tv Lunch Money Bloomberg April 10, 2014 7:00pm-8:01pm EDT
>> welcome to "lunch money," where we tie together the best in business news. i'm adam johnson. in tech, the vampire internet bug. why hardly is freaking out consumers and companies. in motors, and for yoder getting congress to play together with cars. cherry blossoms are coming out of washington and that means christine lagarde is in town for the imf spring meetings. we will be speaking with francois henri-pinault. he is the man behind gucci.
and mary to selma hijacked. -- salma hayek. finally, in pop, they will not let it go. disney is driving kids and moms crazy. we will kick it off with what everyone is talking about. could it bp is with carl icahn and ebay? >> an agreement has been reached with carl icahn, ending the fight before the shareholders meeting. icahn has been pushing to separate ebay from paypal. >> i'm well aware of carl icahn push to separate ebay from paypal. >> we believe it is a no-brainer that paypal should be spun off. i do not think in this case that they should be together. there is no reason they should be together in our opinion. in fact, it would be helped by a management team that is separate and can go their own way. i think the multiple would go up dramatically, and also, the
health of the company would be better. this is going to be an argument. >> oh, yes. his interviews over the phone and daily letters to ebay shareholders have made his mission abundantly clear to the investing public. he was also not too keen on the leadership of john donahoe. >> skype was going to be sold by donahoe, who i think is either naïve or just asleep at the switch here. >> harsh. that was mr. icahn's side of the story. this is mr. donahoe's. >> the board and i have been looking at these alternatives for the past five years. ebay makes paypal stronger by helping them grow faster. it provides more data and to provide a strong financial foundation that will ultimately make paypal more successful as part of ebay, than separate. commerce and payments are converging, not diverging. the commerce companies are trying to
get into payments and payment companies are trying to get into commerce. we are looking at how they can be most successful and the board and i believe the best way is together. >> that was ebay ceo john donahoe in february. this is him today. >> what carl icahn has done is seen the potential and opportunity in our company, so he is becoming a long-term shareholder which is a win-win. >> positive spin from the ebay ceo in his interview with erik schatzker. that was just after the news. carl icahn, who has accumulate about two percent of ebay's january, will get an independent board seat now. icahn wants the chairman of cvs caremark and former chairman of at&t to take the spot. >> doorman is coming off as an independent director that i respect. a director carl respects. i think it is a good addition to
the board, one that i think will allow us to continue to execute on the enormous opportunities in front of us. >> this proxy battle that has been playing out in the board rooms and through press releases, how did that potentially hurt ebay in running the company? >> we were executing just fine, but this allows us to quiet all the distracting noise and focus on the opportunities in front of us. a relatively straightforward opportunity to do this. it is a clear win. it is what the investors want and what we as a company want. now we move ahead, focusing on the enormous opportunity paypal has to capitalize on mobile and digital payments, the opportunity ebay has to capitalize on the commerce opportunity in front of us. we have been driving strong growth and we will continue to focus on that with another strong, long-term shareholder in carl. >> tell me more about the confidentiality agreement. what are you giving to carl icahn that other shareholders do
not get? >> it is something we would offer to any large shareholder, relatively straightforward. which is the directors and i are free to share any confidential information with carl. if and when we do so, that makes him an insider, so inbounds and by the restrictions that any insider would have. he will be longer-term in his orientation. it is relatively straightforward. i will periodically get together with carl and this into him as i would any large shareholder. i think it's going to be a win-win. >> if any of your other large shareholders, blackrock for example, wellington, t rowe, you would give it to them? >> absolutely. if they want confidential information and abide by the restrictions that come with that, then we would be happy to provide it. in this case, that is what he wanted to do. that is what we have done.
>> you know that many see carl icahn as a bully. to those folks that still feel that way, explain to them the value of letting the fox in the hen house. >> i do not think it is a fox in the henhouse. from the beginning i've had direct conversations with carl. in all those conversations he's been respectful and thoughtful in our one-on-one conversations. >> but nasty and accusatory in public? i have not negotiated with carl icahn, so i do not know if that is the way he rolls. >> all i know is in my direct conversation he's been thoughtful. what has happened in this case, jimmy lee, the vice chairman of j.p. morgan, all the last -- called me last week. he was meeting with carl on another topic. he said, i think you and carl should spend some time together. we did over the weekend and we talked repeatedly on the phone and focused on not separation -- we did not focus on the separation, but we focused on the business,
we focused on the enormous opportunities in front of our company. once we did that, we had common ground, and will continue the dialogue, going forward. >> did you hear him say that this is a win-win for shareholders? >> this is a clear win-win for shareholders. it is a clear win-win for our company. he is becoming a long-term shareholder which is a win-win. it is a win-win for ebay shareholders. >> i'm sure mr. icahn will feel good about it, too. you can hear about it when he takes to us on "bottom line" at 2:00 p.m. everything that you need to know about the latest cyber security threat, known as heartlead. and what does it take to get congressmen together? that is coming up in motors. ♪ >> we have breaking news.
cbs has named stephen cole berta the next host of the late show. he viewed -- will be replacing david letterman who will be retiring in 2015. a quick announcement by cbs in a story that many thought would unfold over a period for several months. cbs because the company has -- also in the back on business has ties to cbs. that is where stephen colbert's show airs. we are looking for specifics on when he will take over but we can say cbs is describing this as a five-year deal between cbs and stephen colbert. ♪ >> in tech, we are focused on a
real cyber threat known as heartbleed. it is a newly discovered virus using the encryption used by two thirds of all websites. big deal. we explain how this works. >> the first point we should make is it was found by google researchers and by another company, codnomicon. it is a tremendous find. they found a really important bug. the flip side to that is they also coordinate the release of a fix for it, a software patch. so while the bug is important, there is a fix. most websites have pushed up at six. this is a flaw in the encryption software used by two thirds of the world's internet sites and it is open-source software, which means it is community created and developed. the fact that this flaw has been around for two years raises some interesting questions about who knew about it before. >> you put together some good visuals of what the information
looks like unencrypted. it is not obvious. i cannot see my password. you have to be quite skilled to interpret it. >> there was a researcher from the netherlands who did some interesting stuff yesterday as soon as the disclosure came out, was able to run some tests on popular websites. >> this is what it looks like unencrypted. >> this is from the yahoo! website. they didn't push out the fix right away. they since have done that. he said, i can get usernames and passwords from yahoo! e-mail. it looks like gibberish to the untrained eye, but within that, there is valuable detail. >> dr. vincent burke has 15 years of i.t. security and network management experience. here is what he had to say about the heartbleed virus this morning. >> there are a lot of different kinds of attacks out there.
impersonation to gain access is common. heartbleed is unique in that it goes to the heart of the encryption protocol, probably not the last bug we will be seeing from that. >> i'm told my iphone is very leaky, constantly going out to servers, giving out data and bringing it in. what do i do? how do i secure it? >> you could turn it off. >> aside from that. has anyone produced something that could legitimately secure my iphone or your galaxy? >> it's extremely hard. galaxy phones have to some degree this problem as well. we recently saw this bug in the safari web browser that cause some problems with the ssl. we have this protocol that we have to rely on but
implementation calls are putting it such that it becomes extremely hard to completely trust these technologies. >> betty liu spoke with a tech investor about how heartbleed could impact his ventures. >> i did not know that heartbleed existed until i got an e-mail from our head of security after the news had broken that we have fixed the issue. he jumped on it, found it before most of the news broke. >> how did he get alerted to it? >> i don't know. it's a good question. his job is to be aware of the sort of stuff, so he was doing his job, but he wrote a note to the business informing everyone that this had been an issue for us. like you said, sixty-seven percent of the internet is affected. we addressed it immediately but it is something that i would guess, of the 200 companies that are invested in us, almost all of them would be affected. >> how do you fix it?
you're making it sound easy. >> i think it is actually pretty easy. from what i can tell you, it is an issue with open ssl, and open source technology. security tech. ultimately, you upgrade to the latest version of ssl and change a bunch of passwords. it requires some quick changes but i do not think the changes are particularly hard for the business. the issue is the breach was open for two years or something to that effect. >> did you ever see anything funny? >> no, and the businesses that are most at risk are the really big companies that are always getting targeted on a regular basis. >> walmart, target. >> people with massive amounts of customer data, businesses that are always under the gun. >> speaking of companies like that, digital security company mandy and has released their
annual report looking at the cyber landscape. our reporter sums up the highlights. >> the big take away from this report is modestly improved. the analysis of course is derived from mandian's own cases and hundreds of clients, and this was before we learned about the heartbleed bug. still, the findings underscore the landscape of the 2014 threat challenges and have been made all the more evident by heartbleed. overall, organizations are discovering compromises sooner than before. it took them two weeks less in 2013 compared to 2012, but you should know, hackers were still hanging out in victims networks 229 days last year before they were discovered. organizations are still having a hard time adapting when they have been compromised.
in 2013, only a third of companies discovered they had been breached on their own. one thing that has not changed, financial services is tilde top -- is still the top industry targeted, although threats to media and entertainment also picked up as well. the big picture there is that the list of targets has increased and the playing field has grown. >> no more driving around the parking garage looking for spots. we have the details on the latest parking invention. that is coming up in motors. and imf director christine lagarde sits down with tom keene. why does the madame director have such a soft spot for the u.s.? that is coming up in world. and speaking of, in north korea, a rally to mark the reelection of kim jong-un. he won a predetermined election where no other candidates ran. here is a look at their victory rally. ♪
>> gm has placed two engineers on the with their role connected to the recall involved in 13 deaths. engineer one, gary aldman. according to documents, he rejected a fix because it was too expensive and would take too long. engineer number two, ray digorgio, he quietly greenlighted a switch improvement that others did not learn about for six years after columnists and customers complained. last year a rate he denied under oath that he knew that part had been changed. both gm and toyota have had negative press recently with all these auto recalls.
millions. toyota is trying to convince lawmakers that its cars at least are good for constituents. how is it doing it? it is taking members of congress for a test drive in their coolest new toy. >> part motorcycle, golf cart, part futuristic pod mobile, this futuristic car was enough to pull lawmakers away for a test drive. why? >> toyota has a big plant in my district in indiana. i wanted to see what it could do. i think there are some potential opportunities for it, especially in urban settings. >> i was fascinated by it. i test drove today. >> meet toyota's iroad. this two-seater is powered by a lithium-ion battery, giving it 30 miles per charge. it is yet -- not yet approved for u.s. roads. toyota is pitching it as the perfect car for city dwellers. >> we see this fitting into a
transportation network where they can be shared between users and play a role between mass transportation such as trains or buses to him. -- bus systems. >> why washington? >> when you have a new technology and you are considering to take it to u.s. roads, you may as well show it off to the decision-makers. the iroad employs active lean. the car uses but the company computers that counterbalance centripetal force when the vehicle turns. >> we were testing to see what public reaction would be. is there actually a market for such a vehicle in the united states? >> how did the show go over? >> compared to other hearings, way more exciting. usually when you have fast objects coming at you, it is not in the form of an automobile. >> living in a big city certainly has its challenges, and parking is one of them. fortunately, for the less
spacially aware, there is a robot that can do it for you. >> this is the first time ever that we present the robot to the public. i am one of the founders of serva transport systems. we founded the company in 2010. we developed a robot that can park cars in a park garage. you go in with a car, and the goal of the transfer station is to have a very bright and large area where you can park your car comfortably. then after you have locked your car, you take your key with you, and our robot comes and parks for you in the garage. this is the technology of the serva transport system. you can store up to 60 more cars
-- 60% more cars in a garage. our first installations are at the airports in düsseldorf, germany. since we have information on every car, we needed it for our system, and we need the length, width, height of any car, position of the wheels. we have to make sure that we do not damage your car. >> he is one of the kings of luxury brands, and he is also married to salma hayek. you will meet him after the break. ♪ >> this is "lunch money" on
bloomberg television. i'm adam johnson. the video is the story. an australian search plane has picked up a signal that could be coming from the missing malaysia jet. the signal was detected in the area where search boats have heard similar transmissions over the last several days. crews have narrowed the search zones in an effort to pinpoint the area the pings are coming from. in athens, a car bomb explodes outside greece central bank. no injuries were reported. the early morning explosion coming as greece returns to the international bond market. the country sold more than five
five -- four billion dollars of bonds. demand was stronger than estimated. the first bond sale since company was bailed out in the financial crisis. secretary of defense chuck hagel arrives in mongolia to strengthen ties with the country. as he wraps up his visit, he was given a parting gift, a horse. we are serious. it do not exactly catch them by surprise. this was before he left for asia. >> you are on your way to mongolia, the first defense secretary to go there since rumsfeld. when he left, they gave him the gift of a horse. my question is, are you prepared for a similar gift and is there room on the plane? >> i don't know if they would consider giving me a horse, but i'd be privileged if they gave me any recognition of a partnership with the united states. there is probably no place for
livestock that i've seen on the plane. >> he named the nine-year-old horse shamrock after his high school mascot. finance ministers, central bankers, and other officials are gathering in washington for the imf and world bank spring meetings. >> let me start by saying the main message of the report that we are presenting today is that we have begun to turn the corner from the global financial crisis, in the global financial stability is significantly improving. >> i like good news. please tell us more. >> it is too early to declare victory because there is a need to move beyond liquidity dependence by overcoming the remaining challenges to global stability. >> so despite a strengthening u.s. economy, increased confidence in eu banks, better
policies in developing markets, there are still plenty of challenges. we summed up thus challenges for you. this is our mash-up starting with the usa. >> strong issuance of high-yield bonds and leveraged loans. weaker underwriting standards, a sudden rise in yields. emerging markets, rising interest rates. weakened earnings. inordinary deleveraging of the financial system, in particular, the shadow banking system. let me turn to the euro area. the key challenge is to complete the job of repairing the banks and repairing the corporate's. then enter fragmentation between the brief and the court continued. soft credit is particularly depressed. geopolitical risks and main
main -- remain elevated. finally, failure to adequately address any of the challenges i had mentioned could have a significant impact on global financial stability. >> tom keene spoke with imf director christine lagarde this morning on the banks 70th anniversary. the question, what is the next mandate to bring the imf into the next decade? >> i would hope before the end of the calendar year we complete the reform of the imf, which means we make it more credible, better resourced, and a bubble bubble -- and capable of jumping on urgency issues like in the ukraine. >> within that, the issue is, the support of the u.s., in the "financial times" today, someone argued the founder of the g-20, they are scathing about the u.s. congress. i would ask you to comment on what you need from republicans and democrats. >> i need the united states of
america, my main shareholder, to exercise its leadership in the institution. where the imf is best is in a situation like ukraine. we can send a team right away. they are experts. they have been doing this crisis management for decades. they can immediately identify the issues, do the due diligence, put together a package, around $15 billion, which is a big chunk of money. why do we do that? because membership is behind it. because they have an interest in stability around the world. to do that we need the entire membership supporting us and saying, yes, the imf should do it, and should do it with full support of its main shareholder, the u.s. >> you are one of the few people in this world that have a unique regard for america. your time in washington, chicago. what would you say to isolationist america that continues over many centuries to
want to push away from international affairs? what would you say to the americans that do not want to engage with the imf? >> i was born in france, a country devastated by two successive world wars. when the united states withdraws, everybody loses. when the u.s. engages and exercises legitimate leadership, things improve around the world. i would say, exercise that leadership. it is there, it is yours. >> also in attendance, world bank president jim yong kim. he has been criticized for being too aggressive and not controlling the perception of the institution. >> i came into the institution and we realize the world was changing tremendously. all foreign aid, 125 billion dollars, that may sound like a
lot, but africa needs $100 billion a year. official development assistance is small. the key for development in the future is to bring all the public moneys, money that we have, together with the private sector, to really develop economies. it is a completely different game. the reason we are going through these changes, we now have to be fit for the future. we think we are getting there. >> coming up, the ceo behind kering. they are behind fashion companies like gucci. an italian company shifting talent. and mcdonald's is pulling out of crimea. burger king is moving in. the beef monarch has been making a big push in russia. as for mcdonald's, they are siting manufacturing reasons. ♪
>> when it comes to the good life, it is hard to top francois henri-pinault. in addition to being married to salma hayek, he is the ceo of kering. this company has a huge portfolio of high-end fashion labels. stella maccartney, you name it. he spoke to bloomberg television about how he will grow the business. >> we do not believe luxury and brands can take advantage of all the price segments by stretching the brands, like very low-priced, 200 euros, 5000 euros in the same category. we need to move upwards. the number of customers buying luxury products is increasing in the world. we look at -- in the next 20, 30 years, in terms of economic development around the world, to keep keep -- the key markets are young people, very much attracted by brands, very
aware of health, sports for the young generation. those markets, because of their fast-growing pace, are generating more and more numbers of rich people for the luxury side. >> he also spoke about plans to elevate one of his biggest brands, gucci, which has lost some of it with customers lately. >> the gucci brand, in terms of creativity in the fashion category is what it should be. we need to work much more on the communication side of the brand. we have been a little too much focusing on the product side to raise the brand. this has been done marvelously well. >> when the bottom fell out of the european auto market, penny farina had to look elsewhere.
>> a 1963 ferrari. it sold for $52 million last year, making it the most expensive car in the world. it is one of dozens of ferraris design right here at headquarters in the northwest of italy. >> our relationship with ferrari produced a number of cars with fantastic designs which my father had been working on for more than 100 models. >> it is a legacy that nearly did not continue. pininfarina struck real trouble five years ago with the rest of the european auto market. it shed hundreds of workers, restructured its debt, and was forced to look elsewhere for revenues. only this year will he return to profits. >> the architect seems to be promising. it is the right expression for a long-lasting elegant design. it is very much a promise for the future.
>> the firm's luxury apartment tower in singapore bears the same curves that are seen most at home on a ferrari. those curves are in the design dna. you can spot them here on a trophy for a dubai cycling event. and here on its latest creation, a pen. >> this is not a pen, it is a forever. you can draw and write forever. never go out. >> the pen and pencil hybrid has a tip that has an alloy that leaves a mark on paper, like graphite, but it cannot be erased. >> we put a lot of passion into everything we do, from a macro point of view, and micro. >> we must never stop to innovate and explore new areas,
staying close with quality and excellence. if there is something that we should do in the next year, it is to go back to the root even more. >> it may be made of polyester, but fans of the disney movie "frozen" are crazy for it. and call it the 12 days of homer. fxx will start to show every single episode of "the simpsons" starting on august 21, ending on labor day. >> we have confirmation. >> let's trim the mark. >> nice use of the lingo, homer. ♪
>> this is "lunch money" on bloomberg television. streaming on your tablet, phone, and on bloomberg.com. i'm adam johnson. in pop today, disney's latest animated feature recently became the highest grossing animated movie of all time. it has brought in more than a billion dollars in box office sales meeting "toy story three." if you have not seen it, here is a clip. >> elsa, you look different. it is a good different. and this place is amazing. >> thank you. i never knew what i was capable of. >> did you see the dress? it has fans in a frenzy.
parents will have to settle for the miniature version. the only problem is, stores are out of it and your best bet is finding it on ebay, and that may cost you $1600. >> there are two stories on the dress. i've become an expert on this. there is a very specific one that you can get at the disney store which is now going for big bucks on ebay, and then there is the more modestly priced one through licensed manufacturers, which will sell at walmart, toys "r" us, but even those are hard to get. i wanted to highlight those examples because it helps to explain the consumer products business for disney, which generated $3.5 billion in revenues last year. the stores themselves make up over a third of that revenue. the lines chair comes from the licensing deals that disney has, which ultimately generated the company $2 billion last year.
remember, they are only taking a percentage of what is ultimately sold. we are talking about billions of disney things out there and probably now a lot more because of this "frozen" phenomenon. >> needless to say, disney hit the jackpot when it comes to merchandise on this one. other ones have not been so lucky. >> even with established franchises, it does not go the way you thought. take iron man. "ironman 3" the retailer said it would be a big film, but they may have ended up with too many toys on the shelves. that is an issue for upcoming films like captain america. spiderman. a trend to watch. "frozen" has done well but everything else has not. it has actually hurt some barbie sales. i think that is why disney chooses to be a licensor. you are taking some risk off the table. you are leaving some money on the table but you are also able to get a more steady business from that.
>> parents are scrambling for the elsa dress. jon erlichman knows what it is like. >> i know. i'm the father of two girls, so the insanity has taken over my home. >> "frozen" is not the only thing disney is celebrating. today is the 25th anniversary of -- the 50th anniversary of its famous world park. it's a small world. ♪ >> it is 56 minutes past the
last year. the nasdaq dropped the most since 2011 with tech shares taking the brunt of the selloff. vix stocks dropping, the was on the rise today. protection buying against further decline. joining me now with more in the vix is mark sebastian. he joins me. they're not calling this a selloff. you are saying this is something else. what is it? >> i think we're going through a time correction. a time correction is where the markets fix or ease lower wall time passes. allows the market to figure itself out. look at the nasdaq. 17 and 20 respectively. i think the reason we see the selloff is that the markets basically tell companies it is time to prove it.
you have had years to say there is a growth story ahead. stocks to for growth step up and prove it and deliver earnings. >> one thing we have been taking note of is the fact that it spread between the not -- the volatility of the nasdaq and the s&p. it is the widest it has been a long time, five years? what does that mean for the u.s. market? >> nothing good. when you look at the vix, the rv -- rvx, the vix is a world index. when you see them trading at such huge premiums to the s&p 500, it shows that i think the market is really worried about the stock. momentum stock. going back to my prove it story, and tell companies prove it
volatility will be elevated. >> how do you played this market? think the hedge equity approach. we buy the market treated with the vix low. the market is really scared right now. we can buy insurance, which is the vix is, in case right. my general approach and the approach we are taking is long. allows you to capture as much upside. still have some protection. against the market really a significant 2008-type event. >> thank you so much. c.k. -- marmarkets kets." ♪