emily: i am emily chang in san francisco and this is bloomberg technology. apple shares take a hit after it reports a lackluster results and the iphone maker says it will no longer share how many iphones it's selling. we talk about the tech giants next era. conditions in a state of uncertainty for alibaba. we hear from their vice chair.

and mass walkouts at google change, butses of the ceo says he is still in the drivers seat. we will discuss leadership in silicon valley in the face of employee uprisings. our top story. stocks extended declines. in its fourth quarter, apple said iphone sales barely grew from a year-earlier. at the same time, apple said it would stop providing unit sales for iphones, ipads, and macs as takes steps toward becoming more of a service business. here to talk about all of it, berman,rter and mark who covers apple. mark, walk us through the to apple's surprise decision to not report sales numbers.

like you said, there are two sides to the spectrum. the companyees with line that this does not provide an accurate picture of their business and they are becoming more service focused. on the other side of the coin, reportst don't want to negative year-over-year sales growth anymore. it's not a good look for any that is so pr and marketing driven. emily: we know the industry is rapidly changing. one analyst said it's in recession. what do you think the implications are for apple that they don't want the public to know what these numbers are anymore? kevin: what's most important to a business is revenue growth. whatever that is coming from, products, services, etc. mode is itse's

ecosystem. people don't want to switch to an android operating system. a premium brand gets premium pricing. it's a blessing but a challenge, mainly in the growth markets for smart phones, which are emerging markets where the consumer smartphonerd a $1000 because maybe they are making $2000-$5,000 a year. android phones are the ones providing the first computer to most of the developing world. emily: what are the signals about demand for the new iphone in the current quarter, the holiday quarter, and knowing we are not going to get these numbers next year in that quarter when that quarter reports? was a littleit alarming that iphones year-over-year growth was so small. , rounding down

from 0.2%. why that is alarming is because we had a week and a half of new iphone sales during the fourth quarter. last year, the iphone x did not come out until the holiday quarter. we are talking about known you growth year after year. growth year after year. emily: what are apple's options now in emerging markets where there are cheaper options and android's competition is fierce? kevin: apple is the operational brand, the premier brand. in eastern china -- in every country, really, there are wealthy people who can afford a $1000 phone. emily: and there are cheaper iphones now. kevin: true. but in africa and india we are talking about $60 smartphones, $100 mark phones getting better every year and getting cheaper and cheaper.

a multi-pixelave camera or the ability to store videos, but it's come a long way. samsung is facing some petition from chinese manufacturers, but i think they are going to grow. they have decent growth in china. most of the world will have android phones over the long haul. there are precedents for apple doing this. they stopped reporting ipod unit stopped reporting ipod unit sales and the ipod slowly became less important. they stopped breaking out amc versus -- mac versus laptop sales. we saw that segment become less important than the iphone. in termsthe forecasts of how important the iphone will remain for apple compared to services? heaven: -- kevin: four years, there have been discussions about why it's bad that the iphone makes up

about two thirds of apple's sales. now we are no longer going to have the unit numbers. we are not really going to know what that means. i guess the good news, the silver lining, is that revenue is still growing at a remarkable pace. it's also alarming because unit sales were up 0%, revenue was up 29%. the good news is, we should assume people will continue to buy iphones in the same quantity. even if they don't get much growth in the future, revenue is still going to be fairly consistent. we are talking huge numbers. about one hundred billion dollar holiday quarter coming up for apple in a few years. they are not going away. this is a very marketing pr decision not to see those negatives on the balance sheet anymore. trendskevin, given the you are seeing in emerging can appleow much

grow? much. it can't grow that emily: do you think there is an upper limit? kevin: the next billion consumers coming online in india, china, africa, they are not going to be able to afford an entry-level iphone. it's going to be android-based. mathematics of it. an iphone is a premium brand, and aspirational brand. an ecosystem. warren buffett has talked about this. a smart phone is an important part of your life, perhaps the most important part of your life. would you gladly pay another $100 or $200 not to have to switch from the apple operating system to the android system? you are abut if first-time digital consumer, the decision is easy just because of

the economics of the entry-level smartphones running on android. emily: kevin carter, you are sticking with me. mark berman, thanks so much for stopping by today. coming up, alibaba reported quarterly earnings well above analyst estimates, but is missing addictions -- predictions for year-long sales by about 6%. this is bloomberg. ♪

emily: alibaba reported second-quarter revenue that fell short and it cut its sales outlook for 2019. the chinese e-commerce giant blaming macroeconomic conditions, saying the globe is in a state of economic uncertainty. hesked about the headwinds is expecting. >> retail sales are still growing at 9%. e-commerce over the last quarter in the total market was growing 24%. our gmd ist reported growing at 24%. we are outgrowing the market. hitchedis not entirely to the economy and consumption trends. what we are doing is digitizing not only our own platform, but also the traditional retailers retailm, enabling our

partners to capture more customers and operate their business more efficiently. that's what we call our new retail strategy. that's an area we are very excited about. you are facing rising competition in social commerce. there's also competition in food delivery. what is your strategy a midst the change in currents? >> we have always had strong competitors. to use a sports analogy, competition makes us better. i'm glad to have the competition, but they are in different sectors. there is really not a company that can compete with us on an entire platform basis across commerce, entertainment, and local goods and services. activeserve 600 million

consumers doing transactions on our platform annually. think, our strength, and again, as we tap into the to enable thece traditional retailers to capture ise of their sales, that some market that is $5 trillion. are increasing our potential market two $5 trillion. hely: president trump said had a good conversation with president xi jinping focused on trade. trade talks have not resumed. what is your reaction? >> any activity that will stave off this trade tension is positive. to eithero advantage side to get into a trade war because the two economies are so

dependent on each other. it's a very symbiotic relationship because they are the two largest economies in the world. the future is really joined at the hip. for example, china is buying a lot from the united states, $165 , andon annually in goods another $40 billion in services. there are trade wars, tariffs, that are going to reduce business from american exporters selling to china. there are also american companies operating in china that are making very good profits. total aggregate revenue of $600 --lion and another 49 mill 49 billion dollars of profit. you don't want that to go away. it's a good thing the two presidents are sitting down and about to talk. we hope some good things come out of that and the tension will

get reduced. alibabaack ma said would no longer be creating one million jobs that alibaba promised to create in the united states. as a result of this trade war. alwaysto say there was some skepticism those jobs would be created, but if this drags on, how would alibaba react? joe: remember originally that the job creation assumption was based on the premise of trade, that we wouldflow help small businesses in america cell to chinese consumers. in the wake of all these -- all of these tariffs and tensions about measures, it was impossible to keep that commitment. but if there are ways for the two sides to resolve the tensions, and then we can resume to help small

businesses and farmers in america, we certainly will come back in and be very happy to. the chinese government has led a broad crackdown on the internet. do you think this could undermine the growth that has made companies like alibaba and tencent so giant? joe: i think you have to understand that what you call a is really enforcing regulatory measures in each specific sector. i can't speak for other , apanies, but in our case few years ago, people were on things on our

platform and we continue to police the platform very well. these efforts are helpful and meant to protect consumers. we operate in that environment and comply with regulations. coming up is a big day for you. given what happening in the global economy and the chinese economy, how do you think it will compare to the prior one? >> there are a lot of really cool things going on here. 100 80,000bout brands that will be participating in the sale on our platform. it's a great presentation to the consumers. we call this the olympics of brands. they will a ways be there to compete for the consumers. the other thing about singles'

we are going to implement further our new retail we havees so that partnered with about 200 thousand physical stores that will be partnered with us in 12 cities with consumers that can go to the store or order online. today, mobile phone consumers can be very flexible. they can be in store or sitting at home or the office and order, and you have to reshape your company to be able to serve these increasing demands. these 200,000 stores are going to participate in the single day sales, so we are very excited about that. i do want to talk more about alibaba with kevin carter. what do you make of the results today and of what is happening

in the chinese economy specifically question mark kevin: i think the results are great. the company is growing above the top line. a pretty wars have had significant effect on stocks in the e-commerce sector. they are down close to 35% from the year and highest to the lows this week or last week. perspective, 54 percent topline growth is incredible. there are very few companies in the world that would not feel good at -- about growing up 50 plus percent. they have lowered the estimates for revenue for the full year, but if you put it in perspective, i think things are still quite strong. conferenceid on the call this morning is how i would look at it. you have 300 million middle-class chinese consumers.

that number is expected to grow to 850 million in 12 years. a 150% rise. and they don't have debt like americans. kevin: yes. he touched on debt and the ability for the chinese consumer to leverage themselves up. alibaba is- competing with all industries in china. because so much of china is state-owned, banks, for example, they are susceptible to losing out to newly digital customers. alipay is an example of that. what tiese said about all of this together is the indigenous nation of the entire economy. the bringing together of the entire economy. ago and,re six weeks

it's the one thing i saw on my .ost recent trip it's hard to explain to people. emily: it's a unique experience. i was going to try to ask you to paint a picture for us. >> it's like coal foods meets the jets and -- whole foods meets the jetsons. there are tracks along the ceiling and elevators lifting bags up to go through a whole to go on a scooter and deliver it in 30 minutes. to meet was most striking is that this is still a small part of the business but 60% of their orders were online. i don't know what the whole foods percentages here -- percentage is here in the u.s., but i am sure it is not even 6% if it's even 1%. i don't think people quite understand the leapfrogging going on as entire economies become digitized because they never had bank accounts and a

lot of things we take for granted. out, alibaba point is so huge and spans industries. there's really no other player that can take it on directly as a competitor. is it truly unhitched from the economy, unhitched from the future of the global economy and the chinese economy, or is it even more hitched because it is so large? it's certainly hitched to the economy. but this is a secular change, right? thisr world, we see whether it's netflix versus traditional television, google , we havee newspaper seen how these things have changed our world, but in the developing world, the emerging markets, china, that traditional consumption infrastructure doesn't really exist. consumerthis giant retail sales growth for the country, but it's going on to the smartphone because most of

the retail structures we have at really exist't there anymore. i think joe is right that the entire chinese consumption economy online, off-line, in fact, they even said they are dropping the word de-from commerce. -- word de-space from commerce from commerce. emily: thank you for joining us today. be sure to follow tictoc on twitter. this is bloomberg. ♪

emily: tesla ceo elon musk says he probably would not accept an investment from saudi arabia now. in an interview, he criticized the government over the death of journalist jamal khashoggi.

he is attempting to secure funding to buyout investors and take tesla private. that post led to tesla being sued and find by the sec. musk also said he uses twitter without much of a filter. -- an investment firm has announced it is pouring more then $1 billion into a silicon valley window maker called view. the investor pulled out of saudi arabia last month in response to jamal khashoggi's murder, but he did meet with the crown prince privately. , control at google under pressure with a mass walkout. we will discuss the state of leadership next. gopro's third quarter

earnings report. enough to bring a backup this holiday season? this is bloomberg. ♪

♪ emily: this is "bloomberg echnology." i am emily chang in san francisco. thursday, thousands of google employees locked out of offices around the world and purchased of the company's handling of sexual misconduct allegations against its top executives. it prompted responsive from leadership that google is serious about drawing a hardline and will look at demands for change. >> obviously, it has been a difficult time, this anger and frustration within a company, we all feel it. too.el it, t to

bar, and they clearly do not live up to our expectations and that is where it was important to express our support for the employees today. hely: he also signaled that remains in charge and will not because of the suede vice half uprisings. we are joined by bloomberg tech senior executive editor, founder of the web investment network and also, author of "dear founder: letters to anyone who wants to start a business of." you have a strong history in silicon valley. you were the chair of yahoo!, worked with marissa mayer and mark whitman for a very long time. what has been your reaction as you have seen all of this unfold at google? first, bad behavior should never be rewarded. . emily: let alone tolerated. >> no, and so we need to continue to do a better and , to makeb, obviously

sure we don't have this happen in our companies. i was so progressed to work with meg whitman at ebay, and she laid it perfectly clear to everybody, don't do her thing that you would not want your mother to hear you do or say, or show up on the cover of the new york times. google's problem has been that they did not have the women. there are a few, but they did ranksve women in the top for a very long time, and you saw executives getting away with bad behavior. >> i cannot comment because i haven't been at google, what people were doing to whom, but in general, we need to do a far doing to whom, but in general, we need to do a far better job, as you know, from the book you wrote, of treating people well, and not having these things go on and on companies. when they do go on, they have to get addressed immediately and quickly, and with transparency. emily: brad, it is good to see asunder of front.

he went to the conference and spoke to andrew ross sorkin as the lockout was happening, literally, and he talked about the anger that he himself feels, and also said that he does not run the company by referendum, that even though employees feel empowered, this is not going to necessarily determine how they view the company. how do we square that? brad: he is in a tough position. the way all of this unfolded, andy rubin, who was really succeed larry to page, he left the company in was elevatedar to ceo the following year. so the allegedly inappropriate behavior did not happen after his watch. he is able to share the outrage of the employees and endorsed the -- the lockout. the difficult decisions will come when he has to address some of these five demands the employees have, like ending

arbitration. it could open up the company to liability, so the top decision for him still remains. emily: and it did happen to larry page's watch, who is still bossf alphabet and sanders . brad: that is definitely some awkwardness there. emily: in general, may not come have you ever seen this kind of employee outrage in silicon valley, this kind of employee organization? it has not just happen at google, we saw amazon protesting their shareholder diversity. we saw microsoft employees. purchasing their work with the u.s. government. maynard: i think this is new ground for silicon valley and i think employees want a voice. they have always wanted a voice, but more than ever, they want to share that voice and they want us all to make sure we are using our technology for good and that we are treating people the way people should be treated, with

dignity and respect, more than ever. i have been around a long time, and hopefully i have treated people with respect all the way through that journey, but it feels more visceral now to our employees when we are not doing that. emily: it feels like a strange contribution that contradiction. you and i as generalists, we hear this. so much of this was an open ,ecret and employees knew this and yet now we are seeing this average. >> and was a change of the times. the me too movement, your book, what was sort of known and accepted nowly becomes outrageous. a lot of these funders set up their corporate environments to look like a command -- academic environments and schools are now seeing the other part of that, want to that students have an impact in how universities spend and invest and now, employees are doing the same, -- finding their

voice. emily: a lot of these people has been untouchable. they could not be voted out. mark zuckerberg is the same way seeingard, we are now problems from, calls for him to be more transparent, even questions about whether or not he should still be leading .acebook amid its challenges maynard: i see him becoming more and more transparent, as he did on the earnings call this week. emily: right, he is doing pretty awesome. maynard: right, that is all good. of thehave more control company than a lot of public shareholders would like him to boardbut he still has a and overtime, towards are accountable to hire and fire ceos. emily: but you think he has the whole board in his pocket? they are all mark-loyalists. maynard: i don't know the board

and exec we how the operate, but i know that market is to continue to move the company to better places and if he is not, the board will have to figure out what to do there. emily: -- maynard: i am not speaking on behalf of the board. emily: we had these open-ended questions thrown out there, should mark zuckerberg still run facebook? in any world comedy thing that would be the case? brad: that a step back and look funders amass power. it is to insulate companies from all the short-term demands of the market. and look, with less control and protection, mark has built on enormous franchise and enormously successful. there are plenty of bumps on the road but he has learned the leeway to continue to guide facebook. withrd: a could not agree you more. if you look at where it is today versus where it started, it is an amazing run and it was not without bumps. we need to figure out, and i am

he will, and the board will help, maybe, how to traverse this next set of challenges and bumps. will does not -- revenue be impacted, the noise will grow. these things have a way to, you know, work themselves out. emily: facebook had an earnings , that was a bit awkward, to some people. we had tim cook come out and challenge facebook and google directly about their business model. techdo you make of the smack down happening? i guess it is happened before, larry ellison and bill gates had to their issues. maynard: i was there when cisco used to come and recruit our employees. we were not always friendly. but i think it is way more open today. frankly, i would rather see companies focus on making their

business better than smoking down a lot of other companies. emily: it seems like facebook, broad, investors don't seem to moreider it the vulnerable of the tech giants. and now, marquez said that they will make another big transition. mount -- mark has said that they will make another big transition. now itt was to mobile, is exploiting the messaging systems that they bought. is that a transition facebook can successfully navigate? and: i think there was effort on mark's part to be more transparent in the earnings call. i liked how he referenced sage, he talkedes about getting a hold of the fake news problem. can they be successful? i think with the track record, they have successfully navigated a couple of very hard pivots. this is an existential test. i don't know.

one thing i will say, and the reason people are skeptical that- skeptical, maybe, is social media seems to be governed by fads and people seem to be getting tired of facebook classics, and maybe moving to instagram and elsewhere. that is a risk for them. maynard, something's change, and maybe the expectation of leaders, maybe that you are has changed. how? maynard: number one, there are no quiet moments. you used to be able to go home on the weekend and be with your family and be alone. everything you do every day, somebody is listening or taping. .mily: because of facebook it or twitter. there is no quiet time. work is blended between work and home so much, you are always on and always expected to be representing your company. so i think the pressures are and more intense today

always on, and your expectations of not just running your business, but doing things in a humane manner and making sure you have a voice that is representative of more than just a company, that is all different. webb: maynard webb, of the investments, and brad stone. thank you. ingle's top lobbyist washington is stepping down. former u.s. republican house member, susan molinari, will transition to an advisory role in the january. became one of the biggest spenders on influence in the capital during her tenure as it fought for net neutrality and government contracts. her departure comes as the company battles claims of bias against president trump and the republican party. coming up, gopro tanking, following its third-quarter

report. how the ceo. expects to restore profitability business.ore camera plus chemicals is outperforming the s&p 500, how the store chain has learned not to fight the amazon euro m about embrace it. ,- how not to find amazon era but embrace it. this is bloomberg. ♪

emily: gopro shares are taking a hit after posting a weaker than expected outlook for the holiday season. it gave a revenue forecast of just $380 million for the current quarter, compared to the $393 million analysts predicted. shares fell the most in 10 months, after also reporting margins that missed estimates. the ceo told bloomberg's selina wang that he is confident about the holiday season. >> in the first 30 days

post-launch, our new flagship camera has gone on to become the best-selling gopro ever. , hero sevenoducts white and humor seven silver are selling better than expectations and we are confident that will .ave a great order ina: are you looking at entering potentially other adjacent marker such as wearables, virtual reality glasses? >> for the time being, we are focused on our core business of helping people capture and share their active lifestyles. we are seeing growth in our core business and we are predicting 5 of selftotal units through this year, up 60% year-over-year. first quarter alone, we are seeing 50% higher sales in year, so our core business is growing.

we are making investments in a new types of cameras, like our fusion 360 degree camera which has 47% of the 360 camera market. so we think we have enough growth opportunity and potential to restore profitability to gopro, just by focusing on our core business. selina: trade tensions with china are ongoing and the it was mentioned in the call that you might actually move production out of china next year. where would you move it, and how would it impact costs? nick: we are prepared to move production of our u.s.-bound goods out of china and the first half of next year if we are forced to do so. but we are not making that decision yet. to date, we have not been included in tariffs, but several consumer product companies have made the case to be excluded are tariff lists, so if we

included on that, we will focus on seeing if we are excluded? nick: but in preparation, what countries are you looking at? nick:? nick:? nick selina: i would like to talk about margin expectations, a bit lower than expected. you have already reduced headcount dramatically. are you looking at revenue per employee number, will we see more restructuring? nick: know, we are looking at very successful holiday quarter for gopro irma we are now one month into the holiday season and as i mentioned, hero 7 black is the most successful ever in the first few months post-launch. sellingand2 very well. that sets us up with low channel inventory exiting the year, a great set up for a profitable first quarter? nick: when we look at camera sales, how much of that is from refreshes from existing users is is reaching a new base?

nick: roughly half of our users of the app are using four to six-year-old gopro's. and hero 3. there is a lot we can do to help them upgrade. majority of our business is attracting new customers, so we are doing a good job of attracting new customers globally. black, we're 7 seeing a lot of social commentary about customers being excited to upgrade and those have upgraded our socially sharing it they are really happy with their purchase. so gopro is a verily german business and so far, the social commentary is doing a good job of driving business this holiday. about: you talked partnering with other organizations and has signed agreements with adobe and others. partnerships with

consumer facing companies that can really expand the brand? nick: there have been other opportunities. in this year, we have never our focus to serving our core customers and we have seen growth. total looking at growing unit volume, up 60% this year, to 5 million units. in theill be profitable fourth quarter, and we believe will be profitable for the second half of the year. we believe we can be profitable in q1 of 2019. we are right where we want to be? nick: i want to talk about this -- selina: this new products, how else will he add value to your program to make users want to pay a monthly fee on top of the quite expensive camera? no: we have been quite successful with our subscription service so far. quarter, and we will be testing more, pricing enhanced benefits to

the value proposition for customers and find a program that really clicks, to drive that subscription rate further. emily: that was ceo of gopro, nick woodman. coming up, with the holiday season around the corner, kohl's is on track to outperform macy's and nordstrom. hear from the ceo next. this is bloomberg. ♪

emily: u.s. department store, kohl's, has been on a tear this year. over 40%, farp outperforming the s&p 500. as they launch their holiday shopping campaign, emma chandra set down with the ceo and the age things off with an update on kohl's partnership with amazon where customers can return kohl's'roducts in

stores. >>. >> we have expanded in l.a. and chicago and recently we went to wisconsin. 100 stores, where it relates to customers bringing in their returns to kohl's. it is a great benefit because they do have to package it up, it is free, they don't have to ship it out. all they do is bring in their goods and it is a very seamless process. when we started, one of the first things we wanted to see is whether the operation would work and customers would use it. now, we need to make sure that -- oppositionfit from both us and amazon is a sustainable idea for us in the long-term. is it driving traffic? are you having more people coming into cold stores? michelle: we are up now against a very important season for holiday and we do a lot of analysis. make au think he will

definitive decision after the holiday? michelle: i do want to get the holiday behind us and i know amazon wants to as well. to your question, we do have customers using it. i think the opportunity is, is there enough for them and does that economic model work for both amazon and as. emma: do you think if you continue it, it will help diversify your customer base? you have spoken before about encouraging millennials to shop at kohl's? deep in: we are dipped i the throes of studying that and am hopeful that he will do that .nd broaden our customer base emma: your capex for 2018 has been devoted to i.t., half of it. how much of that is about driving the online customer and when it comes to mobile? michelle: technology is really feeling everything we are doing. certainly, a big portion of it is fueling the digital experience and that is mobile for straws. but we are also investing a lot

in our stores. we have a lot of innovation happening in the back of the house to help our associates be smarter about the store, and we also just started testing self checkout, which makes it really convenient. stores but if2 that works, we could expand. a big strategy for us in personalization. segments like the core customer, millennial customer, they might want different things. so you need to have data, and you need to have a machine-based learning to serve of the content that will be relevant to those unique customers. emma: so is the core customer more important to you perhaps, than the digital customer at the moment? do you see the digital share of sales increasing to a greater how far can it go? michelle: they are both critically important. a majority of our sales happen in our stores, but we see digital as a growth engine, not

only in its own right, but also a great avenue to attract new customers. are you doing anything when it comes to the holiday to attract and compete for the customer online as a lot of people who are trying to drive people to their are you doing s? michelle: yes. for us, i believe polls wins -- kohl's wins, when we have customers engaging. we have buy online, pick up in-store, and we now have by online and ship to store. of reaching the customer digitally, one of the things i will tell you, from a marketing standpoint, we are leaning in more into digital channels. this year, 50% of our spend will be digital, the highest we have been. emma: are you talking about advertising more on social media? michelle: all forms of digital. a search, social media, partnerships with pinterest, across multiple channels. i think is a really thoughtful

plan. emily: the ceo of kohl's, michelle gosse. that does it for this edition of bloomberg technology. i am emily chang from san francisco. have a wonderful weekend. this is bloomberg. ♪

♪ david: you met your wife in high school? michael: we met in seventh grade. david: you did not date around in seventh grade? you just -- [laughter] explain how you invented high-yield bonds. >> to de-risk america, you don't want to be dependent on a handful of debts. down to a came prostate cancer. >> i lost relatives. david: what helped change how we finance things? >> would you fix your tie? david: people wouldn't recognize me if my tie was fixed. [laughter] let us just leave it this way. all right.