find is we are getting closer to understanding root causes. we understand we have a problem. help us start to break down problems we can solve in units of one or two years. this will take 10 years to shift a generation. example. tell us about micro-aggression. tell us if targets work.

and how other companies do it. emily: you are singling out the idea of only this year. the only woman in the room and the experience she has. why is it so important to understand that? >> they have a different experience than women who work with other women. they are more likely to face those every day fights. you are spoken over in a meeting you have to prove your , capabilities over and over again. that wears people down. they feel under pressure, isolated, on guard. it's hard to imagine women can be doing their best work if they feel that way. emily: when it comes to hiring, one of the things square does is put women on a team with other women. a lot of teams are only men because men still dominate the workforce.

being on a team with other women, they have networking and camaraderie and the experience will be better. it comes at a cost. >> i think it's a good strategy. how do you make and retain an -- and advance the women you have? putting them together creates a different culture. they have role models, they have their own. network and they start to advance. if you are the only one over a long amount of time, you start to feel less motivated to stay at that company, less satisfied. if you leave, that's not helpful. emily: there's a compromise. you have teams of all men making decisions without women. >> i don't think it's a simple choice. this one and done approach, a single woman on a team and now

we have diversity. to women at every level, not picking and choosing where to put are underrepresented women across the team. a good strategy is to group women together and accept or realize that leads to better diversity of ideas on that team and hopefully better performance of that team. you can look at the blended teams and see the performance they get. >> it's not a one-shot deal. if that's the only thing you do, you probably won't have a lot of success. the hard thing for management teams, you have to do things in concert and stick with it. if this is seasonal, you won't be any better than you were last year. emily: what's the experience for women of color? >> it's worse. they see more barriers to advancement. lesson support from managers, less access to leaders and senior leaders get you noticed

and they are promoted more slowly. emily: how do we know this isn't just solving a white woman's problem? all the talk is about gender, not race. >> this year we were looking at lesbian women as well. they are having a worse experience. we cannot agree with you more. elevating women means all women. the women who need the most support in the workplace is black women and making sure their voices are heard. emily: you are not only the chief inclusion officer, you are the leader of services. this is a notoriously male-dominated industry. that must be interesting juxtaposition. >> it's a couple of different hits -- anyone in technical sales is harder. being a person of color is harder. for men of color, it's not an easy road as well, or for anyone who is gay.

if i were to put a silver lining ethos there is eco-'s -- of radical transparency. people grow up in an environment where they understand data. one of the things the report does, we put it out there. there is one company were men felt that gender policies were going to hurt them. they were 30% off the benchmark. the ceo said let's have a town hall meeting and put it all out here. let's explore that. that will not fix the tech culture in one go but i think the emphasis on data and transparency is something we can benefit from. emily: that does it for this edition of the best of "bloomberg technology." we will bring you more throughout the week. tune in every day. 5 p.m. in new york. we are livestreaming on twitter.

check us out and follow our breaking news network tictoc on twitter. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

emma: coming up on "bloomberg best," the stories that shaped the week in business around the world. pains alternate with gains as red october drags on for u.s. stocks. >> today is clearly a panic sort of sell everything kind of day. emma: saudi arabia remains the center of controversy after the killing of a journalist. >> it is not convincing too many people in the world. >> it is a heinous crime that cannot be justified. emma: italy projects defiance as the e.u. rejects its budget plan. the ecb holds fast it's stimulus exit strategy. european banks need a courageous corporate earnings report. >> it is the second clean quarter for