♪ emily: i am emily chang live onomy conference where we are talking about the future of technology. guests from around the world in technology are gathering to talk about how technology can change the world for the better and make progress towards the united nations sustainable development goals. we have an exclusive interview with the micron ceo.

first off, our top story, shares of apple falling. investors concerned about new signs of weak demand for iphones. we heard some holdings cut their forecast after some of the largest customers asked to reduce shipments. the company that makes components used in apple's face id. joining us now is david kirkpatrick, founder of tech onomy. brian, what do we know here -- ryan what do we know here? >> we don't know much and some analysts have speculated this could mean a 30% cut in orders from the point of view of apple. this builds on a lot of other concerns we have been seeing about what iphone demand is going to look like from here. last week we had a report out talking about a canceled

production boost for the xr line of the iphone. before that we had apple's fourth-quarter results, where it said it was going to stop releasing the number of units it sells each quarter, with interpreters maybe interpreting that as a sign that unit sales were not going to be a strong when forward. emily: david, this does not mean iphone demand will be back, just that it's less than perhaps what apple expected. for one of is this the most transformative and important technology products in the world? david: i don't see it as that significant. they have raised their prices so they can sell more units -- less units and still make more money. the iphone and apple are the most catalytic company in technology, consumer technology. they are not going away. i think they have been unduly

hurt in this recent downturn in technology stocks. emily: what do we know about momentum? they make components for face id. we are talking about a range of phones that face id is in, not just the 10r. what exactly does momentum do? they are heavily involved in the technology use in the face id. a lot of other types of phones you some of the technology and some analysts have speculated they can maybe get a boost from android phones. at the moment they are so heavily tied to apple i think they get about 40% of their revenue from apple last year. if there is week here it's going to be important for them. you see today the stock is down about 30%, its worst single day drop ever. this is something considers -- that concerns investors. emily: david, you know that any sign of any information about

production of the iphone gets dissected, because we do not hear from apple until the end of the quarter. now we will not be getting specific unit numbers from apple bout the iphone at all. it makes sense, but can apple live up to its trillion dollar market value as a services company? that they were the big question, but i do think the market is overreacting to this hyper magnified news given the general situation that apple still has in the consumer technology economy. i don't think it's nearly as where as it's been interpreted. emily: why not? david: because i think apple has a number of other products and other things happening. look at the airports, that's those are $179s, that everyone on the new york subway needs to have. the apple watch with the ekg in

it. apple is still at the front of consumer devices globally. that will continue to pay off in the macro. the stock day in and day out is not my expertise, but i feel in gut this is an overreaction. emily: overall we have seen it faang stocks take a beating over the past couple of weeks. do we see any signs of that changing now that we are through the midterms? n: these stocks will not be too impacted by the midterms. if there is a move towards privacy and data regulation, that separate thing. i think you will see some analysts come in and see if they can find some bargains. i talked to some semi conductor analysts who think they see some really good values following the big drop in october and going into november. the fact that there is slowing iphone demand, apple is such a big player in the technology

ecosystem that this is going to be felt broadly. david, you are talking about the future of technology here. te iphone is a huge part of transformationech's -- technologies transformation because it enables some of that. iphone is the catalytic device that changed computing, change consumer experience of technology. going mobile has changed everything. that we talk about here at ways thatis the many society is being transformed and the opportunities it creates for business. we are talking a lot about the need for a new attitude of responsibility and conscious capitalism from the technology companies, because they really are not having the kind of reputation they used to have. john chambers said this morning in his travels in middle america, silicon valley is viewed negatively today. that's very serious so we are talking about what technology

can do to continue to change the world and improve its image. emily: apple doing things to combat addiction. apple, facebook, amazon all part of this new era. do think this is a prolonged state of being for technology? do you think that the anti-technology for continues for the -- further -- fervor continues into the future? think it will continue but in general technology will be doing great and its reputation will improve over time. emily: have is technology help us get towards a more sustainable future? david: it is going to help us get to a sustainable future. there are ideas galore at this conference. emily: thank you both. we will continue to monitor this apple story. the trump administration debuted a new tools to fight china's

alleged attack of american intellectual property. export. will use controls, indictments, and more as part of the new strategy after a chinese chipmaker was accused of stealing technology secrets from u.s. based semi micron.r macron -- we will have more on this in the program when we sit down with micron's ceo. coming up, a strong year for ipos set to continue. will discuss some of the acquisitions expected in 2019. if you like bloomberg news check us out on the radio. this is bloomberg. ♪

♪ emily: welcome back to "bloomberg technology" at the techonomy conference in california. softbank's mobile unit will soon join the race of several stock -- strong companies that have hit the market this year. end,e year draws to an 2019 is shaping up to be an equally strong year for ipos as , andnies like uber, lyft airbnb openly discussing their ambitions. today we have greg cut a hate y joining us cudah here. what does the ipo market look like in 2019? >> if we have got anywhere from a flat to upmarket you are going

to have a strong ipo year. there's just no question. some of the big names are going to come out. i think you will see some emerging things around autonomous and cyber that will accelerate in the next years. emily: are we going to be in a flat to up market if these tech stocks are down? emily: i guess it's -- i guess it's all relative i guesstations -- greg: it is all relative to expectations. in terms of broad market, people feel like this is going to be as good a time to do it as any. emily: are you watching uber, lyft, and airbnb? >> no question, those are the big names. clients, i won't say them by name, but i think cyber is. the one thing that's interesting. .

cyber as a defensive play, if you don't have good cyber capability you get picked up in the early stage in a lot of the cyber capabilities. emily: what are the chances all three of those companies, uber, lyft, and airbnb pulled the plug? >> i think it will be as a group because they will be looking at market conditions and similar views as to what the market conditions will look like. if the market is really down, i think they beat -- they may be more in a push. emily: with your outlook for valuations -- what is your outlook for valuations? >> valuations are high. business models were very speculated in the late 90's. you are rolling the dice on a lot of these things. now business models prove out really fast. none of these companies is in a

position where people do not think they are going to be survivors. as business, it is quality. things, i think a lot of other people need to speculate on that. i'm a long-term believer in the global economy and u.s. economy. if you are going to jump in now, maybe it won't be a giant return over three years that over the long term it's going to be really good. wondering if we are seeing some air come out of the bubble right now? >> i think we are and i think it's healthy. it's tough to call it a bubble, in my opinion. i think it's probably an extended correction. i think it's probably healthy to make sure the old irrational exuberance comes back. emily: what sectors are more right for m&a nonpublic than public offerings? >> i think people are trying to

scale cyber but the fact is they get picked up really early. some of the big plays you see this year are really about capability and collaboration. it's all about experience. if you look at the collaboration with red hat, those things are not about future function. i think you will see big m&a continue like that, no matter what the market looks like, because there's a lot of cash out there. emily: last year at this time we were talking all about cryptocurrency, which have downy come down -- called -- calmed down. what does that market look like in 2019? >> blockchain, let's talk about blockchain. i think some of them might not survive. emily: do you think some of the dominant coins will survive --

won't survive? >> the whole point with bitcoin, etc. is that you have something that has a limit. that is going to be some survivors and a lot that don't survive. the thing that's probably missing is this quite revolution of blockchain using it for other purposes. ensure wave in the insurance industry where you are dynamically repricing insurance for ocean freight. it's not exciting but it's billions of dollars to the industry by using blockchain for things like that or used to rights management like microsoft is doing across the industry to use artificial intelligence and blockchain to manage royalties and rights management. places wheret of it's not discussed where there is a heck of a lot of value to gain in the industry. emily: that is a lot of concerns about regulation, lack of transparency.

how much do you think that will hold the sector back? >> i listened to your previous speaker and i think it's not just a great question, but something we have to be on top of. i don't think we ought to leave it just to regulators. i think all of us in the industry need to get on top of it. we have talked about privacy, that artificial intelligence is going to eat my brain. those are probably getting more coverage in some ways that they are already being acted upon in terms of ethical use of ai and things like that. when i don't think is getting enough coverage is how fast technology changes things. take the trucking industry. an entire industry, roadside restaurants, things like that that depend on truckers. best nearly 10 million voters -- that's nearly 10 million voters. do notnd the industry have a plan on how to deal with

those individuals in a rapid change we going to have another controversy on the ethical use of technology. i think sometimes disruption becomes disenfranchised and we have a duty to work together on that as a collective community. greg, thanks so much for stopping by. good to have you. announces its biggest deal yet at $8 billion. how a survey softly maker will help the european company take on salesforce, next. this is bloomberg. ♪ ♪

emily: welcome back to "bloomberg technology" at the techonomy conference. sap announced it is buying it survey software company for $8 million in its largest billion. sap looks to battle rivals like salesforce.

the deal values the survey .alley -- surveymonkey value >> this is the jewel in the crown of sap. it changes us fundamentally. there is a huge new category called experience management. customers today want to protect their brands, their customer relationships. they want to inspire their people to be all focused on what's going on outside the company. they want to understand in real-time the sentiment analysis of everything that moves across the value chain in their business, so this is experience management. ualtrics is the de facto standard in this space. sap is the de facto standard in operations management. if you can marry operational , youwith experience data

have the holy grail of enterprise application software. so this is a bold move. it's all about growth and it's all about the unique synergy of data. and o experience and operational data coming together on one platform to fundamentally change the world. altrics about in the qu point of view. did you go with sap because of price alone or was there something else? do you think it is more valuable a --sap's hands that had as a standalone company? >> yes, we were scheduled to ring the bell on thursday. i came home for the weekend and things move pretty quick so kudos to bill for acting quickly and having an enormous vision around what we are doing. we have never optimized for finances. were the company that bootstrapped for 10 years.

even one public, we had no financial reasons to do it. we had cash in the bank. we were going because we had created this new category. when he'll showed up and said take a look at our business, where we have all of the showedonal data -- bill up and said take a look at our business, where we have all of the operational data -- changed the way employees because weth acm power it a lot of the employee engagement, employee experience in the world. we get 15,000 settlers overnight and we get to go global in a way that xm should be. cannot be more excited. i have been doing this for 16 years and it's just the beginning for me.

i woke up this morning and said i have not felt this way since we were in the basement. anything thatread does not say this is a good theory. strategically it's a good theory. the question has been about the price. it is a very rich price at 20 times revenue. deliver witheed to rics inside of sap to justify the price? will kind of numbers did you pencil -- what kind of numbers did you pencil out? >> let me give you the details on the price. revenues,mes 2019 which is consistent with the benchmark for high profile cloud companies in this environment. so that's number one. and number two, they are growing at 40% on a year-over-year basis. companya pristine cloud

in the experience management company that's fastest-growing. sap is also growing our business in the cloud by 40%. 40%ou combine two companies, this is the fastest growth story in enterprise application software industry in the cloud. sap has 450,000 customers. with our operating in 193 countries in the world. 20% of his revenue is outside the u.s.. market in 25 industries, so we have 15,000 salespeople in 25 industries ualtrcis now selling q trics day one.l last night i had an analyst call and i told him we are going to

be the fastest-growing business software company in the world in the cloud, number one. count on us for double-digit total revenue growth. total operating income grew at a great -- rate greater than the revenue growth. all i need in the business case , this greatsmith innovator, fantastic ceo to just keep doing what you are doing and don't stop and use all of the infrastructure and power of sap to spread your word everywhere in the world. all he has to do is that. she does that, this is the biggest and most successful m&a move in the history of business software. emily: sap ceo bill mcdermott and ryan smith. coming up, sizing up singles' day. y alibaba's record-breaking day came with some warning signs. later in the program, we will

speak to the ceo of micron. his company is the latest epicenter of the u.s.-china technology dispute. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." i am in half moon bay at the techonomy conference. alibaba posting record sales during singles' day. it was a 27% increase from the tally in 2017. while this is a record, we should note that growth slowed from 39% last year. jack ma plans to step down at the end of the year. for more i want to bring in kevin carter and bloomberg tech's selina wang. , walk us through the

numbers and the most significant things to look at. >> we saw $30.7 billion in merchandise sales, a 27% increase, which is still quite impressive given that this is the 10th anniversary of this huge shopping bonanza. that is significantly slowed from the growth last year. we are looking at growth merchandise volume. what that number tells us is the total amount of orders put to the system, it's not necessarily the total amount of sales and is not counter in the potential returns. it's not a great metric for consumer retail -- in the broader picture. into important to note that this giant number includes sales that have been queued up from the day before. alibaba hasto that, been able to continue to juice this number year after year because they continue to add the business to this metric. this was the first year that

their largest southeast asian e-commerce site was added into this. they have been counting new delivery. they were doing starbucks delivery in certain cities during 11/11. emily: now, our colleague in asia talked about how this number that alibaba uses is kind of meaningless because it does not have any direct correlation to the ultimate revenue that alibaba brings in. a aoints out that is widening gap between the size of v and alibaba's actual revenue? is that something concerned -- to be concerned about? >> no, i don't think so. this is a company that when we last spoke reviewing the most recent quarter, they grew revenue that 54%. v numberthat gm

growth rate has been declining in terms of its growth rate, but no. 27% is a fantastic growth number. the company is growing top line over 50%. that will slow. here, theental story rise of the emerging market consumer, the rise of the china consumer is in fact, and -- intact, and going strong. emily: are other investors echoing kevin stallings here or are they more pessimistic -- cabins thoughts -- kevin's thoughts here or are they more pessimistic? >> we are having to reckon with the fact that the chinese economy is slowing and that is the -- there is the ongoing chain were between the u.s. and

china. we suck consumer data from china that was slower than expected. we are hearing from management at alibaba that they are still confident in the emerging middle class. that despite any ongoing geopolitical tensions alibaba is the wave of this growing middle class that has expanding consumption capabilities. evans,spoke with mike week, hedent, last mentioned that sales of big-ticket items were slowing, clean --g scrap flatscreen tv's, refrigerators but they see an uptick in good like cosmetics. emily: clean there are no signst the trade war, that either side is going to back down. how is that impacting your position in alibaba? : emerging markets have been under a lot of pressure in terms of the stocks and the etf that track emerging markets.

the headline that has gotten the most attention is the trade war. more recently some undercurrents of is china's slowing, is the chinese consumer losing steam? those may be true but the secular story here is so much stronger and bigger than any short-term thing. this too will pass. right now investors who have a mid-to long-term approach to things, which every investor should have, should be looking at this sector as a place to invest, because as joe said, the chinese middle class, the emerging-market consumer are long-term secular trends. this othershing into incredible, and important, and big sector trend, which is the smartphone, which is giving a computer for the first time to billions of people and giving them internet access. as they become consumers they are doing it online through

venues like alibaba. carter,ll right, kevin selina wang, thank you both for weighing in. softbank is seeking to raise over $21 billion in the ipo of its domestic telecoms operation as part of the transformation of softbank into a global investment company. the ipo would be japan's largest yet. bloomberg's elizabeth 48 is here to tell us more -- elizabeth fournier is here to tell us more. >> the early pricing indications are what we know and they want to raise up to $21 billion. it would be the biggest ipo in japanese history. what we see here is the next .tage of the evolution he wants to raise this money and move away from the traditional telecoms business and cement his reputation as a technology

investor. emily: so the controversy involving ties to saudi money, would you say that that is behind softbank at this point are investors concerned about that? could we expect softbank at some point to change its relationship with saudi arabia? >> i think at this point it has not had a huge effect. that has been talk of this ipo raising up to $30 billion. that has come down and little bit but that's not rare in the early stages of this sort of ipo. what's more interesting for investors is things like the pressure from the japanese government and also from under competitors -- other competitors. so talked to was a little bit about the broader telecom market dynamics and how the japanese government plays into that. >> at the moment softbank is the number three player in this market.

the government has said they think these companies have capacities to cut fees by 40%. softbank said it could do that behind the scenes by working on things like automation, rather than have to have those cast cussed -- cost cuts right to the customer. is -- once this happens, completely cut off from the business? >> he has been building softbank for almost 40 years. he will still own a big chunk of this business. outwardthis sort of facing part of the business is really switching its focus to what used to be sort of a side hustle for him and now it's really become the main focus with the vision fund. emily: thank you so much for bringing us that update. er.omberg's elizabeth fourni

netflix will test a lower-priced version of its streaming service in some markets. and wants to experiment. inflix is looking for growth places where per capita income is significantly lower than in the united states. still ahead, we speak to paul doherty. this is bloomberg. ♪ \

emily: welcome back to "bloomberg technology."

be leaders in the plan artificial intelligence, companies are often looking to government contracts and not without controversy. amazon's ceo defending its facial recognition software being used by government employees to -- to talk more about this i want to bring in paul daugherty. + is the co-author of "human machine." we see employees questioning how their companies and what their companies are building a i-4 -- ai for. do you have concerns that the ai we are building will share human values. >> technology is neutral, ai is

neutral. what do we as humans do with it. there are new things we need to think about with how we apply technology. when we look at artificial intelligence we look at something called responsible ai. for us that means looking at things like accountability for the algorithms, transparency and explain ability. honesty, and a human centric approach. if you apply those values we think you can put ai to responsible use. emily: who is to say who they sell the technology to and who they do not? >> our mission is to help clients apply innovation that they can transform and run their business more effectively, serve their consumers more effectively. we see a wide variety of how to do that across all industries

across the public sector and working with the government has well. we have an internal process that we look at with our responsible ai principles. we've apply that to the way we create these outcomes for clients. in doing so we. think you can both have bigger principles around ai and make sure we are applying it with companies to design the right kind of outcomes. emily: there is talk about whether ai has hit a wall. it is supposed to be so smart and so transformative it still makes some stupid decisions. >> ai is not a human, does not have human level capability. it cannot be a human. emily: are humans overhyping it? overhyped it is right now but it's not overhyped in terms of the business potential. if the fastest-growing technology we have seen.

fastest-growing technology we have seen in that internet, andce, the initial wave. 19,000 peopled by we have working in ai in technology. china has a very clear, articulated strategy in terms of education, the workforce, data, and the technology of what they are doing. that is accelerating their progress and they are in good shape of their goal of achieving leadership by 2025. the u.s. has a lot of advantages. we are a head terms of research, development, and application of ai. what i say in response to all that is it is too early to say who is the winner. there will be hundreds of thousands of winners in the business adoption of ai across every industry sector. emily: i recently saw a story

about chinese researchers creating an ai news anchor. is my job safe? >> is this the role emily i am talking to -- real emily i'm talking to, i'm not sure? [laughter] we see that in many questions. it's going to -- pro fashion's -- professions. is going to be a long time until that. how do we accentuate the human capability of people and make sure we are using technology to make us more human as a result. your company has more hundred 50,000 employees and have them are technology -- 450,000 employees and half of them are technology? >> we are in technology company.

the largest part of our workforce is those who do coding, computer science. emily: what sort of trends do you see when it comes to women and underrepresented minorities in the technology portion of your business? do you see improvements are not? >> it's a huge focus for us. we are big believers in an inclusive workforce. we set a goal to have 50-50 gender balance in a workforce by 2025. 40 plus percent starting where we are today and making good progress. it's a big personal issue for me. believe with, we the world we are moving into, technology is part of changing our human experience, and changing every aspect of our lives. an inclusiveave workforce at the heart of designing our future it is not going to be the future we want. we are committed to true inclusion and diversity in our workforce. paul daugherty, thank you

so much for joining us. the u.s. government is targeting a chinese technology firm for stealing from u.s. based micron. we will speak to micronceo's sanjay mehrotra next. this is bloomberg. ♪

♪ emily: welcome back to "bloomberg technology." two european mobile phone companies are in talks to build a five g network. the companies would share the costs to accelerate the rollout of the high-speed connection. a deal could be reached early in 2019. first the u.s. government took sanctions by leading

that nearly put the telecoms giant at a business. now a chinese chip manufacturer is accused of stealing technology secrets from micron. joining me to discuss micron is -- joining meron now to discuss is the ceo of .icron, sanjay mehrotra the department of justice has filed charges against them. why do you think the u.s. government is becoming involved? sanjay: it's important that intellectual property is protected. my company just turned 40. it was 40 years, we have invested billions of the voters -- billions of dollars in building new technology. we make memory and storage that is absolutely critical to all technology applications of the future.

it's very important to protect our intellectual property. emily: you talked about the new sanjay mehrotra -- the new micron. what does the new micron look like? >> focused on cost, competitiveness, delivering high-value solutions and in the process absolutely driving greater shareholder value as well as greater value for all key stakeholders of the company. do you worry that the move by the doj risks ratcheting up the tension with china given that china is your largest market. sanjay: china is a large market for us. we are very well engage with the customers in china, who very much appreciate the innovation capability that micron is able to. get to them. . -- give to them. china is an important market.

our customers value the technology and the products that we bring to them. know, one of the three companies in the world that provide memory and storage solutions. to customers rely on us bring invest technology and solutions to them. we rely on them in terms of working closely with them to understand their requirements for the future, and we are very well engage with the ecosystem of customers in china. micron of course has a manufacturing in china, as well as research and development. we are an important partner to china. we want to make sure intellectual property is protected and there is fair, level playing field in the country. emily: you have facilities there, employees there and the chinese government accusing you of antitrust. how do you navigate that situation? sanjay: when we work with them in terms of addressing their concerns, we absolutely openly

work with them, and we're continuing to work with all aspects of technology, customer engagement, our manufacturing, as well as product development capabilities within china? micron is a global company of 34,000 team members worldwide. we are strong in the u.s. in terms of our r&d capability, manufacturing capability, as well as designing products. where are also well spread out throughout the globe, so very well diversified supply chain that the company has, as well as well diversified footprint. any indication now that jeff sessions is no longer the head of the doj that that would change the course of action the u.s. is taking in your case? sanjay: we appreciate the action taken by the doj in terms of protecting intellectual property . their driveect that

will change in any way. emily: you have been telling investors that the memory chip market has not changed. we are not seeing the mad rush to grab market share anymore, but i'm curious about the evidence that you are seeing. another one of your executives told a ubs conference that there had been some inventory issues recently. how do we make sure there is not some big downturn coming? emily: we just -- sanjay: we discussed in our september earnings call that as is well known, there are certain cpu shortages. the important thing is that memory and storage are in the very early innings of driving the growth and experiences that have enabled, whether it's in future, to-- in the ultimately truly process all of sensors onhat the

the car will generate in order to provide for a safe, comfortable driving experience for the future. or in the data centers today, in terms of really unleashing new business models, you need machine learning, artificial intelligence needs to process lots of data. emily: scale has always been important in memory. huge competitor, huge market share, lots of capital. how do you compete? sanjay: with have strong scale of our own and our focus is driving technology for competitiveness and working closer with our customers to design the memory and storage solutions that they need in their future applications. by that what we mean is bringing high-value solutions, such as solid-state drive in your notebook computers. emily: we will have to leave it there. sanjay mehrotra, thank you so much for stopping by. that does it for this edition of "bloomberg technology.

tomorrow we will be speaking to the paintball -- paypal cofounder on the state of fin tech. this is bloomberg. ♪

♪ >> this is "bloomberg daybreak: middle east." slump after they follow a tech lead stumble on wall street. falls for a record 12 straight day, president trump takes aim once again at opec. saudi arabia's plans to cut production. uncertainty waves on european currencies. today is the deadline for a revised italian budget. brexit talks enter the endgame. we hear exclusively from the ceo of the italian energy giant at this hour about the company's latest development deal.