♪ emily: i am emily chang in san francisco. this is "bloomberg technology." coming up, betting on the cloud. ibm fourth-quarter sales beat estimates thanks to double-digit gains in its cloud business. what gives? davos gets into full swing. we will bring the highlights, including conversations with ups and horizon. netflix gets its first ever big picture oscar nomination,

cementing its place in the film industry. jumpedst, ibm shares after reporting fourth-quarter revenue that beat estimates. hitting $21.8 billion, estimates $21.7 billion. cloud revenue for the year jumped 12% to $19 billion. to discuss, we have our senior analyst in new york. ibm shares shot up after hours. is this a surprise? >> it was a surprise with global business services. that means enterprise tech spending is strong. ibm has been saying that the cloud would be big, ibm would get there, but there was a lot of doubt whether ibm could keep up with the more number of competitors.

does this prove ibm can live up to these promises? >> we think the real test will be when the red hat acquisition is closed and they are able to offer more products. their cloud revenue is between 10% to 20%, far lower than amazon and microsoft, growing at a much faster pace. ,n the application side salesforce and workday are growing north of 20%. in contrast, ibm being a small player, its growth rate is ok, what not great. emily: for many years ibm has been touting other initiatives like watson, the weather channel, quantum computing. the question is when will this add to the bottom line. recently spoke with ginni rometty. she had some specifics in terms of when quantum computing

revenue would be impactful for ibm. take a listen. untilt is the timeframe quantum produces commercial results? will seeve years, you commercial business is doing real commercial application, and that means revenue. emily: will this be a big business for ibm? >> think about it. billion,ome up with $1 it will take several years to get there. it would be a small drop. when of the things we said was when the red hat acquisition was closed, they would have a lot more software products to sell, and would make them more relevant when it comes to cloud. emily: i have a chart looking at the three most viable companies, apple, amazon and microsoft. amazon and microsoft surging ahead, taking the crown from

apple. we see the market favoring growth in services. ,oes ibm have what it takes what investors are optimistic about? concerned,s cloud is ibm is a distant third or fourth, but they can be one of the top players when it comes to cloud or hybrid cloud. that is where a large part of the spending will go for the next several years. microsoft is well-positioned. the red hat deal can help ibm strategic position. billion, what is the confidence that will close and there will not be a competing bid? >> that is a tough question. having said that, we have not seen any bids at this point. we will see what happens in the

next six months. we think it close, makes ibm relevant again and it comes to next generation computing. emily: thank you so much for weighing in. tuesday. ebay surged the stock was up 12% on news elliott management sent a letter detailing "urgently needed steps to improve the company." the reason is the guiding philosophy of the plan, and that ebay can unlock value today by refocusing on its core business, improving operations, and enhancing oversight. for more, i want to get to spencer in seattle. breakdown the plan what elliott once ebay to do. >> the only way to refocus on the core asset, they are looking for them to sell stuff of and

the classified advertising business. looking at investor pressure to pare down ebay, just like we saw with the split between ebay and paypal. emily: ebay statement, "we the proposal and look for to the opportunity to engage elliott, as we do with all shareholders." what is left? >> the online marketplace, where it has been closing in on $100 billion a year. probably hit that marker came close to it this year when we see results for 2018. so that is what is left. it is a big chunk. it is a prime acquisition target. if ebay were to shed some of the

things a retailer like walmart, target, or google might be interested in and give a shove back to amazon, if they lose some of the appendages, it might be more affordable and more appealing as an acquisition target for these other companies. all that could be good for ebay stakeholders. emily: how competitive is ebay with amazon when it comes to the marketplace? when you think e-commerce, you think of amazon. maybe i want to buy something used or secondhand then i think of ebay. >> that is the big challenge. ebay has been growing. it is growing more slowly than e-commerce spending overall. marketear, it is losing share and its relevance is shrinking. it's not only losing market share to amazon, but walmart, target, these big retailers

upping their e-commerce gain, but it is still big. it has 180 million customers worldwide, so there is still a lot of things there. emily: another activist shareholder has built up a big position in ebay. the shares are up on this news. what our next steps here? >> this is judgment time for ebay's ceo. he has been preaching the same .hilosophy we knew he would emerge as ceo post-split. , i amcan deliver results watching what the fourth quarter is like. some of the pressure might fade. if it is a disappointing fourth-quarter come you can expect investors to jump on the elliott management bandwagon. emily: thanks so much for that.

following, there apple-qualcomm antitrust trial. qualcomm lawyers got apple to concede it had nowhere else to ready. get iphones 4g no other supplies could deliver to 4g specifications other than qualcomm. that is why they have been arguing it was a business need and not exclusionary practices that lead apple to become dependent on its technology. closing arguments will be february 1. coming up, tech leaders and business leaders converging and davos. we will bring you the highlights. if you like bloomberg news, check us out on the radio, bloomberg app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

>> the ups ceo does not see an economic slowdown in the united states and expects businesses to keep growing. he spoke to tom keene and davos. >> i am not seeing an economic slowdown, especially in the u.s. small business played a big role in this for the season we just completed, retail group 5.6% over last year. 17%, 18 --il group 17 percent, 18%.

>> this is really important. i am guilty of this. the answer is, we get wrong, retail doom and gloom, the world is coming to an end, and online wrapped up double-digit? >> absolutely. we continue to see online growing. on line is still 13%, 14% total retail, so still a long ways to go. and yourll you competition defend against amazon and the desire to take over the movement of parcels? a big customer. we have had a long-term relationship. at the same time, like any large company, they outsource and in source, so we watch carefully what they do and react to it.

most people think of amazon when they think of e-commerce. we are focusing on these hundreds of thousands of small and midsized businesses? . >> why can't they do business with amazon? >> many do, but many don't because they want to control the market rights and don't want someone else to have access to their information. i will give you one example. >> please. >> it is a brokerage of thehousing, so we can match available warehousing space for the small and midsize customers. that can allow them to get today service just like the big retailers. emily: that was the ups ceo with tom keene.

verizon's talked about competition with the tom keene. >> i am excited over new technologies. we are one of the best technology companies in the world. the quick math is $4 billion for this, $4 billion for that, and you have already taken a write-down. you are the new kid in the corporate boardroom. up are you treating the mop of the acquisitions? we did a write off. there are many other things we are having. the yahoo! asset is a great asset.

from an impairment point of view, you take that. we still have the assets and think they are good. saying you don't of ericsson and verizon if you want to build a media conglomerate. >> we are the best network in the u.s., and one of the best in the world. distribution from consumers to big enterprises to small and medium, as well as good brand names. i see her network as a service. we will work with partners instead of having all our assets ourselves. >> is there a downside building ? >> there are so many options.

it's going to be different. we take our route, others take their route, and they believe it is right. 5g.et's talk about what are the goals? we hear about it here at davos. why is it so important? >> 5g is different from any wireless technology. they have been based on throughput and speed only, and latency, so you have more use cases. one.onsumer use cases >> everybody is disturbing to the cell phone. watchinglistening and

is glued to their cell phones. i am only on the phone 20 minutes a day. how we you battle with t-mobile? price, but do it on what is the pixie dust that gets new momentum? >> we serve many types of customers. segment, wesumer still have the best network. that is important. we reported our figures for the fourth quarter. ads.d 1.2 million new i think we have a good momentum in the business. we have had so for quite a while. emily: that was the verizon ceo from dollars. pulling itsdering new service from europe. new rules would require

companies to pay publishers when their articles show up in news search results. it plans to review the directive before making an official decision. at $21set a record million in lobbying in 2018. coming up, netflix dominating the oscars. how hollywood is reacting. we are streaming live on twitter. follow tictoc on twitter. this is bloomberg. ♪

emily: the u.s. labor department , according to a new legal

they impose requirements for visa holders at oracle. record show oracle paid women n, black, and asian workers -- oracle declined bloomberg's request for comment on this story. netflix has one more reason to brag in hollywood. nominations,oscar including its first best picture nod for "roma." 10 nominations overall, tying with the favorite. the recognition comes amid news it is joining major hollywood studios. joining us to discuss this is our guest.

surprise, but welcome news. what is the significance of a best picture nomination for netflix? >> it is hollywood's highest prize. it is voted on by a large group of the industry. it is not voted on by some group of journalists, like the golden is representation that netflix is considered one of them, one of hollywood. to 10 that canp be in the best picture nomination. it is a black and white film. there is very little dialogue. there are no stars, so it is on the film itself, the cinematography, direction, acting, that it has got this

far. whatnk it says a lot about to make the film. that says a lot to filmmakers and creators who might be convinced to go to netflix. amc andt appears that regal are excluding it from their oscar showcases, only playing the best picture nominees that play by the rules, which is a traditional , 90 days fromease being available to the public. amc said for more than a decade movie lovers have enjoyed the showcase to catch up on nominated films. this year academy members nominated a film that was never licensed to play in amc theaters and is not included in the showcase. is that a little sour grapes, or do they have a point?

is this all coming to a head? >> it is not sour grapes. they don't want to cave in any capacity they can when it comes ,o this exclusive run they have and this window of three months. it has over the years -- back in the day, it used to take forever before you could see a movie at home. now it is three months. now it is the big movies that last the longest before they are available at home. netflix did part with the strategy and gave it just three weeks before they let it stream at home. , the big theaters were not going to show it. ,hen this film was nominated people might choose to go out to , and that isinema

the theater business. they are choosing to not show it for this sort of principle. it is going to be a big question in the next two years as other streaming platforms come online if this will come to a head. only seems to be cementing its position in hollywood with this confirmation. i will let you continue your reporting on that. thank you for joining us. coming up, we discussed what the future holds for huawei as it pushes for global growth despite the u.s. urging allies to cut ties. , the prolonged u.s. government shutdown putting cybersecurity at risk. we will talk about where heckler hackers may spot weakne. this is bloomberg. ♪

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♪ emily: this is bloomberg technology. joining us for bloomberg a break australia. shery: i'm shery ahn in new york. >> let's take a look at the top global tech stories of the day for you. rbm reported fourth-quarter revenue of $21.8 billion, above estimates. cloud revenue grew 4% year-over-year. tencent was left out when regulators ruled the latest batch of online games in china with concern the largest game company could wait longer than

. regulators halted the release of new titles in the world's largest gaming market. dyson's moves its headquarters from the u.k. to singapore. recent growth has been triggered by growing customer base in asia. wasdyson ceo said the move not over fears of brexit. huawei's head spoke in davos, weighing in on the impact of the global trade war. onwe are seeing the effect companies including huawei, including some of the detectors froe sector from the tech world. as technologies have relied on global innovation, we are probably suffering the most right now. shery: this is while the u.s. is

urging allies to avoid using huawei's equipment for fears it can be used in espionage, something the company is repeatedly denied freedom joining us to discuss -- denied. digital fellow at new america. great to have you with us. huawei really taking a hit. we are not talking only about the u.s. but also europe and elsewhere. way --viewing whil while how will this affect china's ambitions for their 2025 policy? >> the chinese government stated it wanted a chinese global brand competing in high-tech sectors. it is a real blow for companies like whilhuawei. i think a lot of chinese tech companies and throughout the tech sector are beginning to reevaluate their plans to move into markets which are subject to u.s. influence. emily: there is an argument to be made that economies are more

closely intertwined than we understand. i have a chart that shows when manufacturing slowdown in china, that impacts the united states economy. does he have a point when he says that the trade war is going to be damaging for global tech? samm: the reality is that the tech sectors are highly interconnected, not just the u.s. and china, but globally. when we are looking at unwinding supply chain, global partnerships, this is something that is not easy to do. there are a number of u.s. companies that are seriously reevaluating reorienting away from china. extremely costly to undertake. these conversations are certainly going on. shery: canada reviewing the use of whilhuawei. a were able to catch up with minister from canada at davos. >> canada has spoken to the

united states about the case. it is a decision for the united states whether to seek in at tradition of check -- someone from china, whether it is a citizen, catch up with them and make a case for extradition in the legal system. shery: it could take years. will this be the thorn in u.s.-china relations long after a deal is potentially made? samm: for the last couple of weeks, and a lot of rumors, is she going to be released? there is a lot of uncertainty around this. it is so sensitive because of the trade negotiations. with the reality is even if she is released, the u.s. ambitions to dismantle huawei are much bigger than this arrest. there is a whole government effort to take down huawei and we will see it even if the case drags on. >> it was not just about huawei. last year, we saw the supplier ban, zte, that was lifted.

that nearly crushed the company. i wonder how will it compare and how well-positioned is huawei compared to zte last year in overcoming all of this? samm: zte was so dependent on the u.s. market that a denial ban would have brought a company to its knees. i don't think it is as grave for huawei but when we are talking about u.s. going out to partners and saying block huawei, that is crippling to a company that is really ahead at looking at the market and being a leader. they will have to reassess their business model. emily: i'm curious what you read between the lines between what we heard from the canadian foreign minister in terms of how well the united states and canada are actually aligned here given the conversations the u.s. is having with other allies around the world to block why huwawei. samm: canada is essentially paying the cost for an issue

between the u.s. and china right now and it is very dicey. i will not understate the complication the position canada is in. do yo emily: do you think they could get allies on side? samm: a number of countries are having serious talks of reevaluating whether to have huawei in their network. is the u.k. going to walk back the model they had used for years where they evaluate the cybersecurity risks to having huawei part of the network . they are beginning to reevaluate that. japan.e germany, others, this could be the bellwether on whether huawei will need to reorient this global ambition in the 5g space. shery: last year, we saw china proposing this new i.p. law that would ban companies that infringe on intellectual property from financing, bonds,

government funding. how seriously is china taking all of these international concerns? are they really putting effort out there to actually address these issues? samm: president xi jinping as doubled down. it is something they have talked about doing for a long time. after zte was almost brought to knees, the government in beijing said this is a critical vulnerability and we .eed to create our own talks there have been about the trade talk saying that they have been canceled and the white house denied that, that talks are continuing. there is a meeting with a chinese official at the end of the month that can be very critical. how unprecedented is the lack of transparency here in the back and forth? samm: to me, what is

unprecedented is the lack of coordination within the u.s. bureaucracy on this. to this day, we still don't know whether president trump knew going into his dinner with xi jinping that mung had been arrested or not. the fact that this went on with a doj action simultaneously to incredibly sensitive meetings between the two state leaders, that is the unprecedented factor. lack of transparency on top of it, and i think we are in a whole new world. emily: and the administration claimed he did not know. samm sacks, thank you so much. always great to have you here. much more ahead on bloomberg television. this is bloomberg. ♪

emily: as the u.s. government shutdown hits its 32nd day, the impact on cybersecurity is becoming more clear. aside from furloughed employees at department like the cybersecurity infrastructure agency, one new report is highlighting the risk to government websites. according to a cybersecurity january, more than 130 government sites are at risk because their security certificates are lapsing. to tell us what this means is our white house reporter in washington. what does this mean? >> thank you for having me. i think what this report reflects is the fact that with the less federal employees working on cybersecurity, the

employees that are involved are having to triage and pick and choose among the most important projects which is why perhaps we see things like security certificate for websites lapsing because there is not enough people to triage and handle on the -- all of the tasks. emily: will this make the united states weaker in cyberspace? alyza: one of the big challenges in cybersecurity for government jobs is attracting and retaining the right talent. given the number of very well compensated, very desirable jobs in cybersecurity in the private sector, the government is constantly looking to attract and retain new talent. experts are saying this could be problematic because things like the government shutdown make cybersecurity jobs in the government less desirable. similarly, it could make contracts with the government see more risky to top private sector companies. emily: you've got u.s.

intelligence today warning that adversaries like china and russia are taking advantage of this global turmoil to threaten the united states. what does the u.s. intelligence strategy believe today for cybersecurity? alyza: the intelligence strategy released today is showing a commitment to cybersecurity. they recognize the effects that cyber threats can pose in terms of public health, public safety, trust and basic institutions and global norm. the new strategy has made a commitment to devote intelligence resources as well as aim to help other parts of the government deter threats. emily: you've got a lot of sources in the cybersecurity community. what are they saying? alyza: they are saying that we need to wait and see downstream how this affects cybersecurity. there could be possibility for after-the-fact, taking measures that would mitigate the damage. right now, it seems too soon to

tell the full effects of cybersecurity on the government shutdown. emily: thanks so much for reporting on this. the familiar refrain before president trump and congress passed a $1.5 trillion corporate tax-cut was companies will use this for buybacks. one year later, we have some data that shows that really happened. a new bloomberg businessweek article to go look at how four major companies fared after the enacted. apple spent $22 billion as of september of last year. to washington with the author of this piece laura davidson is standing by. talk to us about how apple compared to the rest. laura: apple compared to every other company. the numbers are of greater scale, but in terms of trendlines how they spent their money, it is in line with what we saw a lot of companies do.

disney, starbucks, visa. they put a lot of money into buybacks. they saw the tax rate go down to 21%. what they heard from investors and when they were looking around, they had a long period of growth and investing in new things. we are going to give this back to investors. you saw that someone with dividends but it was really buybacks that was the strategy of choice. emily: how does it compare to what they promised to do with this money? laura: really in line. apple promised to spend a couple of million dollars in buybacks, which that number 72 billion represents the first three quarters of last year. assuming what they did in the last quarter aligned, they would have hit that mark. they pledged to add 20,000 workers. they added 9000 last year and with the opening of campus in austin they are going to do that

at 2023. emily: out as potentially tougher economic ties and that all of these plants? apple has cut its forecast for the quarter. a big iphone slowdown. will that impact what they do with any extra cash they have? laura: it could. it is very easy for them to cull those back or defer or delay the this is the story of the tax and trade intersection. companies started last year giving big bonuses, super excited. i can invest a lot and get a good tax break, but with all the oil, car company saw all of their tax benefits be enough by tariffs. that is something going forward where it is really uncertain where the talks with china will go. apple has already said we need to cut our expectations. it is not going to be when we thought it was going to be. the other thing to remember is tax rates this year, next year,

these are the lowest corporate tax rates we are going to see. there are some side revisions of the law that means the effective rate companies are paying will go up over time. now it is the time to reap the benefits and other headwinds are stopping it from happening. what will you, be tracking? laura: the thing really to watch this year -- our people following with the promises they said they would? we saw a lot last year of one-time bonuses. they are basically at a 40% tax cut. how is it affecting big picture, macro economic factors? republicans when they passed this law said we would hit 4% growth. that did not quite happen. democrats said this would all go to buybacks and dividends, none of it will be invested in workers, in research and development, new jobs down the line. that worst fear also was not played out. it is really looking forward --

what are people doing with the money? are they manufacturing things here, abroad? dislodgea big pole to to get people to manufacture things here but a lot of experts are saying this is not the global economy. we may see these around the edges and may see some high-profile examples, but to see how widespread the effects of this law will be. emily: laura davison, thank you so much for your reporting. still ahead, can a.i. disrupt the real estate industry? betting big on startups that seem to think so. we will speak to the ceo next. this is bloomberg. ♪

emily: starbucks is expanding its delivery service with ubereats. it will offer delivery in san francisco tuesday, expanding to boston, chicago and other cities in coming weeks. the company says it plans to bring delivery to nearly a quarter of its u.s. coffee shops in seven cities this spring and will test in other countries this year. 95% of its menu will be available through ubereats. it adds another high profile brand to deliver delivery following his deal with mcdonald's in may. more and more homebuyers are taking their search online using sites like zillow, redfin. while searching has evolved, traditional brokerages have been notoriously slow to catch up with technology with high cost business models and a 6% seat. a real estate startup was to close the gap. it is the first licensed residential real estate broker

to circumvent the traditional a flatto offer buyers 2% fee. total funding at $75 million from investors including former google executives and the crate and barrel founder. joining us from l.a. to discuss is rex ceo jack ryan. thank you for joining us. your business model is somewhat untested. what makes you think this is going to work? jack: we have been in business for three years. we are up to $1 billion of homes listed and sold. very well tested. it has been tested in other injury sees -- other industries too. think about how you trade shares today. all the other industries have done this other than this industry so it is working very well. been notaltors have excited about startups going around them. do you think that receptivity is

changing? jack: i am not sure it will reale with potential estate brokers, the traditional ones. it will only change the consumers. the consumer save $20,000. it is all things you would expect when you bring a.i. and big data to an industry that has been people driving you around in a car, looking outside a ho me. it is a much better way to buy a home, selling home. it is the same thing that most of your viewers in the financial sector are used to. just applying the same techniques. emily: give us the idea of the kind of volume you are doing in the markets you operate. what percentage of home sales are you getting? jack: we are probably listing now between five and 10 homes a day at this very moment. we just launched three years ago. we are launching in 12 cities in the next six months so the volumes are quite large.

it is hard to find a company that has scaled as fast as we have. moving $3bably billion to $5 billion of homes this year alone. emily: what is your outlook for the real estate market going into this year? we saw somewhat of a slowdown at the end of last year, but nobody could really predict which way things are going to go. the markets are fast-changing and hyper local which i am sure makes pricing a bit difficult. what is your view on trends in 2019? jack: it is hard to predict, but in many ways this is why -- this noticed theike, i passing of jack vogel this week. the 6% load in the mutual fund, they would charge you 6% to invest in a stock. that is what happened in the residential real estate space. when you reduce the fees to move shares or bonds or homes, then

the whole market goes up independent of what's going on in the overall market because the assets underneath those securities become more valuable. frigiddrive down cost, assets go up. i think residential real estate is a great place to invest because as technology hits the sector, the underlying assets will keep going up independent of the macro effect impacting the industry. emily: that said, how is that impacting your pricing strategy? jack: the market or our technology? emily: the market in general. the political and economic uncertainty we are experiencing right now. jack: for us, it actually helps us because on the buy or sell side, you want to limit the time you are exposed to the market. if you are going faster, you are better. because we are going around this clunky process, buyers and sellers being matched through a.i., that time you are exposed

is much shorter. not only do we help you buy the home, we help you with mortgage, the insurance, the title -- all of those services and make it a one-stop shop. the shorter the transaction, the less risk you have to the market. the volatility you are referring to is actually good for technology companies like ourselves. emily: will be interesting to see how the real estate market plays out in 2019. thank you joining us. that does it for this edition of bloomberg technology. we are live streaming on twitter. follow our global breaking news network on twitter. i'm emily chang in san francisco. this is bloomberg. ♪

>> very good morning. i'm in sydney where australian markets have just opened for trade. shery: welcome to daybreak asia. ♪ haidi: the top stories this wednesday -- u.s. stocks fell for the most in three weeks as pessimism in trade war and tech tumbling. oil fell and the yen strengthened. davos saying new winds are blowing across the world. mike pompeo