♪ emily: i'm emily chang. this is bloomberg technology technology. it qualcomm falls. we will discuss the impact of trade tensions. says thetify podcast podcast that is paying off but shares fall. wall street drills we work on its -- they face questions about

their finances. first, shares of qualcomm falling in after hours trading after they gave a downbeat fourth-quarter sales forecast. at the high end, they are looking at $5.1 billion sales. warningin line with a issued back in april. joining us to discuss our guests from new york and l.a.. >> the revenue forecast for the current quarter was late. the forecast for the quarter also very light. up $.75.ted eps street was looking for $1.10. it boils down to qualcomm's

basic is this model. it has a controversial practice of not just selling chips to manufacturers but licensing and they want royalties equal to a certain percentage of the value of the device. this has caused a lot of litigation problems for qualcomm. earlier with apple this year. there are a lot of questions about similar case brought by the ftc. a judge in the ninth circuit ruled against qualcomm. they are waiting for an appeal and there is not a lot of clarity in today's earnings reports. they may be getting into it on the call as we speak but not a when theyrity about can expect resolution on this idea. was very upbeat about the prospects for 5g in their earnings report saying their design wins have doubled. investors are not sure what that revenue stream is going to look

like because of this unsettled issue with the ftc. they also came out and said until they get a deal with huawei over the same issue, it is unclear if huawei will make additional payments to them. huawei is taking market share in china which has ramifications for the entire space. qualcomm has been on a roller coaster ride this year. it is down 18%. more than 20% now if these declines hold tomorrow. still up 29% on the year. like a wild ride this year. >> quite a roller coaster over the last couple of years given the broadcom takeover. they also had to cut off supplies for some of their supply to huawei after the trump administration blacklisted it in the midst of the trade war and national security concerns. give us the latest on talks between the u.s. and china. we know there is a new set of

talks on the calendar for september. do we know if they agreed on anything? flu --ere left with very few clues about anything discussed at this meeting. the officials met for half a day. are going toy reconvene again in september which is weeks away. beyond that, they described the talks as constructive but there was no real indication of concrete progress that was made. if we listen to the analysis coming out in the hours since the talks ended, it seems like the site are settling in for a slow burn in the negotiations from now on. the fact they are not doing a lightning round of negotiations out of these meetings in shanghai the just ended suggests that things are at an accelerated pace at this point. there was some speculation that these talks could extend up to or even past the 2020 elections. that doesn't seem like an

unlikely time horizon at this point. emily: what is this mean for qualcomm? space,cially in the chip there was quite a rally in chip stocks since the g20 meetings when it seemed like there was some progress being made. it doesn't seem at there was a huge selloff in chip stocks because of these recent trump tweets that sara indicated make it sound like these negotiations could drag on past the election. i think that is mostly because the election -- while that is happening the tensions are not escalating. he has not made any threats of new tariffs at the moment. that is something that could can't -- change day by day. stocks, it has been a noisy quarter for chipmakers. some customers accelerated purchases of chips earlier in the year in order to get ahead

of what they consider to be an escalating trade tension situation. it is definitely causing noise in the earnings report. it is not the first thing companies are talking about but it could change if it looks like tensions are going to ratchet up that potentially more tariffs could be in store. what is the likelihood we are in for the long haul here past november 2020? >> it seems like there is no quick solution to this trade war. if there is a provisional or halfway deal, it's not clear that the trump administration would go for that. it has promised to get to -- tough on china. it's unlikely trump would go back on his election bid and say he got anything less than promised. trumpht be safer bet for to continue the negotiations and hope that the economy takes a long area he got a rate cut today. whether it was big enough or not

that will help keep the economy chugging. i think this might be a safe for strategy but we will have to see day by day how things play out. in the meantime, the trump administration is still moving forward. they have export controls area there are a lot of other strings they can pull that have impact on china that may put them in the corner as well. much forank you so that additional context. apple looking at life beyond the iphone. whether wearables and services are going next. this is bloomberg. ♪

emily: apple generated than half of its total quarter revenue of

the iphone for the first time since 2012. in order for life beyond the iphone to be successful, apple will need to continue to sell the iphone's or make other goods and services available. our analyst is here to discuss this. what is your take on the now shrinking part of the pie that the iphone has? >> the good news for apple is that they have investors to focus on what is next for apple and you just touched on a lot of it. as you saw today in qualcomm's earnings, you have a mature market for smart phones and you have seen it in the iphones with inclining unit sales. i do anticipate that will be the case until we have a 5g device likely next fall. for apple it is about payments,

financial services beyond payments, health care, premium video content, advertising but done in a way that protects the privacy of the consumer. i think story for apple, the services story or non-hardware story is a good one. i think investors are warming up to it which is why the stock rebounded so significantly after the earnings announcement late last year. >> they do go hand-in-hand area people to use services they need to use the iphone. in order for more people to use the services, more people need to use the iphone. how does apple continue to drive those things in the middle of the smartphone slump? >> the key for apple is they have a strong base. it's not as though iphone users are switching devices. they are just holding on to their device for a longer. of time. what would inspire these users

to upgrade, it is a 5g device and that looks like it will happen next year. so long as they can maintain their installed base and keep evil using apple products, is easier to overlay the services on top of that either premium news, premium video etc. and i think that has the stock well-positioned here. we were speaking to a guest yesterday who said many apple services are mediocre. some are doing increasingly well like apple pay. toyou see apple being able ize other services? >> we definitely don't think mediocre when we think apple. their premium video content, they have aligned themselves with a plus talent.

wereyears ago, if we having this conversation, my expectations were low for apple pay. they have far exceeded my expectations. part of what they are doing and hardware is you are seeing strength in wearable devices such as the apple watch. generally speaking, low and apple don't go hand-in-hand. i would never think of their products or services as low-quality. i think of the a plus hollywood talent they have and the success they have had with apple pay and i expect that to extend to other products and services. emily: in the future, do you see the iphone continuing to be a shrinking part of the pie? as part of ait get percentage of revenue share? absolutely. for apple to be successful five years from now, smartphone sales may have to be less than one third of total revenue. the big question if we had this

conversation six to 12 months to go, where is apple in the smart home? that eitherwas alexa devices or google assistant devices will dominate the internet of things within a connected home. the homepod was disappointing for apple so we think they will go after another way to go after the connected home. i think apple five years from now will generate less than a third of their revenue from smartphones. emily: always good to have you and your insight here. coming up, spotify with its second-quarter earnings. a miss on subscribers. the ceo says that's on us. this is bloomberg. ♪

emily: spotify shares fell the most in almost five months after

slowing subscriber growth. they reportedly ended the most recent quarter with 108 million subscribers. our reporter joins us to discuss this. >> investors see spotify as a momentum stock and growth story. that means that every quarter, they expect spotify to not just hit their numbers that to beat them considerably as another company like netflix has done quarter after quarter. to be good is a 10 at forecasting. the numbers that it reports are either going to meet what they say or be slightly above or in this case slightly above -- below. investors almost always react negatively. i'm a whole, their stock has been doing just fine this year. what to the podcasts have

to do with it? spotify says it is working but clearly not enough to beat the estimates. >> one of spotify's challenges is they have fixed costs. of the monthly charge that it collects from you, a majority of that goes directly to music rights holders. they are trying a lot of different things to reduce the cut that they pay right holders to make it more profitable. they are trying a two-sided marketplace which is selling tools and services and another is podcasting which is opening up a whole other area of audio programming. the issue right now is it cannot carve out podcasting from its revenue pool. podcasting mostly just adds to the cost at the moment because there is not a good way to make a bunch of money from it. this not good advertising products or technology around that. construction wise, it's not saving any money. it's a good talking point for them right now.

it doesn't make a difference in terms of numbers. >> how is competition shaping up? is apple music eating into a share of the pie? x they say no. the numbersed on they have seen from apple, apple is growing at half that rate. apple has grown and youtube has grown but spotify is clearly the market leader. the big question for the leader investors and analysts is how long is this growth going to continue? five years or slowdown were quickly? can they find a way to reduce what they pay the labels whether it is podcasting or other means? emily: thank you for that context. half ofyear and a searching for the home of its second headquarters, amazon chose to split between virginia and new york. shortly after the decision was made, we watched the downfall of the new york campus as local officials pushed back. since then, u.s. cities have

upped the ante to try to persuade amazon to bring employees to new locations. one city that stood out was nashville, tennessee. amazon announced that its center of excellence would be moving to tennessee. asked the governor how he planned to bring amazon and others to the state. income tax and a very low business taxes. we have a tax structure that is randomly to businesses. soundly managed. companies know that so they sort i look athan incentive packages that states have to offer. we certainly deal with companies in that way. we incentivize companies to come there. they look at workforce development and we have done a

lot in our state to create workers for companies that are coming there. particularly tech companies and technology-based companies. our administration has done something called a future workforce initiative that is establishing the kinds of education curriculum and pathways that will create the workers for the future. a presence has there. what in the future do you think you can offer tech companies? you are obviously making the case here in san francisco this week to put a bet on tennessee. >> the biggest thing we can do is show to them our commitment for workforce. jobs requirelated a workforce of the future. they require an education system that i believe understands the

needs of the workforce. thereated something called give act. the futures workforce initiative. those are legislative initiatives that in fact create workers of the future. it changes the way our middle schools and high schools look. skillsges the type of that people and workers in tennessee have. be a place that when lyft is looking to expand their operations in tennessee, they know that they can add the thousand jobs they need to or amazon will know that the 5000 jobs they need to fill that there will be a workforce out there to do it. our investment and that is very important. >> do you see a risk that nashville or tennessee might not learn the lessons of seattle

which saw a rising housing costs, a traffic crunch because it didn't move fast enough when amazon came calling? >> what i think is most important and we are talking about this in our department of transportation but with other municipal leaders is made to think about what transportation is going to look like in the future. investing in a multibillion-dollar system that maybe antiquated by the time it is built is not what we want to happen. transportation is rapidly changing. if you talk to some of the companies here about how people are going to move, that is what we need to be investing in from a transportation standpoint. we have to stay ahead of the curve in our major cities in tennessee. we want to be ahead of the growth curve as much as possible so that we cannot make the same mistakes that other cities have

had to make and had to learn. we are going to learn from their mistakes and not make them. after this conversation, you have capitol hill increasing scrutiny of tech. facebookt specifically. you think the big companies are too big? >> what i think about these companies, washington has an opportunity and they have a role in the topics you are talking about but i am a business person who sees these companies primarily as an opportunity to create jobs. when the market allows them to grow and flourish and to create more jobs, that is good for state like tennessee. if they are in our state and they are growing and flourishing, i think that's good.

what would you say to those who say that these companies are stifling or need more regulation? >> there is an appropriate place for regulation in our world. protection of rights. that is important to look at but at the same time, the government needs to stay out of businesses to the degree that they can. there is a right balance their and i think we have to find that balance. i am a free market person who , whenes that businesses thriving, are good for the economy and jobs. conversation there with the governor of tennessee. short the yacht meat, you will have to pay. they are now the highest among all u.s. stocks. beyond meat has written more than 700% since its ipo.

up, testimony in age discrimination claims against ibm indicates the company may as many as 100,000 workers and the past years. that's all coming up. this is bloomberg. ♪

emily: this is "bloomberg technology." it finally happened -- the fed delivering its first interest rate cut in over a decade. >> we decided today to lower the target for the federal runs rate by .25% -- the federal funds rate by .25%. the outlook for the u.s. economy remains favorable, and this action is designed to support the outlook. emily: the news sent u.s. equities into the red, fueling speculation the central bank does not necessarily at the start of an easing cycle.

the president tweeting his as usual,e, saying, powell let us down, but at least he is ending quantitative tightening, which should not have started in the first place. we are winning anyway, but not getting much help from the federal reserve. what does this mean for tech? m: it is that combination of times when economic news and financial news combined with technology news, particularly when it comes to president trump. as you mentioned, perhaps he was looking for more than just a 25 asus point rate cut. in the press conference that after theell gave federal reserve's decision, there was a little bit of back and forth in terms of the wording he used because he at one point talked about how this was not the beginning of a rate trend.end -- rate cut

so newsrooms and trading rooms heard one and done. does this mean the federal reserve will not be cutting rates and a trade -- in a meaningful way by the end of the year? that also helped send stocks lower, but the notion being that 25 basiss just the one point cut, will that be enough in order to sustain stocks, move higher, plus, you are seeing that comparison between rates in the united states and rates in other developed nations. in many cases, they are negative. on a comparative basis, it is as if the u.s. is expensive. what is interesting is that the dollar rose as a result of the rate cut. it was supposed to go the other way, but the index of u.s. dollar moved higher, and that is the opposite of what the

president has previously tweeted that he wants. he wants a weaker dollar and is concerned china as well as the european union and ecb are keeping their currencies cheaper than the dollar for competitive reasons. emily: meantime, you have a number of tech companies we do not talk as much about on this show having big moves for story-specific, company-specific reasons. at, amd.eet tell us what is going on in terms of their individual stories. meat almost speaks for itself, and it is beyond rational to some extent. while sales are great and the company is generating an lot of positive dublin city, the company did -- positive hopelessly city, the company did come out that they would raise

more money by issuing more shares. that, it is still a small company when you compare it to, like, archer daniels any of the package food companies, but this has really taken on a life of its own, and it reminds at least some of the investors i spoke to a little bit about test -- a when yout of tesla have this big public excitement, but when you look at the actual numbers, it is not necessarily a company that should enjoy that level of market capitalization. on the other hand, we talked about ships. you mentioned amd. let's begin with qualcomm because qualcomm is still waiting to get paid for a variety of products that while way -- huawei built in china on

behalf of qualcomm. the 5g story has to do with chips that do everything from measure the efficiency of the to the ability of the device to use both high-frequency and medium frequency spectrum, and qualcomm tradebig advantage, but disputes with china, battles with quality, that is not something that has settled well with investors and qualcomm has said they might not the able to meet earnings estimates. emily: lots of big news. thanks for breaking it down. good to have you with us. ibm has lit up as many as 100,000 workers in recent years. facing severalre lawsuits claiming age discrimination against older workers. a former employee alleges it was

part of an attempt to make ibm appear cool and trendy as it tried to appeal to millennials. bolivia, there are a number of different losses here. talk to us about the allegations. olivia: we have a class-action lawsuit filed in manhattan and different civil suits filed across the country in california, pennsylvania, and texas. the similar thread is they are fired older employees in order to bring in and retain new younger workers. they actually call these cases a hireand higher -- fire and discrimination scheme. they allege ibm has been carrying out this sort of resource action since as far back as 2014. said: ibm in a statement

they have reinvented ibm in the last five years to target higher value opportunities for clients. the company hires 50,000 employees every year. tell us more about how the company is responding. olivia: ibm is a 108-year-old company and has faced fading revenues for years, and it has been trying to reinvent itself. it has kind of totally missed the mark in the cloud computing revolution and has been lagging behind the likes of amazon, microsoft, and google for about a decade, so the company is on this new growth trajectory, bringing in hybrid cloud and trying to become a whole different company that focuses on newer technologies like artificial intelligence and made acloud, and it just $34 billion acquisition. part of the strategy of laying off older workers and bringing in new younger workers is to and the company around

become, as we read in this deposition, a cooler, trendier company where young talent would want to work for ibm in a similar way they would want to work for google or amazon. emily: thank you. with theeepening ties walt disney company. in the wake of the disney/fox merger, the hulu scripted original team is joining walt disney. this emmett speculation over if disney can create compelling original tv shows not tied to existing licensed titles, as it launches its own streaming service. in may, bloomberg reported disney could take full control of hulu in a deal with co-owner comcast. up, while jeffrey epstein could be waiting up to a year to go to trial in the midst of sex trafficking allegations, silicon

valley executives wasting no time distancing themselves from him. we will discuss next. this is bloomberg. ♪

emily: jeffrey epstein facing charges of sex trafficking underage girls, has long claimed a social of -- a social circle of powerful in washington and wall street, but a different group of elite distancing themselves from even the briefest and counters with epstein -- entrepreneurs of silicon valley. the way these contacts came about is jeffrey epstein's little black book, his contact list as rest is, which include a lot of names we recognize here in tech. tell us. >> certainly. who the people

relationships had gone back at long time, but they are only marginal relationships, not where they had seen him and hung out with him a lot. bill gates was one of his calling cards. that is something that when you look at the financial community, they say this guy had services for bill gates, he must have been all right, but bill gates told us today that's not really true, that he may have spoken to him once or twice in a philanthropic context, but there was not any real work done for bill gates by epstein. emily: right. people saying he never provided services of any type to bill gates. sergei brin declined to comment. richard branson saying there's no personal or is this relationship between the two, nor has there ever been. reid hoffman hosted a dinner in palo alto for a a miss neuroscientist where elon musk supposedly introduced epstein to mark zuckerberg, so all three of

them get pulled into this discussion. he has had only limited context -- limited contact in the context of academic fundraising. a zuckerberg spokesman said they had only met in passing. what are the implications, though, of even the hint of contact between these folks? >> by the way, the dinner you referenced, that was only a couple of years ago. that means this was well after epstein was declared a registered sex offender. that is really what is at stake here. in new york as well, you have a massive private equity firm, apollo, whose cofounder had a deep standing relationship with epstein, and their own investors now say this care is a reputational risk, to say you are a venture capital founder and you had a relationship with

epstein of any sort. your lp's might be asking why. especially after he was a registered sex offender. earlier this year, one founder had a discussion with epstein about funds and did some research on who it was and decided not to take the money. but a lot of these relationships are well before 2009, so it is really the relationships after that matter the most. annalee: fundraising is tough. i'm sure the story will continue to evolve. thank you so much for joining us. -- emily: fundraising is tough. how the economic slowdown is weighing on a south korean giant next.

this is bloomberg. ♪

emily: samsung shares tumbled after the company said second-quarter profits more than halved from a year earlier. net income tell more than -- fell more than 54% while revenue dropped 4% amid global trade tensions and a wireless industry slump. has rattledde war the industry. selina wang joins us to discuss. these are pretty dramatic off apple'sing results which were not amazing but certainly not this bad. is this more of a samsung-specific problem than something that has to do with trade or smartphones in general? : they beat some estimates on some fronts, but they did see falling net income, operating profit, and revenue. the big story for samsung has

been an industrywide story around memory chips. the whole industry has suffered from low demand, falling prices, the overhang from the trade war, economic uncertainty as well as slowing demand from new data center players, but we did hear positive news from samsung -- they are expecting demand to pick up in the second half of the year. a big sign was they expect these data center players to reconsider purchasing again. we also did see declines in their mobile business. 42% decline in operating income. the whole industry has been dealing with problems, but they did say profitability was eroding because of intensifying competition in these low to midrange markets. some samsung-specific issues, but they've also been dealing with a lot of global geopolitical overhangs. us about how the u.s. china trade war and the dispute between japan and south korea are impacting samsung specifically. one of the biggest

overhangs is how long this u.s.-china trade war will drag on and how much it will affect global growth. korea spat ish also a huge concern for investors. there were a lot of questions from analysts on the call about how they would minimize the impact. we did not hear a lot of details from executives. we know they have enough components for now, despite the export curve, but the problem is if these do drag on, if they become even broader, how will samsung find alternate suppliers? it could lead to production issues. , that is aei front double-edged sword. on one hand, as huawei suffers from challenging demand abroad, that is a way for samsung to come in on the smartrun, but in terms of their profitable chip business, that is damaging in

terms of samsung not being able to purchase as many components a way for samsung to come in on the smartphone front. emily: how are issues impacting demand for the samsung phones? selina: as you mentioned, they have had a slew of branding problems and have been seeing declining profits in their mobile division. they also made the decision that smartphone launches will be similar to april and june. some of the bright spots in samsung earnings, one of them is display. we saw apple come out with earnings recently that had strong results, stronger demand than it expected, so that is expected to be a bright spot in this display screen area. another bright spot executives

touted on the earnings call is the development of 5g and the growing demand for 5g chips. however, it is still early stages and there's a lot of skepticism about how that will play out for the rest of the year. it is worth pointing out that another reason why there was such a negative share impact after their announcement is that they ended up delaying the announcements in shareholder return plans until next year, concerns to global growth and geopolitical uncertainty. emily: what are you watching when it comes to the second half of the year, the holiday quarter, which always tells us so much about how the company is actually doing? selina: we will definitely be watching to see how these new smart phone launches unfold. they are facing a lot of competition in these lower, and it sure markets where a lot of cheap phones are coming from china. we will also be watching for memory chip demand. there has been a lot of talk from analysts and investors and

samsung themselves that this is starting to reach a bottom. again, the biggest issue for are theseght now geopolitical problems they cannot really forecast themselves. analysts asked how they are forecasting the impact and they said there is a lot of uncertainty. they are unsure themselves the best way to go about minimizing it. executehow they try to their own plans, there's only so when ity can control comes to these global spats. emily: thanks so much for that reporting. meantime, an analyst day for wall street banks wednesday. reported looking to go public in september in what is or put be the second biggest initial public offering of the year. we -- they are set to be -- share sale ofng

$7 billion. what do we know about this analyst day? >> we don't know a lot. we know analysts came in and heard the pitch, learned about the business model and tried to how they might be covering it. analysts had to agree not to discuss what was shared until the actual ipo. hassituation is that the s1 not yet been made public. we know they filed controversial -- confidential documents last april and announced they have filed those documents but we still have not gotten to see them. the company is aiming to do an ipo in september based on our reporting, so one would think maybe there's a chance in the

next month we might get to look at the documents that show their earnings, losses, all the nitty-gritty, which certainly many of these people are excited to look at. it has been a company that has gotten a lot of attention. tople will be interested look at the cold, hard numbers. about whats talk people are actually looking for. what are the questions they want answers to? >> i think they are trying to assess this as a real estate company or tech company. they have gone back and forth for many years about its business identity. at once to be seen as a tech company, in part because it is interested in getting that sort of multiple in the markets, and it would be a much more valuable proposition for them to be seen a such. many people look at it and say this is a company that takes on leases, rents out smaller parcels of real estate and should be considered more like a

real estate company or investment that is modeled more models are done. emily: you mentioned the more conventional metrics. there has also been controversy around the founder and how much money has been taken off the table. what is the status of that? of the is still part story people will try to get their hands around when they are deciding how to value this company. you mentioned the founder and ceo has taken out loans against some of his holdings. wework has sold some of his equity in the company. he has also been known to have personal holdings of real estate . the company has made steps to try to resolve some of those perceived conflicts of interest, but it is something i imagine is a big question on a lot of analysts and investors' minds. do we think this might be a problem for the company as it goes public? emily: do we have a sense of how much money they are making, if they are profitable? >> they are not profitable. that's why we talked about

adjusted ebitda. they see themselves as profitable on a building by building basis, almost building typethe approach. does that building itself make it wrong -- make a positive profit, and they say yes, but it is removing a lot of expenses other people think should be counted into the greater populations. emily: i know you will keep us posted if we get that filing. thank you so much. that does it for this edition of technology." be sure to follow our global breaking network tictoc on twitter. this is bloomberg. ♪

paul: welcome to "daybreak australia." sophie: we are counting down to asia's major market opens. paul: the top stories we are covering in the next hour, the fed says today's rate cut does not mean the start of a new easing cycle. the president says jay powell has let the country down. the move sent wall street tumbling