♪ in santaylor riggs francisco. this is bloomberg technology. it streaming surge. comcast debuts its new streaming service. and it stand out against others? microsoft makes a major push into removing carbon from the earth's atmosphere. we will get details from the president and chief legal officer. we'll talk to an analyst to

thinks peloton is not just a fad. cap bullish sentiment coming up. continue with dominance of tech in the u.s. markets. up 1.7 percent, nasdaq of more than 1%. is something bigger going on? >> let 2019. 2019.feels like yesterday after the signing of the trade deal, it was just the stocks that dropped. typically a relief rally would come after a big selloff from the major averages. it feels a little bit more like perhaps the early stages of euphoria with the bubble paradigm. it and dislocation been into the

economic phase than a euphoria and 10 eight. does that match the fundamentals ? greater than 20 times forward pe, as you note last year earnings fell by double digits. they are expected to fall for the fourth quarter and the first quarter of 2020. by the end of the year, analysts are looking for double digits growth up for tech and the chips. for the chips, the first half of the year is difficult. speaking of getting ahead of ourselves, i want to show you a chart here. another day another new record high another trillion dollar company. that is none other than alphabet. you can see a catching up to the likes of apple and microsoft. what did alphabet do to join the

$1 trillion club? >> they have been executing. investors are rewarding those shares putting it into the elite status. means, whenwhat it you have the dow hitting big psychological levels, does it mean something? probably less so. in this case, it truly is an elite status. it that points to the dominance of tech and internet. moving forward, it doesn't mean managers are going to have to wait the stock were large-cap and tech managers are already overweighting. it is certainly nice to have. this has come on stellar performance and large numbers. that's very impressive. taylor: i want to talk about fundamentals and folding in the technicals.

we're coming up on earnings we look at fundamentals. at the technicals set us up for earnings? >> that chart their is pretty amazing. what we are looking at on top is the s&p 500 tech index and the blue boxes are where the index has been well above the 200 day moving average. that means investors are ahead of themselves. at that time, the rsi on the bottom and momentum indicator was well into overbought territory close to 85 and 86. are 18% above the 200 day moving average which is far more than earlier. the rsi is only at 77 relative to 85. a little bit of a bearish divergence. this earnings season has got to or wecked out of the park

will see some quick consolidation. taylor: thank you, abigail. unveiled itsially entry into the streaming universe. the service is not launching until april. while it will feature new original content, it is going to thatheavily on hopes viewers will continue to tune in and pony up for old favorites like the office, parks and rec, and brooklyn 99. there will be three different pricing tiers ranking from free to nine dollars and $.99 per month. , our analyststhis are joining us. how does he got standout in this market? >> what comcast has said and telegraphed is that it is free to a lot of people. you see in the marketplace,

netflix cost $10 to $13 depending on your package. disney plus is seven dollars. hulu is six dollars to $10. the two that are coming up our hbo max and peacock. loading is much programming as possible and charging a high price relative to the others. peacock for its most basic plan is free. ofre is one basic package five dollars and another at $10 but you will be able to access lots of shows and movies at no cost. that is comcast and competition with the likes of netflix and hulu but also with facebook and youtube. strategyhe pricing mean anything? it seems like a race 20. i think lucas is right.

we're missing the point here. these guys are in this to protect their core business. business of. providing cable service, they want that $85 cable bill. they will do everything they can to protect that business and give their core customer a reason not to cut the cord. netflix can only survive if they can charge every single customer. hbo is already charging customers so they are just enhancing their core business model by giving customers more for the same price. at the end of the day, i think the right solution is that all give all content on demand all the time. i would pay more to be able to watch i love lucy on my comcast subscription. that has been the problem. the deals that are cut with the

talent that creates the shows, you're only able to go back something like five weeks on broadcast television. what opened the door for netflix. realized -- comcast that we can bundle and give it away for free. warner realize we can keep our own hbo content and bundle it for free. amazon is giving everything away anyway. netflix is way behind because they don't have window to monetize the first content. has another side business that they can rely on to funnel this. taylor: give me a reaction to the content wars.

netflix is standing out with more oscar nominations. in the content wars, where does comcast stand out? michael is right in that this fits into the comcast broader strategy which is the streaming will never be the major business. they don't want streaming video over the internet to be the dominant platform. comcast interest is selling you cable and increasingly selling you internet. andants you to view comcast by internet from comcast and it makes a healthy margin on that. as freel offer peacock bundled into those people who either get cable from comcast or get extremity flex which is extremity -- -- they are not going to compete at thesame level as some of

other players. at that leads me to believe that it will not be quite as successful. it might be fine for comcast corporation. they will make a ton of money selling internet service but they have to figure out how they want to position peacock in the marketplace against netflix, amazon and disney plus. i'm not sure what comcast and represents to the average consumer and they probably have to spend a lot of money to make it known. taylor: i wonder the capacity for these different streaming services per person per household. the average household spends something like $85 on cable. netflixan see from numbers, add $12.99 to that. we are spending $100 per month on video content. people are very comfortable

spending that. above median household incomes are -- incomes are fine going up to $120 or more. they will add as many services as they perceive a need to add. adding concept that is not necessarily original, they are not all exclusive. disney has old stuff like the simpsons which makes it worthwhile for a guy like me. people who have the capacity to , that meansr more they will cut the cord if they really want this content. i don't think they are competing for subscribers for the first year or two. never old.

thank you both for joining us. coming up, microsoft joins a global movement to fight climate change. we will hear from brett smith about plans the tech giant has in store. this is bloomberg. ♪

major: microsoft made a investment announcement wednesday. it will invest $1 billion in companies and organizations working on carbon reducing technology. i spoke with the president and

chief legal officer, brad smith earlier. puticrosoft's commitment to a billion dollars into innovation is part of a broader plan but the fund itself will really be focused on accelerating innovation and climate reduction and removal of technology where money is not flowing already. one area that we see being a paramount importance is the creation of new and better technology that will enable us all to remove carbon from the atmosphere. see ar area where we critical need for money where it is not yet flowing is for example, project finance for renewable energy. there are some parts of the perhaps especially in the united states and western europe where capital is already flowing for new renewable energy. not everywhere. we want our money to make a difference. you really looking

outside the u.s. to deploy this $1 billion? >> certainly we are looking outside the united states in part. especially when it comes to the that willf new places generate renewable energy. when it comes to technology innovation, it doesn't no boundaries or specific countries. i am sure there will be some of the slowing inside the united states, across europe and around the world. taylor: as you take a look at microsoft's goals, you have a plan by 2030 to be carbon negative. where are we on achieving that goal? >> in many ways, the most ambitious thing we are seeing today is as you just mentioned, we will be carbon negative as a company by 2030 not just for our company but for our supply chain. by 2050, we will remove on the environment all of the carbon

that microsoft has emitted either directly or four electrical consumption since we were founded in the year 1975. that is a big goal. we have a detailed plan but we have a lot of work to do. that's why we say this is a decade-long ambition for us. working withre your suppliers and customers to make sure they are doing their own initiatives in terms of being carbon neutral as well. how are you folding in these goals with your contracts with suppliers and customers? it requires a detailed plan which we have been putting together over the past months. one aspect when it comes to supply, naturally the supply of electricity for ourselves react what we are saying is that by the year 2025, we will have purchased -- purchase agreements in place for 100% renewable it energy for all of our data centers, all of our buildings and campuses worldwide.

then, there is all of the other emissions that are generated as supportive -- part of our supply chain. benext your we will implementing new tools and processes for our suppliers. we will want to see consistent measurement of their emissions. we want to help our suppliers with new tools so they can reduce their emissions. we will be talking with our suppliers in the coming months. i think you can expect to see us move forward to new economic incentives so that as we are buying goods and services, we are focused on encouraging our suppliers to reduce their emissions and if they do, i think they will find it easier to sell their products to microsoft. taylor: that was brad smith of microsoft. we will hear from him next about how microsoft and other tech could benefit from the u.s. china phase one trade deal. this is bloomberg. ♪

taylor: more from brad smith. about theut long-lasting tensions between the u.s. and china. i asked him to elaborate on his comment about -- >> it was a good and important step. it adds stability, it creates a foundation for additional progress. it adds to business confidence. it we were definitely very happy to see it and supportive of it. i think we should all want to see continued progress made by the two governments together. realu were talking about a threat of a technology cold war. what does that look like to you? >> i think that a phase one trade deal doesn't necessarily put to rest the other technology

issues that have become part of the geopolitical landscape. these are the two largest economies and they have the strongest tech sectors. both governments are focused on national security implications. conversation has become a conversation around national and economic security. i don't think that is going to change because of a phase one trade deal. we should all expect this to be a complicated issue throughout the decade. you only get about 2% of global sales from china. has that been part of a concerted effort to protect yourself until these issues are resolved? theft anding about ip

tech transfer. does this change anything for microsoft's fundamental business? today, the u.s. government has concerns about certain aspects of chinese information technology coming into the u.s. thing whereee the the shoe was on the other foot in china. i don't think that is going to change anytime soon. simply because of a connection that the government in each country see between information technology and their national security. i think that means they are still -- there are still very important opportunities for collaboration. there's a lot of basic research that happens in the technology space that is really global. there's the creation of software individualing by

developers. i think the world is going to need our two countries to work together even while we manage these tensions. if you take something like sustainability, if you look at carbon, the two countries that have the biggest impact our china and the united states. toneed to work together solve some of the world's big problems for our own sake as countries and for the world as a whole. taylor: i want to move as well onto the jedi pentagon contract and the subsequent amazon lawsuit. they are saying you didn't deserve it. cap you respond? >> every contract we have is important. some are different and even unique.

our jedi contract to support the united states military is not just an issue of commercial responsibility, it is an issue of national responsibility. and embrace that. we sought this contract out. one of the reasons we did is, we recognize the cloud technology would become vital for the nation's defense and we knew we had the wherewithal to build a better product. it is worth keeping in mind that the procurement process for this contract from start to finish was almost two years. one thing that we did was put more engineers on it and a focus on constantly improving our product to meet what we knew would be the defense department's needs. there at this and i think is an interesting lesson for all of us. certainly in the world of business but maybe in life more

broadly. first, never assume that you are so far ahead that you can't lose. never conclude that you are so far behind that you can't catch up. every day, we focus not just on catching up but leading. that when the full story is told, when people understand are going to find is that this country has dedicated people who work for the department of defense who focused on one thing and one thing only. buying the technology that would best protect the country. that was brad smith of microsoft. is making how foxconn a deal with fiat to help charge up the road. that's next. this is bloomberg. ♪ when you move homes, you move more than just yourself.

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no kidding. we're doing all we can to make moving simple, easy, awesome. go to xfinity.com/moving to get started. ♪ taylor: this is bloomberg technology. we join daybreak australia to bring you the latest in global tech news. let's take a look at the top global tech stories. get harder for u.s. tech companies to sit -- secure foreign investments. that handleompanies sensitive personal data like social media and health care to go under increased vetting by foreign investors. the rules will take effect february 13.

is reportingker sales well above analyst estimates. they also posted fourth-quarter earnings better than expected. the company is investing in technology to make sure it maintains its lead over samsung and intel. the rollout of 5g phones this year is expected to lead to faster growth. morgan stanley is recommending selling tesla shares. analysts, optimism around the growth in china is now priced into the stock. the stock price has more than doubled since the beginning of october. those are your top global tech stories. speaking of electric cars, a company that assembles iphones is getting into the eb market. it will be responsible for the design components and supply chain management. fiat will handle the actual assembly of the cars. york isus now in new

our auto reporter. experienceut their in the elected vehicle industry and fiat in the chinese market. that question gets to the bottom of the idea that this is a puzzling joint venture as our reporter in detroit has on the story pointed out. they have a lot of supply chain expertise in china. lithium-iont with batteries that go into iphones and also go into electric cars. those are two very different product. don't just ask me, ask apple. everyone is familiar with the idea that that -- they flirted in going into this industry and decided against it.

fiat has a very small market share in china. that problem will maybe not be solved if they are able to pull off this merger. analysts are confused about what to make of this. >> the obvious first focus on china is obvious given that we have talked about tesla success in the market there in china. i wonder if it is soon enough to catch up to tesla. i would if they think they will be successful there. >> that's a great question. this is essentially two companies that are inexperienced in bringing electric vehicles to market. it raises questions about whether it's too little too late. worth pointing out that there are a lot of electric

vehicle ventures and china that we don't hear a lot about because they don't do a lot of volume. they are essentially pumping out compliance cars to allow for --se companies to be able to to hit the tougher emission standards the car companies are being held to in that market. think about electric vehicles in china, one of the first comes to mind is china and the shanghai factory. this venture pose a significant challenge to tesla? >> we aren't sure what kind of volumes were talking about. the venture still doesn't have a formal agreement. we don't know how big their ambitions are. we know that foxconn is a huge company. another question that will be interesting for them to have to answer is a taiwanese company, there are issues of whether or this is a ticket for fiat

chrysler to be eligible for subsidies. that's one of the ways in which tesla is able to potentially succeed with this new factory you just mentioned. a good day not have today. what is the significance of their downgrade with morgan stanley? had an interview with another analyst earlier this week. they noticed the stock has taken off in a serious way very quickly. you heard of echoes in morgan with what wasysis said earlier this week, the idea that the valuation is may be at this point. >> we were starting to wonder who are tesla's comparisons -- competitors in the u.s. market? >> it is a sense that fiat

, it is ajoint venture sense of just how many competitors there will be. there's a question of how many to take seriously and how many will stay compliance projects that the companies don't have a choice but to explore. there will be a ton of competition and this because of the need to hit tougher standards and the volume, we heard them say they look at the opportunity in this market to do volume. that's why they are focusing on china first then maybe after that exporting elsewhere. >> we have a ton of data coming out of china this evening. are we seeing any signs of a recovery in the chinese car market? >> not that i have seen. through the year and for china,

there was ongoing real challenges with the auto market. some questions about whether the electric vehicle segment will see some relief from -- the government has sent a single that they are going to hold off on dialing back of subsidies because that was as we know a big impact the back half of last year where we saw growth for quite a while even when the broader market was slowing down. once subsidies were dow back, the market joined the rest of the industry. on the hill, they are talking about the subsidies. i want to talk to you about pricing strategy in china. tesla was trying to cut their pricing models. they are well below the luxury videos -- vehicles. what does this mean about pricing strategy in china for

these electric vehicles? >> with tesla, what you are seeing is a strategy of trying to get more in line with where you see the mass market. because int's ok tesla you have a premium brand that people will be willing to pay up for for the technology and the cool factor that elon musk has brought to the industry. if you are fiat chrysler and just entering this game and getting into building a brand and just jumping into the market now, you are probably going to have to get to a point where you can offer these models very cheaply. bit is where we see quite a of volume for the electric vehicle segment. a lot of these compliance cars have limited range and aim for company and government fleets and more so about checking a box been going after the consumer. >> thank you.

much more ahead. stick with us. this is bloomberg. ♪

to one, pellet gun is more than just a fad. shares rose wednesday after it was written that none of the bike alternatives represent a legitimate threat to the dominance in the space. the writer joins us now. walk me through your thesis. ultimately, i think long-term the way investors will value their situation business. as much as we talk about equipment sales which are the majority of sales today, i think down the road, they are building

toward a large profitable and ultimately sustainable subscription business. the valuation of other similar companies, investors are jumping all over themselves to be part of a company like that. but ihere is competition think the bigger point here is that this entire segment is poised for extended growth. that is the result of a lot of a clubtransitioning from or gym experience to an at-home experience. the size of that market is going to be up substantially and pelleted stands the best chance of withstanding that market. >> you mentioned valuation. are they a hardware fitness company or a software tech company? that changes the valuation.

>> they are clearly some combination of both. aey want to be valued as software tech company. it way we put together our valuation is based on the sum of the parts. we are valuing their current business which is 80% hardware based on a fast-growing but nonetheless hardware versus their suspension business at a much higher multiple. albeit not quite as high as the companies that have sustained success on that front. companies like netflix. planet fitness in the fitness space is garnering a premium multiple. thesef you think about software as is instruction service companies, those companies are garnering impressive multiples. we think about their subscription business at six times and the equipment business

at three times. if you put them together, we get 3.7 times their sales just the $37 we are putting out there. >> walk me through your analysis on the bottom line. the ceo said we could be profitable but the board doesn't think it's in our best interest. comfortable with that? >> i am. that comment rubbed some people the wrong way but i would argue that at least in my experience, when companies transition from , low profit orth no profit in this case companies to being lower growth more profitable companies, they tend to get dinged in terms of the valuation. then the stock ends up going the wrong direction. even that the end goal is a big profitable sustainable subscription business, i think everything that management is doing is with that end goal in mind.

the next fewr years, within reason, if they see a trade-off where they can invest money and stimulate growth, even if they have to sacrifice margins to do it, they will be more than willing to do so. it is worth noting that a gross margin level, these are profitable businesses. >> give me more of your analysis , what is the number one key line item you would like to see the company turnout? >> subscribers will be the big number. so much of this is based on what three years,ke five years or 10 years down the road. the single most important number is the subscriber number. that, the number of subscribers that roll off of -- overbscriptions of the course of a quarter. then a distant third is the

gross margin of their subtraction business. lot of expect a whole leverage out of that this year but over the next couple of years, as they get more and more subscribers, you are not going to see as much investment in terms of new studios and trainers. we should be able to leverage that line item as well. taylor: thank you for joining us. facebook backing away from plans to sell ads and whatsapp. it is being said that whatsapp has expanded a team. about whatsapp at strategy? abouty have talked putting ads inside of the status feature which is similar to stories. it that makes a lot of sense because facebook sells those

types of ads in other properties. the thought of looking through the stories of your whatsapp friends been coming across an ad doesn't seem as intrusive as other types of messaging ads. the wall street journal is reporting that the plants have been abandoned. what i am hearing is that it's more of a postponement. thatnot necessarily whatsapp is never going to run ads, it's more that they will do it in 2021 if not later whereas some thought it might happen this year. billionthey paid $19 for this company. how do they monetize that? >> they have not made much of that back. whatsapp has been focused on growing its user base. they make a little bit of money by charging businesses to send messages to users. that's their key priority right now. how can they let small businesses and emerging markets

that don't have a website or any other way of communicating with their customer base send messages? then they charge on a per message basis. that is a more likely immediate andness plan for whatsapp ads may be coming in the future. taylor: we are getting some this shoulding that not affect the fundamentals. if this were other regulatory pressures against facebook trying to integrate themselves? when you look at how facebook would monetize whatsapp, you look at the ad stacks that they built. the technology that exist inside of facebook and also powers instagram and messenger. maybe there is something around using that same technology power ads inside whatsapp.

it's an interesting theory that perhaps, bringing all the technology together for these different platforms might be part of the issue. taylor: there is a business plan to this. how does that fold into facebook's strategy? >> right now, facebook is 99% advertising. that's why facebook has talked about putting ads inside of whatsapp. when you look at what they might be able to do outside of ads, with interesting is diversifying their business a little bit. saying we are not 100% reliant on the ad industry that we can sell a more enterprise product to businesses and if that works, we have messenger that also has 1.5 billion users. figure out a

business model that works for both. i want to get your comments on some of the more negative rhetoric we are getting out of washington, d.c. this just being the latest. where do they stand on their facebook political ad policy? >> nothing has changed, unfortunately. this policy is, as you know, they will not affect check politicians including advertisements. that means that a politician could lie and pages spread it to as many people as they want. nancy pelosi has a personal reason to feel the way she does. there was a deepfake at about heard that -- circulated on facebook. she was affected by the idea that misinformation could circulate on facebook. taylor: thank you for joining us. still ahead, apple is teaming up

with the national basketball association. why the nba chose apple music playlists. this is bloomberg. ♪

taylor: on thursday, apple and the nba announced a partnership that included an independent playlist. ofwill have about 40 songs hip-hop vis and will be refreshed weekly. we're joined by our reporter who covers the nba. what do apple and the nba get from this? this, my heard about hair caught on fire. this is the most exciting thing for me in a long time. essentially, it is a playlist that the nba is going to use to curate the song selection may have on social media. let's say you are watching their

favorite series of lebron james highlights from last night, you will get something from this playlist in the background. it will also be playable in the app. for apple, this puts the more upfront with what's going on culturally with music. for the nba, it is giving them more eyeballs. viewership of the nba, the regular tuesday or wednesday timberwolves versus trail blazers game is not getting as many viewers as it once did. taylor: your analogies are very funny. on a more serious note, is apple fansus about getting nba to go over to apple music? >> absolutely. nba, despite viewership's

going down, is one of the most viewed sports platforms across the whole world. the nba is massive not only in the united states but it is the biggest deal of deals and china and parts of europe right now. that collaboration could spur people who watch the nba on spotify toward apple music. they want the playlist that is going to be curated by apple and promoted by the nba. the cool thing is only start to see players in the nba who are not only basketball players but also make music off the court will start appearing on that playlist down the road. that's when you will see the most interesting parts hitting sink. where does this fall in terms of their strategy? is this also part of an extended push to catch up to spotify? anything apple does to

add to apple music is almost single-handedly about trying to to try toarket share make the experience better. every additional partnership can't hurt. it's not going to insult unsubscribe but it could potentially gain some subscribers. that's important for their long-term growth. taylor: thank you as always for joining us. that does it for this edition of bloomberg technology. we are live streaming on twitter. be sure to follow our global breaking news network at quicktake on twitter. this is bloomberg. ♪

♪ good morning. i'm haydee stroud-watts in sydney, markets just online. in newi'm shery ahn york. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." ♪ tech internet and financials propel wall street's to new highs, the trade deal and strong consumer demand keep the rally going. shery: president trump weighs conflicting headlines as the senate approves his new nafta, but the