♪ emily: welcome to "bloomberg technology." down,s ending the day dragged down in part by facebook, amazon, netflix, due in part to consumer confidence hitting the lowest levels in six years. alphabet shares up after hours as the company reported stronger-than-expected revenue. i just got off a call with the alphabet ceo. i will bring you more on that

any moment. i want to bring in our bloomberg markets reporter, taylor riggs. walk us through the equity markets. pricing seemed to deteriorate toward the close. taylor: so much volatility today, on days you would typically see from earnings. companies reporting like caterpillar, 3m, really thinking that the worst is not as bad as it seems. all of that, like you mentioned, really deteriorating into the close. a lot of that had to do with consumer confidence data, showing that levels are down to the lowest since 2014. the russell 2000, 1 of the bright spots in an otherwise pretty negative day. continued talks about states separating from the federal government and trying to

reopen on their own time, a lot of these small-cap stocks are the performers today as we continue to get these talks about reopening the economy. crude is another big story we are following today. all over the place today. positive, negative, positive territory. about 3%act ending up higher or so. you did have some negative action after some mati indexes said they were going to get out of the june contract early. that created a lot of selling pressure. effectively, they were trying to avoid what happened a week ago. when the may contracts were starting to expire. you saw a lot of companies trying to avoid that situation. toly: i want to dig in

alphabet's results. reporting letter than expected revenue for the quarter. there was concern there would be massive and slow down. it started in march but the quarter still ending strong. alphabet shares up after hours. taylor: the company coming out and saying that ad sales fell about 10% in march. so you are seeing that significant slowdown. we knew that the first quarter was a backwards looking quarter. say looking to see first quarter revenue growth in the ad space up about 4%, then seeing the decline in the second quarter. the fact that it was coming in much better than expected, that leads to some of the post-market reaction. it all comes down to the second quarter. that is some of the analysis we are getting on the call.

a drop of about 10%. you are still getting that drop in quarterly revenue but perhaps not as bad as expected. quickly, the bright spot about the cloud, seeing some growth on a quarter by quarter basis. startedrter, the first to reveal the revenue. they are clearly the third leader relative to aws and microsoft, but they have a lot to grow the cloud product. emily: we are going to dig into alphabet a little bit more. i have john freeman on the phone. i just got off a call with the alphabet know and we talk about the trends they reported, the slowdown in revenue.

important,, what is we remain optimistic about long term trends. and behavior shifts from one area to another. basically saying, while they did see a big slowdown in ads, it was only in march and they did not see slowdown anywhere else through march. you look at the overall advertising market, it is going to get it. that is what you can see, particularly in those businesses where you can measure on a month-to-month basis. obviously, march was pretty horrific. i think people might be missing that there is a shift going on, from traditional sort of linear broadcast media to online

interactive communication kind of media, mobile platforms, social platforms, obviously search and youtube are great examples. of what happens, in a period economic uncertainty and a real downturn, i think that should accelerate and that is kind of an offset. i actually don't think it is going to be that bad as they will come out of this a year from now even stronger than they were. thate may not realize traditional media was 50% of overall ad spend. 2019 was the first year that offline succeeded at. unfortunate

economic situation. emily: i did speak to her about where they plan to continue to invest. they have been very careful to say that they are going to continue to invest in strategic areas and they are focused on long-term opportunities like search, cloud, hardware. the big question that you alluded to, what does the next quarter look like? how much further does and spending slow? she said they would be getting into that on the call happening right now. i am looking at the terminal and watching for headlines as they roll in. how bad could it get? say advertising is down 20% in the second quarter.

maybe this down 30%. obviously, there are some areas that are opening up faster. obviously, there are caveats. how better the aftershocks? that is kind of a wildcard. that, i do think youtube, the engagement with youtube has gone through the roof. younger people tend to skew towards the youtube demographic. youtube also has some of the lowest of any of these platforms. it is very cheap to advertise on youtube. inexpensive advertising, there it is. so, there is that advantage. i actually think google still has positive growth. it is tough to say. maybe it goes into the high

single digits. i still think they come out of this a lot healthier. i don't think they need to -- they have so much cash. nobody is worried about the financial stability of that company. as an analyst, looking at it, a couple more quarters. it is valuable if they continue to invest in driverless car's, quantum computing, cloud. i am not as worried about it. obviously, they have the financial flicks ability to do so -- financial flexibility to do so. emily: ad revenue, 30% year-over-year. that said, they are going down hiring. she said, to be clear, we are still adding, just slowing the pace of hiring relative to what we thought it would be at the beginning of the year. sundar pichai, the ceo, said

they would not be bringing employees back to work until at least june 1. does that concern you? it does not. they have such flexibility. any other company. they are going to put a freeze on hiring. a very close one of layoffs right below that. with google saying, we will slow down hiring, it speaks to the tremendous operating leverage inherent in this business. to maximizent profits, it is not difficult for them to do that. i think they are in a very good position. billion in net cash, that is actually not a

significant portion of their market cap. i think they are well positioned. we also don't know how bad things do get. that is the overriding caveat to all of this. emily: a couple more things from our conversation. she said that the fitbit acquisition, they are still open to close that at the end of the year. the it comes to some of antitrust probes we have been covering last year and this year, they are still recovering to those but no updates. cfra, thankn from you for calling in. continuing our conversation. will be speaking with pierre from new street research, talking about tesla and apple coming up leader this week. this is bloomberg. ♪

emily: big tech earnings continue this week with test loud tomorrow, apple out thursday. -- with tesla out tomorrow, apple out thursday. from new street is with us. the question remains about revenue and the current quarter given that tesla's operations have been basically shut down here in the united states. what are you expecting tomorrow? we know how many cars have been produced and delivered. the key question will be profitability and free cash flow.

interesting -- expectations, how much cash tesla will have burned in the quarter. production on the back end of veryuarter, judged significantly challenged. to 20,000 cars5 in transit. idea, i would not be surprised to see a cash burn for the quarter. becauseht be a surprise factsaid something -- the that the cash burn is significant when you stop using cars.

body from your that could be a major surprise on q1. emily: how badly do you expect the shut down in tesla production to impact ongoing results? the alameda county sheriff, initially they claimed they were an essential operation and then a non-essential operation. there were some plans apparently to bring workers back this week. haltedd quarters still at this point. pierre: it is a major disruption. what you can expect today, you know that tesla tried to get nextinto production mode

week, but it is probably not going to happen. probablyfe side, getting back to work in june. the production number is going to be very low, maybe 25,000. shanghai, that will depend 50,000 cars produced. hopefully distribution will be all right. demand is very strong, logistics are getting back in place. i think the 50,000 cars that are stuck in transit today will be sold as well but that leaves .5,000 cars next quarter less than a next time around because he will not have cars in transit anymore. we are probably talking half $1 billion of cash burn in q2 as well.

how much can china and the shanghai factory make up for this, given that china was hit by the pandemic earlier in the year at people are not buying cars in other hard-hit parts of the world right now? think some of the --duction in shanghai shanghai will produce as many cars as it can. in china, as necessary and europe, and elsewhere in the world in other asian markets. shanghai might be doing 30,000 cars. probably not more than that. obviously, that is something we will be all over tomorrow. let's talk a little bit about apple, leading corporate america

in shutting down stores early. chinaad their store in shut down. they withdrew some numbers they had projected for the year. when it came to the pandemic predicted the united states, they shut down stores around the world. we expect shipments to be 25% below where we were february,them mid when you look at how long the shutdowns have happened in china , the impact of today's shutdowns in most markets. that is the kind of number we would expect. i would not expect that to be a surprise. that is something that company moved their guidance to

manage expectations. quarter, we have the beginning of a recovery, but it is probably going to be slow. honestly, would knows. we will have to see. i would not expect them to be specific on their guidance for the second quarter for that reason. generation, business product. the key questions at key conversations with management on the phone in a couple days is going to be about q3, q4, and the 5g lunch, of course. emily: meantime, what about apple's services business. plus atnched apple tv the right time. still, probably not enough to make up for a 20% drop in

smartphone shipment. the good thing is it is clicking up slowly. int kind of decline smartphone revenues, iphone revenues. no one will expect that, of course. we don't expect any major disruption on service revenues. how concerned are you coming phone line up? there have been discussions about them pushing out the new iphone. the impact on the supply chain of the coronavirus mean for apple going seven quarters forward? pierre: it is a very good question. i think it has been the cause of

a lot of late nights at apple and apple suppliers. a few weeks ago, the feedback was that apple was willing to push production as fast as possible to maximize the amount of phones it could get out and ready to ship. a few days ago, we heard comments about things being potentially pushed back. i think apple is doing their best to get ready for the product launch. 5g iphone. of course, the logistics around that is challenging. think the demand for the iphone will recover the. it remains a higher end product.

apple, they are really -- the real challenge is going to be how they manage costs in the iphone driven by 5g. additional materials into the manage the radio of 5g. it is not going to be in apple's interest. it will be better for them to .eep iphone prices competitive , a bigt i think surprise, big moving part not expected by investors. decline.gnificant of newpierre ferragu

street research. as always, appreciate your insights. we'll be across all of those apple results thursday and of course tesla on wednesday. more after this quick break. this is bloomberg. ♪

we are continuing to listen into the alphabet earnings call. alphabet reporting first quarter revenue higher than expected. coming in at $33.7 billion, up 14% from a year ago. the company stated that ad spending was still strong until march, when they saw a significant slowdown. they said they are starting to see some very early signs of recovery but it is not clear how durable that behavior will be. they anticipate that q2 will be

a difficult one for the ad business. we will continue to monitor those headlines. coming up, more of "bloomberg technology." will be speaking with the ceo of class pass about physical fitness. this is bloomberg. ♪ ♪

welcome to bloomberg technology. 3m, the maker of personal protective equipment, reported a jump in sales on more than just its face mask's this. today the ceo spoke with guy johnson and vonnie quinn. he thinks the second quarter will be the worst for the global economy. take a listen to that interview. >> looking at where we are as we come into the second quarter and the outlook, weed with -- we did withdraw our guidance. we highlighted some of the

challenges that we are facing as we come into the quarter. even out of the first quarter we saw deceleration in markets geographically and in key markets great we see very strong demand in respirators as an example but we saw a slowdown in areas like elective procedures in health care. our medical solutions business saw sharp decline in the world business. business. -- oral while week withdrew guidance, -- we withdrew guidance, we started with where are we april to date. we are down in the midteens globally. ,hat is true for the americas even stronger in the americas as we come through the first several weeks in april. that is setting us up for the

slowdown in the actions we are ndking to manage against een market demand and cost. >> a lot of economies and president is the likely to hear about this later on. the process is starting to get underway, reopening. ppe inave the necessary place to allow this process to happen? what visibility do you have about companies having the right ppe to bring people back, about the availability of ppe for people to start going about business as, as we start the process of reopening? which areas look better prepared? >> the story to this point has been ramping up production. we have seen unprecedented demand for ppe. the respirators that are used by

health care workers and first responders on the front line, that demand outstrips our capacity to produce enough product. we have been ramping up, brought capacity online. out of sars we invested to be ready for crises that come along and demand we step up. covid-19, the battle is greater than anything we have seen. we'll take the u.s. capacity from 35 million a month to 50 million a month by june. we will take our worldwide capacity and double it towards the end of the year to be able to produce almost 200 million respirators a month. for us that is our focus now. the demand in the near term is greater than our ability to produce, but we will make investments. as an industry, ramp up to serve that. it is that phase, and reopening the economy will be the next

kind of asset -- aspect about that. something we talk about, how are we expecting to see that? there is a lot of uncertainty how it will play out. we will work to double our output of n95s this year. reporter: you said you would never raise prices during a pandemic. will you be able to keep them fixed, and what about raw materials and the supply chain? >> it is really critical to the ability for us to supply the frontline health care workers and first responders. we have to manage our entire supply chain. the raw materials through production and through supply and logistics as well. we have had strong support from our suppliers on raw materials. we have not seen the raw

material price increases. part of what we benefit from, are things materials that are not unrelated to oil and gas and the price of oil and gas, by products of refining oil and gas products. we are seeing that stable, and the outlook is, we can manage that. roman.the 3m ceo mike we don't know when we can go back to the gym again, but the virtual workout is here to stay. in the midst of the pandemic classpass reduced its staff by more than half but pivoted to livestream classes. joining me is the ceo, fritz lanman. thank you for joining us. the vast majority of your studios have closed, but you have added 15,000 classes worldwide. tell us about the activity and

demand you are seeing. >> it has been robust and strong. people realize health and wellness has been a critical part of -- a global macro trend for the last 15 and 20 years. in the light of covid, your health outcome is better if you are in shape. you are seeing people more focused on it now they need to combat the quarantine wine consumption. it has been robust. classpass has been a monthly recurring subscription for off-line workouts. you can go to hundreds of cities, 30,000 different studios, one day boxing, next yoga, next hit the treadmill. they were shut down so we lost a livestreaming platform where customers can look at these taxes -- classes class ata shadowboxing

host, and they can invite college friends or family across the globe. emily: as we start to talk about potentially reopening the seem to jim's -- gyms be a place where it is not possible to be 100% safe. how do you see being more online potentially longer than other businesses? >> we are taking a cautious approach. we work surprised to see that gymns were part of the phase one reopening. they advocated the decision on when to open to partners, governors. they are advocating the decision down to the mayor, which seems like a relatively reasonable strategy. , once it ising legal, we depend on studio partners to decide if they want to offer classes or workouts and

then let customers decide if they want to partake. we will offer live streaming options probably forever because we think the world will be heterogeneous between off-line and digital experiences. we are not going to turn on our subscription billing until we are confident the majority of these markets are back online and people feel safe. but we are advising studio partners and gym partner should do is take -- what we are inviting partners to do is take hygiene seriously, what methods are they employing, and we are advising those partners to adhere to social distancing and offer livestream classes of those who are not comfortable coming back into the studio in person. emily: you are waiving the commissions and giving the proceeds to these studios that are struggling. your competitors are giving away things for free, peloton has made its apps free for a while

and seems to have gotten the mind share in quarantine. what do you think you have on the competition? a partner of classpass'. a lot of those people are classpass attendees. they are a partner. we think that they are great. anybody who is doing more to get people into the fitness category is good for all of us especially .lasspass as an aggregator we are sitting on top saying, we are not prescriptive whether spin is better for you, boxing or boot camp or swimming. you might be a mix and match person, or you might want to do some digital and some online. -- off-line. we offer thousands of free videos and audio workouts. you don't have to subscribe. our main concern is keeping partners in business.

that is the biggest risk, how many gyms and studio partners will survive this, and that is why we watched the live streaming effort, which is working. a lot of people have moved communities to zoom. we are seeing the emergence of social workouts. people inviting people from across the country or a different country altogether. we have launched a donation campaign. to $1ass is matching up million. and see us -- you can see us waiving the fees and during the matching program. our main concern is not competition but how do we keep as many users active and how do we keep our studio and partners in business? emily: this has been important for physical and mental health. you did lay off 22% of the workforce, 31% of folks

furloughed. i'm sure you are mapping this out in terms of how many folks youran continue to keep in employ, if this drags on. do you expect to make more cuts, and how many studios won't survive as you make these your calculations? lucky we could raise financing in december. the reason we acted swiftly with the cuts, we are going to take a hope for the best but plan for the worst outlook. rather than have that as 1000 cuts, which is the worst thing you could do, i could rather cut hopefully you will -- i would rather cut more than you will hopefully need to. we don't anticipate making more cuts, but the vision down the road will depend on how effective are the federal government's responses to containing covid-19? we have seen different responses

in asian, north american and european markets. we need testing to effectively contain this thing. we are dependent to some extent on a strong, coherent federal response taking those forms. we don't anticipate any further cuts being necessary. on our partner site we have been positively encouraged. we were worried we could see thousands, tens of thousands not able to survive. i read a report saying small business owners have one month of cash in the bank. we have seen only a handful of closures. part of it is because they have taken swift action in terms of furloughing employees. even in america, aggressive response, which will allow people to put businesses in sleep mode and come out the other side. bybeing able to make money

livestreaming has kept partners, the majority of them are still alive. hopefully that doesn't change. good to hear you are seeing that on the ground. the classpass ceo, thank you for taking the time. will be interesting to see how much of the behavior we are experiencing become part of the new normal. thank you for stopping by. cannot goy, but either. hundreds of thousands of foreign workers are in limbo based on u.s. immigration policy. we will bring you that story next. this is bloomberg. ♪

about 200,000

foreign-born workers who were on the h-1b's the may have to -- visa may have to leave the country or lose their jobs by june. big tech employs a lot of these workers. i want to bring in olivia. we know that more than 22 million americans have lost their jobs, but what does it mean for foreign-born workers especially as president trump has halted immigration? >> that is right. millions of americans have lost their jobs. a large portion of that includes earn workers who are effectively in limbo. many of these foreign workers have been laid off or forced to take absence from their work because of the coronavirus. them, the problems for particularly the h-1b visa, which is temporary, people who have specialized skills, they

can only stay in the u.s. for 60 days without being paid. this means time is running out for hundreds of thousands of people who are on that temporary visa status and watching the days go by and don't have any other options. take a company like google which says it will slow it employs a lot of people with h-1b visas. the that mean some of the companies might consider it more expedient to focus on cutting foreign workers, or what are their options if they want to keep these workers? are a lot of questions of how this will be impacted long-term. if we see hundreds of thousands of these h-1b workers leave economy, what will that impact the?

i spoke to immigration lawyers who said they are fielding scores of calls from businesses that are confused about what to do right now. we know around three quarters of h-1b workers in the u.s. are in the technology industry. this is impacting both big tech companies -- those big tech companies. they are trying to wade through the right decisions. do you furlough a u.s. worker payroll?an h-1b on the you will jeopardize the legal right to say in the country if you don't, or if you lay off the workers and keep u.s. workers on staff, because it is the easier option? if they make either decision, they expose themselves to determination suits down the line. a lot of unanswered questions how this will impact companies as we move forward. bring us some personal

stories. i wonder what pressure these workers are under right now given the uncertainty of this. there must be a lot of fear. >> i talked to one couple who are based in new jersey. dentists.work as they have been in the u.s. for five years, and they had a harrowing story. to the u.s. from india and studied advanced dental degrees, racked up half $1 million in student loan debt combined and now they face the prospect to the u.s. from india and studied of their status evaporated in 18 days. they don't have the option to go back to india because the borders are closed indefinitely. if they stay in the u.s., they lose immigration status. .hey become unlawful

i talked to them and asked what is the emotional toll on you right now? they said they are losing sleep, the husband is losing his hair. all that can do is sit and wait. every day they log on to the u.s. website hoping there will be some relief provided to people in their situation. emily: that is terrifying. i know the trump administration has taken a hard line on immigration but i wonder might there be mercy rules in place for people in this situation, given you have got big tech ceo's, mark zuckerberg or session at della who have made h-1b these is a priority. >> we have seen technet, a lobbying group which represents the big tech companies, call for an extension for the deadline. they want to push this out to september 10 to allow foreign

workers to stay in the country legally until they can get through this crisis. president of technet said the trump administration has done filing deadlines. they are calling for a similar -- foreign workers who are in an impossible mission right now. position right now. emily: we will check back in with you for updates. video streamers like netflix are seeing big booms in the midst of the quarantine but spotify not so much. we will bring you details on that next. this is bloomberg. ♪ ♪

unlike the video streaming industry which has

seen a boost from the pandemic, the music industry has been suffering including spotify, which had planned to expand into south korea and russia. those plans are delayed. i want to bring in lucas shaw. we have spotify earnings results coming out later this week. how is the pandemic impacting these companies? >> the biggest impact in the music business has been on the live sector. there can be no concerts for the for seattle future. we have seen negative impacts on audio streaming across the board. no streaming of music on spotify and other services. the only other bright spot is video streaming is up. youtube is one in a fishery. -- beneficiary. emily: talk about what spotify intends to do this. we often listen to music on our commute and things -- commutes

are not happening right now. >> i think at the moment they will try to write it out. they have seen -- ride it out. it has stabilized the past couple of weeks, but the company could experiment with different types of podcast. they bought the ringer, a sports media broadcast company. there are no sports to talk about. they could talk about entertainment, comfort food and spotify could revisit video or other programming if they think that will benefit them long-term. they will try to continue experience -- expanding internationally. this has gotten in the way of plans in korea and russia. emily: what are you expecting from the results tomorrow? >> i think they will have perfectly fine additions in terms of new customers, but they

will have to comment on the fact listening is down. the executive cfo will try to spin this as good news. will be different from the earnings report from netflix last year which is everything is great. -- last week which is everything is great. lucas,thank you so much, for the update. we will have spotted by earnings results tomorrow and tesla, also got apple later in the week. don't miss all of that on bloomberg technology later this week. tune into daybreak australia after this quick break. i am emily chang. ♪

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♪ haidi: very good morning. i am haidi stroud-watts in sydney alongside shery anh in new york. u.s. consumer confidence slides and undermines the new york session. more companies pulling guidance. infections continue to rise around the world with the u.s. topping one million. france and spain moving towards lifting some virus restrictions. the pandemic is expected to