Bloomberg Technology 08/09/2023
>> FROM THE HEART OF WHERE INNOVATION, POWER, AND MONEY COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE HYDE IS OFF TODAY. FULL EARNINGS COVERAGE AHEAD. LYFT FALLS AFTER THE RIDESHARING COMPANY REPORTED ITS LOWEST REVENUE GROWTH IN TWO YEARS. THE COMPANY UNVEILS ITS FIRST ALL ELECTRIC ESCALADE IQ. AMAZON IS IN TALKS TO BE AN ANCHOR INVESTOR IN ARMS IPO IN A DEAL THAT COULD RAISE $10 BILLION FOR THE CHIP COMPANY.
FIRST, A CHECK ON THE MARKETS. TECH IS LOWER. THE NASDAQ 100 IS DOWN MORE THAN A PERCENTAGE POINT. THE PHILADELPHIA SEMICONDUCTOR INDEX WAS SOFTER BY ONE POINT 6%, UNDERPERFORMING THE MARKET. WE ARE WAITING FOR THE CPI PRINT ON THURSDAY. WE GET THAT DATA AND WE THINK TO OURSELVES, WHAT WILL THE FEDERAL RESERVE DO NEXT? THERE IS POSTURING IN THE MARKET FROM THAT POINT OF VIEW, BUT EARNINGS WILL BE A THEME OF THE SHOW.
WE'VE HAD A NUMBER OF EARNINGS INTERVIEWS WITH CEOS AND THE REACTION TO THE DOWNSIDE IS ALSO A FACTOR, PARTICULARLY FOR THE NASDAQ 100. THE 10-YEAR YIELD GOES BACK DOWN TO 4%. THE STEADY TRICKLE DOWN FROM 4.2% TO 4%. BITCOIN IS STILL AT THE SAME 29,005 HUNDRED U.S. DOLLARS FOR TOKEN LEVEL. THESE ARE THE KEY NAME STARTING TO SHOW.
LYFT IS GOING TO BE ONE THAT WE WILL GET TO IN A MOMENT. RIVIAN IS DOWN 7.5 PERCENT. THE EV MAKER UPDATED ITS PRODUCTION GUIDANCE FOR THE YEAR AND LOWERED ITS GUIDANCE FOR PROJECTED LOSS TO 4.2 BILLION DOLLARS. THERE IS SOMETHING THAT THE STREET DOESN'T LIKE.
WE ASK, WHY DON'T THEY DO MORE IN TERMS OF RAISING GUIDANCE? LYFT, THE STORY IS THE GROWTH IS THE SLOWEST SINCE THE PANDEMIC ERA. THEY GAVE A STRONG OUTLOOK FOR THE CURRENT QUARTER. THERE ARE OTHER CONCERNS ABOUT LYFT VERSUS ITS PEERS. CREDIT SUISSE KEEPS AN OUTPERFORM RATING ON THE SHARES AND LOWERED ITS PRICE TARGET TO $18 FROM $23 AND FOLLOWING THE RESULTS. IT SEES REVENUE OFFSET BY HIGHER INSURANCE COSTS'S GOING INTO 2020 FOUR AND BEYOND. LET’'S BREAK IT DOWN WITH
MANDEEP SINGH. LYFT'S GROWTH IS BELOW THE REST OF THE RIDESHARE INDUSTRY. HOW MUCH IS THAT A CONCERN? MANDEEP: WHEN YOU LOOK AT ALL OF THE MARKET PLACES BOOKING AND AIRBNB, IT IS A WINNER TAKE ALL MARKET. I FEEL IT WILL PAN OUT THE SAME WAY IN THIS CASE SIMPLY BECAUSE LYFT DOESN'T HAVE A DIFFERENTIATED OFFERING WHEN IT COMES TO RIDESHARING. CONSUMERS ARE PRICE-SENSITIVE.
THEY WILL GO WITH THE COMPANY THAT HAS A LOWER ETA, MORE VARIETY IN TERMS OF THE PRODUCT IT IS OFFERING, AND OVER TIME, WHEN YOU LOOK AT LYFT'S STRATEGY AROUND LOWERING PRICES, YOU HAVE TO ASK, WHAT CAN THEY ACCOMPLISH? THEY WILL NOT GET AN AMAZON-LIKE SUBSCRIPTION MODEL WHERE THEY HAVE A PRIME SUBSCRIPTION AND THAT IS HOW YOU DRIVE ENGAGEMENT. THAT IS WHERE I FEEL THEY WILL BE SHORTSIGHTED IN TERMS OF USING PRICING AS A LEVER. THE MARKETPLACES WITH THE MOST SUPPLY GROWTH EVENTUALLY ARE THE ONES THAT END UP WINNING. THAT IS WHERE UBER HAS AN ADVANTAGE. ED: WE ARE SHOWING A CHART THAT ACTIVE RIDERS BREW IN THE QUARTER. WHAT ARE WE LEARNING FROM LYFT ABOUT THEIR BUSINESS IN THE SENSE OF ENGAGEMENT? MANDEEP: THEY ARE COMING BACK, BUT COMPARED TO PRE-PANDEMIC LEVELS THEY ARE NOT THERE.
THIS IS DRIVEN BY SUBSIDIES. THE BIGGEST PROBLEM WITH THIS BUSINESS MODEL IS THE USE OF SUBSIDIES AND HOW EFFECTIVE IT IS IN ECONOMICS. YES, YOU'RE GOING TO BRING THOSE CUSTOMERS BACK, BUT HOW LONG ARE THEY GOING TO STAY AND WHAT IS THE REPEAT RATE WHEN IT COMES TO DRIVING THE TRANSACTIONS ON A RECURRING BASIS? THAT IS WHERE, IF LYFT RAISES PRICES OR UBER LOWERS PRICES, THOSE CUSTOMERS WILL GO BACK. THE RETENTION LEVEL IS FAIRLY LOW AT THIS POINT IN TIME, I FEEL. ED:
THE CEO TOLD BLOOMBERG HE IS TRYING TO MAKE LYFT A HEALTHIER BUSINESS. MOVE PRICES MORE IN LINE WITH MARKET. HE JOINED IN APRIL. WHAT IS YOUR ASSESSMENT OF THE JOB HE HAS DONE AND WHAT HE CAN DO TO CHANGE THE FORTUNES OF THE COMPANY? MANDEEP: I FEEL HE HAS BEEN OPEN-MINDED ABOUT ALL OF THE STRATEGIC OPTIONS.EVEN THE COMPANY BEING UP FOR SALE .
WHEN YOU LOOK AT THE HISTORY OF MARKETPLACES, THE DISTANT SECOND ONES, GRUBHUB, POSTMATES, CAVIAR, THESE ARE THE SMALL PLAYERS THAT GOT TAKEN OUT. IN LYFT'S CASE, THAT IS AN OPTION. THE VALUATION IS AT ITS LOWEST LEVEL TRADING AT ONE TIMES SALES. PROBABLY A PARTNERSHIP COULD BE A CATALYST. THERE ARE A NUMBER OF CATALYSTS FOR THEM TO THINK OF THE NEXT STEPS.
FROM A STAND-ALONE PERSPECTIVE IT IS A HARD JOB, BUT I FEEL HE IS QUITE OPEN-MINDED ABOUT THE VARIOUS OPTIONS ON THE TABLE. ED: MANDEEP SINGH. IF YOU ARE A RIDER FOR DRIVER FOR LYFT AND YOU HAVE A PERSPECTIVE, REACH OUT TO ME.
RIVIAN, EVEN AS THEY PURSUE COSTLY PRODUCTS. A DAY AFTER THE COMPANY REPORTED BETTER THAN EXPECTED EARNINGS AS IT WORKS THROUGH THE SUPPLY CHAIN SNAGS AND ACCELERATES EV PRODUCTION. >> ULTIMATELY, WHEN WE THINK ABOUT THE PATH OF THE PROFITABILITY AS A BUSINESS, WE HAVE A CLEAR LINE OF SIGHT AS WE HAVE PREDICT ABILITY IN OUR PRODUCTION RAMP AND TIGHT PREDICTABILITY AROUND THE SUPPLY CHAIN AND THE CONTRACTUAL REDUCTIONS WE WILL SEE. WE ARE WITNESSING THOSE AS EVIDENCED BY THE NUMBERS WE PUT UP YESTERDAY.
WE ARE LOOKING WITH A LOT OF EXCITEMENT TOWARDS THE NEXT SEVERAL QUARTERS AS WE MARCH, RUN AS FAST AS WE CAN, TOWARDS PROFITABILITY. THAT IS THE LONG-TERM NECESSITY FOR THE BUSINESS, TO SELF-FINANCE OUR GROWTH. WE HAVE BEEN VERY CLEAR THAT OUR CASH BALANCE, AS YOU ALLUDED TO IN YOUR QUESTION, PUTS US IN A POSITION TO FOCUS APPROPRIATELY ON THE LONG-TERM, MEANING WHILE WE ARE FOCUSED ON RAMPING OUR NORMAL FACILITY TO 25% GROSS MARGIN, WE ARE DEVELOPING AND PROCEEDING WITH THE R2 PROGRAM.
IT IS MAKING GREAT PROGRESS. I DON'T THINK I'VE BEEN AS EXCITED AS I AM ABOUT R2 AS I'VE EVER BEEN ON A PRODUCT, SO WE ARE LOOKING FORWARD TO SHOWING THAT. THE CASH HAS PUT OURSELVES IN A POSITION TO NOT NEED CAPITAL THROUGH THE END OF 2025. ED: YOU HAVE THE INFRASTRUCTURE TO SERVICE AMAZON. DOES THAT MEAN YOU CAN SHIP R1 TO EUROPE BECAUSE THAT INFRASTRUCTURE IS IN PLACE? >> WE ARE FOCUSED ON THE IMMEDIATE TERM TO RAMP SALES AND DELIVERIES IN NORTH AMERICA. WE HAVE SO MUCH DEMAND BACKLOG
AND CUSTOMERS LOOKING FORWARD TO THEIR VEHICLES. THAT IS THE FOCUS. WHEN WE THINK ABOUT GOING TO EUROPE, THE R2 PROGRAM, THAT PLATFORM CONTEMPLATES A SIGNIFICANT MARKET ENTRY, AND WE THINK A NICE MARKET FOR. SO, THAT IS SOMETHING OVER THE NEXT FEW YEARS THAT WILL BECOME AN IMPORTANT MARKET FOR US. ED: YOU TALKED ABOUT TRYING TO GET OUT OF THE EXCLUSIVITY AGREEMENT WITH AMAZON. THE OTHER QUESTION RIVIAN FOLLOWERS HAVE IS, WHAT TYPE OF DEAL WOULD YOU DO NEXT? WOULD YOU GO FOR THE BIG FLEET OPERATORS LIKE UPS OR FEDEX? FOR MANY DIFFERENT DEALS WITH SMALLER MOM-AND-POP SHOPS AND SMALLER FLEET OPERATORS? >> THERE ARE ELEMENTS OF BOTH AND WE ARE SEEING A BROAD USE CASE FROM DELIVERY TO COMMERCIAL VAN APPLICATION AND ARE NAVIGATING THAT AS WE SPEAK IN TERMS OF FOLLOWING OUR AMAZON RELATIONSHIP WHAT ARE OUR NEXT BIG CUSTOMERS AND HOW WE SEQUENCE IT TOGETHER. A LOT OF IT IS MINIMIZING THE
AMOUNT OF COMPLEXITY WE ADD TO THE BUSINESS BY HAVING SIMILAR USE CASES WITH THE IMMEDIATE FOLLOW ON CUSTOMERS. OVER TIME, WE WILL BROADEN THE USE CASES AS A PLATFORM AND ARCHITECTURE THAT WE CALL THE RIVIAN COMMERCIAL VAN PLATFORM DESIGNED LONG-TERM TO COVER A BROAD SPECTRUM OF USE CASES. ED: THAT WAS THE RIVIAN CEO SPEAKING TO ME EARLIER. SHARES DOWN MORE THAN 8%. OFF SESSION LOWS, IF WE CLOSE AT THIS LEVEL OF DECLINE IT IS THE BIGGEST DROP SINCE MARCH.
THEY RAISED GUIDANCE TO 52,000 UNITS THIS YEAR. THAT IS 2000 MORE THAN THEY PREVIOUSLY SAID. PEOPLE IN THE MARKET ARE SAYING, REALLY, COME ON. ON PAPER THEY CAN BUILD MORE ELEKTRA VEHICLES THAN THAT. THEY ARE DOING WELL COMPARED TO OTHER NAMES IN THE EV SPACE. COMING UP ON THE PROGRAM, WE SIT DOWN WITH THE GM PRESIDENT MARK REUSS AS THEY UNVEILED THEIR NEW ALL ELECTRIC ESCALADE IQ FROM THE EAST COAST ON BLOOMBERG TECHNOLOGY. ♪
ED: WELCOME TO OUR BLOOMBERG TELEVISION AND RADIO AUDIENCE WORLDWIDE. GENERAL MOTORS UNVEILING ITS FIRST ALL ELECTRIC 2025 ESCALADE IQ. LET'S SEND IT TO MATT MILLER SITTING DOWN WITH THE GENERAL MOTORS PRESIDENT, MARK REUSS. MATT:
WE APPRECIATE YOU JOINING US. THIS IS A VERY POWERFUL VEHICLE WITH 450 MILE RANGE AND A HIGH PRICE TAG. WHO ARE YOU AIMING THIS PRODUCT AT? MARK: THE FIRST ESCALADE WE SOLD OVER ONE MILLION UNITS. ONE OUT OF EVERY THREE SUVS IN THIS LUXURY SEGMENT IS AN ESCALADE. WE HAVE A VERY SUCCESSFUL BRAND. IT HAS BEEN AN UNBELIEVABLE VEHICLE FOR CADILLAC AND GENERAL MOTORS. WE KNOW THAT THERE ARE PEOPLE WHO ARE WANTING AN ELECTRIC FULL-SIZE SUV.
WE WILL BE THE FIRST ONES TO REALLY BRING IT HERE WITH AN ICONIC BRAND. THIS IS IN ADDITION TO OUR INTERNAL COMBUSTION ENGINE ESCALADE.YOU CAN SEE IT IN THE NEXT STEP IN THE DESIGN LANGUAGE FOR CADILLAC, INSIDE AND OUT. THIS WILL BE ON THE CUTTING EDGE OF EVERYTHING. IT IS THE ESCALADE STANDARD OF THE WORLD. MATT: YOU ALREADY HAVE THE HUMMER, WHICH IS DEFINITELY ON THE CUTTING EDGE OF EVERYTHING.
EARLY ADOPTERS WAITING FOR A BIG ELECTRIC VEHICLE I'M ASSUMING GOT THAT. WHO IS LEFT TO BUY THE ESCALADE AT $130,000 TO START? MARK: THE PLATFORM IS VERY FLEXIBLE AND DIFFERENT THAN THE SUV FROM HUMMER. YOU WILL SEE IT IN THE PROPORTIONS, WHERE WE ARE REALLY GOING AFTER EFFICIENCY WITH 450 MILES OF RANGE. THAT IS A BIG DEAL FOR FAMILIES AND PEOPLE WHO TRAVEL. IT IS A BIG RANGE VEHICLE AND IS 750 HORSEPOWER. THE HUMMERS ARE IN THE
THOUSANDS HORSEPOWER. IT IS A LITTLE BIT DIFFERENT CUSTOMER. IT IS DIFFERENT FROM A DUTY CYCLE STANDPOINT, BUT STILL BUILT ON THE 2024 MOD BACK THAT WE USE ON OUR ELECTRIC TRUCK PLATFORMS. MATT: THERE IS CRITICISM ABOUT THE BIG BATTERY PACKS.
BLOOMBERG NEW ENERGY FINANCE WROTE THAT YOU ARE USING A LOT OF LITHIUM THAT MAYBE SHOULD BE LEFT FOR THE SMALLER ELECTRIC VEHICLES. HOW DO YOU RESPOND? MARK: GENERAL MOTORS WILL MAKE BOTH, NUMBER ONE. WE WILL MAKE THE EQUINOX TO THE BLAZER. THOSE ARE IN THE BIGGEST SEGMENTS IN THE WORLD AT PRICE POINTS THAT ARE THE MOST AFFORDABLE, RIGHT IN THE WHEELHOUSE OF THOSE SEGMENTS.
WE WILL DO THAT TOO. TECHNOLOGY CHANGES. ANYONE WHO THINKS THAT WE WILL HAVE THE SAME TECHNOLOGY EVEN A YEAR FROM NOW CHEMISTRY-WISE WITH OUR BATTERY SYSTEMS ACROSS THE INDUSTRY IS NOT INKING ABOUT IT RIGHT. IT HAS BEEN MENTIONED THAT THE ATOMIC COMMUNICATIONS INDUSTRY, THERE WERE PEOPLE WHO WERE FEARFUL OF COPPER. THAT CHANGED. YOU GET INTO SILICON, YOU GET INTO CHIPS, THINGS THAT ARE A NEW TECHNOLOGY IN BREAKING TRANSFORMATION OF THE INDUSTRY. HISTORY BOOKS WILL SEE THIS AS JUST THE FIRST STEPS. MATT: THE PRESIDENT OF GENERAL MOTORS AT THE INTRODUCTION OF THEIR NEW, CADILLAC'S NEW EV ESCALADE IQ.
I HAVE DRIVEN THE ESCALADE, THE V WITH ALSO 700 HORSEPOWER. IT HAS A V-8 AND IT EATS A LOT OF GAS, THAT'S THE PROBLEM YOU ARE TRYING TO SOLVE. THERE WILL STILL BE PEOPLE WHO WANT THE V-8. HOW LONG WILL YOU SELL THE INTERNAL COMBUSTION ENGINE ESCALADE ALONG WITH THE ESCALADE IQ? MARK: WE HAVE A HUGE AMOUNT OF STORAGE IN THIS VEHICLE BECAUSE OF WHAT WE HAVE UPFRONT WHERE THE ENGINE USED TO BE AND A LOT OF WHEELBASE. THE SECOND ROW PACKAGE IS DIFFERENT TOO.
YOU ADD THOSE THINGS TOGETHER AND THEY ARE DIFFERENT VEHICLES EVEN THOUGH THE OUTPUT ON A POWER BASIS IS SIMILAR. WE WILL DO BOTH AS LONG AS PEOPLE WANT BOTH. IF YOU LOOK AT THE LONG-TERM HORIZON, THE MARKET AND THE CUSTOMER, WE HAVE NOT EVER SOLD A VEHICLE LIKE THIS IN THE MARKET HAS NOT SEEN A VEHICLE LIKE THIS. THIS IS THE FIRST STANDARD IN THE WORLD AND WE WILL SEE WHAT PEOPLE DO. MATT: YOU WILL BRING OUT THE SILVERADO WITH I BELIEVE A SIMILAR BATTERY PACK AND RANGE AS AN OPTION. ARE YOU SEEING PRICE PRESSURE BECAUSE WE ARE SEEING FORD CAPITULATE AND CUT PRICES? TESLA DRIVING THAT? HOW ARE YOU EXPECTING PRICING TO WORK OUT? MARK: WE ARE STARTING SILVERADO WITH OUR WORK TRUCK. WE ARE PRICING IN OUR BATTERY
AND RANGE CAPACITY AND DUTY CYCLE CAPACITY ON SILVERADO AND SIERRA FOR EVERYBODY'S PRICE POINT. WE KNOW WHAT PEOPLE WANT IN A WORK TRUCK FROM OUR STANDPOINT AND IT WILL GO THROUGH THE RST, WHICH WILL BE A HIGH RANGE, HIGH MODULE. BUT YOU DON'T HAVE TO DO THAT. WE WILL OFFER THOSE AS OPTIONS. CUTTING PRICE MEANS WE DIDN'T SEE IT RIGHT. I THINK THAT WE ARE IN THAT
WHEELHOUSE OF WHAT PEOPLE CAN AFFORD AND WHY, SO I FEEL GOOD ABOUT OUR PRICING. MATT: WILL THESE VEHICLES BE PROFITABLE WHEN YOU START SELLING THEM? MARK: YES. MATT: WILL YOU BE ABLE TO MAKE ONE MILLION OF THEM IN 2025? ELECTRIC VEHICLES? MARK: ELECTRIC VEHICLES? I THINK SO. WE DID 50,000 THE FIRST HALF OF THE YEAR, AND THAT WAS OUR TARGET. YOU HAVE TO BRING SELL PLANS ONLINE AND DO THE ASSEMBLY PLANS TO MAKE THESE.
OUR FIRST PLANT IN OHIO IS AT FULL CAPACITY AND RUNNING WELL. OUR SECOND ONE WILL BE IN SPRING HILL, TENNESSEE NEXT TO OUR FACILITY THERE. THE THIRD ONE WILL BE IN LANSING, MICHIGAN AND WE ARE DOING THE CONSTRUCTION NOW. ONCE WE GET PAST THE FIRST PLANT IN OHIO AND LEARN HOW TO MAKE THEM, WE DO IT AT VOLUME. WE DUPLICATE THAT IN SPRING HILL AND LANSING. THE FIRST ONE IS OUT.
WE KNEW IT WOULD BE SOMETHING WE'VE NEVER DONE BEFORE. WE TACKLED THAT, DOING IT WITH HIGH QUALITY AND RATE. THAT IS HOW YOU GET DIVINE PRODUCTION. MATT:
I WAS GOING TO ASK ABOUT THE PRODUCTIONS, ARE YOU PREPARED IN MAKING AN EXPENSIVE INVESTMENT IN RAISING THOSE COSTS BECAUSE THEIR DEMANDS THEY SAID ARE PRETTY AUDACIOUS? MARK: WE CAN'T COMMENT ON WHAT PEOPLE SAY OR DON'T SAY. WE ARE NEGOTIATING WITH OUR WORKFORCE IN EARNEST AS WE ALWAYS DO AND WE ARE THERE TO MAKE A GOOD AGREEMENT, FAIR AGREEMENT, AND AGREEMENT THAT WORKS FOR EVERYBODY. ALWAYS A PLEASURE. MATT: THE PRESIDENT OF GENERAL MOTORS TALKING ABOUT CADILLAC'S NEW ESCALADE IQ. ED: MATT, THANK YOU VERY MUCH. BREAKING NEWS. THE U.S. SUPREME COURT IS ALLOWING APPLE TO KEEP ITS APP STORE PAYMENT RULES IN PLACE FOR THE TIME BEING, DISMISSING A REQUEST FROM EPIC GAMES THAT WOULD HAVE LET DEVELOPERS DIRECT IPHONE USERS TO LOWER-PRICED ALTERNATIVES ONLINE.
THEY ARE SIMPLY DECIDING ON A PREVIOUS NINTH U.S. CIRCUIT COURT OF APPEALS DECISION EARLIER THIS YEAR THAT APPLE'S RULES VIOLATED CALIFORNIA'S UNFAIR COMPETITION RULES. THEY ARE SAYING, THE SUPREME COURT, THAT THAT RULING CANNOT BE IMPLEMENTED STRAIGHTAWAY, SO APPLE CAN KEEP ITS POLICIES FOR NOW. THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: IT IS TIME FOR WORK SHIFTING.
WE LOOK AT THE CHANGING LANDSCAPE OF THE LABOR MARKET AMID ADVANCES IN TECHNOLOGY. WEWORK IS SAYING THERE IS SUBSTANTIAL DOUBT THAT THE CO-WORKING STARTUP WILL BE ABLE TO STAY IN BUSINESS. THEY ARE BLEEDING CASH AND CUSTOMERS OF ITS OFFICE RENTALS WHO ARE CANCELING MEMBERSHIPS IN DROVES. SOFTBANK DROPPED AS MUCH AS FOUR POINT 6%, THE MOST SINCE MAY WHEN IT REPORTED AN UNEXPECTED NET LOSS FOR THE QUARTER AND REFRAINED ANNOUNCING PLANS TO BUY BACK SHARES. THEY ARE CAUTIOUSLY RESUMING INVESTMENTS TO CAPITALIZE ON OPPORTUNITIES IN AI AND EMERGING TECHNOLOGIES. THE U.S.
COMMERCE DEPARTMENT HAS RECEIVED 460 STATEMENTS FOR PROJECTS SEEKING FEDERAL FUNDS FROM LAST YEAR'S CHIPS AND SCIENCE ACT. PROPOSALS WILL COMPETE FOR SOME OF THE $39 BILLION IN FUNDING AIMED AT REDUCING U.S. RELIANCE ON ASIA SEMICONDUCTOR CHANGE BOOSTING DOMESTIC MANUFACTURING OF CHIP TECHNOLOGY. AMAZON IS IN TALKS TO JOIN OTHER COMPANIES AS AN ANCHOR INVESTOR IN ARM THAT COULD RAISE AS MUCH AS $10 BILLION.
ARM IS THE CHIP DESIGNER THAT COUNTS THE WORLD'S BIGGEST TECH FIRMS AS CLIENTS AND HAS HELD DISCUSSIONS, AS REPORTED, WITH INTEL AND NVIDIA. JOINING US IS TOM GILES. THIS IS INTERESTING. THE OBVIOUS QUESTION, WHY WOULD AMAZON BE AN ANCHOR INVESTOR? TOM: 250 BILLION CHIPS IS HOW MANY CHIPS ARM HAS DESIGNED OVER THE YEARS. ARM IS AN INCREDIBLE PLAYER,
INCREDIBLY IMPORTANT PLAYER IN THE DESIGN OF CHIPS. IN PARTICULAR, IT IS A LEADER IN DESIGNING CHIPS THAT ARE USED IN THE DATA CENTERS THAT ARE RUNNING ALL OF THIS COMPUTING POWER THAT AMAZON WEB SERVICES IS BEHIND. THE DATA CENTERS THAT RUN THINGS LIKE AZURE FOR MICROSOFT.
DATA CENTERS THAT WORK FOR GOOGLE, FOR EXAMPLE. THESE ARE THE KINDS OF CHIPS THAT ARM IS BEHIND. COMPANIES LIKE NVIDIA, INTEL, AND AMAZON WANT A PIECE OF THAT.
THAT IS WHY THERE IS SO MUCH INTEREST IN THE ARM IPO. ED: AMAZON USES ARM'S DESIGNS IN THE GRAVITON CHIP. ONE OF THE BEST STORIES IS ALWAYS THE BIG IPO. THIS FEELS LIKE THE BIG IPO OF 2023. TOM: HUGE. ED:
THEY ANCHOR INVESTORS ARE NOTABLE. WHAT IS THE VIBE IN THE NEWSROOM? WHAT ARE WE TRYING TO LEARN? TOM: WE ARE IN THIS INCREDIBLE LULL FOR IPOS. IF ARM GETS TO MARKET AROUND THE SEPTEMBER TIMEFRAME, AS WE HAVE BEEN REPORTING, IT WILL BE A HUGE TURNING POINT FOR THE IPO MARKET. WE HAVE NOT SEEN MUCH. THIS WOULD BE NOT JUST AN IMPORTANT IPO, BUT A BIG IPO, THE LIKES OF WHICH WE HAVEN'T SEEN SINCE FACEBOOK MANY YEARS AGO. ALSO, ALIBABA FROM CHINA.
IT HAS BEEN A LONG TIME SINCE WE HAVE SEEN IPO'S OF THIS SIZE. IT WOULD BE A BIG SHOT IN THE ARM FOR THIS MARKET. ED: WE HAVE BEEN TALKING ABOUT RIVIAN, THE LAST BIG IPO THAT I COVERED IN 2021 AND AMAZON WAS AN ANCHOR INVESTOR IN THAT. COMING UP, THE PAYMENT SERVICE FOR CASH APP LIFTED TO BUY FROM HOLD. ALSO NEWS THAT IT IS EXPANDING ITS PARTNERSHIP WITH CASH APP OWNER BLOCK.
COMING UP, THE CEO JOINS US ON THE SHOW. SONY ELECTRIC GIANT SAYING THAT THE SMARTPHONE MARKET WILL NOT REBOUND UNTIL NEXT YEAR. SONY IS PUSHING BACK ITS FORECAST. "THE RECOVERY OF THE SMARTPHONE MARKET IN CHINA IS SLOWER THAN EXPECTED, AND CONDITIONS IN THE U.S.
ED: WELCOME BACK. ED LUDLOW IN SAN FRANCISCO. STRAIGHT BACK TO THE EARNINGS STORY, THESE ARE THE TWO NAMES THAT WE ARE WATCHING. BOTH MOVING TO THE UPSIDE. BOTH CEOS JOINING US NOW. THE INFRASTRUCTURE SOFTWARE COMPANY OUT WITH SECOND-QUARTER RESULTS THAT BEAT EXPECTATIONS. THEY WILL START RAISING ITS FOR YOUR FORECAST. JOINING US IS
THE CEO AND COFOUNDER. LET'S START WITH THE GUIDANCE. THE LATEST RAISE BEING 12% TO 14%. WHAT GAVE YOU THE CONFIDENCE TO DO THAT, AND COULD YOU HAVE GONE HIGHER? >> THERE IS DEMAND FOR SECURITY SOLUTIONS. WE ARE SEEING STRONG DEMAND FOR OUR MARKET-LEADING SOLUTIONS TO STOP RANSOMWARE AND DATA EXFILTRATION IN THE MICRO SEGMENTATION AREA. THAT HAS LED TO INCREASED
CONFIDENCE TO HOW THE SECURITY PRODUCT GROUP WILL DO THIS YEAR. WE ARE THRILLED TO SEE WE ARE BACK IN TWO BUT DIGIT EARNINGS GROWTH NOW. IT WAS A VERY NICE PLACE TO BE. ED: THE NUMBER OF ANALYSTS NOTING THAT YOU HAVE OUTPERFORMED FOR A FEW QUARTERS NOW, BUT PARTICULARLY THE SECURITIES STORY IS GAINING MOMENTUM. WHAT IS THE MOTIVATION FOR CUSTOMERS TO SPEND, TO COMMIT THEIR INVESTMENT ON THE SECURITY SIDE? TOM: GOOD QUESTION. ACROSS THE LANDSCAPE THERE ARE CHALLENGING ECONOMIC CONDITIONS. SPEND IS NOT EASY TO COME BY FOR MOST ENTERPRISES, BUT THEY NEED TO HAVE SECURITY.
THEY CANNOT AFFORD A MAJOR RANSOMWARE INCIDENT OR DATA EXFILTRATION PROBLEM. AKAMAI HAS THE LEADING SOLUTIONS TO HELP THEM. THAT IS DRIVING A LOT OF THE BUSINESS. GOING FORWARD, ADVANCEMENTS WITH GEN AI WILL GIVE AN ADVANTAGE TO THE ATTACKER. WE SEE WITH THE TOOLS DEVELOPED, WORM GPT, ALL THAT STUFF, IT MAKES IT EASIER TO MAKE MALICIOUS BOTS AND MORPH MALWARE. IT WILL BE EASIER TO GET AROUND THE TRADITIONAL SECURITY DEFENSES. THAT IS WHY BEING ABLE TO HAVE
THAT SECOND LINE OF DEFENSE INSIDE OF AN ENTERPRISE IS SO MUCH MORE IMPORTANT NOW.TO KNOW WHEN YOU HAVE BEEN PENETRATED AND ISOLATE IT AND STOP IT FROM SPREADING BEFORE YOU GET REAL DAMAGE. ED: YOU RAISE A POINT THAT MANY IN YOUR INDUSTRY HAVE GOING BACK TO THE CONFERENCE EARLIER IN THE YEAR. GENERATIVE AI AND QUANTUM COMPUTING ARE JUST AS MUCH OF A TOOL FOR THE THREAT ACTORS AS THEY ARE PART OF YOUR DEFENSE STRATEGY. I WONDER IF YOU COULD GIVE INSIGHT INTO HOW SERIOUSLY YOUR CUSTOMERS TAKE THAT? DO THEY ACKNOWLEDGE THAT THERE IS A TECHNOLOGICAL COMPETENCE AND THE THREATS THAT THEY FACE? TOM: I THINK QUANTUM COMPUTING IS NOT AN ISSUE YET. GEN AI IS BECOMING ONE. THE REALIZATION IS BEGINNING TO SET IN.
WITH ANY BIG TECHNICAL ADVANCE, GEN AI QUALIFIES COME YOU GET A LOT OF GOOD AND SOME BAD. IT IS AN ASYMMETRIC ADVANTAGE TO THE ATTACKER WHEN IT COMES TO TRYING TO GET PAST AN ENTERPRISE'S DEFENSES. WE ARE PROBABLY ON THE CUSP OF SEEING MORE ATTACKS AND MORE EFFECTIVE ATTACKS. ENTERPRISES ARE CONCERNED. ED: TELL ME ABOUT WHAT IS GOING ON INSIDE OF YOUR COMPANY. YOU HAVE CUT COSTS. THE STREET IS REALLY HAPPY WITH YOUR PERFORMANCE.
WHAT CHANGES ARE YOU MAKING INTERNALLY AND WHAT INVESTMENTS MIGHT YOU MAKE? TOM: THE NEXT FRONTIER IN SECURITY IS API SECURITY. WE ARE MAKING A LOT OF INVESTMENTS. I THINK WE ARE IN A GOOD POSITION TO HELP ENTERPRISES. THEY ARE ASKING FOR HELP. PRETTY MUCH ALL OF THE MAJOR ENTERPRISES KNOW THAT THEY HAVE A PROBLEM NOW WITH THE RELIANCE ON APIS AND NOT HAVING THEM ADEQUATELY SECURED. WE ARE MAKING LARGE INVESTMENTS IN OUR INFRASTRUCTURE AS A SERVICE BUSINESS, CLOUD COMPUTING, WITH THE IDEA THAT WE WILL BE ABLE TO SPIN UP AN ENTERPRISE'S CONTAINERS WHICH THEY CANNOT DO TODAY. THAT WILL LET THEM GET MUCH CLOSER TO THE END-USER USER AND HAVE BETTER PERFORMANCE.
BY USING OUR OTHER CAPABILITIES FROM OUR DELIVERY BUSINESS, WE THINK THAT WE CAN DO THAT AT LOWER COST THAN THEY ARE SPENDING WITH THE HYPER SCALARS. IN MANY CASES THE HYPER SCALARS ARE THERE COMPETITOR. AKAMAI WILL BE THEIR PARTNER. ED: SHARES UP MORE THAN 9% ON AN INTRADAY BASIS TRACKING FOR THEIR BIGGEST GAIN SINCE MAY AND HIGHEST LEVEL SINCE MAY 2022. AT ONE POINT THE SESSION WAS UP 13%, THE BIGGEST JUMP GOING BACK TO OCTOBER OF 2018.
AKAMAI CEO, TOM LEIGHTON, THANK YOU. ANALYSTS ARE PLEASED AFTER COMMERCE PAYMENTS PLATFORM MARQETA REPORTED SECOND-QUARTER REVENUES THAT BEAT ESTIMATE SHARES, SURGING AFTER A RENEWED PARTNERSHIP WITH BLOCK TO POWER ITS CASH APP CARD PRODUCT. THEY TALK ABOUT EXPANDING SERVICES TO OTHER MARKETS.
A LOT TO UNPACK. YOU -- WHO BETTER TO DO IT WITH THEM SIMON KHALAF? EXTENDING REMOVES AN OVERHANG ON THE STOCK. WHAT DOES IT DO FOR YOUR COMPANY? WHAT VISIBILITY DO YOU HAVE IN TERMS OF YOUR OWN GROWTH AND ABILITY TO IMPROVE THE BUSINESS? SIMON: THE ANALYSTS ARE EXCITED ABOUT MULTIPLE THINGS, NOT JUST THE RENEWAL OF THE CASH APP CONTRACT. WE BEAT EARNINGS. WHAT THEY ARE EXCITED ABOUT IS EMBEDDED FINANCE IS NO LONGER A BUZZ WORD OR PIVOT OF FINTECH AND DISLOCATING FINTECH FROM CRYPTO. IT IS MAKING A BIG DIFFERENCE
IN CONSUMERS LIVES. THEY RECOGNIZE THE ROLE THAT MARQETA IS PLAYING IN EMBEDDED FINANCE. SEVEN OUT OF 10 AMERICANS ARE USING FINTECH OR AN EMBEDDED FINANCE PRODUCT BUILT ON TOP OF MARQETA. THAT IS WHAT DRIVES THE EXCITEMENT. ED: WHAT DOES THIS FOUR-YEARS MORE
WITH BLOCK AND GIVE YOU? SIMON: THE ABILITY TO CONTINUE TO INNOVATE WITH CASH APP. THE PHENOMENAL SUCCESS THAT CASH HAS ACHIEVED, BEYOND ANYBODY'S EXPECTATION, IS A COMBINATION OF CASH APP THAT READ THE MIND OF THE AMERICAN CONSUMER. THEY WANT A SEAMLESS BANKING EXPERIENCE OR BANKING-LIKE EXPERIENCE THAT RESEMBLES EAS E OF TIKTOK. THEY WANT A PRODUCT THAT CONSUMERS LOVE. IT IS ALSO THE RESULT OF THEM WORKING WITH PLAYERS LIKE US, WHO UNDERSTAND THE COMPLEXITY OF THE BANKING AND FINANCIAL SYSTEM.
THAT RELATIONSHIP HAS LED TO PHENOMENAL GROWTH. WE EXTEND THAT OVER THE NEXT FOUR YEARS. IT GIVES BOTH COMPANIES THE ABILITY TO CONTINUE TO INNOVATE.
WE CONTINUE TO OFFICE SKATE -- OBS-- CASH APP CONTINUES TO TAKE THIS TO MORE CONSUMERS. FOR US AS A COMPANY AND GIVING US A NICE BASELINE TO GROW FROM. ED: ARE THERE OTHER THINGS THAT YOU CAN DO WITH BLOCK TO DIVERSIFY MARQETA FURTHER? SIMON: THERE ARE SO MANY THINGS THAT WE CAN DO WITH BLOCK. BLOCK IS A PHENOMENAL COMPANY. THEY HAVE LOW 20 MILLION CARDS OUT THERE. THEY ARE GROWING SO FAST. ONLY
A FEW PERCENTAGE OF THOSE CARDHOLDERS ARE PUTTING THE PAYCHECK ON THE CASH APP. THAT CAN BE EXTENDED. MARQETA HAS HAD PHENOMENAL SUCCESS IN ACCELERATING WAGE ACTS AS WORKING WITH SHIFT AND GIG WORKERS FOR THEM TO MAKE THEIR MONEY INSTANTLY WITHOUT BURDENING THE WORKING CAPITAL OF THE COMPANY. THAT IS SOMETHING THAT CASH APP CAN DO SUCCESSFULLY.
IT SPEAKS TO THE AUDIENCE, IT SPEAKS TO THE INSTALL BASE. THERE 70 THINGS WE CAN DO WITH BLOCK. ED: WHO DO YOU PHONE? WHAT IS IT LIKE TO DO BUSINESS WITH JACK DORSEY? IS HE ENGAGED AND ACTIVE IN BLOCK AND YOUR RELATIONSHIP WITH MARQETA? SIMON: WE DON'T COMMENT ON WHO WE WORK WITH. WE WORK WITH MANY DIVISIONS OF BLOCK. I WOULD SAY THAT WE HAVE A
PHENOMENAL RELATIONSHIP. IT FEELS LIKE IT IS ONE TEAM, AND THAT IS WHAT IT TAKES THESE DAYS. WE NO LONGER LIVE IN A WORLD WHERE YOU JUST HAVE AN API AND EVERYONE GOES IN THEIR OWN DIRECTION. WE ACTUALLY WORK WITH THEM, WE PARTNER WITH THEM, AND THE NICE THING IS EVERYONE HAS THEIR LANE. THEY ARE PHENOMENAL AT
INNOVATION AND UNDERSTANDING AND DELIVERING TO THE CONSUMER. WE ARE REALLY GOOD AT OBF USKATING THE CONSUMER SIDE WHILE WE ACTUALLY FOCUS ON ELIMINATING COMPLEXITY OF THE BANKING SYSTEM. IT HAS BEEN A PLEASURE WORKING WITH THE TEAM. ED: BEFORE WE LET YOU GO, TWO COUNTRIES ASSOCIATED WITH MARQETA ARE BRAZIL AND EASTERN EUROPE. WHERE ARE YOU LOOKING TO EXPAND GEOGRAPHICALLY? SIMON: WE DEFINITELY SEE BRAZIL AS A PHENOMENAL OPPORTUNITY FOR US. WE JUST ANNOUNCED OUR CUSTOMER. IT IS A TREMENDOUS OPPORTUNITY
AND ONE OF THE FASTEST GROWING GEN AI MARKETS -- GROWING FINTECH MARKETS. IT IS A LARGE COUNTRY AND THE REGULATORY ENVIRONMENTS ARE FAVORABLE. WE ARE EXCITED ABOUT THAT. IN EUROPE, WE HAVE SEEN A LOT OF INTEREST AND EXCITEMENT.
WE ARE EXPENDING AND ARE EXCITED ABOUT THAT. WE HAVE A LOT OF CUSTOMERS WITH GLOBAL AMBITIONS AND MARQETA WILL STAND BEHIND THEM. IF THEY TELL US THEY ARE GOING TO GO TO THE MOON, WE WILL BE ON THE MOON. WE ARE EXCITED WITH THE RELATIONSHIP WE HAVE WITH OUR CUSTOMERS. ED: COMING TO ME FROM OAKLAND, THANK YOU VERY MUCH. ON BLOOMBERG TECHNOLOGY, WE
WILL TALK ABOUT THE RISE OF GENERATIVE AI AND ITS IMPACT ON THE EUROPEAN VC ECOSYSTEM WITH TARGET GLOBAL. THIS IS BLOOMBERG. ♪ ED: LET'S TALK ABOUT GENERATIVE AI AND ITS IMPACT ON GLOBAL VC. WHAT IS IT MEAN FOR EUROPEAN TECH AND EUROPEAN VC? LET'S DISCUSS WITH THE FOUNDER AND EXECUTIVE FOUNDER OF THE PAN VC FIRM TARGET GLOBAL. WE TALK A LOT IN THE UNITED STATES ABOUT LAST NOVEMBER. EVERYTHING THAT HAS BEEN HAPPENING AND COMPANIES BEING FOUNDED IN THE FIELD OF GENERATIVE AI. IS THAT PLAYING OUT IN THE
COUNTRIES AND REGIONS OF EUROPE THAT YOU ARE LOOKING AT? >> FIRST, THANK YOU FOR HAVING ME. I THINK THAT IT IS PLAYING OUT GLOBALLY. IT IS HARD TO SET THE BOUNDARIES FOR THIS TYPE OF TECHNOLOGY BUT IT IS EASY TO OVERESTIMATE THE SHORT-TERM IMPACT AND GROSSLY UNDERESTIMATE THE LONG-TERM IMPACT. THAT IS ONE THING THAT YOU HAVE TO CONSIDER WHEN YOU ARE THINKING ABOUT GENERATIVE AI AND WHAT IS GOING ON IN THE MARKET. ED: THERE IS THE IDEA IN SAN FRANCISCO WHERE I AM THAT A LOT OF NEW AI AND SOFTWARE-FOCUSED COMPANIES ARE BEING STARTED BECAUSE OF THE HISTORIC RELATIONSHIP WITH STANFORD.
ARE THERE ANY CITIES IN EUROPE WHERE YOU RECOGNIZE A CONVEYOR BELT OF TALENT COMING OUT? >> ONE OF THE INTERESTING THINGS ABOUT EUROPEAN TECH IS THAT IT IS MORE DISTRIBUTED THAN U.S. TECH. EVERYONE TRIES TO FIND THE SILICON VALLEY OF EUROPE, OF CHINA. I THINK THAT IS NOT THE RIGHT COMPARISON. THE BEAUTIFUL THING IS THAT
EUROPE HAS ABOUT 65 CITIES THAT HAVE A UNICORN. THERE -- THE ECOSYSTEM IS SPREAD OUT. IT MEANS THINGS CAN GROW IN UNUSUAL PLACES. UC LONDON, RELIGION AND TEL AVIV -- YOU SEE LONDON, BERLIN, AND TEL AVIV BEING HUGS. PLACES LIKE SPAIN AND POLAND AND ROMANIA.
THAT IS THE CHALLENGE ABOUT INVESTING IN EUROPE BUT ALSO A GREAT OPPORTUNITY. ED: USUALLY BASED IN TEL AVIV, ISRAEL. THE RECENT NEWS FLOW, AND INDEED WE HAD AN INTERVIEW WITH BENJAMIN NETANYAHU ON BLOOMBERG TELEVISION AT THE WEEKEND, IS AROUND THE JUDICIAL RULING. HAVE YOU RECONSIDERED HOW YOU VIEW ISRAELI TECH AND STARTUPS IN YOUR HOME NATION? >> WELL, I THINK THIS IS OBVIOUSLY FOR US NOT A BUSINESS QUESTION. IT IS A DEEPER QUESTION ABOUT
THE HEART AND SOUL OF OUR COUNTRY. AS AN INVESTOR IT IS HARD TO COMPLETELY IGNORE IT. I THINK ISRAEL STILL HAS INCREDIBLE TALENT, A DEPTH OF INNOVATION, AND EVENTUALLY THE INDUSTRY WILL PREVAIL AS THE COUNTRY WILL. ONE OF THE AMAZING THINGS TO SEE IS HOW THE TECH INDUSTRY AND VC INDUSTRY ARE AT THE FOREFRONT OF THE CIVIL SOCIETY. IT IS PEOPLE TALKING ABOUT ESG. THIS IS ESG IN THE STREETS. TO ME IT IS AMAZING. ED: ON THIS PROGRAM WE HAVE HAD FOUNDERS FROM ISRAEL FROM A BROAD RANGE OF INDUSTRIES, FROM SELF-DRIVING TO SELF-WEAR AND FINTECH.
ARE THERE ANY YOU THINK IS A STRONG POINT? >> CYBERSECURITY IS INTERESTING IN ISRAEL AND THERE ARE A COUPLE OF COME NEEDS -- COUPLE OF COMPANIES BEING SOLD. YOU SAW WIZ HIGHLIGHTED IN FORBES, SO THERE ARE GREAT THINGS IN CYBER. ISRAEL IS WELL-POSITIONED AROUND AI. NOT NECESSARILY THE PROTOCOLS, BUT A LOT OF THE APPLICATIONS, DATA, DATA SECURITY, DATA INTEGRITY, IDENTITY MANAGEMENT. A LOT OF THOSE THINGS ISRAELI
TECH KNOWS HOW TO DO WELL, SO I THINK IT IS WELL-POSITIONED. ED: ONE OF THE BIG STORIES OF THE DAY IS ARM. CONSTANT NEWS ABOUT ITS LISTING IN THE UNITED STATES. HOW MUCH OF A BLOW IS IT TO EUROPEAN TECH OR THE U.K. THAT ARM ELECTED TO LIST IN THE STATES AND NOT CONTINENTAL EUROPE OR THE LONDON MARKETS? >> I TEND TO THINK THAT LISTING -- THE LISTING VENUE IS A POLITICAL QUESTION AND A PR QUESTION, NOT MATERIAL. WHAT MATTERS IS ARM IS A U.K. COMPANY HEADQUARTERED IN
CAMBRIDGE AND IT DOES BUSINESS IN THE U.K. AND HAS ITS IP IN THE U.K. CONTINUES TO EMPLOY AND TRAIN ENGINEERS IN THE U.K. AND BE A BRITISH COMPANY AT THE FOREFRONT OF GLOBAL TECHNOLOGY AND CONTINUE TO GROW. WHERE IT IS LISTED IN THE FINANCIAL ENGINEERING HAPPENS -- YOU CANNOT IGNORE THE FACT THAT IT IS EASIER TO DO IT IN NEW YORK. THERE IS MORE SCALE AND IT IS
EASIER FOR INVESTORS TO LOOK AT ONE MARKET. I TEND TO THINK THAT IT IS NOT A BLOW AT ALL. IT IS AN AMAZING OUTCOME FOR THE BRITISH ECOSYSTEM TO HAVE A COMPANY LIKE ARM. HOPEFULLY IT WILL BE ANOTHER ONEHUNDRED BILLION DOLLAR EUROPEAN COMPANY .
THERE ARE NOT ENOUGH OF THOSE. ED: THE FOUNDER AND EXECUTIVE CHAIRMAN OF TARGET GLOBAL. GREAT TO GET MORE ON THE EUROPEAN PERSPECTIVE. COMING UP, ESPN IS GETTING INTO SPORTS BETTING. MORE ON THAT STORY, NEXT. THIS IS BLOOMBERG.
♪ ED: THIS IS WHAT THEY ARE TALKING ABOUT. ESPN SIGNED A LONG-TERM EXCLUSIVE AGREEMENT WITH PENN ENTERTAINMENT, LICENSING ITS BRAND FOR SPORTS BETTING AND DEEPENING TIES TO THE GROWING ONLINE GAMBLING BUSINESS. THEY WILL HAVE THE 10-YEAR RIGHT TO USE THE NAME IN THE U.S.. THE COMPANY SAID ON TUESDAY THAT PENN WILL RE-BAND ITS BARSTOOL WITH ESPN SELLING ALL OF ITS BARSTOOL SPORTS SUBSIDIARY TO -- WHICH IS WHAT THEY'RE TALKING ON THE SOCIAL MEDIAS. DISNEY'S EARNINGS COMING OUT LATER TODAY. AFTER THE DRAMA OF BOB IGER'S CONTRACT RENEWAL, WE GO TO THE EXISTENTIAL QUESTION. HOW DO YOU BECOME PROFITABLE IN
STREAMING? THAT IS WHAT INVESTORS ARE LOOKING FOR. >> WELL, ONE WAY IS DEALS LIKE THIS ONE. I WAS SURPRISED ABOUT THE MARKET REACTION TO THE PENN GAMING DEAL. THEY CAN STILL HAVE ADS FROM OTHER SPORTS BETTING COMPANIES ON ESPN. NOTHING BUT UPSIDE IT SEEMS IN THIS DEAL. IT IS HOW YOU INVIGORATE A LEGACY BRAND LIKE ESPN, WHICH IS STRUGGLING WITH LOSING TRADITIONAL CABLE SUBSCRIBERS. I AM SURE BOB IGER WILL TALK A
LOT ABOUT THAT DEAL ON THE CALL AND WILL LIKELY GET QUESTIONS. BROADER WHAT WE HAVE SEEN THIS EARNINGS CYCLE IS AFTER ALL OF THE PESSIMISM ABOUT LEGGY SEAT MEDIA BUSINESSES -- LEGACY MEDIA BUSINESSES, A LOT HAVE SURPRISED. WARNER BROS., PARAMOUNT, THEIR ADVERTISING BUSINESS ON TRADITIONAL TV CHANNELS IS CHALLENGED, BUT THEY HAVE CUT COSTS AND ARE SAVING MONEY WITH THE STRIKES. THEY HAVE TENDED TO LOOK AT HER. ED: THE ESPN/CHRIS: DEAL --THE ESPN/PENN DEAL, I WONDER HOW MUCH BOB IGER'S FINGERPRINTS ARE ON IT SPECIFICALLY.
WILL WE SEE HIM RESTRUCTURE DISNEY'S BUSINESSES? CHRIS: THAT IS ONE THING PEOPLE WILL LOOK AT. THEY DID A LOT OF COST-CUTTING THIS YEAR. 7000 JOBS, 5 BILLION PLUS IN SAVINGS THEY WERE LOOKING FOR. WE MAY GET AN UPDATE ON THAT. THIS IS A BOB IGER DEAL. THE HISTORY OF THE SPORTS BETTING THING, BETTING IS SOMETHING THAT DISNEY HISTORICALLY SHUNNED. THEY DID NOT LICENSE THE MARVEL
SUPERHEROES TO SLOT MACHINES. DID NOT ALLOW THEM ON THE CRUISE SHIPS. THIS WAS TURNED AROUND A FEW YEARS AGO UNDER THE PREVIOUS CEO WHO SAID WE CAN USE THE ESPN BRAND IN SPORTS BETTING BUT NEVER GOT A DEAL DONE. THERE WERE TALKS. THIS IS ONE THAT BOB IGER CLOSED , PROBABLY AT THE LAST MINUTE BECAUSE THE SPORTS BETTING MARKET IS ALREADY CONSOLIDATED AROUND A FEW PLAYERS. ED: IT WILL BE A BUSY AFTERNOON. THE STOCK SOFTER HALF A PERCENTAGE POINT IN THE SESSION, BUT IT'S BASICALLY FLAT YEAR TO DATE, UNDERPERFORMING THE S&P 500. DO THE EARNINGS CHANGE THAT
GOING FORWARD? THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. RECAP EVERYTHING ON THE PODCAST, WHERE EVER YOU GET YOUR PODCASTS. AS WELL AS THE BLOOMBERG TERMINAL.
FROM SAN FRANCISCO, THIS IS BLOOMBERG.
2023-08-10 20:48
