taylor: i am taylor riggs in san francisco, in for emily chang, and this is "bloomberg technology." strong debut. shares of alibaba begin trading in hong kong, ending the trading day more than 6% above the list price. bookkeeping with scrutiny. and we hear from viagogo

chairman and founder after that stubhub cash deal from ebay. five years ago, alibaba pulled off its biggest ever ipo on wall street today, the biggest share sale in hong kong in years. the listing is being seen as a triumph for a stock exchange. it comes as pro-democracy protest have gripped the city for weeks. joining us from washington, john freeman, vice president of equity research at cfra. if you look at the company raising an additional 11 dollars, where do you see that use of in terms of that cash? john: it will be interesting to see what they do. i think that brings them to

about $43 billion in total, 21 in net cash. i would like to see them invest more heavily into the cloud business which is a percent of revenue now, it was growing 64% year-over-year growth in the last quarter. we have seen this movie before, how the small business scales with amazon. 12% of revenue, 70% of profit. as it crosses the breakeven point soon and they can offer additional services, i think that would be a good way to spend the money. i am sure they will invest some of along those lines as well as artificial intelligence and cognitive computing. i think those are the things i would like to see them focus on with the use of cash. here is showing basically alibaba continuing to gain ahead of other rivals in

china like tencent, extending that lead, extending that outperformance. have they not done enough in the cloud computing and other sectors you mentioned? it seems that, from the stock price, they are well ahead of rivals. was valuedamazon previously, no one really saw the cloud computing coming. cloud,baba, perhaps the to a large degree, reflects some of the optimism of that cloud business. i think a lot of people don't realize what kind of earnings growth that can propel. in the past, earnings growth has been well over 40%, but it has actually lagged behind revenue growth. and sort ofe cloud

the scale efficiencies of the retail business, that is likely to reverse such the earnings growth will exceed revenue growth in the low 30's for the next three years. that is pretty compelling for a stock that is trading at 24 times earnings. you usually don't see that here in the states for a tech company like that. taylor: you have mentioned amazon a few times. i think, over the years, as we have tried to define this company, we would off-the-cuff say it is the amazon of china. i have heard maybe that is not accurate. as you look at this big company with tentacles in many business lines, how do you categorize alibaba? john: i would say it is very much the amazon of china. a revolving door page, that is how you would describe it of course, there are significant differences. but they are dominant in

e-commerce. just like amazon is dominant in e-commerce the united states. they do direct sales as well as support a third-party platform for third-party sellers. they are getting into the media and entertainment side. alibaba of course is also involved in payments, that kind of area, relative to amazon. i think the companies are similar. one of the things that are propelling alibaba to faster topline growth is the fact that e-commerce is a larger percentage of chinese commerce. .bviously growing faster a lower level on an absolute basis. they have had a chance to really shine.

amazon cloud business growing at about 40%. i think that is what you want to focus on. that is how i view the company. one note in your research says patriotism does not go far as equity investing. looking at this hong kong listing, does the company today, given its chinese base, create some goodwill with hong kong by listing and hong kong? john: absolutely. i think that is reflected in the fact that -- this is not an ipo. there is nothing initial about it. it is a secondary offering. normally, with a secondary offering, which is diluted, which it is, the stock price declines a little bit. in this case, it went up. that is because mainland chinese

were able to purchase shares for the first time directly. that is good. at the end of the day, stock prices reflect earnings growth. as a fundamental investor, you need to look at that in evaluating alibaba. taylor: fundamental and patriotic analysis. that is john freeman at cfra. thank you. dell is exploring a sale of its security business. the company acquired rsa security through the 2016 takeover of emc, that went for about $2 billion. on tuesday, the company reported third-quarter earnings with profit stopping wall street estimates. for more, let's head to new york where bloomberg deals reporter liana baker has been covering this. just in the past couple of minutes or so, the bottom line, the company released this

corporate demand for computers. walk me through your takeaway. liana: dell sales only group about 1%, less than analysts thought by a small margin. earnings did beat analyst estimates. it did say it would tried to pay off about $1.1 billion in debt. dell has long-term debt of about $47 billion. the shares did not really move after its earnings today and they will have a call later. taylor: i want to talk about that deal, this diverse securities space, selling off $1 billion. is this because they wanted $1 billion to pay down some debt or other executed -- or are they exiting the cybersecurity business that they don't want to be in? liana: as i understand, even if dell gets $1 billion for rsa, that will not move the needle for paying off debt. they still have $47 billion in

long-term debt. in will help the company become leaner. they are really more focused on pcs, storage, infrastructure, and cybersecurity is not a huge focus of them anymore. dell has looked before in selling a stake at secure works, a cybersecurity provider. billion, even if it does not sell come all not be a huge needle mover but it is a big story because rsa is a big name. taylor: it is reportedly less than what they paid for it a decade or so ago. is that indicative of the changing landscape among cybersecurity businesses? liana: rsa is a good business. it was founded in 1982 and has high margins. in had purchased the company 2006 and that was a different time.

the cloud was just getting off the ground. there are so many cybersecurity companies that focus on what rsa is focused on, which is connected corporate employees to their networks. it is a different time. there are newer companies out there, that we talk a lot about. baker fromna bloomberg, thank you for joining us. betweenp, more tension bloomberg -- between google and employees as the company fires four workers engaged in protest. this is bloomberg. ♪

taylor: more tension between management and google -- management in google and the company's activist workers. they fired four employees for what they say was violation of data policies. but some say that organizing activities led to their dismissal. some google staff have been protesting the company's work with the military, amongst other reasons. we are joined by capital analyst mark mahaney, and bloomberg analyst. what do we know about the firing? >> four employees. we know a couple of their names, we don't know the other two. all four have been involved in protest some of the contracts that google has with, for instance, customs and border protection with the u.s. government. they have also been protesting

some of the things happening in the past few years that google included how the company has handled sexual harassment. the connection between all of those is basically that they have either been involved in helping lead some of the internal protest. point do youat fold this into your fungal -- into your fundamental analysis, if at all? layoffs on an employee base of 110,000, that qualifies as immaterial. if it leads the company to not participate in areas that are potentially attractive like these contracts, there could be an issue for wall street. we are in the bay area, an unusually woke community. some of their employees are very actively and politically involved. i don't think this is terribly

surprising. only if it really leads to missing out commercial opportunities. like mark was saying, this is happening a lot and a lot of different tech companies. where does this sit in terms of size and scope, and increasing distrust between staff and management? alistair: i think google has had a great history where employees have been empowered to say a lot of things on internal message boards, share their thoughts. a lot of the things google has come up with over the years, they kind of power engineers and , in general, if the company steps away from any other contracts, that would be bad, but i think this latest

skirmish, where the company is trying to get everybody back to work and focus on strategies. taylor: we know google had bought for it. we know -- bought fitbit. we know that facebook was the original bidder. where do you see all of these big tech players vying for the wearable space? mark: they are vying for the wearable space. we had google for fitbit, $2 billion cold cash. facebook for control labs, roughly $500 million. amazon with echo loop and frames. when you see three of the major faang names start investing in wearables, we should start paying attention. snapchat is another company that has a crested -- that has

invested aggressively. next't know if this is the computer platform like mobile phones, probably not. but if there was not something here companies would not be investing. taylor: what is it about wearables? alistair: i think it is basically we had pcs, then laptops, then phones, then something that is wearable is even more connected with you, goes with you. maybe in the future, things they have, yougy would be able to just say things. the other part is the data, that google is very interested in how technology, if they have that data, it can inform some of the work they are doing in that area. taylor: you have been talking about google, facebook, twitter a little bit. i want to talk about the

campaign add policies of these companies. google seems to have been coming in the middle with facebook on one side, twitter on the other. how do you view google's political ad policy? mark: i think it is still a work in progress at all three of these companies. twitter made a statement about not allowing political advertising. that struck me as sort of an extreme position. there seems to be increasing scrutiny on these companies, if they are going to accept political advertising, they should for them. facebook said they are not going to fact check but they probably should. that is personal opinion. the only reason it matters, we have a major election coming this year and there is a fair amount of revenue. we think there will be at least $2 billion spent online trying to influence people's political

opinion and how they vote. people want to see more transparency, that is the basic thing that most voters, citizens want to see. they should offer that. none of them are actually doing a great job of showing greater transparency but they should be able to do it. taylor: bloomberg's alistair barr, thank you for joining us. will be sticking around. coming up, his top tech picks for 2020. that is next. this is bloomberg. ♪

uplor: we are wrapping third-quarter earnings and the communication services sector posted some strong topline revenue growth year-over-year. the bottom line is telling is a different story. take at earnings-per-share growth year-over-year, relatively muted. now, rbc analyst mark

mahaney. what happened third-quarter in the middle of that income --tement where mark: i think at the top of that list would be amazon. they are doubling down on this one day investment. that is an expensive investment. i think there is a more interesting story at the other side of the curve. companies brought forward their profitability timelines. about print its first positive ebitda quarter. pinterest, too. i was struck by the positive inflection points rather than the negative ones. taylor: you brought up lyft and uber.

are you confident that 2020 targets are intact? mark: no. i think they have a high probability of getting by insurance costs. i think they also have pricing power. i think these companies, as private companies, work run really inefficiently, really aggressively, more growth, which means a lot of wasteful spending. investors come in and say, we need profits. the management teams are responding to that. i think there are places they can take excess cost without sacrificing growth. i think we will become more confident in 2021 profitability. taylor: how much of a hit for uber was the london news this week where they temporarily did not get their license reviewed? mark: tbd. i want to be careful here. i don't think they have been kicked out of london.

this has happened to them before. they will appeal the decision, be able to continue to operate for a couple of months. i assume there will be able to work it out with the london powers that be, the taxi commissions. there is no doubt that uber and lyft have taken on taxis. consumers have shown they like ridesharing services. it is not over yet. they have not been kicked out yet. happenedis that, as about a year ago, they will stay in the market, they will just have to work on more concessions. taylor: facebook remains one of your large-cap top picks. as you take a look back at where this company has run with all the regulatory scrutiny, why facebook? mark: facebook, microsoft, google, amazon, apple. facebook is certainly in the crosshairs. i don't think they have done

anything that cuts across antitrust lines but they have had issues with data privacy, user data protection. we are focused on that, concerned about that. that said, i think that is more than priced in. fundamentals are the strongest with the free cash flow generation. taylor: another big theme of the year, the streaming war. disney plus. where do all of the streaming wars fit into your thesis? clearly is a major inflection point here. netflix went out on a limb and said, we think there could be a market for screen -- for streaming. it seems everyone agrees. look at netflix's stock. when it finally started trading up was the first day disney was out because that risk is in the stock.

right now, this is a scale business. canver has the most subs afford to spend on content. netflix has the most global subs today and in four years, my bet is they still will. taylor: we only have about a second. you look at a chart. what you think is the biggest play on streaming is roku. they are crushing it. but it has been volatile. why roku? mark: if you are going to be a streaming provider and you want to advertise your service, why don't you market to all those people already using roku devices? and if people start their subscription on roku, there will be a revenue share. there are a few derivative plays but roku is one of the best. taylor: i could do this every day. rbc capital's mark mahaney, thank you. coming up, we head to hong kong

as we look at alibaba's listing debut. this is bloomberg. ♪

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taylor: this is "bloomberg technology." we join bloomberg daybreak australia to bring you the latest in global tech news. i'm taylor riggs in san francisco with shery ahn and paul allen. let's look at the global tech stories of the day. group holding is considering a sale of u.k. software provider. the sale could fetch close to $2 billion for the switzerland-based asset manager. it provides special software for governments, health care providers, schools, and more. a softbank backed startup raised

funding via an analytics customer company. it tries to predict user behavior to help clients and advertisers. it raised $162 million in investors date from including so-called a capital and southbank. -- sequoia capital and southbank. a venture will target startups from southeast asia to india to health and strength in its foothold in fast-growing mobile and internet markets. those are the top global tech stories we are watching. l: let's turn our attention to asia's most valued corporation, alibaba. the chinese e-commerce giant pulled off the biggest share sell in hong kong in nearly a decade, raising $11 billion. alibaba plans to use the funds to improve operational

efficiency and pay for continued innovation. joining us from hong kong with more details, we have bloomberg's own sophie kamaruddin. you were on the hong kong exchange on tuesday. we saw alibaba shares rising. how was the mood -- the mood? it appeared to be a successful day. sophie: hong kong is home to two of asia's most valuable companies. we had alibaba ceo daniel zhang and senior management joined on stage by the hong kong finance secretary. there were dancing mascots. a lot of cheers as alibaba shares opened at 187 hong kong dollars, above the issuance price. shares rose as much as 8%. it was the most actively traded

stock in hong kong, far outpacing rival tencent, bumped down to second place as hong kong's most valuable firm by market cap. rising for a fourth straight day. some cleaning the narrow -- the stocks are fully exchangeable with a one to eight ratio guide. what are you hearing about use of cash? they are raising $11 billion. we spoke with an analyst at the top of our hour. they say they have $40 billion in cash. what are they -- where are they spending? shery: the total funds raised could be boosted to $12.9 if the agreed to option is exercised. when it comes to this new era

held by daniel zhang, we could see acquisitions. funds could be pumped into rivals on the mainland, as it has tencent and others to contend with. we have our bloomberg columnist thinking you could see buybacks. perhaps it will sit on the cash pile. paul: is there a sense alibaba might want to move closer to home and perhaps repatriate some of the money in new york? shery: this was part of the reason offered as to why alibaba chose hong kong after failing to list here in 2014. there are plenty of investors on the mainland chomping at the bit to get in. when you look at the valuations for alibaba, there certainly is room to narrow the gap. we see that with players like

thatn and tencent, given alibaba is the most-h -- m ust-have. the stock connect perhaps be initiated by next year. that expected to boost valuations for alibaba. taylor: it is a crowded market. amazon, a lot of local chinese players as well new thing at their --nipping at their heels. shery: we have seen their ecosystem expand over the course of a year, getting into various segments. they are looking to move into segments like logistics. we have seen this strategy of saying they will try and hit the consumer across various touch points. you have seen that with how ali pay operated. is built to billion

going to the start of space. we have alibaba looking to move beyond asia when it comes to its ambitions. where they go from here with thta war chest, certainly lots that could be done across the horizon. paul: this was obviously a very important day for the hong kong exchange and hong kong more broadly. is this going to boost liquidity and encourage a few other listings? shery: that is the expectation. chief wasong exchange cheerful yesterday following the debut of alibaba. he said he was confident other companies will look to hong kong when it comes to their listings, given the relaxation around share structure. china calling for companies to return home. hong kong has missed out in asgalistings, checkas --

chinese companies had to turn home. chinese unicorns may consider this journey, as alibaba has paved the way, if you will. there is a consultation underway for alibaba to join the hang seng index. currently unable to do so because of the secondary listing, as well as its governance structure. it looks like, with the ambitions hong kong has, there will be more reviews of how to entice these tech unicorns to come back to hong kong. you had carrie lam being among the campaign leaders to bring alibaba to the city, which is a signal of confidence given the economic conditions we have endured the past few months. taylor: stick with us. we have much more ahead.

this is bloomberg. ♪

taylor: just one day after uber's future in london was cast into doubt, its rival says it started service in the city within weeks. it had expected to begin its london business before the end of the year. the company is looking at a january launch. the indian ride hailing company, backed by softbank, says it already serves millions of customers in u.k.'s cities since its rollout last year. to discuss the implications for uber, we are joined by a partner at sadiq khan -- thank you both for joining me. gabe, let me start with you.

i am confused about the actual issue. i think it is safety. i think city officials have become hostile to ridesharing company's. they are blaming them for traffic congestion. what is the issue, in your opinion? there has been a number of issues over the years with the most for london serious recently is the impersonation of drivers by 50,000 people. they don't have security -- 15,000 people. they were asked in london to use facial recognition technology. they did not implement this in the timeframe they were supposed to. at this point they have once again had their license suspended. they will appeal that. i imagine it will go through the courts. the real question is how soon will this actually take affect on the streets. taylor: i want to pose the same

question to you about how long it will take to impact the company's fundamentals. >> that all depends on what happens in the courts. bethe near-term, they should operating business as usual. license,ctually lose a you will see a real impact to revenue. we estimate maybe 5% of total revenue. the larger question and the more long-term question would be what happens with competitors as they come in and try to take share and leverage off this opportunity. taylor: where do you see that competitive landscape? gabe: at the end of the day, uber has built an incredible product, a great marketplace. however, it is a commodity at this point. in the u.s., most of the drivers

lyft, but for uber or the consumer wants a ride. i don't think they necessarily care who provides it. withhas been on the outs municipal governments increasingly the last few years. we thought it would change with the new ceo, and instead they doubled down on these disruptive tactics with local governments. we are seeing a real pivot in how government will deal with companies like uber. taylor: i want to show you a , showing the stock price is trading $30 a share. most analysts have $44 price target, which would be a gain from the current price. how much of the regulatory hostilities that we see are starting to impact yours views

on the stock? ygal: it is not making it easier. it is not just london. it is happening in california. this could be a really serious security threat. drivers impersonating other drivers, drivers driving without licenses to do some. it could be a real risk. other studies start taking a look at this, too. when does the regulatory environment ease up on uber? it is up to uber to address those security threats and put them behind them. it has been happening way too often for uber in the first six to nine months as a public company. ultimately, we think they will be back in london. it is a big market.

they can navigate these waters and end up in a better position. that will be a better test -- a big test for them going forward. taylor: is regulatory issues the biggest headwind for the stock? ygal:it is one of them. competition and regulatory issues are the two big challenges. pricing is one of the biggest issues in terms of profitability. that is a big factor over the long-term. regulatory things keep popping up. talk to me more about competition. who is the biggest threat for uber at this point? is it lyft? ygal: lyft is the biggest threat in the u.s. u.s, you are starting to see rationalization come in, there are only two key players.

the environment in the u.s. is certainly better. in europe, there are a number of competitors. it depends where they are. competition outside the u.s. is still a big issue. inside the u.s., it starts to stabilize better. taylor: i want to get your thoughts on competition. where is the biggest competitive risk for uber? counterpoint, i think this is a much more serious situation than we think. on top of what is happening in london, you have ab5 in california. it is not necessarily a competitor. if people are made employees instead of contractors, it will change the business.

year,ost $3 billion last more this year with a laissez-faire regulatory system. tighter -- aget seattle bill today called for a minimum wage and tax on rides, this will get more serious. the competitor is the personally owned automobile. taylor: walk me through that thesis more. gabe: ultimately, uber will have to raise their prices significantly. they are losing 30% on each ride now. they are subsidizing that. on top of that, you have these new taxes being levied. ask,sts go up, you have to what is the growth rate going to look like? back tole going to go

personally driving automobiles? want goode time, we actors to be working with the city government. a is up to uber to take different approach and start to co-create solutions with cities instead of fighting cities. that will not pay dividends for .hem or stockholders of uber taylor: when we talk about these differences and similarities between uber and lyft, uber often looks like the smart one, doing a lot of different diversification, where lyft is clearly the pure north american player. any indication that uber or lyft has the right strategy? what is your opinion? ygal: our view has been shifting, not just from this week, but the past couple months. on one hand, uber's global ambitions and ability to

leverage their platform across rideshare and food delivery, but growing, small part of your business -- that creates an opportunity for them. it is a really big market. see the fundamentals on a global basis come together, you can see where there is a lot of profit potential for uber and the long-term. in the near-term, lyft's strategy is a lot cleaner. the food delivery industry is under a lot more competitive pressures. the economics of that business are under significant question, whether they could last and for the opportunity there is over the long-term. in international markets and rideshare, there are more than two partners.

think it is going to take uber longer to get to the clean point. lyft seems to be there better right now. taylor: thank you both for joining us. still ahead, after the wework debacle, softbank is not just losing investor's trust, its paper profits have also raised questions. we have the story. this is bloomberg. ♪

taylor: after the wework fiasco, up model hastart been under fire. the company's accounting drew scrutiny, as softbank provides little transparency of the profit gains on its income statement. pavel, for joining us. walk me through the difference between paper gains questioning softbank's model. ofwe have had two-some years vision fund. while there has been a sneaking suspicion that a $1 billion fund, a

valuations. it was not until the wework fiasco that we start to see results. we took a more systematic approach, see how softbank contributed to the valuation. the second part is how softbank books these gains on their balance sheets. in the past two years, the vision fund emerged as the biggest earner for softbank, far outpacing sprint and domestic telecom operations. at the same time, built entirely on paper gains. taylor: do we see companies one-offork as situations, or has this been indicative of what is going on at softbank? >> that is the multibillion-dollar question. for one, we know the vision fund's ride-hailing companies

have been devalued. hat is a direct inclined -- direct impact from the decline in uber shares. record that the entire ride-hailing folio has been -- portfolio has been reduced, but there is no way to tell. the vision fund cannot disclose these numbers. two, the process of marking them up or down can be quite subjective. taylor: should ifrs accounting rules be changed so they are less subjective? as thewe don't go as far issue of ifrs, but you do come away with an impression that while ifrs standards are exacting and the vision fund has plenty of checks and professionals working to cross

the t's and dot the i's, this is the time where there is so much liquidity sloshing around and a years, theperse in need to spend most be strong. taylor: that does it for this edition of "bloomberg technology ." "bloomberg technology" is live streaming on twitter. be sure to follow are global breaking news network on @tictoc on twitter. this is bloomberg. ♪

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own home. order now to get big savings - but only for a limited time. just go to leesa.com today. you need this bed. paul: i'm paul allen in sydney. we are an hour away from the market open in japan and south korea. shery: i'm shery ahn. sophie and i'm kamaruddin. welcome to "bloomberg markets: asia." paul: new optimism about the trade talks. president trump says negotiations are in the final throes and going well and will continue. wall street expanded record highs for -- highs,