BGC's Gillis Downgrades Apple to SELL on Product Pipeline (Aud)

assets for four point eight billion dollars. Oh, this means for the by rating the Colin Gillis of Beach e Z Partners has had on Yahoo and Oh, by the way, ahead of Apple's earnings tomorrow, PIM, he's downgraded Apple to a cell. Yeah, the sheriffs of Apple are down about one and a half percent right now. And right now, let's go to Charlie Pellett in the Bloomberg News from for Bloomberg Business Flag and I thank you very much, PIM, thank you, Kathleen, and worse Verizon and Yahoo the day's

top business story. We are brought to you by se I have evolving investor and regulatory demands affected your investment firms operational redness. Imagine transforming your business with SEIS Global Platform at se i C dot com slash. Imagine Verizon buying Yahoo's web assets, sending the company's to decade run as an independent business. Verizon will pay cash in the deal that includes Yahoo real estate, but excludes some intellectual property,

which will be sold separately. Yeah who shares They are lower now by two point five percent. As for Verizon, they are also lower down six tenths of one percent. Tim arns Strong is the CEO of Verizon's A O L business, and on Bloomberg Television and Radio this morning, he talked about integrating Yahoo. By the way, we we work in Silicon Valley all the time. We have a big office is a multiple officers there, and the Yahoo

team we've spent time with um. I think we both have a similar strategy and similar outcomes, and there may be synergies in the deal, but this deal is about growth and we're going to focus on the growth areas. Synergies will come, but it's got to start with strategy structure and then cost structure as the third item, and also a name changed too, because Yahoo will wind up changing its name. It will be left with stakes in Alabama Group Holding and Yahoo Japan, with the combined market

value of about forty billion dollars. Federal Reserve policymakers begin meeting tomorrow, and when the Monetary Policy Panel meets Tuesday and Wednesday, a majority of investors expect them to do what they've done at every meeting this year. That is nothing. Tenure down to thirty seconds, ye old one point five seven Gold down five tenths of one percent. And now let's take a look at the other stories making news. Thank you, Charlie from the Blueberg newsroom. I'm Matt Miller.

As the Democratic National Convention kicks off in Philadelphia, there are reports that Hillary Clinton's campaign has asked her former rival to encourage his supporters not to boo bloombergs. Bob Moon reports lead emails suggesting Democratic officials look for ways to undermine Bernie Sanders of outrage his supporters, bringing an awkward start for party leader and convention host Debbie Wasserman.

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what to expect this week from Hillary Clinton's campaign. Her campaign and her message this week is that we're stronger together, we can solve our problems. We can begin in to project a better country. And the m t A plans to shut down the L Train subway tunnel for eighteen months. The closure will happen in two thousand nineteen and will disrupt commutes for more than three hundred thousand new Yorkers

who traveled between Brooklyn and Manhattan. The move was forced by damage due to the salt water that flooded the tunnel in two thousand twelve during Hurricane Sandy. Global News twenty four hours a day, powered by over undred journalists and analysts in more than one or twenty countries. I'm Matt Miller. This is Bloomberg, and we thank you, and again recapping, we do have the SMP five hundred index trading lower, down eight points to sixty six. That is

a drop of four tenths of one percent. I'm Charlie Pellett and that's a Bloomberg business flash. You're listening to Taking Stock with Kathleen Hayes and Pimpbox on Bloomberg Radio. So it's the end of an era, or at least the end of a big chapter for Yahoo in the beginning of its new existence is part of Horizon Communication safter Verison agreed to buy Yeah whose web assets for four point eight billion dollars, ending the company's two decade run as an independent business that took it from a

Stanford University startup at the dawn of the Internet Age two. Unfortunately, for Yahoo also ran behind nimbler online rivals such as Google and Facebook. So what does it mean for investors? What does it mean for the company moving ahead? Colin Gillis is here to answer all of these questions. He's Director of Research and senior Technology Analysts at b g C Partners. Colin, Welcome, Hello, Kathleen. So we knew Verizon. Yeah, who was going to get bought by somebody? Verizon's name

had been bandied about. Let's start by what this means for Yahoo? What is it now? Well, you know, it's out with a whimper, uh, and it will become folded into Verizon. They suggested that the transaction will close in the beginning of next year and we'll see what happens to the brand name itself. But Verizon is interested in the piping, the ad technology that powers Yahoo as they seek to get more into advertising expand some of their video offerings become more than just a carrier that competes

on data and pricing. Con I can't resist it. Tell me how much did Microsoft offer for Yahoo at one point? About ten times more pim Can you hear me? Now? There was a lot of value that's been destroyed by various management teams trying to turn this company around, so the spring, but they didn't do too badly. Write all those management teams they managed to take home quite a nice little packet. Yeah, of course, that's right. Uh, And that is quite tough if you think about how much

the current management team has been paid to. Really, just how much is uh Marissa Mey are going to take home? Well, we'll have to see what the final figures, but you know, something north of a hundred million UH is expected. Well, so the very least, I guess we could say that Verizon did a good job just sitting and waiting right as a disc got more affordable. There is that there is that, that's right, um, and you know it's also hopefully they'll preserve employee jobs. Right, But it's not done.

There's still going to be a holding company left, right, that's going to be turned into a an investment advisory company that's going to have the assets of Ali Baba, Yahoo Japan and cash in there using for investors, then what do I what do I own? What should I buy? You know you had a buy rating on Yahoo before, correct, that's right? And you know what you're hoping to see is that there is a discount that these assets trade

to parity. Because Ali Baba is a publicly traded stock, we know that you know it's worth you can take a quote, you know, X number of dollars to share saying with Yahoo Japan and the value of the assets, and this holding company trades at a material discount to that. And we're hoping to see that gap closed now that there's no longer concerned that management be spending that money and Wasteand I want to turn your attention out of tomorrow and Apple, and really you downgraded the shares of Apple.

I don't get this at all. Explain it? Okay, Well, you know we put a cell on it, and um, you know we have long been uh neutral, we've been positive. Right now we're out there saying we think the upcoming iPhone cycle is going to disappoint people. And typically Apple works on a tick talk basis, which means that you get a major update with a new form factor which is the tick, and then the next year you gotta talk it's an s upgrade. It's more incremental this year

or than we expect a tick talk talk. We expect another incremental update happening in two thousand and sixteen is Apple gears up the big push the tenth anniversary iPhone, which will be a redesign in and this could cause numbers to come down in September and December as people wait to hold off to up read their phone. I like your Haiku. It has become clear that the muse

that drove Apple has gone somewhere else. I know it's a bit sad, but you know, if you think about the degree of just iteration that we've had happening at Apple, you know, we haven't really opened up major new product categories. At some point, people are not going to be caring. You will not care so much about just a slightly better camera or slightly faster processor, a little bit more memory, right. They want to see new form factors. And quite frankly,

the whole market itself it's slowing down. Smartphones grew less than one percent in its entirety last quarter. So you don't want to pay a ten multiple for a stock that's yielding two point three that is arguably at least, if not the largest and best UH mobile communications manufacturer in the world. Yep, you know, and in fact, because I look out at the next billion dollars in value, Right,

is that going to be on the positive side. On the negative side if iPhone unit continue to come down, Right, there is ample room for air to come out of Apple. It's still the largest company on a per on, on a strict market account valuation. You can talk about ratio is all you want, right, but it's still north of five billion dollars half a trillion dollars. And so we've

seen nine consecutive quarters of iPad revenue declining. This is the third consecutive quarter where iPhone revenue is going to decline. So we have to be careful that Apple is not starting a long term negative downtrend. All right, We're gonna leave it there, Thanks very much. Colin gillis joining us as the technology analyst and director of research at the

b g C Partners. Talking about Apple shares of Apple today down about one and a half percent, trading at ninety dollars and one cent signed fim Fox, my co host Kathleen Hayes, this is bloomberg. As the Democrats get their convention underway in Philadelphia, we're going to step back and look not just the politics, but what do the elections mean for the markets, from stocks to bonds and currencies. This is coming up on Bloomberg Radio.