Facebook Vs. Sony: A Virtual Reality Battle Begins

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... coming up on her down the street the real life battle for virtual reality and its tally in a poster child for disruption gone awry ... stay ahead of the headlines stay on top of the markets this is her down the street from Wall Street Journal hello and welcome to her street the podcast we are the Wall Street Journal's home for commentary on all things financial all over the world ... reporting from New York and Miriam Gottfried ... join my my colleague Alex Frangos who is ... usually based in Hong Kong but is actually here in New York this week the Dow having Alix to be here ... a second segment will be looking ... at the cool chair and disruption that brought about Valeant's stunning fall ... but first we have heard on the Street's Dan Gallagher is here to talk to is that virtual reality I can't take things for being here to be here ... so you wrote this week that Sony has become the need to be in virtual reality why do you think it has an advantage over say Facebook's Oculus ... well the aam ... one of its allied sheep currently in the you know when you consider that no more accurately around our to want to be on ... or about ... one hundred ... and you know me know in what is and will be about thirty seven million up the cake for seven to go shopping because selling to ... go up crying so I think they've got it to be expanded and in terms of ... you'll be able to ... push for unity we go for a while ... I'm having trouble with regular reality so can you give me a sense of why this is important for companies like Sony ... thing is is that they can ... still be game changing experience for its ... you know PlayStation users will what's what's the deal that ... would mean for the R and then up hope or for year two is shrinking because of the of the potential of ... Korea really interested ... in the spirit of the technology really haven't been there until recently ... ALM so for Sony yet this is a week you you know they'll be out who you know the PlayStation four and a strong leader with the Xbox one Shapiro there ... at the top of this ... having this generation are told that I think this ... you know ... tell them or for were it not get elected ... worker Ellie told to read it I think I think for Copley years it's going to appeal to a statement of the statement ... that emerge but Dom Gilford long haul ... I wonder is this ... just a really nice product that mean ... virtual reality seems like not CD and ... you know kind is scary Even ... I just don't really get the seal on a mass level ... he will agree that technology lot better it that that really you know take away a lot of those facts though ... you know they're in areas ... of my Petershill bit of an interest rate now I don't think of something you were hoping to work model to play ... call of duty were like picturing Howard sort of thing but ... if you know especially when it became experiences are well designed for it ... I'd you know I've ... been ... a lot this weekend last year ... or so there's a lot of ... um ... you know one way to bring video game to cheat this into this area ... pretty creative and stalled out you know for you know ... sugar is or anything else there's a lot of ... interest rates ... I did deflation just the right ... to caddie for a while ... for investors to be looking at Sony ... one reason worry about with this team has ... been good for your business that that the dead PS business ... is the new console to go we eventually so ... is the heel VR goggles a foreigner Dollar Yi VR goggles away for them to come stay in the hardware business to stay in that ... you know DVD you know you know having a you know you keep on people buying an idea like an actual physical product ... I think I think that all of the um I don't I don't DVD ... you know came Apple that is going away anytime soon the two were mainly the ... there's not a good way to ... bring in ... you know the ... high definition games boast that it would really want to get around for awhile now and ... the upward rally as to that you know we need a powerful computing device ... you know hopefully to rot that now long walk on longer term ... I'd you know I think you can get where ... you're more of that down you go online to think that that that I think we're talking maybe years out ... return on its investment in virtual reality just retaining any doesn't have to have ... applications beyond the need for it to really be a successful technology ... I know I think I can so they can begin to well not just going to ... be her face with this you know it is ... her company ... I don't know ... um but yes you know we're a tad him for Sony a bit and I think it's actually ... the book is that ... the idea that porch or yell the advance beyond the Kiwi business you know in in the years ahead to two other application I've read the book and then ... you know the two billion Oculus to have the cabinets ... they can see this as ... you know compelling eight ... years in the future ... much more applications letter the other applications and a ... hard time imagining why would put some ... others for gaming or you know ... it watching entertainment or something what to wear ... what a good entertainment period I'd you know for Facebook social platform I take him over he said ... you know it three in ... in previous David Kelly the field porch rally becoming a part of the social networking experience ... comedy I think of potential there for that potential Micron minded to teach and retailing ... um you know there's there you can imagine quite if you ... if you know like suggesting ... that technology after derided apart when after really come down to give it to control things happen that's ... he'll open a Europe ... of ... efforts to seems like a little bit like the for CTV is and this is why ... I'll explain my reasoning I think ... it's rather like something that people manufacturers and companies have decided we needed ... but is not something that I simply clear need for ... that certain something that the say it's can it be the next thing ... but it hasn't arrived I need you can also compared to like ... the smart home or ... all these kind of concepts were things need to be on the main air we need to have this ... these devices more I just don't really see why I am in need in my life for for Tori ... well I think right now for your credit card market rallied to a ... two hit men of people with the actually it did it ... for quite some time um so I think the long-term you know I get ideas will be ... for keeping the I knew something that would you like ... you know if incrementally brought up that experience but not enough I think just because ... most people can't ... they all ... have different ... work really really completely changes the picture ... so ... perky mean terrorists their Korea lobbyist fuel ... on the edge of contemplation everything ... so I don't see that is and ... I think they ... bill DeCambre trail the beyond that I can see ... there ... is a Chinese place in this ... these views here is that the three ninety nine is still to be several months before they ... come out its three ninety nine the price for there to make money on the seem to be undercutting what ... their competitors are charging ... um you know we is the isthe charging enough A is this raises a loss leader ... I the eye they told people we directly apparel operator that there are now losing money on it I don't know how much they're making to be honest I don't know ... either you are good that you're gonna ... want these things ... but ... the only team that is you're not trying to make a huge profit on all full ... you know you're trying to get them installed base there to get ... the you know he can't make it harder for him ... so it will be read to reach a point ... that's a little bit it's just the ATSB are expanding the aren't eating is ... it there's been so much hype about virtual reality that he just he because it didn't ... really have stood ... to me it seems like ... the degree of hype and the man of investment that these companies to me in this technology ... in I think in its seems that ... you know to really get a payoff they have to be able to apply it be on ... this sort of need sch ... the market could because Mishkin Clark is huge and amazing bigger than movies rated says well yeah they they mean you can't say the Hunter percent of gamers are going to buy a virtual reality autonomous any gamers don't go to Arizona moviegoers don't go to see three D movies that three D movies have the you know of a major factor in a box ... three D movie and the companies that focus on three D movies where they know they're not doing that well today I mean ... I think three is also been sort of like a mixed bag in terms of the technology that in terms of making people money well I had a previous home and then ... here we are there that are not a real force her to feel like a gimmick it it ... it what it promised Wall torture Ellie actually delivers I think there is ... plenty of different on that front but ... the I you know actually I think these folks view is a longer term ... that really cant that I could see the candy I think it can take a while you're in a lot of ... I think we can do to the idea of which will be the that that kind of ... the Opel cars ... were going to wrap it there thanks to an ... coming up I'll dalliance cost of disruption may have contributed to its collapse ... Veronica Dagher ... you wanna know how the rich invest spend and protect their money ... and listened to the Lotte senior wealth podcast ... for more information check this added the beest dot com slashed podcast ... by the Sun nineteen states are announ spot ... WSJ podcast listen ambitiously ... now back to the show ... welcome back to her down the street the podcast on Miriam Gottfried here with Alex Frangos and our colleague Charlie grant I Charlie ... and in thanks for having the Acer being here truly this is been a rough week for valiant to put it mildly ... the company's earnings announcement we lead Marriott forty five percent or so decline in its stock price absolutely ... absolutely on the numbers can and wait lighter than analysts had expected but that was ... only scratch the surface of a problem on Valley and ... has not filed its annual report with the Securities and Exchange Commission on Tuesday they told investors they can't say for sure when the documents coming ... um that's a serious problem they have a lot of debt ... aam on their balance sheets and they've started talking about aam ... since they can take to work on ... defaulting on their obligations and anytime a company starts talking about that ... aam and public earnings call ... you can be sure there are serious credit problems and the stock responded accordingly Turley this to sound like a trainwreck baby they could take a step back for Zach and Allie and here tells about ballet knew who they are and ... to what they represented in terms of like changing the pharmaceutical industry and ... you know when why those dreams are now it seems like the of the massive puddle on the floor ... short well for years that I it was the darling from a company of Wall Street and or were good reasons for that aam fell and I came to the market with the new model they said drug research is wasteful than Pharma ... companies get will return to want to invest in the promised a new way ... Bellway was buying up older drugs from other companies buying up existing company is ... cutting costs ... and ... that the theory that difference coming up the way for whistle spending goes right to the shareholders for earnings investors love that they can get enough but ... the stock ... basically ... expanded tenfold in five years under my Pearson's leadership ... ALM so they have no R and D budget ... they they they have no they haven't aren't a budget but it's a minimalist compared to other Pharma companies and for a long time other Pharma companies felt the need to have it and show they were more like valiant and the handle has ... swung hard the other direction and has a certain Alessi Richard Kinder than being a disrupter coming in and not doing R and D and PC like sifting through the trash to find treasure and ... go out and re marketed but that is proven not to be the case and this ... every week you hear a lot of the car in this economy of disruption but fetching not easy to disrupt an industry like pharmaceuticals that is like so big and so entrenched rate that's right and urban sprawl was revolutionary but um ... in other words it is on past that and so what we found out it's a strategy has serious limits on the public the general public regulators politicians were unaware that a big part of this company is ... revenue machine was jacking up prices on trucks on bets ... concentrated portfolio ... aam is that really the reason that this model failed or is there something else about ... having your own in house R and D that turned out to be really valuable well yes I mean ... a little bit of both um when you ... when you have a lot of debt you can afford to have your growth slow ... and one thing that valiant could use desperately right now which it really doesn't have its surefire blockbusters coming in the pipeline ... aam ... Momo almost every other drug company that has been spending ... money their earnings have ... earnings are depressed someone up by both wasteful R and D spending R and D is ... kind of a gamblers ... projects I mean you you you ... you you'll never get everything right in its biology is hard things happen you lose money on those ... but it provides ... a bought a robust program provides a safety net when things go ... wrong will salute to talk about we are value is now in league with their stock price how that how the market is valuing their equity and and ... also their debt which is pretty substantial so ... and you think that investors are looking is this is a turnaround is this to ... you know breaking up for its part cycle How does Downing good at it well will there in ... a very tough spot and each bidders a few things they can try but there are limits each strategy so they can sell some assets to pay bondholders um ... that's one possibility would that be like certain drugs that they would sell to other companies shortening their best-known Rand is probably the best among consumer ... contact lenses everyone is familiar with that need to have some value on ... but it's not clear on what exactly ... what exactly they plan to sell the Mike Pearson the CEO painted ... on Tuesday that asset sales were likely potent ... when there was very little detail given is he the guy to do this again is is is this is this is his project and now ... he's basically in you can investors hope that he did Mike Pearson is the guy that can turn this into an old fashioned Pharma company ... that that's a great point ah Lixin Dundas trend of heaven on its business model full stop and the old business model was completely my Pearson's creation so it is a little in Congress that he's leaving the brand new company ... and a new direction Kate early to take a quick breakaway comeback the final word on value ... John Warnock one updates on the biggest stories of the day than listen to what's news from the Wall Street Journal from top business stories Apple says if a weekend the security of their phones they make their customers' data more vulnerable to the economy I think the American consumer is ... alive and doing well to election twenty sixteen days in big day in presidential politics obviously is the day at the New Hampshire primary tacked back several times a day and enjoyed watching Oops from the Wall Street Journal WSJ's podcasts listen ambitiously ... now back to the show a beach area let's get right down to it used to stallion survive this episode intact as its current form ... home will be very hard for all the assets to stay intact I mean ... I don't think the company is going to go completely out of business summit the drugs will evaporate or the factories but I mean I think you'll see some shuffling in what is in their portfolio ... aam what that entails is anyone's guess at this point and is getting that means a further loss of value for shareholders from here um yes will with thirty one billion dollars in long-term debt on the balance sheet it's going to be a very tough sledding for the equity holders who are ... get paid after bondholders ... we are going to have ended their thinking Charlie that wraps things up for this week spurred on the Street podcast ... please join us every week for the latest in global investing ... for more please check this out and WSJ dot com slashed her that still the U S J dot com slashed her ...