what's cool about microsoft is that you can actually go and be a product tester. a lot of people from high school would actually go to microsoft and test new products and they would give you a free mouse. >> you met your cofounders in middle school. tell me about that. >> the first cofounder of box, who is now our chief financial officer, we actually played trumpet together in middle school. neither of us were good at that. throughout middle school and high school, i did a lot of stuff on the internet with jeff and later in high school. >> tell me how box began. >> if you go out 10 years ago, there was >> not a lot of innovation happening. it was really hard to do basic things like, how do you share your files and access data from anywhere, and how do you collaborate and work with other people. i was in college at the time. what if you could have these sort of hard drives in the cloud that would let you put all your files in these hard drives and access it from the internet and the device you wanted to work from. >> tell me about those early days. fondest memories.

most of microsoft profits come from corporate customers. we all tend to talk about the world in consumer driven technology and that is not really the world microsoft is in anymore. so there are a couple ways to think about it. do they need to be relevant to consumers in order to stay relevant to corporations? what is the line between those two things? perhaps not as clear as it might seem. things have a way of moving from the consumer world to the corporate. but is microsoft staying relevant with corporations and they were certainly doing their darnedest to stay that way. and corporations tend to move a little more slowly than consumers do. >> we are a couple minutes into a conversation about microsoft and satya nadella and not once have his comments about women and racist come up. does that mean that microsoft and nadella himself handled that issue well? you give him high marks for his first year. that was certainly an important moment. >> you know it was. i tend to have a bit of a controversial take on this. i guess in the sense that i feel like there was a bit to

and we'll talk about microsoft. let me start with microsoft thing first. ck to the movie, michael has a new by when you played out. tell me what you think the mush of wrafrs is. i can read anything on any given day about people's projections and idea about the future of this opportunity. you're gone. gates isn't legislation the big innovations -- you look up the next ten years, the world's going to continue to tranfoam through noengnology. -- you've got to have talent, ideas, what i call capabilities, you know, software development, being in the internet cloud, building hardware. those are capabilities. so you got to have the tools. talent, ideas, and helps some business have good profitability. support you through thick and thin if you will. who's in better shape than microsoft? there's companies on the list. there are guys i can't say their names that we compete with. google. other guys out. there at the end of the day, you've got more cash reserve. >> we have a real shot. and we continue to serve both people, consumers, as well as businesses and business

what's cool about microsoft is that you can actually go and they let you be a product tester. a lot of people in high school would actually go to microsoft and test out new products and then they would give you like a free mouse at the end of it. >> ok, you met your co-founders in middle school. tell me about that. >> so, dylan smith, kind of the first co-founder of box who's now our chief financial officer, we actually played trumpet together in middle school. neither of us were any good at that. and then throughout middle school and high school though, i did a lot of stuff on the internet with jeff and later in high school with sam ghods. >> tell me how box began. >> if you go back about ten years ago, not a lot of innovation was happening. so it was really, really hard to do basic things like, how do you share your files, how do you access your data from anywhere, how do you collaborate and work with other people? i was in college at the time. and the original idea was what if you could have these sort of hard drives in the cloud that would let you put all your files in the

microsoft into buying his own team. we caught up with him in seattle and talk to him about the microsoft surface on the sidelines. arted about asking him what else you want to see tablets do in the future. >> i think to be able to continue to be able to sort things out process things faster. i know microsoft has more and more things to do and i want to talk to them about that this off-season. that will be kind of cool. >> what kind of things because the league controls it, too? >> just be able to hit all the third downs. when we watch film, that is one of the things i'm able to do throughout the week. look at all the third downs, all the red zone plays, all the scramble play, all the pressure plays. >> you are working with them over the off-season, you are already thinking about that stuff? >> i think about how i can help microsoft and the process on the sidelines. new technology will continue to develop and it is great that microsoft is innovative to do it. >> how do you decide what companies even beyond microsoft to work with in terms of endorsements? >> i try to be genuine with what works for me. i use the surf

so boss co's comment about how microsoft does its business resonates with me. but in each one of the cases that i tell you about -- and of course we have all spindle of cyber cases. we have one of the largest concentrations of exploitation of children cases involving cyber medium. we have cases involving a theft. we announced one that's in the news today involving $1 million of theft with a couple who were using surfing social security numbers at wal-mart with 900 victims. so we're doing this every day. and like most u.s. attorneys' office a large part of what we're doing you never hear about. but it has been victim focused and it has also been done with attention to the fact that we embrace the challenge of having to deal with both the security issues and the privacy issues. that responsibility in western pennsylvania falls on my shoulders. and like most u.s. attorneys we accept and relish that challenge. and all of the conversation about where the legislation and the law will go will never take that responsibility out of the u.s. attorney's office ultimately.

don't forget about microsoft, the work they're doing with the cloud and other technology is huge. les: by the way, maybe in a week or so microsoft will retest its all-time high. >>> up next, the payne's pros are going to update investment ideas from the show that have been in the news the last week. i've got two that are down big. remember, though, no pain, no gain. we'll be back in three minutes to make you money. ♪ ♪ creeping up on you... fight back with lief so smooth... cre.it's fast. you... tums smoothies starts dissolving the instant it touches your tongue ...and neutralizes stomach acid at the source. tum, tum tum tum...♪ smoothies! only from tums. charles: hey, guys. great tweets. keep them coming. time now for no payne no gain. that's my favorite part of the show. it's where we look at my ideas. these are things. we don't cherry-pick them. big news. first up is green mountain. i mentioned this a whole bunch of times. most recently in november. down 15% from that high. the company is giving a warning. some firm came out and said they won't do as well this las year. none of

>> what about a company like microsoft? we have been talking about them. the new c.e.o. crosoft however arguably has missed some of the technological hits of the last 10 years. how does a company like microsoft change? can they change? >> i believe they can. but it is all about -- are you willing to change the whole blueprint that the company has built to? so many of our modern companies are built around functional silos. people doing their job, not seeing the big picture. not getting close to commerce. so if you want to actually foster that kind of innovation inside the company, you have to be willing to set up internal startups and there is a lot of detail to the structure of how you do that. >> i wonder about the companies where that is part of the culture. i've been thinking about amazon. my waking hours and sleeping hours. i was at their facility in tracy, california, this week. amazon is this culture of pizza box teams. you don't want a team starting a project that is more than one pizza, one late night pizza session away from being too big. but i wonder if -- that

you have to talk to me about microsoft hitting a new high almost. ve me microsoft next time around. then we have china. the world's largest economy. based on something called purchasing power. it means $1 trillion in china buys you a whole lot more than $1 trillion here. therefore, china is bigger than us. monica crowley has something to say about that. >> it is hard to argue with that particular statistic. i think that is the key. the key to political stability is a stable middle class. the middle class has increased purchasing power. i think what they are doing here is projecting a little bit into the future. stuart: i believe that they are catching up to america. >> it is a bigger market for them. you have these people. so many billionaires. you can never get them back on a bike. they have to keep this bad boy going. no competition. japan and germany were in ruins. we had an ability to grow. you can argue since the mid- 70s. this was bound to happen. >> the competition with the united states and the west was not to let terry, per se. that is the n

different from the business records of microsoft itself but so that's the kind of distinction that i think we would point to in the situation you're talking about once you get into government situation, once you get into that sort of civil litigation issue, then you have again i think the same sort of equity which is microsoft, or gm in this case, is the target of litigant, of the litigation. note under the stored communications director right now if you're talking about doing civil discovery with respect to come in a case and you're going after and pcs provider or an rcs provider, the scope of civil discovery with respect to the content of the eno, there's already very limited. so we have come outside that situation in a case where you're in a provider situation. think the big difference intermediary provider and the actual of alleged. >> so to step back for a second term eventually get to answer your question i think, first i think it's worth noting this issue of government access to data that is stored extraterritorially is very important for law enforcement in all countries come and we're dealing with an and national criminal environment. f

how about 175 million dollars amid the amount microsoft lost in the nook deal with barnes & noble. s to about $125 million. thatlost $175 million for two-year adventure with the nook. >> we continue to see these black eyes on microsoft's record. we have been talking about how big a job he has ahead of him and how microsoft has really missed so many of the great advances in technology over the last 10 years. at some point, do these add up? >> i wonder more if this is about the realizing the surface is working for them in the ways they wanted to work. -- want it to work. the surface initially had a rough run but seems to be doing better right now. maybe they think that is helping them tom at it own need to be in the nook business. barnes & noble is willing to pay them something for it, may be time to get out. >> the tablet market is struggling. how optimistic are you? seeing is are really that the use case -- the launch of the tablet was so big so fast. some of the best use cases we can't even imagine yet, but we will start to see them soon. >> cory johnson, our editor-at-large, thank

about $175 million? that is the amount microsoft lost in its nook deal with barnes & noble. ny's buyback comes about $125 million. about $175 million or that adventure with the nook. >> we continue to see these black eyes on microsoft's record. bigere talking about the job they have ahead of them and how they have missed so many of the great advances in technology over the last 10 years. at some point, do these add up? this is moref about them realizing the surface is working for them in ways that they wanted it to work and the nook was a way to hedge their bets. had a rough start but seems to be doing better now. maybe they think they do not need to be in the nook business. willing toble were pay them something, so maybe it was time to get out. >> the tablet market is suffering. how big of a role can the surface play in that? >> because the launch of the tablet was so big and so fast, some of the best use cases we probably cannot imagine yet, but we will start to see them soon. johnson, thank you. thank you all for watching this edition of "bloomberg west." see you later. ♪

think about microsofts and intel. >> apple even. >> look at cisco.at kind of a nasdaq at 25, 30 times forward estimates versus 2000. to david's point, you get better earnings over time. david, i wanted to ask you about revenue growth. if the economy continues to improve, you expect then i'm assuming to see revenue acceleration and multiple expansion or just looking for just better margins and control and better profitability? >> i think the point of earlier before the break that, you know, with the oil tax in effect the tax coming down, in terms of income distribution, you have an opportunity for broader segments of the population to take the discretionary dollars and use it for improving the technology that they own and obviously revenue growth off of that, household budget realoe case can acceleration and a situation here where the yield curve levels and the curve itself stays low, you know, obviously positively sloped, might see improvement in terms of multiple putting on the earnings and looking at acceleration in terms of economic growth and pro

how about microsoft? shares are up 29%.s because everybody thinking the new ceo is doing something right? not somebodys people were sad to see leave. he is looked at microsoft and said what are our assets and what can we do well. let's get rid of religion. let's not think of windows everywhere. putting their products on other platforms. really making it clear that he is not religious. two thet is been in religion of windows. they have some smart people there. some of the most creative people in tech research work there. i think you're going to see them do more and more creative out-of-the-box stuff. i think people really love working for him. problemting you have a is the first up to recovery. what we have heard from him is we are going mobile and cloud. when i hear those words, you don't know what you are doing. >> they know what they are doing with cloud. there cloud service is successful. they are up there with google and amazon. ibm is not at their level. microsoft gets cloud. he pushed them toward cloud long time ago.

when you think about it, some of its peers, look at microsoft, monster year here, up about 25%.t's getting back up towards those prior highs. and then the other one is intel. it's up 40% this year. one of the things that's interesting is intel is well off those 2000 highs. but all three of those companies i just mentioned, oracle, the ceo larry ellison just replaced himself with two other people. he's still there as the chairman. intel had the new ceo a year ago. obviously microsoft bomber stepped down and dell has taken over. new blood telling new stories and the stocks have been working. that brings me to cisco, okay? here, this thing is really a disaster for all intents and purposes if you look back over the past ten years in a tight range. i want to say this. the three prior names i talked about, they all traded about a market multiple about 15 or 16 times next year's earnings. cisco, 13 times. why is that? something's not resonating here. the story is not being told correctly. when you think about that, this looks like a coiled spring to me. if there was ever a reason for i

dell, covered compaq, microsoft. tummy about the days as a tech analyst in the 1990's. >> one of my first experiences with the agenda conference. remember the first dinner walking into the tent. days you look around and there is bill gates and larry ellison michael dell. you could just walk up and talk to them. it was like, oh my god. >> even back then, did you know they were of greatness? >> i got invited when i was covering microsoft, they have this annual analyst meeting. my second trip out there somebody handed me a car and said you will be at bill's table tonight. i was 27, 28. >> it does not matter if amazon never turns a significant profit? >> it only matters if wall street doubts that they can. >> how do you become a top tech analyst? what does that involve? >> i was fortunate. the research was not generating as much profit on its own. i was experimenting with this premium model. that is when i started above the back then.a fax it's sort of way back then. ,> above the crowd, 6'9" playing on your height. >> i got a call o

about. before, hurt microsoft right? >> it also hurt sony before as well.ack andeep on coming haunting these sorts of companies. the microsoft xbox network only last week was affected by these sorts of problems. claimedquad righteousness on that one as well. , because whenurt you are trying to login in, you couldn't play some of the games. interestingly, this happened back in august as well. it was sony online entertainment and psn that was targeted. they went as far as to have a bomb threat upon the president of sony online entertainment. his flight was canceled because lizard squad actually claimed there was some sort of bomb issue. the fbi got involved. to disband. started it was understood that their identities were exposed. that happened back in august. come september, they are at it again. we see a repercussion of what happened three years ago. we saw sony's network off-line for 23 days, almost a month. it was april 2011. they were hacked back then. 77 million accounts were stolen. it was the largest data breach of its kind at the time. it is a reoccu

microsoft digital goods, they have the very strong with that. however, in america credit cards are very ubiquitous. [no audio] they don'tr them, care aboutthe consumer pays the price at the time and microsoft gets hit for usb or other credit card payments. worryporters say not to about the price, but really the price is what is going to hold back adoption. how do you continue to make the case that if the price falls that bitcoin should be invested in? >> it is made as a currency for the internet. a currency to be used and spent. often it is speculative. two years ago the price was it isless than $200, now down from a high of 1200. we don't know where the price is going to end up, but merchants do not care that much about it and the people that use it now think of it as a stable currency and are not focused on the price . that is just the speculators. three months ago we announced partnership with paypal and the currency went up 30%. last week to the price did not go up that much, showing that the currency is stabilizing and a lot more institutional's are starting to treat it as a real currency rather than last years start up. >> it certa

about 2.9 apple phones were booted up. you drew the comparison earlier to how far down that line microsoft actually is. but is it a surprise to see apple this far in the lead. >> i think yes. it is. but you can get it through your ad b thinking about the fact that apple is what you get as the gift for the holiday. as the disadvantage that samsung and other products are not thought of that way. people go to the apple store and give ipads and give iphones as gifts and the other products don't have that going for them right now. >> it's dramatic when you think about still apple doesn't have the largest market share. they are only about 12%. they are the ultrahigh end. and when you think about the dominance of the product you can sometimes forget that fact. >> europe closes in a couple minutes. and more deflation in spain and greece. >> just note the magnitude of the fall today. it is holiday thin trade obviously. so for any given trade you might expect an exaggerated movement. however a rough day for europe overall. it is interesting that oil is clearly under pressure. you have brent below $58 and that's c

>> what about a company like microsoft? the new c.e.o.icrosoft obviously missed some of the technological hits of the last 10 years. how does a company like microsoft change? can they change? >> i believe they can. it is about are you willing to hange the whole blueprint? if you want to fost they are a kind of oin vegas inside the company, you to set up internal startups. >> i wonder about the companies where that is part of the culture. i've been thinking about amazon. amazon is this culture of pizza box teams. you don't want a team starting a project that is more than one late night pizza session away rom being too big. hat is amazon. that is part of their culture. they are cheap, small teams that work fast. what about when that approach is wrong? >> i believe culture comes from the process. the way people get promoted. if you want to have a culture of small team or when you have a big problem, you find a way to break it into smaller problems. you have to set that process decision from the top. i think what is really interesting is when

but microsoft doing well. >> there was one shareder yesterday very vocal about valuations and that is steve ballmer, now the largest independent shareholder in the stock sitting in the second row and tweeting i don't favor market --. specially versus other tech companies. when you see a stock like microsoft up 30%. at what point do you cool it on the buy back and plug that into cap backs instead. >> i never liked buybacks. a lot of shareholders, especially investors or funds like companies to say hey we're going to buy back oun ore stock with our own money because we think it is cheep. frankly that tells me they don't have anything to grow. you got to invest in your business. if it is not going to grow, give me cash back. >> -- >> or sell ibm? >> maybe. i don't know. that is a good question. on apple, they have so much cash though i don't know what they are going to do with it. they have a ton of cash. maybe that is a good use. when you get to the point you have more cash than the u.s. government then you start giving it back. >> right. on microsoft, i don't know. if you are ballmer,

so the comment about how microsoft does its business process needs with me. but in each of the cases that i tell you about, of course we have the whole spindle of cyber cases. we have one of the largest concentrations of that the exploitation of the children's cases involving cybermedia. we have cases involving the effects. we announced one that is in the news today involving the million dollars of theft of a couple that were using the social security numbers at wal-mart, with the 900 victims. so, we are doing this every day and like most of the u.s. attorney's office is a large part of what we are doing you never hear about. but it is victim focused and it's also been done with attention to the fact that we embrace the challenge of having to deal with both the security issues in the at the privacy issues. that responsibility in western pennsylvania .-full-stop my shoulders and most u.s. attorneys about the accept and relish the challenge. in all of the conversations about where the legislation into law will go will never take that response ability out of the

this is the microsoft cloud. about synthetic drugs that killed two teens in grand forks, north dakota, there was someone in that small city that was somewhat of an expert. andrew spovrd, a local drug dealer with marijuana and cocaine was also selling chemicals he bought on the internet. the synthetic drugs that killed christian bjerk and elijah stai came stamped delivered to his door. >> he had a good working knowledge of the substances, the potency of the substances and what dosage unit would be common for a typical user. >> what he didn't know, stole a bag of white powder without knowing what was inside that bag or just how potent it was. budge melted the powder into chocolate he gave into his new friends including elijah stai. budge also sold some of the same drug to a young man who would share it with christian bjerk. >> adam budge in the beginning was the common link between the two overdose victims. prepared the 2cinbome. elijah stai died from that. >> in the suburb of houston, texas, a father and entrepreneur na

how much do private companies, microsoft, etcetera, know about us? >> so, i think the -- being really precise here -- they don't necessarily know about you, the individual. what they have is a picture and the aggregate of what are a population of people, a specific age, a specific time, a specific location doing. what are they asking? so i think the challenge here is that, yes. i don't think anybody can deny this. there would always be a way to trace it back, trace that individual's search query to them individually. i don't know any company that actually collects information in ways that make it easy to identify a single individual in that aggregate picture. so when they're collecting data, they're really collecting it in bulk, you might say. it's very difficult to get to that information, so to be able to, as somebody internal to the company, i have to go through aappropriately a lot ofgatekeepers who protect the privacy of individual users. none of these companies would exist if they were making it easy to access your private information. the chal

get the and bolts about how they go about doing their business and it's a real integral look at that and the unofficial hero that comes out of brian's book is microsoftabout them taking on the infrastructure criminal organizations legally to take them off-line so that's a pretty interesting read. my favorite is kevin paulson' paulson's -- covers from 2006 to 2007. the main story is a hacker by the name of max butler. he is a fantastic story writer and is going to make a great movie someday. his transmission. his transition from white hat hacker to black hat hacker is really interesting. his claim to fame is that there was four or five main underground informer selling credit cards and he didn't like the way they were operating so he decided to fi fix it in the y he did it was a marathon session from 48 hours of hacking and took down all of those web sites that criminals were using to control the data put them on his own underground forum and put a banner across the four web site saying come to my site. if he was a good guy we would be high-fiving everyone that did that. his downfall was that he had one of the site temple traded by the fbi. asia mulla

microsoft change? >> i believe they can but it is about how can you change the blueprint? of the modern companies are focused on people doing their job, not think the big picture and getting close to customers. if you want to foster the innovation, you have to be willing to set up internal startups and there is a lot of detail for how you do that. talking toeen microsoft a lot this week. i have spent time at the facility this week. amazon is a culture pizza box team. you do not want the team more than one eighth the box away from being too big. everyone at amazon is like that. they are cheap, small teams. what about when that approach is wrong and that is part of the culture you can change? >> i believe culture comes from the process and accountability decisions you make. the way people are compensated and get promoted. if you want culture of small teams or when you have a problem you have find -- you find a way to break it down, you have to be willing to set the process decision from the top. i think what is interesting is when i go to corporate america these days i will

about today. stock number one is a biggy and softy, jp morgan initiating microsoft with an overweight. >> it is onlyside but a hot stock here. there are three factors. microsoft has the strongest cloud platform. the analyst says the grip on the enterprise is unmatched, in other words corporate america, fancy word for enterprise. windows as big as it is microsoft's third biggest product line. the analysts say that is their third biggest. >> thatti innishiation. >> it has had a big year. >> don't rain on the pc parade. >> give credit where credit is due. >> bank of america adding fed ex. >> analyst believes the company will capitalize on the profit improvement plan and declining gas prices. fed ex just owns a couple of trucks. you have rising demand and maybe a big cyber monday could benefit fed ex, as well. yesterday was unbearable. and a benefit in the fuel surcharge. positive call on b of a on fed ex up 2.75 a share. >> you have to practice what you preach. you were chastising everybody else for cyber monday. >>> stock number three sun trust with a buy. >> $53 target about 17% upside to the current

this is the microsoft cloud. we are aboutwe have the speed. we have the technology. and we have the team. we made over 15 billion successful deliveries last year. 15 billion! football has a season. baseball has a season. this is our season. >>> leading the news in the daily mirror, scorned wife leaves love rat husband and twin sister naked in car park. it happened in eastern china. the wife used the cell phone tracker to locate the whereabouts. she jumped in and took off, leaving them exposed and embarrassed. oh, my goodness. >>> ski trails previously thought unrideable are now a possibility. the relatively new sport of speed riding is a combination of mountain skiing and human flight. they say anybody can do this. riding in the most remote mountain environment, they're proving the sky is not the limit there. >> you think this is -- >> don't be a scaredy cat. i'm angie goff. this is "first look" on msnbc. >>> i'm thrilled today. i want to thank president obama, the canadian government for the efforts that went into this huge

but if all you cared about was money you would never consider an official bounty program by microsoft you would just sale it on the black market as you could for as much money as you could. >> what's the sin tentative for the government to regulate it if the government is buying it. >> i don't think the government can regulate it. it's not like we are buying widgets where you need certain materials it's totally intellectually property. finding the vulnerability is end lex tull property. you don't know someone has this until it's either used against you or they tell you that they have it. >> it makes it very difficult to regulate it. >> does the government have a responsibility to inform citizens that it's sitting on a software vulnerability? kaleb says, yes, the government should warn citizens. what if 100 to $200 million in a bank account were hacked from a known flaw it's only a matter of time. kim, how much should the government inform the public when they discover a software vulnerability? >> it's being debated in the government right now. it's been a problem for a long time. the

about it a little bit. so that is kind of where google is. >> i got you. mike murphy has a question. >> you bring up microsoft and that's where i want to go there. talk about google and you hear about the competition coming for google. you rarely here microsoft but i read that bing is up to 19% of search. microsoft's performed great. google is down for the year. are they really going to take considerably more market share from google? >> i really don't think so. but, you know, at this point it is sort of the at the margin. bing i think has surprised people in that it's done a little better than you would have thought. and this kind of ties into the yahoo as well. if you saw recently mozilla fire fox, they switched over from google to yahoo which is powered by bing. and there is some talk that when apple, there is some talk that they have a search contract with google that comes up for renewal in early 2015. there is no reason to believe apple will want to help enable their biggest competitor through android and smart phones which is google. so would it surprise me to see apple switch to somebody else? ? it it

about data being stolen. we are seeing real growth in the private cloud and you're seeing a lot of energy being applied by microsoftnd vmware with the red hat and the number of new companies that we are partnered with. >> and their private enterprises to do the things that the public cloud offers. the sound like powerful trends, if you look into the future what do you see as the most disruptive technology, the thing that will change our lives as consumers and the thing that will change the course of history for companies? >> silicon costs are coming down dramatically and that is creating not one billion devices but one trillion devices. all kinds ofing new business model disruption beyond technology disruption. ,hink what uber and airbnb these are not technology innovations as much as they are business model disruption striven by the availability of technology and low-cost. that will continue and only accelerate. one billion to one trillion devices you have a enormous amounts of data and metadata has to be analyzed and interpreted and you have to do something with it and then you can enhance all kinds of businesses