Bloomberg Technology 08/17/2023
EX FROM THE HEART OF WHERE POWER AND MONEY COLLIDE IN SILICON VALLEY, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. QUICKTIME CAROLINE HYDE. AND I'M ED LUDLOW. THIS IS BLOOMBERG TECHNOLOGY. COMING UP, WE GET THE READ ON THE STATE OF THE E-COMMERCE CONSUMER. WE BREAK DOWN THE WALMART. STRONG ONLINE GROWTH.
PLUS, THE LARGEST MAKER OF COMPUTER NETWORKING EQUIPMENT MAKING HEADWAY IN AI. AND IN SECURITY TECHNOLOGY GRID WE BREAK DOWN CISCO'S RESULTS. MEANWHILE, RAISING $20 BILLION OF MARKET VALUE IN ONE DAY ALONE AFTER POSTING THE SLOWEST REVENUE GROWTH SINCE THE EUROPEANS PAYMENT SHINES IPO.
WE WILL BRING THE DETAILS, BUT WERE TALKING ABOUT AN EROSION GRID ONCE AGAIN, SENTIMENT ON THE DOWNSIDE ON THE NASDAQ. THESE AREN'T ENORMOUS MOVES. BUT THE VOLUME A LOW WILL SEE SOME NERVOUSNESS AROUND WHAT IS HAPPENING IN THE BOND MARKET. SIGNIFICANT SELLOFF. A RATE AT WHICH WE ARE INCLINING AND YIELD SPREAD WE ARE SEEING ANOTHER SIX BASIS POINTS ADDED ON THE TENURE. THIS WILL COME THICK AND FAST. U.K. YIELDS ARE UPPER US -- ACROSS
THE WORLD. A MOVEMENT TO BONDS THAT WILL SEE INTEREST RATES CONTINUING TO HAVE TO REMAIN AT A SUSTAINED HIGH LEVEL. INTERESTING THAT WE GOT A REPRIEVE IN CHINA. CHINA IS THROWING EVERYTHING IT CAN FROM A GOVERNMENT PERSPECTIVE AT STABILIZING THE ECONOMY. WE ARE WORRIED ABOUT THE
PROPERTY SECTORS IN THE ECONOMIC SLOWDOWN. 1.1% THEREABOUTS AFTER A SIGNIFICANT SELLOFF AND WHAT HAPPENS WITH THE BIG CHINESE NAMES TRADING HERE IN THE U.S.. THIS ALSO FALLING OFF A CLIFF. LET'S HAVE A LOOK AT BITCOIN.
IT'S A VOLATILE ASSET CLASS. WE ARE TAKING A DIVE AT MIDDAY. 2.5% MOM. THE BOND YIELDS ARE MOVING HIGHER. WE ARE GETTING OUT OF RISK ASSETS IN GENERAL, AND IT IS TAKING AN IMPACT, ED. BUT WE ARE FALLING OFF A CLIFF.
>> STRAIGHT TO EUROPE. THIS IS A NAME AND BIG TECH THAT WE DO TALK ABOUT. THE FINTECH PLAYER BUT THE STORY HAS HIGHER INTEREST RATES WEIGHING ON ITS ABILITY TO EARN, BUT ALSO PRICE COMPETITION HERE IN NORTH AMERICA.
WE GO TOWARD TEAMING EURO. WE WILL HAVE A COMPANY PERSPECTIVE FROM AMSTERDAM, AND UNDERSTAND THE MARKET REACTION FROM LONDON LATER IN THE DAY. THIS IS SOMETHING WE NEED TO DIG INTO BECAUSE NEITHER OF US SAW THIS EARNINGS SEASON, THIS NAME COMING. BIGGEST DROP ON RECORD.
HERE IN THE U.S., TWO NAMES WE ARE WATCHING IN THE EARNINGS CONTEXT. THE FIRST IS CISCO. THE AI STORY GRID CISCO BENEFITS BOOKING $500 OF SALES ALREADY ON ITS AI PRODUCTS. GROWTH IS SLOWING, BUT THE STREET SEEMS TO LIKE THE FORECAST. DETAILS FROM OUR EDITORS THE NEXT BLOCK. WALMART IS DOWN 1.6 PERCENT. SECOND CONSECUTIVE QUARTER WERE THE OUTLOOK HAS BEEN RAISE, BUT HERE'S THE ONE FOR ME.
E-COMMERCE SALES JUMPED 24%. THIS IS AN E-COMMERCE STORY. MUST GET MORE DETAILS FROM BRENDAN CASE WHO COVERS WALMART FOR US OUT OF DALLAS. RUN US THROUGH THE TOP LINE OF THE EARNINGS? >> THE BIG PUSH FOR WALMART IS THAT THEY EASILY SURPASSED WALL STREET ESTIMATES FOR THE SECOND QUARTER. A LITTLE BIT LIGHT ON THE THIRD QUARTER FORECAST, SO I THINK THAT IS WHY SHARES ARE DOWN AND THERE'S BEEN SO MUCH ENTHUSIASM ABOUT WALMART THIS YEAR. ANYTHING LESS THAN PERFECT IS GOING TO HURT SHARES.
DROPPING DOWN TO E-COMMERCE, THAT WAS A REAL BRIGHT SPOT. UP 24%, THAT'S A SECOND STRAIGHT QUARTER OF REALLY STRONG GROWTH IN THAT REGARD. DEFINITELY A BIG POINT OF PRIDE FOR WALMART. >> TALK TO US ABOUT WHAT THEY ARE DOING RIGHT, HERE. ARE THEY GETTING A MARKET SHARE, ORDERED THEY CLIMB MORE E-COMMERCE BUCKS OFF OF THEIR OWN CUSTOMER ALREADY, OR ARE THEY PEELING AWAY FROM AMAZON? >> THERE ARE COUPLE DIFFERENT THINGS TO UNPACK THERE. ONE OF THEM IS SOMETHING THAT DOESN'T HAVE ANYTHING TO DO WITH PLACING ORDERS FOR GROWTH RATES.
IT IS ADVERTISING WHICH IS INCLUDED IN THEIR E-COMMERCE BUSINESS. WALMART HAS A BIG MULTIBILLION-DOLLAR ADVERTISING BUSINESS THAT IN ALL RESPECTS EXCEPT FOR ONE IS BIG AND SUCCESSFUL, ONE WAY IN WHICH IT ISN'T IS THAT IT STILL DRAMATICALLY TRAILS AMAZON. BOOSTING THAT BUSINESS IS A BIG PRIORITY FOR WALMART.
THEY ARE DOING IT, BUT THEY STILL HAVE A LONG WAY TO GO. THEN, IF YOU SWITCH TO THE SHOPPER SIDE, WHAT YOU ARE SEEING. A COUPLE OF INTERESTING TRENDS THERE. STRONG GROWTH IN DRIVE-UP. PEOPLE GOING TO THE STORE TO PICK UP ONLINE ORDERS. BUT YOU ALSO SEE GROWTH WHICH ACTUALLY SURPASSES DRIVE-UP THIS QUARTER IN LIVERIES? MORE CUSTOMERS ARE TAPPING INTO THE DELIVERY OPTIONS AT WALMART. >> YOU AND I WROTE A STORY ALMOST A YEAR AGO TOGETHER ABOUT HOW WALMART DOES HAVE NEARLY AS MANY SHELF PICKERS FOR ONLINE ORDERS AS IT DOES PEOPLE WORKING IN PHYSICAL STORES.
DO WE GET ANY SENSE FROM THE CALL ABOUT STRUCTURE, HOW WALMART IS ADDRESSING IS IS IS FOR THIS KIND OF SURGEON E-COMMERCE DEMAND THAT YOU'VE OUTLINED. A 24% JUMP IN THE QUARTER. THEY GIVE A BIT OF AN UPDATE ON THEIR SUPPLY CHAIN. WHAT THEY ARE TRYING TO DO IS THEY'VE GOT A LOT MORE AUTOMATION GOING INTO THEIR BIG DISTRIBUTION CENTERS BUT THE OTHER THING THEY ARE DOING IS THEY ARE TRYING TO BUILD OUT WHAT THEY CALL FULFILLMENT CENTERS WHICH ARE INSIDE STORES BUT NOT VISIBLE TO CUSTOMERS, AND WHAT THEY ARE DESIGNED TO DO IS GET A LOT OF THE PRODUCT PICTURES OUT OF THE AISLES AND HOW TO DEDICATE A OF THE STORE THAT IS DESIGNED TO SEND STUFF OUT TO CUSTOMERS. WHAT YOU ARE GOING TO SEE IN THE COMING YEARS IS AS THAT RAMPS UP, THERE WILL BE A BIGGER AND BIGGER CAPABILITY TO DO THAT THE LIVERY. IT LOOKS BASED ON THE SECOND
QUARTER RESULTS LIKE THERE IS A LOT OF DEMAND FOR THAT, BUT TIME WILL TELL. >> GREAT ANALYSIS PARADE WE THANK YOU SO MUCH. FROM BLOOMBERG, WE ARE DIGGING INTO THE ADVERTISING FLARE THAT BRENDAN WAS OUTLINING THEIR, AND ULTIMATELY, HOW WALMART IS DIGGING UP ITS PROWESS. ALASTAIR MCLEAN, FROM THE GIGE METRICS IS LEADING THE OPTIMIZATION PLATFORM FOR MARKETPLACE BRANDS. 0 MILLION IN TOTAL AD SALES OPTIMIZE, AND I KNOW YOU KNOW WALMART INTIMATELY. WHAT IS REALLY WORKING FOR THEM. HOW ARE THEY MANAGING TO LURE
OVER NEW BRANDS? >> BRILLIANT RESULTS. WALMART IS CERTAINLY GETTING SHARES. WE ARE USING AI TO OPTIMIZE THE LARGEST SHARE OF BRANDS SELLING ON WALMART.COM. WE'VE GOT MILLIONS OF DOLLARS OF DATA, SO WE KNEW THE RESULTS WOULD BE GOOD.
THE MARKETPLACE SELLER VOLUME IS ACCELERATING. THERE IS A SELECTION OF THOUSANDS OF BRANDS AND THEY ARE TURNING INTO A TECHNOLOGICAL POWERHOUSE. THEY ARE INVESTING IN API, BUILDING ON TECH TO ENABLE AI COMPANIES JUST LIKE OURS TO GO EVEN FASTER.
THAT IS A BIG PART OF IT. THE TECHNOLOGY. >> WE KICK OFF THE SHOW RIGHT. BLOOMBERG TECHNOLOGY, WE START TALKING ABOUT WALMART AND THE AUDIENCE IS GOING WHAT ARE YOU TALKING ABOUT? BUT E-COMMERCE ADVERTISING, AND THE ANALYSIS TO BROADEN AI. ALASTAIR, WHAT IS YOUR READ ON HOW COMPETENT WALMART IS IN THOSE FIELDS RELATIVE TO AMAZON? IN THE CONTEXT OF ADS AND AI, WE'VE BEEN TALKING ABOUT AMAZON FOR A WHILE. WALMART IS A NEWER CONVERSATION.
>> WELL, THEY ARE DOING VERY WELL. THEY ARE INVESTING A TON. SELF -- SET THE LAND IS THE CEO, AND WALMART CONNECT SEGMENT IS CRATING THE AND ADD BUSINESS WHICH IS REALLY GROWING LEAPS AND BOUNDS IN TERMS OF THE TECHNOLOGY, AND TURNS OF THE INVESTMENT, AND THEY ARE REALLY MOVING VERY QUICKLY, VERY VERY QUICKLY. >> IT IS INTERESTING. CARRYING CONSUMERS IN THIS EQUATION, WHY E-COMMERCE IS JUMPING. 24% IS A BIG MOVE.
>> AND THE READ ON DATA THERE, IS TO WHETHER SOME OF THE UNDERLYING THOUGHTS ON WHETHER THE CONSUMER IS RESILIENT AT THIS MOMENT, WHETHER WALMART HAS ALL THE RIGHT PRICE POINTS FOR ANY TYPE OF CONSUMER BECAUSE ALL OF US ARE TRYING TO READ THESE TEA LEAVES. YES, THE NUMBERS LOOK GREAT, BUT TARGET AND WALMART BOTH SOUND PRETTY CONSERVATIVE, AND INDEED A LITTLE CAUTIOUS ABOUT THE CONSUMER RIGHT NOW. >> I THINK THE MOST INTERESTING THING ABOUT THE DATA WE SEE IS THE CHANGE IN THE WALMART CONSUMER. I THINK THAT IS THE STIGMA THAT MAYBE WALMART IS ALL ABOUT OLDER SHOPPERS OR TRADITIONAL SHOPPERS, BUT THE GROWTH IN THE MODERN YOUNGER CONSUMER THAT IS OPENING UP, WHILE IT IS ONE OF THE FASTEST-GROWING APPS ON THE MOBILE SIDE OF THINGS, THERE IS A REALLY BIG PLAY AROUND OMNI-CHANNEL.
THE FACT THAT WALMART.COM CAN REALLY DO THINGS THAT OTHER MARKETPLACES CANNOT IS REALLY POWERFUL, THEY CAN CONNECT THE DOTS BETWEEN ONLINE AND OFF-LINE. THAT'S WHAT EVERY BRAND ONCE. THE OMNI-CHANNEL PLAN. >> REMIND US HOW INTERNATIONAL WALMART IS. FOR ME, THAT IS PURELY AN AMERICAN NAME, BUT NO.
IT'S INDIA. IT'S MEXICO. WE ARE SEEING STRENGTH. AS U.K. VOICES, WE KNEW IT FOR HAVING HAD ASKED HER FOR ONE POINT. >> ACTUALLY. THERE'S OF COURSE THE FLOW CART ASSET IN INDIA. WHAT IS INTERESTING FROM AN INTERNATIONAL PERSPECTIVE IS THE FOCUS ON RECRUITING AND ACQUIRING THOSE MARKETPLACE SELLERS FROM OVERSEAS.
TO SELL INTO WALMART.COM. THAT WAS ONE OF THE BIGGEST DRIVERS OF AMAZON'S IN HIS MARKETPLACE, A FLYWHEEL OF SELLERS, SO WE SAW WALMART TO A LOT GLOBALLY. ATTRACTING BRANDS FROM OVERSEAS. VERY SIMILAR TO THE AMAZON PLAYBOOK. IT IS CERTAINLY WORKING. >> IF YOU ARE AN ADVERTISER, WHY IS WALMART AN ATTRACTIVE OFFER RELATIVE TO ANY OTHER E-COMMERCE NAME. >> I CAN TELL YOU THE DATA WE HAVE IS THE RETURN IS THE PRIMARY METRIC THAT ADVERTISERS USED TO DETERMINE THE ROI.
THE RESULTS ARE WALMART AND THE WALMART CONNECT PLATFORM ARE CONTESTED. IT IS VERY PROFITABLE TO SELL AND ADVERTISE ON WILMER.COM, AND REALLY, THAT IS WHAT IS ATTRACTING MORE SELLERS COMING OVER. IT IS LESS COMPETITIVE, MORE OF A GREEN FIELD. AND AS I SAID, THE ROI, THE ROW ASKED, THE RETURN ON SPEND IS REALLY BEST IN CLASS. WE EXPECT THAT TO CONTINUE.
>> NEW NAMES TO THE SHOW. THANK YOU FOR JOINING US HERE ON BLOOMBERG TECHNOLOGY PRINCE SPEAKING OF WALMART, CHINA'S INTERNET REGULATOR IS REACHING OUT TO FOREIGN FUNDS, INCLUDING THE RETAIL GIANT. THEY PLAN TO DISCUSS WAYS TO NAVIGATE BEIJING'S DATA SECURITY RULES IN AN EFFORT TO REASSURE MULTINATIONALS WORRIED ABOUT THE ABILITY TO OPERATE IN CHINA. UNDER THESE LATEST REGULATIONS. COMING UP, THE LARGEST MAKER OF CAN -- COMPUTE NETWORKING EQUIPMENT IS MAKING HEADWAY AND AI, BUT ALSO SECURITY TECHNOLOGY. WE WILL BREAK DOWN THE RESULTS NEXT. THOSE SHARES ARE UP 4%. A QUICK LOOK AT PALANTIR SHARES PRINT DOWN PRETTY SHARPLY. 7%. NOT ANY HEADLINES CROSSING THE
BLOOMBERG TERMINAL, BUT I WOULD SAY THAT WE HAVE BEEN ON A SHARP TRAJECTORY IN RECENT WEEKS. FROM BEING HEAVILY OVERBOUGHT. IT'S COME THROUGH THE 58 MOVIE AVERAGE FOR THE TECHNICAL CHART FENCE. THIS IS BLOOMBERG TECHNOLOGY. >> EARNINGS ARE THINKING FAST. SHARES ARE MOVING HIGHER AFTER
DELIVERING TO A RESILIENCY, THE DEMAND OF CHUCK ROBBINS, BRILEY HAVE A NICE AI POTENTIAL. SAYING, THIS IS A HUGE OPPORTUNITY FOR CISCO. WE ARE THESE ARE FOCUSED ON WINNING IN THE SPACE. LET'S GET MORE ON THE RESULTS.
VICK IS WITH US. NICK, HOW DO THEY PROFIT. HOW DO THEY CAPITALIZE ON THIS AI MOMENT? >> IS STILL PRETTY EARLY DAYS. THEY DID .25 HUNDRED MILLION DOLLARS IN SALES FROM AI PRODUCTS. I THINK WERE TALKING ABOUT STUFF THAT HELPS SPEED THROUGH THE PROCESS. TRAINING LARGELY WHICH MODELS, REGENERATIVE AI, IT IS JUST THAT WE'VE BEEN FOCUSED A LOT ON THE CHIPS PEOPLE NEED TO RUN THAT FROM NVIDIA AND OTHERS. OBVIOUSLY, THE NETWORK IS PART OF THAT EQUATION AS WELL. WE EXPECT THAT TO BE A BIG
PLAYER IN THE SPACE. >> LET'S GEEK OUT FOR A MOMENT WITH ED. YOU ARE A MAN WHO GETS EXCITED ABOUT THAT.
>> THE LOGIC IS REALLY CLEAR. WITH ALL OF THE HYPER SCALING THAT IS PROVIDED, THERE IS MORE NETWORKING GEARS, AND THERE ARE NO WORRIES. WHAT IS INTERESTING IS DOESN'T HAVE MUCH TO DO THEY I. THEY'RE COMING OUT OF A. WHERE THEY ARE PLAYING CATCH-UP TO THE PANDEMIC. >> YES. IF YOU LOOK AT THE SALES FORECAST ITSELF, IT LOOKS
PRETTY BAD. IT HAS A TERRIBLE COMPARISON WITH THE LAST YEAR THE YEAR THAT JUST ENDED. SALES SURGED, LIVING PERCENT. AND NOW, THEY ARE ONLY GOING TO GROWING 2% OR SO. IT IS OBVIOUSLY A BIG COMEDOWN, BUT THE EXECUTIVES HAVE AN LIKE THIS. YOU KNEW THIS WAS GOING TO HAPPEN, AND IF YOU LOOK AT THE GROWTH IN A MORE LONG-TERM PERSPECTIVE, IS NOT A HUGE ISSUE.
>> WE ARE JUST ENTERING THE FIRST QUARTER OF FISCAL 2024. WE JUST FINISHED FISCAL 2023, TO A POINT. CHUCK ROBBINS TALKED ABOUT RECURRING REVENUE. JUST EXPLAIN THE RECURRING REVENUE AND WHAT CISCO IS DOING TO MAKE MONEY ELSEWHERE. >> SO, TRADITIONALLY, THIS IS A MASSIVE NETWORKING GEAR COMPANY. THEY COULD DO NO WRONG IN THE OLD DAYS OF SILICON VALLEY.
EVERYONE NEEDED BIG HARDWARE, EXPENSIVE HARDWARE. THE PROBLEM IS THAT THERE TENDED TO BE -- THEY TENDED TO BE LUMPY. THERE WERE SALES ONE QUARTER AND LESS SO THE NEXT PRAYER THEY'RE TRYING TO GET TO A SUBSTANTIAL MODEL. THEY'RE PAYING A CERTAIN AMOUNT
EACH QUARTER, AND IT'S MORE RELIABLE. >> WHERE ARE ANALYSTS ON THE VIEW OF CISCO? WHERE IS SENTIMENT MORE BROADLY ON THIS PARTICULAR NAME? WHAT IS THE RUN LIKE? >> I THINK PEOPLE HAVE BEEN PRETTY EXCITED ABOUT THE LAST YEAR OR SO. JUST, OPTIMISTIC THAT THIS IS -- IF YOU LOOK AT THE YEAR-OVER-YEAR, OR THE PAST FIVE YEARS OR SO, IT'S BEEN A LITTLE BIT INCONSISTENT IN GENERAL TERMS OF GROWTH. I THINK THEY'VE -- OBVIOUSLY
CISCO HAD A MOMENT WHERE THEY WERE ABLE TO TURN THE ENGINES ON FULL THROTTLE, AND I THINK PEOPLE ARE MORE OPTIMISTIC THAN MIGHT BE EXPECTED ABOUT THE COMING YEAR, EVEN THOUGH SALES ARE DECELERATING. >> THE FINAL COMPONENT TO WORRY ABOUT IS SECURITY. IT IS SORT OF A STANDALONE MARKET, REALLY QUICK. WHAT DO THEY SAY ABOUT SECURITY? WAX IT IS ONE OF THOSE -- THERE ARE THREE THINGS THEY CALLED OUT.
AI, DATA CENTER, SECURITY, AND OBVIOUSLY THOSE ARE THREE HUGE BUZZY THINGS THAT PEOPLE WANT TO SEE YOU GROWING IN, AND THEY SAID THEY MADE PROGRESS IN ALL OF THEM. I DON'T KNOW IF THEY WERE QUITE US PACIFIC ON SECURITY AS TO HOW MUCH PROGRESS LATELY, BUT IT IS DEFINITELY A KEY THING FOR THEM. >> GREAT TO CATCH UP WITH YOU. THANK YOU. ONE OF THE SHINING LIGHTS TODAY IN TERMS OF EARNINGS. ALL THINGS CISCO. MEANWHILE, ALL THINGS GLOBAL SPARK -- SMARTPHONE. IT'S HEADING FOR ITS WORST YEAR
IN A DECADE. WE WILL DISCUSS WHY, NEXT. APPLE IS A BIG TALK ON THE BROADER NASDAQ READ NASDAQ 100. REALLY PULLING DOWN FROM THE POINT PERSPECTIVE GRID DISAPPOINTING EARNINGS REPORT GOING BACK A WEEK OR SO, BUT THE PRESSURE IS OFFER THIS COMPANY TO DELIVER FOR THE IPHONE. PLENTY OF GC CONTENT ON THE BLOOMBERG TO HAVE ABOUT SIX WEEKS TIME, EYEING UP TECH GIANT. HAVING A THIRD STRAIGHT QUARTER OF DECLINING SALES. PLUS, EXPECTATIONS OF THEIR. HISTORICAL DATA. WE ALSO WENT TO TELL YOU WHAT
IS NOT RISING. WE'LL SEE WHAT'S HAPPENING IN THE WORLD OF CRYPTO. WANT TO SHINE A LIGHT JUST BEFORE THE SHOW. WE TOOK A LEG LOWER ON THE WORLD THE, THIS IS MORE ABOUT MARKET SENTIMENT THEN FULL MARKETS SELLING OFF YIELDS AND DRIVING HYBRID THE DOLLAR CAN FOCUS. >> THIS IS BLOOMBERG.
>> WILL SEND A DAILY DOSE OF TALKING TECH. GLOBAL SMARTPHONE SHIPMENTS ARE HEADED FOR THEIR WORST YEAR IN OVER A DECADE. SHIPMENTS EXPECTED TO DROP 6% YEAR-OVER-YEAR. ACCORDING TO THE LATEST COUNTERPOINT RESEARCH, AND ESTIMATE IS DUE TO A DISPLAY DEMAND IN THE U.S.. BUT A DETERIORATING CHINESE ECONOMY. PLUS, THE SMARTPHONE SALES
SWINDLED. THE TOP WIRELESS CARRIERS HAVE LOST BILLIONS IN REVENUE. AT&T, TMT AND VERIZON HAVE COLLECTIVELY LOST NEARLY 5 BILLION IS OVER THE PAST 12 MONTHS COMPARED TO THE PREVIOUS YEAR, IT IS NOT JUST SMARTPHONES. THE WORLD'S BIGGEST PC MAKER
MISSED PROFIT ESTIMATES FOR THE SECOND QUARTER, UNDERSCORING THE DEBT OF THE GLOBAL DOWNTURN. >> LET'S TALK ABOUT MISSING EXPECTATIONS. WE ARE GOING TO PIVOT AWAY FROM EUROPE BECAUSE ABBY IS WIPING OUT MORE THAN 13 MILLION, PERHAPS 20 MARKET VALUES, FALLING OVER 30 OVER 40% ON THE TRADING DAY AFTER MISSING THE FIRST HALF REVENUE ESTIMATES. FOR MORE ON THE DUST PAYMENT CAUSES AND COMPANY, AND THE COMPETITION THAT'S RIGHT OVER HERE IN THE UNITED STATES, WE ARE JOINED SIR JACOB. A BRILLIANT CONVERSATION TO
HAVE WITH THE BOTH OF YOU. FIRST AND FOREMOST, YOU COVER THE COMPANY FROM A REAL FOCAL POINT OVER THERE IN AMSTERDAM. WHAT DO YOU MAKE OF THESE NUMBERS? WHY IS IT SUCH A SHOCK, THIS FOCUS OF GROWTH IS THERE PROFITABILITY. >> RIGHT, SO I DID REPORT EARNINGS FOR THE FIRST HALF THAT THIS ESTIMATE IS ON BOTH REVENUES AND MARGINS. IT BOASTED THE SLOWEST NET REVENUE GROWTH SINCE IT WAS LISTED. THE COMPANY ATTRIBUTED THIS TO A WEAKER CLIMATE WITH HIGHER INTEREST RATES AND PRICE COMPETITION IN NORTH AMERICA. THE THING WITH ADYEN IS THAT
THEY CONTINUED HIGHER, AND THEY HAD ABOUT 550 EMPLOYEES. THAT WAS IN THE FIRST HALF, AND THAT HAS A WEIGHT ON MARGINS IN THE FIRST HALF. >> WET SPRING SHARES UP AND TALK ABOUT THIS BIG DROP? WHAT DOES THE STREET SAY? THIS IS THE BIGGEST DROP ON RECORD. >> DEFINITELY. WHEN YOU THINK ABOUT A GROWTH STOCK LIKE ADYEN, IT IS A VERY MOMENT WHEN THREE THINGS THAT ARE NO LONGER A GROWTH STOCK. WE SAW THESE KINDS OF THINGS
HAPPENING WITH THAT BEFORE THE FACEBOOK PARENT WHEN THE FLAGSHIP HIT A BUMP AND WE SAW THINGS HAPPENING AS WELL BECAUSE WE SAW NORTH AMERICAN REVENUE -- THE GROWTH ACTUALLY HAVE TO DURING THE FIRST HALF, BUT THIS IS A BIG ISSUE BECAUSE WE HAVE SEEN SEVERAL QUARTERS MISSED EARNINGS ESTIMATES, BUT THIS IS THE FIRST TIME WE'VE SEEN THIS SINCE THE IPO MISSED PROCESSING REVENUE ESTIMATES, PROCESSING VOLUME ESTIMATES, AND IT'S NOT JUST A MESS. IT’'S A MESS OF 8%. THE QUESTION IS WHETHER THE COMPANY CAN REVIVE GROWTH. WE KNOW THE COMPANY HAS REITERATED THEIR NEAR-TERM GUIDANCE, BUT THERE ARE NOW SOME CONCERNS AS TO WHETHER THE COMPANY CAN ACHIEVE THE GROWTH TRAJECTORY ANYMORE, GIVEN THE COMPETITION IN THE U.S.. >> WELL ON THAT FOR A MOMENT. THEY HAVE SPOKEN OUT ABOUT THIS
BEING -- THIS HIRING AND FOCUS ON GROWTH WHICH IS AT ODDS WITH BASICALLY EVERYTHING ELSE ON THE MARKET. THERE IS A LONGER-TERM POTENTIAL, BUT IS THIS A CULTURAL FOCUS THAT THEY'VE GOT AT THE MOCHAS -- MOMENT, THEY WERE TO HIRE AT THE MOMENT? HOW DO THEY CONVINCE INVESTORS? >> ADYEN HAS BEEN VERY FOCAL -- VOCAL ON IT PREPARING THE COMPANY FOR THE NEXT SIX GROWTH PHASE. THEY'VE LISTED ONLY A FEW YEARS BACK. THEY HIRED ABOUT A THOUSAND 200 EMPLOYEES LAST YEAR, THEY EXPECT TO HIRE A SIMILAR AMOUNT THIS YEAR. ABOUT 550 ONE EMPLOYEES IN THE FIRST HALF ITSELF.
THE COMPANY HAS SAID THAT THIS IS THEIR FOCUS, ALTHOUGH THEY DID MENTION THAT THEY WILL SLOW DOWN HIRING FROM NEXT YEAR. YES, IT IS IN CONTRAST TO A LOT OF THEIR IPOS WHO HAVE DROPPED -- ANNOUNCE JOB CUTS IN THE PAST YEAR OR SO. >> ALL RIGHT. HENRY AND SARAH OUT OF AMSTERDAM. THANK YOU SO MUCH. TEAM COVERAGE. WE LOVE THE STORY BECAUSE IT'S ABOUT EUROPEAN TECH NAMES. IS QUITE BIG. YOU READ THE STREET RANT.
WHAT THEY'RE WORRIED ABOUT IS THAT IT'S NOT COMPETING WITH THE U.S. NAMES FOR MERCHANT ATTENTION. >> WHETHER OR NOT THEY ARE NOT WILLING TO FIGHT ON A PRICE PERSPECTIVE WHETHER IT IS -- ARE THEY LOSING CUSTOMERS? CUSTOMERS THAT ARE USING THEM A LITTLE LESS, OR IN THIS ECONOMIC ENVIRONMENT, WILLING TO PAY FOR THE HIGHER PRICE PRODUCTS, IS INTERESTING. ALSO HOW THE COMPETITION COALESCES. ALL EYES ARE ON A PRIVATE JUGGERNAUT THAT IS STRIFE, AND HOW THEY MANAGE TO TAKE IN TERMS OF THE MARKET SHARE. >> A COMMITMENT TO HIRING WHILE THE U.S. APPEARS TO BE TRIMMING JOBS. ALL RIGHT, BLOOMBERG
TECHNOLOGY, COMING UP. A SUITE OF LARGE MODEL PRODUCTS. WE WILL SPEAK TO THE CEO. THAT IS COMING UP. FROM SAN FRANCISCO, OVER NEW YORK, OR DAYS INTO THE WEEK, THIS IS BLOOMBERG TECHNOLOGY. ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY."
ED LUDLOW IN SAN FRANCISCO. CAROLINE: CAROLINE HYDE IN NEW YORK. THE NASDAQ 100, THE BIGGER BENCHMARK OF THE POWERS OF TECHNOLOGY IS TRADING FLAT. SENTIMENT HAS BEEN CHANGING.
WE ARE WORRYING ABOUT THE 10 YEAR YIELD, IT IS UP SIX. 5, 6 BASIS POINTS. WE HAVE SEEN THIS SUDDEN SHIFT HIGHER IN TERMS OF LONGER SHIFT RATES. THIS RESILIENT U.S. ECONOMY MEANS PERHAPS THEY HAVE TO KEEP RATES HIGHER.
WHAT DOES THAT MEAN FOR RISK ASSETS? BITCOIN IS DOWN. WE HAVE BROKE THROUGH THE LEVEL WE HAVE SUSTAINED FOR SEVERAL WEEKS. WE ARE NOW SUB-28,000. THE LOWEST IN TWO MONTHS FOR BITCOIN. THE NASDAQ 100 IS MANAGING TO POKE INTO THE GREEN. APPLE LOWER IN TERMS OF POINTS,
A PERCENTAGE POINT. WORRYING ABOUT HOW TO STIMULATE AND DRIVE FORWARD GROWTH OF IPHONE SALES AFTER THEIR NUMBERS DISAPPOINTED. OVER IN LATIN AMERICA, A KEY FINTECH FOCUSING ON NEW BANKING.
UP 5%. THE COFOUNDER AND CEO IS SELLING ABOUT 30% OF HIS STAKE. CISCO UP MORE THAN 4%. THE NUMBERS LOOKING GOOD. AI, ALREADY $500 MILLION WORTH OF SALES. ED:
A STORY ABOUT THE CORPORATE WORLD. WHAT ABOUT THE LABOR MARKET? A NEW SURVEY FINDS MANY AMERICANS SAY AUTOMATION COULD EASILY REPLACE THEIR JOBS. YOUNGER WORKERS, PARTICULARLY BLACK PEOPLE AND HISPANIC AMERICANS FEEL MOST THREATENED BY AI IN THE WORKPLACE COMPARED TO WHITE COUNTERPARTS. SOME 3/4 OF THOSE POLLED EXPECT AI TO LEAD TO MORE UNEMPLOYMENT WITH WOMEN MORE INCLINED TO SEE DEATH IN MEN.
POLLS SHOW MOST AMERICANS THINK THE INCREASED USE WILL GENERALLY BE A GOOD THING FOR WORKERS SO A SLIGHT CONTRADICTION. CAROLINE: THERE ARE ANXIETIES, DEEP, BUT SO MANY OPPORTUNITIES WHEN IT COMES TO ARTIFICIAL INTELLIGENCE. WE HAVE THE PERFECT GUESTS TO TALK ABOUT THAT. ADAM WENCHEL THE CEO OF ARTHUR. YOU HAVE THIS NEW TOOL THAT IS HELPING COMPARE THE PLETHORA OF MODELS THAT ARE OUT THERE AND SEE IF THEY FIT YOUR BUSINESS CASE IN PARTICULAR. ADAM, TALK US THROUGH THIS ANXIETY THAT WE WERE JUST TALKING ABOUT, WHETHER YOU THINK IT IS VINDICATED. ADAM: IT IS VERY UNDERSTANDABLE, THE
ANXIETY. YOU INTERACT WITH CHAT GDP, IT IS BREATHTAKING HOW HUMANLIKE THE RESPONSES ARE. AI HAS BEEN DEPLOYED A LOT IN THE LAST FIVE YEARS AND ACCELERATING EVERY YEAR AND UNEMPLOYMENT IS STILL HISTORICALLY LOW. THERE IS VERY LITTLE EVIDENCE THAT AI IS TAKING JOBS.
THERE IS NOT MASS JOB LOSS THAT HAS BEEN OBSERVED ANYWHERE. ED: WE GO BACK TO THE CISCO STORY. WHAT WE KNOW IS COMPANIES ARE INVESTING IN THEIR WAY. THE USE OF LARGE LANGUAGE MODELS. THE WAY I SEE YOUR PRODUCT IS WHEN I AM BUYING A NEW LAPTOP, I GO INTO A GRID SIDE-BY-SIDE, COMPARE PROCESSING POWER, MEMORY, OPERATING SYSTEM. YOU ARE BASICALLY OPERATING THE EQUIVALENT FOR COMPANIES TO CHOOSE THE BEST FOR THEM. ADAM: ABSOLUTELY.
THE IMPORTANT THING IS YOU CAN TEST IT EXACTLY ON WHAT YOU WANT TO DO WITH IT. THE WAY YOU USE HER LAPTOP IS DIFFERENT FROM THE WAY MY HIGH SCHOOLER DOES OR THE WAY MY FATHER DOES. YOU WANT TO KNOW HOW CISCO WILL PERFORM FOR ME SO I HAVE MY OWN PROPRIETARY DATA I WANT TO SEED IN AND OUT -- FEED IN. THERE ARE A LOT OF NUANCED DIFFERENCES THAT CANNOT BE REDUCED DOWN TO A SINGLE NUMBER ON A LEADERBOARD. THIS ALLOWS PEOPLE TO TEST THE
KIND OF PROMPTS WITH DATA AND SEE HOW IT PERFORMS. ED: LLM, CAROLINE, LARGE LANGUAGE MODEL, IT HAS BECOME A BLANKET TERM BUT THERE IS SUCH VARIATION BETWEEN THE PARAMETERS. CAROLINE: I GO BACK TO WHEN YOU AND I FIRST STARTED DOING THIS SHOW TOGETHER. IT WAS NOVEMBER. WHAT CAME OUT OF THE GATE?
CHATGPT. WHEN YOU ARE LOOKING AT THE NUANCES IN THE LARGE LANGUAGE MODELS, HOW ARE WE SEEING THEM DIFFERENTIATE? ADAM: CLOUD 2 HAS BEEN GREAT WITH TESTING. IT IS DOING A GOOD JOB OF ANSWERING QUESTIONS WHEN IT SHOULD BE ANSWERING QUESTIONS AND NOT ANSWERING WHEN IT DOES NOT KNOW THE ANSWER. THAT CAN BE REALLY IMPORTANT. CLOUD2 PERFORMS IMPRESSIVELY. WE SEE BIG DIFFERENCES IN TERMS
OF HOW THEY HEDGE. SOME MODELS ARE MUCH MORE LIKELY TO NOT WANT TO ANSWER IT WESTERN AND SAY I AM AN LLM AND I SHOULD NOT BE ANSWERING THIS. THOSE ARE SOME OF THE DIFFERENCES THAT OUR TESTING, OUR TOOL CAN TEASE OUT FOR PEOPLE. ED: HOW DO WE DEMOCRATIZE AI
TECHNOLOGY, ACCESS TO IT, LOBAR THE THRESHOLD SO YOU DO NOT HAVE TO HAVE -- LOWER THE THRESHOLD? HOW DOES THAT HAPPEN? ADAM: THAT IS A BIG CONCERN RIGHT NOW, ACCESS TO THE HARDWARE. THE EXPENSE AND THE AVAILABILITY OF IT. THESE SYSTEMS WILL BECOME MORE EFFICIENT OVER TIME. THERE ARE OTHER VENDORS STARTING TO MAKE HARDWARE MORE CAPACITY COMING ONLINE. IT WILL TAKE A WHILE UNTIL THAT HAPPENS. THE NICE THING WITH OPEN SOURCE MODELS AS YOU CAN GET A PRE-TRAINED MODEL THAT YOU CAN USE OR MODIFY.
WHAT FACEBOOK HAS DONE AND ANOTHER -- A NUMBER OF OTHER PEOPLE HAVE DONE WITH THE OPEN RELEASE OF THESE MODELS HAVE PUT THEM IN THE HANDS OF A LOT OF PEOPLE WHO MIGHT NOT HAVE HAD ACCESS TO THEM BEFORE. ED: CAN ARTHUR MAKE MONEY WITH THIS BUSINESS MODEL? ADAM: ABSOLUTELY. THERE ARE THINGS THAT WE DO THAT ARE PROPRIETARY, INCLUDING OUR ABILITY TO BLOCK OTHERS NATIONS. WE FELT IT WAS -- BLOCK HALLUCINATTIONS.
YOU WANT TO PUT THIS OUT IN PRODUCTION AND TRUST THAT IT GOES WELL. IT IS A MAJOR IMPEDIMENT FOR A LOT OF PEOPLE. WE HAVE SEEN IT SLOW PEOPLE DOWN IN THE PROCESS. AS MANY PEOPLE AS POSSIBLE TO PUT THESE INTO PRODUCTION. THE REASON WE OPEN SOURCE IS TO ACCELERATE PEOPLE'S ABILITY TO DEPLOY THESE TOOLS IN A RESPONSIBLE WAY IN AN ENTERPRISE. CAROLINE:
ULTIMATELY, YOUR BUSINESS ARTHUR IS ABOUT MAKING MONEY. I AM INTERESTED AS TO THE GROUNDSWELL OF HYPE AND REALITY, HOW MUCH ARE YOU SEEING COMPANIES WANTING YOUR SERVICES AND WANTING TO UNDERSTAND HOW THEY PUT THEIR MONEY TO WORK IN AI LLMS? ADAM: IT IS UNLIKE ANYTHING I HAVE SEEN IN MY CAREER. CHATGPT, BEING ABLE TO PLAY AROUND WITH IT AND SEE THE POWER OF IT. FORTUNE 100S, DOWN TO EVERY SINGLE STARTUP, BOARDS ARE ASKING ABOUT GENERATIVE AI STRATEGY AND HOW IT WILL TRANSFORM OUR BUSINESS. THAT SENSE OF URGENCY HAS CASCADED. WE ARE SEEING ALL SORTS OF
PROJECT TEAMS MOBILIZING AND WORKING ON WAYS TO TRANSFORM SOME KEY LEVERAGE POINTS USING LLMS. IT HAS BEEN BREATHTAKING TO SEE. A LOT OF TIMES, THEY CALLED US TO HELP THEM. THERE ARE A LOT OF THE DETAILS THAT COLLECTIVELY ARE A LITTLE BIT DAUNTING WHEN YOU ARE TRYING TO STAND UP. ONE OF THESE SYSTEMS, ALTHOUGH IT IS ACCESSIBLE TECHNOLOGY, THERE IS A LEARNING CURVE AND WE HELP OUR CUSTOMERS WITH THAT ALONG WITH COMMON DEPLOYMENT CHALLENGES AROUND HALLUCINATIONS. ED:
ADAM WENCHEL, ARTHUR CEO, THANK YOU FOR JOINING US ON "BLOOMBERG TECHNOLOGY." AFTER HIS WORLD TOUR TO DISCUSS ARTIFICIAL INTELLIGENCE, SAM REFLECTED ON THE EMOTIONAL POWERS OF THE TECHNOLOGY AND THE NEED FOR GLOBAL REGULATION. EMILY CHANG SPOKE TO HIM FOR THE LATEST EPISODE OF "THE CIRCUIT." EMILY: WAS THE GOAL MORE LISTENING OR
EXPLAINING? SAM: THE GOAL WAS LISTENING AND ENDED UP WITH MORE EXPLAINING THAN WE EXPECTED. WE TALKED ABOUT THE NEED FOR GLOBAL REGULATION. LISTENING WAS SUPER VALUABLE.
>> I HEARD YOU DO HANDWRITTEN NOTES. WHAT HAPPENS TO THE NOTES? >> I TURNED IT INTO THE TOP 50 PIECES OF FEEDBACK FOR USERS. THERE ARE A LOT OF THINGS WHEN YOU GET PEOPLE IN PERSON FACE-TO-FACE OR OVER A DRINK, PEOPLE SAY "HERE IS MY VERY HARSH FEEDBACK ON WHAT YOU ARE DOING WRONG." >> YOU DID NOT GO TO CHINA OR RUSSIA.
>> I SPOKE REMOTELY IN CHINA BUT NOT RUSSIA. >> SHOULD WE BE WORRIED ABOUT THEM AND WHERE THEY ARE ON AI? >> I WOULD LOVE TO KNOW MORE PRECISELY WHERE THEY ARE. THAT WOULD BE HELPFUL. >> HOW HAS CHATGPT CHANGED YOUR OWN BEHAVIOR? >> THERE ARE A LOT OF LITTLE WAYS AND ONE BIG THOUGHT. THE LITTLE WAYS, ON THIS TRIP FOR EXAMPLE, THE TRANSLATION WAS A LIFESAVER. I ALSO USE IT IF I AM TRYING TO
WRITE SOMETHING. I FIND THAT I WRITE FASTER AND I CAN THINK MORE SO IT IS LIKE A GREAT UN-STICKING TOOL. >> I SEE THE PATH TOWARD THIS BEING MY SUPER ASSISTANT.
>> SUPER ASSISTANT? WE TALKED ABOUT RELATIONSHIPS WITH CHATBOTS. IS THIS SOMETHING PEOPLE COULD GET EMOTIONALLY ATTACHED TO AND HOW DO YOU FEEL ABOUT THAT? >> LANGUAGE MODELS ARE SOMETHING PEOPLE ARE GETTING EMOTIONALLY ATTACHED TO. I HAVE A COMPLEX SET OF THOUGHTS ABOUT THAT. I PERSONALLY FIND IT STRANGE AND DO NOT WANTED FOR MYSELF. I HAVE A LOT OF CONCERNS.
I DO NOT WANT TO BE LIKE PEOPLE SHOWING PEOPLE WHAT THEY CAN DO WITH TECH BUT SOME PEOPLE NEED TO BE CAREFUL CAROLINE: SAM WITH OUR OWN EMILY CHANG. SHE ALSO SAT DOWN WITH THE MICROSOFT CEO. TONIGHT, 10:00 P.M. IN NEW YORK OR AVAILABLE TO STREAM AT 8:00 ON BLOOMBERG ORIGINALS. WE WILL BE BREAKING DOWN
SYNOPSIS' THIRD-QUARTER EARNINGS WITH THE CEO, AART DE GEUS. THIS IS "BLOOMBERG TECHNOLOGY." ♪ ED: LET'S GET TO SYNOPSIS. THIS IS THE CHIP DESIGN SOFTWARE MARKET. ANNOUNCING -- ASSUME THE ROLE OF PRESIDENT AND CEO EFFECTIVE JANUARY 1, 2024. LET'S BRING IN AART DE GEUS,
SYNOPSIS' CURRENT BUT OUTGOING CEO. WELCOME TO "BLOOMBERG TECHNOLOGY ." REAL GROWTH IN CHINA IS WHERE I WANT TO START. I WANT TO START THERE BECAUSE NOBODY ASKED YOU ABOUT IT ON THE EARNINGS CALL. HOW ARE YOU GROWING IN CHINA? DR. DE GEUS: THE GROWTH WAS STRONGEST QUARTER BECAUSE IT WAS THE POST-COVID QUARTER. IN GENERAL, CHINA HAS REMAINED
STRONG FOR US FOR THE LAST 10 YEARS WHILE SIMULTANEOUSLY HAVING SOME RESTRICTIONS ON WHAT WE CAN DO THERE. DESIGN OF CHIPS CONTINUES EVERYWHERE IN THE WORLD. ED: YOU BOOKED SO FAR IN THE YEAR ABOUT $500 MILLION OF AI SALES. WHAT IS THE MAIN DRIVER OF THAT? YOU ESSENTIALLY CREATE SOFTWARE THAT IS USED IN THE CHIP DESIGN PROCESS.
WHAT IS DRIVING THE AI-SPECIFIC GROWTH? DR. DE GEUS: IF YOU LOOK AT THE MOST ADVANCED HARD-DRIVING CHIPS, AI IS IN THE MIDDLE OF THE THAT. IN YOUR REPORTING YOU HAVE AI DRIVING THE NEED FOR FASTER, LOWER POWER, HIGHER CAPACITY CHIPS. ADAM: THE COMPETITIVENESS OF THAT IS ESSENTIAL. IT IS ANOTHER WAY OF SAYING
THEY ARE THE ONES THAT USE THE MOST ADVANCED SILICON TECHNOLOGIES AND THE MOST COMPLEX ARCHITECTURES. THIS IS WHERE SYNOPSYS IS THE LEADER. WE DO THE MOST ADVANCED CHIPS -- I SHOULD SAY WE SUPPORT OUR CUSTOMERS DOING THE MOST ADVANCED CHIPS IN THE WORLD FOR OUR EXISTENCE AND IT IS A WAY THAT CONTINUES TO GROW. ED:
CAROLINE, I EXPRESSED SURPRISE THAT NOBODY ASKED ABOUT CHINA BECAUSE AART IS TALKING ABOUT THE COMPETITIVE -- CAROLINE: THAT FEELS POLITICALLY CHARGED, AS WELL, AART. CAN YOU TALK US THROUGH THE RESTRICTIONS AND THE CONCERNS ABOUT LOVING YOUR VERY SPECIFIC SOFTWARE TO BE USED BY CHINA WHEN WE ARE WORRIED ABOUT THE TENSIONS AND THE AI RACE? DR. DE GEUS: THE MOST ADVANCED AI CHIPS COME FROM CHINA. MANY COMPANIES ARE INVESTING IN THAT. SOME OF THE LARGEST SEMI CONDUCTOR COMPANIES ARE DRIVING THE STATE-OF-THE-ART AND SOME OF THE MOST ADVANCED STATA -- STARTUPS ARE DRIVING THE STATE-OF-THE-ART.
CUSTOMERS FIRST COME TO US BECAUSE THEY RELY ON THE ABILITY TO DIFFERENTIATE. IF THERE IS ONE WORD ON THAT, THE "SPEED" OF THE CHIP DETERMINES EVERYTHING. . THE OPPORTUNITY COMING IN, ALL OF THESE ALGORITHMS TAKE A LOT OF COMPUTATION. THE FASTER YOU CAN MAKE THOSE, THE MORE OPPORTUNITIES THERE ARE. IT IS ONE OF THOSE WONDERFUL
SITUATIONS WHERE THE DEMAND CONTINUALLY EXCEEDS WHAT OUR CUSTOMERS CAN DELIVER. THE RACE IS ON AND IN THAT RACE WE ARE A KEY INGREDIENT. CAROLINE: MANY OF YOUR PEERS IN SILICON VALLEY ARE NERVOUS ABOUT THAT RACE AND, BOY, IS THE ADMINISTRATION WORRIED ABOUT THAT RACE. WHAT KIND OF CONTRACTS DO YOU HAVE A CHINA AND ARE YOU GETTING ANY PUSHBACK ON YOUR ABILITY TO SELL? DR. DE GEUS: IT IS FAIRLY STRAIGHTFORWARD.
THE RULES OF ENGAGEMENT ARE CLEAR. WE FOLLOW THAT ABSOLUTELY TO A T. THE ISSUE IS MORE FOR CHINA ITSELF THAN FOR US. IT IS A CERTAIN PERCENTAGE OF OUR BUSINESS THAT IS GROWING WELL OVER TIME.
WE HAD A VERY STRONG QUARTER IN KOREA, FOR EXAMPLE. WE OVER THE YEAR HAVE DONE WELL IN ALL PARTS OF THE WORLD. IF THERE WERE NO RESTRICTIONS WE COULD PROBABLY SELL MORE TO CHINA BUT WE LIVE UP TO THOSE RESTRICTIONS.
WHAT I WANT TO HIGHLIGHT, THOUGH, EVERY NATION IS INVESTING IN CHIP DESIGN. I AM SURE YOU ARE FAMILIAR WITH THE U.S. CHIPS ACT. ALL OTHER NATIONS HAVE FOLLOWED UP WITH THEIR OWN CHIPS ACT. WE ARE NOT COUNTING AT ALL ON THESE BUT WHAT IS CLEAR IS THE WHOLE WORLD UNDERSTANDS CHIPS ARE ABSOLUTELY CENTRAL TO THIS NEW WAVE OF WHAT WE CALL "SMART" EVERYTHING IN THE WORLD. ED: YOU HAVE BEEN AT THIS COMPANY SINCE THE LATE 1990'S. I KNOW YOU ARE STEPPING DOWN.
I WANT TO GET YOUR REACTION TO THE INTEL NEWS THIS WEEK AND HOW YOU THINK IT WILL IMPACT THE LANDSCAPE IN TECH AND CHIPS IN PARTICULAR. DR. DE GEUS: I HAVE BEEN THERE SINCE THE MID-1980'S. ED: APOLOGIES. MID-1980'S. DR. DE GEUS: IT GIVES AN INTERESTING PERSPECTIVE BECAUSE A LOT OF THESE COMPANIES EXISTED AT THAT TIME AND THEY HAVE THE SAME PATHWAY -- HOW TO STAY CLOSE TO THE LEADING EDGE -- AND INTEL IS A GREAT EXAMPLE. THEY ARE SUBSTANTIALLY
INVESTING IN THEIR NEXT EDGE. YOU MIGHT HAVE SEEN THE AGREEMENT WE DID EARLIER THIS WEEK WHERE WE PROVIDE MANY OF THE BUILDING BLOCKS THAT ARE NECESSARY FOR THEM TO BE SUCCESSFUL. THESE BUILDING BLOCKS GET SPECIFICALLY DESIGNED FOR THEIR MOST ADVANCED TECHNOLOGY. IN GENERAL, PART OF OUR ROLE IS TO SUPPORT ALL THE FOUNDRIES TO GO TO MARKET AND WHAT THEY NEED IS THE DESIGN TOOLS TO BE READY FOR THEM AND THEY NEED THE IP BLOCKS TO BE READY FOR THEM.
WE PROVIDE BOTH OF THOSE. WE PROVIDE THOSE FOR A BROAD SET OF BOUNDARIES. THAT RACE IS ON, TOO. THE RACE FORWARD IS A BIG POSITIVE.
YOU ARE FAMILIAR WITH 50 YEARS OF MOORE'S LAW THAT WAS OF UNSEEN MAGNITUDE. WE HAVE ENTERED A NEW ONE OF THESE. THE NEW ONE IS MULTIPLE CHIPS WILL GET TOGETHER IN VERY HIGH PROXIMITY, INCLUDING STACKING THEM, LIKE MOVING FROM BUILDING HOUSES TO -- BUILDING HOTELS.
THIS IS ALL DRIVEN BY SMART EVERYTHING. CAROLINE: THE FOCUS FROM YOU AND THE PERSON WHO PICKS UP IN JANUARY 2024. YOU COFOUNDED THE BUSINESS IN 1986. WE THANK YOU SO MUCH, AART DE GEUS, SYNOPSYS CEO. CAROLINE: LET'S ADD NEW YORK CITY TO THE PLACE THAT TIKTOK ACCESS WILL BE BANNED ON GOVERNMENT-OWNED PHONES.
BLOOMBERG'S -- A BUSY WOMAN. TALK US THROUGH IT. >> THE SECURITY THREAT THAT LEGISLATORS HAVE TALKED ABOUT HAS COME TO THE FOREFRONT. THE CYBER COMMAND CALLED IT A THREAT TO THE CITY'S TECHNICAL NETWORKS AND MADE THE DECISION TO GIVE THE CITY 30 DAYS OFF OF GOVERNMENT PHONES. THE STATE OF CALIFORNIA IS TAKING A LONGER APPROACH.
THERE WAS A BILL AUTHORED BY A SENATOR THAT IS CALIFORNIA SB-7 4. IT HAS BEEN APPROVED BY THE ASSEMBLY COMMITTEE TO BASICALLY BAN IT ON ALL GOVERNMENT PHONES. THAT BILL HAS TO GO TO THE APPROPRIATIONS COMMITTEE AND TO GOVERNOR GAVIN NEWSOM DESK -- GOVERNOR GAVIN NEWSOM'S DESK. IT WAS SAID THAT TIKTOK HAS BEEN RUNNING INTERFERENCE SO WHILE THIS APP IS GETTING BANNED ON GOVERNMENT DEVICES, MORE THAN 35 STATES IN THE U.S., IT IS STILL RUNNING
INTERFERENCE IN TRYING TO CONVINCE LAWMAKERS TO NOT JUST BAN TIKTOK BUT YOU WIDEN THE BAN TO ALL ENTERTAINMENT DEVICES. WE ARE SEEING DAYS BANS ROLL ON BUT CALIFORNIA IS PROBABLY THE NEXT ONE BE BUT WATCH CLOSELY. CAROLINE: ALEX, WE THANK YOU. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." ED: THE EARNINGS SEASON IS RELENTLESS. APPLE, SPOTIFY IN THE BLOOMBERG PLATFORMS. FROM SAN FRANCISCO AND NEW YORK, THIS IS
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