1 00:00:04,640 --> 00:00:09,239 Speaker 1: Broadcasting live to New York, Bloomberg eleven, Washington, d C. 2 00:00:09,480 --> 00:00:14,760 Speaker 1: Bloomberg to Boston, Bloomberg Twell hundred to San Francisco, Bloomberg 3 00:00:14,840 --> 00:00:18,639 Speaker 1: nine to the country, Julie's ex General one nine and 4 00:00:18,760 --> 00:00:22,480 Speaker 1: around the globe the Bloomberg Radio plus Appen Bloomberg dot com. 5 00:00:22,880 --> 00:00:28,560 Speaker 1: This is taking stock. I'm Kathleen Hayes along with pim Fox. Yes, 6 00:00:28,600 --> 00:00:30,640 Speaker 1: the cat was out of the bag over the weekend, 7 00:00:30,640 --> 00:00:34,240 Speaker 1: but it's confirmed today that Horizon is buying Yahoo's web 8 00:00:34,280 --> 00:00:38,200 Speaker 1: assets for four point eight billion dollars. Oh, this means 9 00:00:38,240 --> 00:00:41,080 Speaker 1: for the by rating the Colin Gillis of Beach e 10 00:00:41,200 --> 00:00:45,480 Speaker 1: Z Partners has had on Yahoo and Oh, by the way, 11 00:00:45,520 --> 00:00:49,320 Speaker 1: ahead of Apple's earnings tomorrow, PIM, he's downgraded Apple to 12 00:00:49,440 --> 00:00:51,600 Speaker 1: a cell. Yeah, the sheriffs of Apple are down about 13 00:00:51,600 --> 00:00:53,599 Speaker 1: one and a half percent right now. And right now, 14 00:00:53,640 --> 00:00:55,480 Speaker 1: let's go to Charlie Pellett in the Bloomberg News from 15 00:00:55,520 --> 00:00:58,600 Speaker 1: for Bloomberg Business Flag and I thank you very much, PIM, 16 00:00:58,640 --> 00:01:01,960 Speaker 1: thank you, Kathleen, and worse Verizon and Yahoo the day's 17 00:01:02,000 --> 00:01:04,200 Speaker 1: top business story. We are brought to you by se 18 00:01:04,400 --> 00:01:09,360 Speaker 1: I have evolving investor and regulatory demands affected your investment 19 00:01:09,400 --> 00:01:14,560 Speaker 1: firms operational redness. Imagine transforming your business with SEIS Global 20 00:01:14,600 --> 00:01:19,520 Speaker 1: Platform at se i C dot com slash. Imagine Verizon 21 00:01:19,640 --> 00:01:23,959 Speaker 1: buying Yahoo's web assets, sending the company's to decade run 22 00:01:24,000 --> 00:01:27,280 Speaker 1: as an independent business. Verizon will pay cash in the 23 00:01:27,319 --> 00:01:31,360 Speaker 1: deal that includes Yahoo real estate, but excludes some intellectual property, 24 00:01:31,600 --> 00:01:34,800 Speaker 1: which will be sold separately. Yeah who shares They are 25 00:01:34,840 --> 00:01:38,320 Speaker 1: lower now by two point five percent. As for Verizon, 26 00:01:38,520 --> 00:01:41,040 Speaker 1: they are also lower down six tenths of one percent. 27 00:01:41,520 --> 00:01:44,440 Speaker 1: Tim arns Strong is the CEO of Verizon's A O 28 00:01:44,600 --> 00:01:47,600 Speaker 1: L business, and on Bloomberg Television and Radio this morning, 29 00:01:47,840 --> 00:01:51,000 Speaker 1: he talked about integrating Yahoo. By the way, we we 30 00:01:51,120 --> 00:01:53,200 Speaker 1: work in Silicon Valley all the time. We have a 31 00:01:53,240 --> 00:01:57,040 Speaker 1: big office is a multiple officers there, and the Yahoo 32 00:01:57,080 --> 00:01:59,720 Speaker 1: team we've spent time with um. I think we both 33 00:01:59,720 --> 00:02:02,720 Speaker 1: have a similar strategy and similar outcomes, and there may 34 00:02:02,760 --> 00:02:05,000 Speaker 1: be synergies in the deal, but this deal is about 35 00:02:05,000 --> 00:02:07,040 Speaker 1: growth and we're going to focus on the growth areas. 36 00:02:07,280 --> 00:02:09,639 Speaker 1: Synergies will come, but it's got to start with strategy 37 00:02:09,720 --> 00:02:12,480 Speaker 1: structure and then cost structure as the third item, and 38 00:02:12,720 --> 00:02:15,440 Speaker 1: also a name changed too, because Yahoo will wind up 39 00:02:15,520 --> 00:02:17,560 Speaker 1: changing its name. It will be left with stakes in 40 00:02:17,600 --> 00:02:21,239 Speaker 1: Alabama Group Holding and Yahoo Japan, with the combined market 41 00:02:21,320 --> 00:02:25,840 Speaker 1: value of about forty billion dollars. Federal Reserve policymakers begin 42 00:02:25,960 --> 00:02:29,160 Speaker 1: meeting tomorrow, and when the Monetary Policy Panel meets Tuesday 43 00:02:29,160 --> 00:02:32,160 Speaker 1: and Wednesday, a majority of investors expect them to do 44 00:02:32,200 --> 00:02:35,280 Speaker 1: what they've done at every meeting this year. That is nothing. 45 00:02:35,680 --> 00:02:38,239 Speaker 1: Tenure down to thirty seconds, ye old one point five 46 00:02:38,360 --> 00:02:42,120 Speaker 1: seven Gold down five tenths of one percent. And now 47 00:02:42,200 --> 00:02:44,400 Speaker 1: let's take a look at the other stories making news. 48 00:02:45,080 --> 00:02:47,919 Speaker 1: Thank you, Charlie from the Blueberg newsroom. I'm Matt Miller. 49 00:02:48,360 --> 00:02:52,079 Speaker 1: As the Democratic National Convention kicks off in Philadelphia, there 50 00:02:52,080 --> 00:02:55,359 Speaker 1: are reports that Hillary Clinton's campaign has asked her former 51 00:02:55,520 --> 00:02:59,679 Speaker 1: rival to encourage his supporters not to boo bloombergs. Bob 52 00:02:59,760 --> 00:03:03,560 Speaker 1: Moon reports lead emails suggesting Democratic officials look for ways 53 00:03:03,600 --> 00:03:06,640 Speaker 1: to undermine Bernie Sanders of outrage his supporters, bringing an 54 00:03:06,680 --> 00:03:09,520 Speaker 1: awkward start for party leader and convention host Debbie Wasserman. 55 00:03:09,600 --> 00:03:11,960 Speaker 1: Her resignation won't take effect until after she opens and 56 00:03:12,000 --> 00:03:14,680 Speaker 1: closes the gathering, and her interim success for Donald Brazil 57 00:03:14,760 --> 00:03:16,880 Speaker 1: is already working to keep the Party United We need 58 00:03:16,919 --> 00:03:19,320 Speaker 1: to come together tonight. We're going to have a big night, 59 00:03:19,400 --> 00:03:22,640 Speaker 1: a lot of good voices. Bernie Sanders, Elizabeth Warren, and 60 00:03:22,680 --> 00:03:24,520 Speaker 1: of course the first leader of the United States. This 61 00:03:24,560 --> 00:03:27,000 Speaker 1: is gonna be an exciting convention. We're going to break 62 00:03:27,000 --> 00:03:29,720 Speaker 1: out in a joyful noise. Who he's disappointed in? Party leader. 63 00:03:29,720 --> 00:03:31,679 Speaker 1: Sanders says he'll be there tonight on a mission to 64 00:03:31,720 --> 00:03:36,200 Speaker 1: defeat Donald Trump. Bob Moon Bloomberg Radio. Meanwhile, Baltimore Mayor 65 00:03:36,280 --> 00:03:39,400 Speaker 1: Stephanie Rawlings Blake has been chosen to gabble in the 66 00:03:39,480 --> 00:03:43,480 Speaker 1: full Democratic National Convention in place of outgoing Democratic Party 67 00:03:43,560 --> 00:03:47,920 Speaker 1: Chair Debbie Wasserman Schultz. Donna Brazil will replace Wasserman Schultz 68 00:03:48,000 --> 00:03:50,800 Speaker 1: at the end of this week's convention. Here's Brazil on 69 00:03:50,840 --> 00:03:54,360 Speaker 1: what to expect this week from Hillary Clinton's campaign. Her 70 00:03:54,400 --> 00:03:57,840 Speaker 1: campaign and her message this week is that we're stronger together, 71 00:03:57,960 --> 00:04:00,280 Speaker 1: we can solve our problems. We can begin in to 72 00:04:00,720 --> 00:04:04,000 Speaker 1: project a better country. And the m t A plans 73 00:04:04,040 --> 00:04:07,360 Speaker 1: to shut down the L Train subway tunnel for eighteen months. 74 00:04:07,680 --> 00:04:10,000 Speaker 1: The closure will happen in two thousand nineteen and will 75 00:04:10,040 --> 00:04:13,040 Speaker 1: disrupt commutes for more than three hundred thousand new Yorkers 76 00:04:13,040 --> 00:04:16,000 Speaker 1: who traveled between Brooklyn and Manhattan. The move was forced 77 00:04:16,080 --> 00:04:18,320 Speaker 1: by damage due to the salt water that flooded the 78 00:04:18,320 --> 00:04:22,040 Speaker 1: tunnel in two thousand twelve during Hurricane Sandy. Global News 79 00:04:22,080 --> 00:04:25,080 Speaker 1: twenty four hours a day, powered by over undred journalists 80 00:04:25,080 --> 00:04:27,600 Speaker 1: and analysts in more than one or twenty countries. I'm 81 00:04:27,640 --> 00:04:32,120 Speaker 1: Matt Miller. This is Bloomberg, and we thank you, and 82 00:04:32,160 --> 00:04:35,160 Speaker 1: again recapping, we do have the SMP five hundred index 83 00:04:35,200 --> 00:04:38,320 Speaker 1: trading lower, down eight points to sixty six. That is 84 00:04:38,360 --> 00:04:41,400 Speaker 1: a drop of four tenths of one percent. I'm Charlie 85 00:04:41,440 --> 00:04:45,880 Speaker 1: Pellett and that's a Bloomberg business flash. You're listening to 86 00:04:45,960 --> 00:04:49,760 Speaker 1: Taking Stock with Kathleen Hayes and Pimpbox on Bloomberg Radio. 87 00:04:50,400 --> 00:04:53,400 Speaker 1: So it's the end of an era, or at least 88 00:04:53,440 --> 00:04:55,680 Speaker 1: the end of a big chapter for Yahoo in the 89 00:04:55,720 --> 00:04:59,839 Speaker 1: beginning of its new existence is part of Horizon Communication 90 00:05:00,000 --> 00:05:02,719 Speaker 1: safter Verison agreed to buy Yeah whose web assets for 91 00:05:02,800 --> 00:05:05,880 Speaker 1: four point eight billion dollars, ending the company's two decade 92 00:05:05,960 --> 00:05:08,760 Speaker 1: run as an independent business that took it from a 93 00:05:08,920 --> 00:05:13,359 Speaker 1: Stanford University startup at the dawn of the Internet Age two. Unfortunately, 94 00:05:13,400 --> 00:05:17,400 Speaker 1: for Yahoo also ran behind nimbler online rivals such as 95 00:05:17,440 --> 00:05:20,160 Speaker 1: Google and Facebook. So what does it mean for investors? 96 00:05:20,200 --> 00:05:22,080 Speaker 1: What does it mean for the company moving ahead? Colin 97 00:05:22,120 --> 00:05:24,760 Speaker 1: Gillis is here to answer all of these questions. He's 98 00:05:24,800 --> 00:05:27,920 Speaker 1: Director of Research and senior Technology Analysts at b g 99 00:05:28,279 --> 00:05:33,440 Speaker 1: C Partners. Colin, Welcome, Hello, Kathleen. So we knew Verizon. Yeah, 100 00:05:33,440 --> 00:05:35,680 Speaker 1: who was going to get bought by somebody? Verizon's name 101 00:05:35,720 --> 00:05:37,919 Speaker 1: had been bandied about. Let's start by what this means 102 00:05:37,960 --> 00:05:40,520 Speaker 1: for Yahoo? What is it now? Well, you know, it's 103 00:05:40,560 --> 00:05:44,239 Speaker 1: out with a whimper, uh, and it will become folded 104 00:05:44,279 --> 00:05:48,240 Speaker 1: into Verizon. They suggested that the transaction will close in 105 00:05:48,279 --> 00:05:52,160 Speaker 1: the beginning of next year and we'll see what happens 106 00:05:52,279 --> 00:05:55,920 Speaker 1: to the brand name itself. But Verizon is interested in 107 00:05:56,279 --> 00:06:00,600 Speaker 1: the piping, the ad technology that powers Yahoo as they 108 00:06:00,600 --> 00:06:04,680 Speaker 1: seek to get more into advertising expand some of their 109 00:06:04,760 --> 00:06:08,240 Speaker 1: video offerings become more than just a carrier that competes 110 00:06:08,279 --> 00:06:12,080 Speaker 1: on data and pricing. Con I can't resist it. Tell 111 00:06:12,120 --> 00:06:15,359 Speaker 1: me how much did Microsoft offer for Yahoo at one point? 112 00:06:17,640 --> 00:06:21,839 Speaker 1: About ten times more pim Can you hear me? Now? 113 00:06:22,440 --> 00:06:26,720 Speaker 1: There was a lot of value that's been destroyed by 114 00:06:26,800 --> 00:06:31,240 Speaker 1: various management teams trying to turn this company around, so 115 00:06:31,320 --> 00:06:33,440 Speaker 1: the spring, but they didn't do too badly. Write all 116 00:06:33,440 --> 00:06:35,839 Speaker 1: those management teams they managed to take home quite a 117 00:06:35,920 --> 00:06:39,640 Speaker 1: nice little packet. Yeah, of course, that's right. Uh, And 118 00:06:40,240 --> 00:06:42,520 Speaker 1: that is quite tough if you think about how much 119 00:06:42,600 --> 00:06:46,480 Speaker 1: the current management team has been paid to. Really, just 120 00:06:46,640 --> 00:06:49,960 Speaker 1: how much is uh Marissa Mey are going to take home? Well, 121 00:06:50,000 --> 00:06:51,840 Speaker 1: we'll have to see what the final figures, but you know, 122 00:06:52,279 --> 00:06:56,760 Speaker 1: something north of a hundred million UH is expected. Well, 123 00:06:57,000 --> 00:06:58,599 Speaker 1: so the very least, I guess we could say that 124 00:06:58,880 --> 00:07:01,320 Speaker 1: Verizon did a good job just sitting and waiting right 125 00:07:01,520 --> 00:07:04,880 Speaker 1: as a disc got more affordable. There is that there 126 00:07:05,120 --> 00:07:08,960 Speaker 1: is that, that's right, um, and you know it's also 127 00:07:09,720 --> 00:07:14,320 Speaker 1: hopefully they'll preserve employee jobs. Right, But it's not done. 128 00:07:14,640 --> 00:07:17,880 Speaker 1: There's still going to be a holding company left, right, 129 00:07:17,920 --> 00:07:21,800 Speaker 1: that's going to be turned into a an investment advisory 130 00:07:21,840 --> 00:07:24,720 Speaker 1: company that's going to have the assets of Ali Baba, 131 00:07:25,120 --> 00:07:29,320 Speaker 1: Yahoo Japan and cash in there using for investors, then 132 00:07:29,360 --> 00:07:31,440 Speaker 1: what do I what do I own? What should I buy? 133 00:07:31,480 --> 00:07:34,280 Speaker 1: You know you had a buy rating on Yahoo before, correct, 134 00:07:34,440 --> 00:07:36,720 Speaker 1: that's right? And you know what you're hoping to see 135 00:07:36,880 --> 00:07:39,920 Speaker 1: is that there is a discount that these assets trade 136 00:07:40,240 --> 00:07:43,239 Speaker 1: to parity. Because Ali Baba is a publicly traded stock, 137 00:07:43,320 --> 00:07:45,840 Speaker 1: we know that you know it's worth you can take 138 00:07:45,840 --> 00:07:47,520 Speaker 1: a quote, you know, X number of dollars to share 139 00:07:47,560 --> 00:07:51,200 Speaker 1: saying with Yahoo Japan and the value of the assets, 140 00:07:51,240 --> 00:07:54,640 Speaker 1: and this holding company trades at a material discount to that. 141 00:07:54,800 --> 00:07:57,040 Speaker 1: And we're hoping to see that gap closed now that 142 00:07:57,120 --> 00:08:00,960 Speaker 1: there's no longer concerned that management be spending that money 143 00:08:01,280 --> 00:08:04,400 Speaker 1: and Wasteand I want to turn your attention out of 144 00:08:04,480 --> 00:08:10,120 Speaker 1: tomorrow and Apple, and really you downgraded the shares of Apple. 145 00:08:10,240 --> 00:08:13,280 Speaker 1: I don't get this at all. Explain it? Okay, Well, 146 00:08:13,320 --> 00:08:15,960 Speaker 1: you know we put a cell on it, and um, 147 00:08:16,000 --> 00:08:19,720 Speaker 1: you know we have long been uh neutral, we've been positive. 148 00:08:19,960 --> 00:08:22,800 Speaker 1: Right now we're out there saying we think the upcoming 149 00:08:22,800 --> 00:08:26,160 Speaker 1: iPhone cycle is going to disappoint people. And typically Apple 150 00:08:26,200 --> 00:08:29,000 Speaker 1: works on a tick talk basis, which means that you 151 00:08:29,080 --> 00:08:32,720 Speaker 1: get a major update with a new form factor which 152 00:08:32,760 --> 00:08:34,640 Speaker 1: is the tick, and then the next year you gotta 153 00:08:34,679 --> 00:08:39,120 Speaker 1: talk it's an s upgrade. It's more incremental this year 154 00:08:39,480 --> 00:08:42,680 Speaker 1: or than we expect a tick talk talk. We expect 155 00:08:43,200 --> 00:08:47,079 Speaker 1: another incremental update happening in two thousand and sixteen is 156 00:08:47,120 --> 00:08:50,360 Speaker 1: Apple gears up the big push the tenth anniversary iPhone, 157 00:08:50,520 --> 00:08:53,960 Speaker 1: which will be a redesign in and this could cause 158 00:08:54,280 --> 00:08:58,280 Speaker 1: numbers to come down in September and December as people 159 00:08:58,400 --> 00:09:01,000 Speaker 1: wait to hold off to up read their phone. I 160 00:09:01,080 --> 00:09:03,960 Speaker 1: like your Haiku. It has become clear that the muse 161 00:09:04,040 --> 00:09:07,079 Speaker 1: that drove Apple has gone somewhere else. I know it's 162 00:09:07,080 --> 00:09:08,960 Speaker 1: a bit sad, but you know, if you think about 163 00:09:09,000 --> 00:09:14,200 Speaker 1: the degree of just iteration that we've had happening at Apple, 164 00:09:14,760 --> 00:09:18,160 Speaker 1: you know, we haven't really opened up major new product categories. 165 00:09:18,520 --> 00:09:20,360 Speaker 1: At some point, people are not going to be caring. 166 00:09:20,840 --> 00:09:23,600 Speaker 1: You will not care so much about just a slightly 167 00:09:23,720 --> 00:09:28,200 Speaker 1: better camera or slightly faster processor, a little bit more memory, right. 168 00:09:28,240 --> 00:09:31,960 Speaker 1: They want to see new form factors. And quite frankly, 169 00:09:32,000 --> 00:09:35,640 Speaker 1: the whole market itself it's slowing down. Smartphones grew less 170 00:09:35,640 --> 00:09:38,160 Speaker 1: than one percent in its entirety last quarter. So you 171 00:09:38,160 --> 00:09:40,480 Speaker 1: don't want to pay a ten multiple for a stock 172 00:09:40,559 --> 00:09:44,960 Speaker 1: that's yielding two point three that is arguably at least, 173 00:09:45,040 --> 00:09:50,359 Speaker 1: if not the largest and best UH mobile communications manufacturer 174 00:09:50,400 --> 00:09:52,920 Speaker 1: in the world. Yep, you know, and in fact, because 175 00:09:52,960 --> 00:09:56,839 Speaker 1: I look out at the next billion dollars in value, Right, 176 00:09:57,240 --> 00:10:00,120 Speaker 1: is that going to be on the positive side. On 177 00:10:00,160 --> 00:10:04,880 Speaker 1: the negative side if iPhone unit continue to come down, Right, 178 00:10:05,080 --> 00:10:08,080 Speaker 1: there is ample room for air to come out of Apple. 179 00:10:08,160 --> 00:10:10,960 Speaker 1: It's still the largest company on a per on, on 180 00:10:11,000 --> 00:10:13,640 Speaker 1: a strict market account valuation. You can talk about ratio 181 00:10:13,720 --> 00:10:16,120 Speaker 1: is all you want, right, but it's still north of 182 00:10:16,200 --> 00:10:19,760 Speaker 1: five billion dollars half a trillion dollars. And so we've 183 00:10:19,800 --> 00:10:23,560 Speaker 1: seen nine consecutive quarters of iPad revenue declining. This is 184 00:10:23,559 --> 00:10:26,880 Speaker 1: the third consecutive quarter where iPhone revenue is going to decline. 185 00:10:27,080 --> 00:10:30,160 Speaker 1: So we have to be careful that Apple is not 186 00:10:30,360 --> 00:10:33,720 Speaker 1: starting a long term negative downtrend. All right, We're gonna 187 00:10:33,760 --> 00:10:37,160 Speaker 1: leave it there, Thanks very much. Colin gillis joining us 188 00:10:37,200 --> 00:10:40,959 Speaker 1: as the technology analyst and director of research at the 189 00:10:41,600 --> 00:10:47,000 Speaker 1: b g C Partners. Talking about Apple shares of Apple 190 00:10:47,080 --> 00:10:50,440 Speaker 1: today down about one and a half percent, trading at 191 00:10:50,520 --> 00:10:54,320 Speaker 1: ninety dollars and one cent signed fim Fox, my co 192 00:10:54,400 --> 00:11:03,240 Speaker 1: host Kathleen Hayes, this is bloomberg. As the Democrats get 193 00:11:03,280 --> 00:11:06,600 Speaker 1: their convention underway in Philadelphia, we're going to step back 194 00:11:06,600 --> 00:11:08,760 Speaker 1: and look not just the politics, but what do the 195 00:11:08,760 --> 00:11:12,240 Speaker 1: elections mean for the markets, from stocks to bonds and currencies. 196 00:11:12,480 --> 00:11:14,200 Speaker 1: This is coming up on Bloomberg Radio.