Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Tesla's profits plunged despite record vehicle sales and a must
Speaker 3: hijack moment on his proposed trillion dollar pay package, Plus.
Speaker 4: The White House says it is weighing broad software restrictions
Speaker 4: against China as it pushes for tech self reliance.
Speaker 3: And we sit down with t Mobiles incoming CEO Shriny
Speaker 3: Gopalan about the company's third quarter results.
Speaker 4: So first we check in on these markets, which despite
Speaker 4: the geopolitical tensions, despite concern about some numbers not hitting
Speaker 4: the mark in the earnings underneath the bench, but we're
Speaker 4: still up six ten percent on the NASAQ one hundred ED.
Speaker 4: That feels like there's a risk on sentiment more broadly,
Speaker 4: and that says we eye all prices on the hig
Speaker 4: side inflationary concerns, but we.
Speaker 5: Shake it off when it comes to the NASDAK. We're
Speaker 5: looking underneath to herd.
Speaker 3: Yep, let's go to Tesla down three percent, but not
Speaker 3: as down as much as it was when the stock opened.
Speaker 3: The story from earnings was really simple, record vehicle sales
Speaker 3: and deliveries, but profits plunged higher cost Tesla talked about tariffs,
Speaker 3: talked about the impact of policy and how it had
Speaker 3: expanded its products to react to that. But then right
Speaker 3: at the end of the earning school the story became
Speaker 3: about Elon Musk and his proposed pay package.
Speaker 2: Listen to this.
Speaker 6: The point is, I just like that the needs to
Speaker 6: be enough boarding control to give a strong influence, but
Speaker 6: not not so much that I can't be fair if
Speaker 6: I go insane.
Speaker 4: Elon mus there, ending his final moments on the conference call,
Speaker 4: making the case to shareholders for his one trillion dollar
Speaker 4: pay package.
Speaker 5: Let's get more on all of the Tesla numbers.
Speaker 4: Ita mckeenny is with us, senior analyst of autos and
Speaker 4: auto Paths at td Karen, and you're joining us go
Speaker 4: buy rating on the company five on a nine dollars
Speaker 4: price target, which is about twenty percent higher than where
Speaker 4: we currently trade. Going straight to the numbers perspective before
Speaker 4: perhaps a pay package.
Speaker 5: Was there anything to shout about?
Speaker 7: So the quarter overall, thank you again for having me,
Speaker 7: was fairly in line with our preview thoughts that the
Speaker 7: setup was fairly balanced for the stock going in. As
Speaker 7: you know, the stock had kind of rallied into the quarter,
Speaker 7: estimates had gone up a little bit since the record
Speaker 7: kind of deliveries and then and the upside there, and
Speaker 7: so we did think that the balance that the setup
Speaker 7: was fairly balanced. Going in the numbers themselves, we were
Speaker 7: fairly mixed, but overall in line on an operating basis
Speaker 7: that the numbers were about seven percent above street expectations
Speaker 7: when you exclude the restructuring item that came out a
Speaker 7: bit of a surprise. There were some below the line
Speaker 7: items such as a higher tax rate that caused EPs
Speaker 7: to miss. Free cash flow was actually very strong. So
Speaker 7: over some put and takes in the numbers, but fairly
Speaker 7: in line, maybe even a bit better operationally versus consensus,
Speaker 7: including on a better gross margin overall.
Speaker 4: Okay, so that gross margin and actually the cash that's
Speaker 4: still coming into the business, is that enough to really
Speaker 4: drive forward on basically the now focus of Elon Musk
Speaker 4: and Tesla more broadly, which is AI, which is robotics,
Speaker 4: which is autonomous.
Speaker 7: Yes, to your point, the gross margin actually beat nicely
Speaker 7: in the quarter eighteen percent verse consensus at seventeen point
Speaker 7: three percent. Oppex was actually higher, including for SGNA, So
Speaker 7: you're seeing the company making still substantial investments in future growth,
Speaker 7: including of course AI. But the free cash flow very strong.
Speaker 7: Catpex came in a bit below expectations. At the balance
Speaker 7: sheet is very strong with with over forty billion dollars
Speaker 7: of cash and low thirties of net cash after dead
Speaker 7: so the balunary is in great shape. You are seeing
Speaker 7: the company can team to make an investment. Go to
Speaker 7: see the gross margin beat as well.
Speaker 3: We're trying to tie must comments about the compensation package
Speaker 3: to the earnings that were posted. And the way that
Speaker 3: I look at it is that the boarders set him
Speaker 3: over ten years, both operational and financial goals twenty million
Speaker 3: vehicles over ten years. That means he needs to average
Speaker 3: five hundred thousand a quarter. They've set him ebit our
Speaker 3: goals and in the earning statement and on the call,
Speaker 3: they tried to explain with a broader portfolio of models
Speaker 3: and more affordable models how they will achieve that.
Speaker 2: Did they answer those questions?
Speaker 7: Yes? I think when we looked at the CEO compensation
Speaker 7: proposal when it came out, we were actually very encouraged,
Speaker 7: and a lot of analysts have views over what Tesla
Speaker 7: should do, where they should be investing, and what the
Speaker 7: future will hold. We've been very bullish on autonomy, not
Speaker 7: only for the Robotaxi vertical, but also for what we
Speaker 7: call the consumer av vertical, the FSD vertical, and we
Speaker 7: thought the product goals, the four of them kind of
Speaker 7: laid out in the compensation proposal, were very aligned with
Speaker 7: our kind of long term thesis of where Tesla should
Speaker 7: be investing, what they should do, particularly around the FSD
Speaker 7: part of it, given how disruptive that could be, but
Speaker 7: that the company's comments last night on the call were
Speaker 7: supportive of that, including kind of making the point that
Speaker 7: as the launched use incremental FSD features that could accrue
Speaker 7: very nicely to ev demand to kind of address that
Speaker 7: issue as well. So those girls seemed very aligned with
Speaker 7: our thesis. That actually turned us more bullish on the
Speaker 7: star kind of long term, but we read those proposals.
Speaker 2: It's either.
Speaker 3: This morning, the New York State Controller joined us on
Speaker 3: Bloomberg Surveillance. Listen to his take on why they voted
Speaker 3: no on the compackage.
Speaker 8: When you see the excessive compensation package. I mean, you know,
Speaker 8: credit to mister Musk, He's already one of the richest
Speaker 8: men in the world. How much more rich does one
Speaker 8: person have to be?
Speaker 3: But for Elon Musk, it wasn't about money or how rich.
Speaker 3: It was about voting control, the argument that he needs
Speaker 3: a certain level of control for Tesla to realize the
Speaker 3: vision of humanoid robotics and more broadly, AI, where do
Speaker 3: you stand on that?
Speaker 7: Sure? Yeah, absolutely, Elon kind of made that point very clear.
Speaker 7: You know, ultimately the proposals you know, are tied to
Speaker 7: market cap targets as well. They are to your point, ambitious.
Speaker 7: They will require very very strong execution. But once they're delivered,
Speaker 7: if they're delivered, there's a substantial amount of upside to
Speaker 7: EP a longer term as we see it. And and
Speaker 7: you know, we give Tesla a very significant competitive positioning
Speaker 7: as well. So given the amount of execution, UH the
Speaker 7: needs to take there, I told you kind of understand
Speaker 7: UH management and the point around this, and again, those
Speaker 7: goals very well alignment where we think Tesla should focus
Speaker 7: on over the next five plus years. And and so
Speaker 7: you know, we felt pretty good about you know, the
Speaker 7: overall game plan for where to invest where to focus on,
Speaker 7: and we felt those goals for us were positive in
Speaker 7: the scheme of where we see the company going.
Speaker 3: It's I'm mcayley of TD Karen, thank you very much.
Speaker 3: Now coming up, the White House says it's weighing more
Speaker 3: export limits against China, this time targeting critical software.
Speaker 2: We have more in that story. Next, this is Bloomberg Tech.
Speaker 3: Let's get over to the Evident AI symposium taking place
Speaker 3: right now in New York and bring it together hundreds
Speaker 3: of banking executives and innovators to discuss AI adoption in
Speaker 3: financial services. Goldman Sachs cio Marco Orgenti speaking with Bloomberg's
Speaker 3: jeen Eric Shaska.
Speaker 9: How do you take people through this journey? And so
Speaker 9: the human fact or the human element are more important
Speaker 9: than ever today. I say that technology is even what
Speaker 9: technology or what AI can do, is ahead of what
Speaker 9: people accept that they can do with it.
Speaker 2: So there is a.
Speaker 9: Gap there, there's a cultural gap, friction. Think there is friction,
Speaker 9: but it's also like sometimes fear right. And this period
Speaker 9: of transformation creates for the first time, creates almost like
Speaker 9: a competitor to the human species which we never had before,
Speaker 9: which could be in some cases smarter than us. And
Speaker 9: the way people face that pret is very different, and
Speaker 9: some people adopted and embrace it, and some people are
Speaker 9: just resisting it. But back to the importance of the
Speaker 9: first topic that I talked about, why is data so important?
Speaker 9: Sometimes when a lot of you know, we talk with
Speaker 9: other people in the business and other CIOs, etc. Or
Speaker 9: people are asking me what's the best advice, And today
Speaker 9: the best advice is really make sure that you have
Speaker 9: a great data quality story in your firm, because that
Speaker 9: will be the single most important determinant of the.
Speaker 4: Government sachs Ceio there Marco Argenti talking about their own.
Speaker 5: Eric Shatska catch.
Speaker 4: The full conversation going on at the symposium on live go.
Speaker 4: But now we switch gears to what the White House
Speaker 4: is saying. Well, perhaps it's weighing new export limits on China,
Speaker 4: but this time targeting critical software that can send ripples
Speaker 4: through the tech sector. From Vaccinia tech editor Mike shev
Speaker 4: It joins us Now and more. And it's trying to
Speaker 4: understand how far reaching such limitations would be.
Speaker 10: Mike, Well, it's a great question, Karen. We still don't
Speaker 10: know the answer about how far the scope of this
Speaker 10: will go. But the Treasury Secretary said yesterday that everything
Speaker 10: is on the table. And really this is another instance
Speaker 10: of the US or China trying to escalate ahead of
Speaker 10: a key round of negotiations, and we have one coming
Speaker 10: up this weekend where the two sides will try to
Speaker 10: hash out their differences. What the US is hoping to
Speaker 10: get from China this time around as a relaxation of
Speaker 10: some new export controls on rare earths at Beijing just
Speaker 10: imposed much to the chagrin of the US and many
Speaker 10: of its allies, and Treasury Secretary Beston not only says
Speaker 10: that everything is on the table, but he's also saying
Speaker 10: that the US may act in concert with its allies.
Speaker 10: And some of the areas that could be targeted are
Speaker 10: critical software, including chip software used to design chips, but
Speaker 10: it also could be brought Reuters reported yesterday that they
Speaker 10: may go as far as looking at anything made with
Speaker 10: US origin software and trying to restrict that. And that
Speaker 10: is a measure that the US took against Russia back
Speaker 10: in twenty twenty two following Russia's invasion of Ukraine.
Speaker 3: Mike overnight a communicate from the Communist Party's Central Committee
Speaker 3: in China the country who aimed to quote greatly increase
Speaker 3: the capacity for self reliance in the domains of science
Speaker 3: and technology timing.
Speaker 2: What do we need to know well ed?
Speaker 10: This is clearly a challenge for the US because one
Speaker 10: thing we have heard from the Trump administration is an
Speaker 10: articulated desire to try to sell back into the Chinese
Speaker 10: market some of the American tech stack and the idea
Speaker 10: this is one that we have heard from White House
Speaker 10: AI advisor David Sachs and others that if we can
Speaker 10: sell into China, we can compete with China in other
Speaker 10: markets globally. So this is something where we see China
Speaker 10: is perhaps pushing away from the US tech SEC and
Speaker 10: trying to go on its own. We also have some
Speaker 10: great reporting from our colleagues in Asia and Africa that
Speaker 10: is an example of how important this is. We see
Speaker 10: how Deepseek is making inroads in Africa in today's Big Take.
Speaker 10: It's worth reading on the terminal and elsewhere if you
Speaker 10: haven't seen it, but it shows just how China is
Speaker 10: building this model at home of lower cost AI, both
Speaker 10: the hardware and the software, and then offering it in
Speaker 10: markets where the US is hoping to compete, but perhaps
Speaker 10: being beaten to the punch by Chinese innovators.
Speaker 3: Bloomberg's Mike Shephard out of DC, thank you very much.
Speaker 3: We have breaking news crossing the Bloomberg terminal, reporting from
Speaker 3: the Wall Street Journal. President Trump pardoned Binance founder Changpeng
Speaker 3: Jau on Wednesday. The markets are reacting vik at xbi
Speaker 3: usd Binance coin. It is spiked as those headlines cross
Speaker 3: the Bloomberg terminal, the team in New York getting it
Speaker 3: up on the screen. The Wall Street Journal citing sauce
Speaker 3: it is on the pardon of jaw by the President.
Speaker 3: Bloomberg's not match the reporting. We'll showing you the market reaction.
Speaker 3: We'll look into it, and when we have more we'll
Speaker 3: bring it to you. Let's get back to Bloomberg Tech.
Speaker 3: Natalie Galla Princevill economists and director at Board, an aipower
Speaker 3: and enterprise planning platform. Natalie, you provide macroeconomic analysis and
Speaker 3: strategic guidance on business investment and economic policy to global companies.
Speaker 3: You just heard shep going through the software component on
Speaker 3: trade back and forth, and then China realizing that it
Speaker 3: has to look at itself in some domains where it
Speaker 3: relies on the United States as you track trade right now,
Speaker 3: I'd like you to answer, does software actually play any role.
Speaker 2: In any of this negotiation?
Speaker 5: Yeah?
Speaker 11: You know, I think it plays a really significant role
Speaker 11: on this negotiation right because as we talk about AI
Speaker 11: and the importance of really being a leader in this space,
Speaker 11: we know that the US right now outspends China on
Speaker 11: a ratio about five to one. But of course there's
Speaker 11: a lot of accusations around distillation, and when we zone
Speaker 11: out from an economists point of view, it becomes a
Speaker 11: lot less about what's the marginal cost to China to
Speaker 11: produce a model and more about are we doing what
Speaker 11: we can to protect US innovation? And it's really key
Speaker 11: that we get this right because this is an industry
Speaker 11: that's estimated to translate into trillions of dollars in global
Speaker 11: GDP over the next decade.
Speaker 4: So when we think about the actual US names that
Speaker 4: get caught up in this analysappoint to Cadence Design Systems,
Speaker 4: DESCO Systems, Synopsis, as well as being companies that might
Speaker 4: be limited in their ability to export to China. But
Speaker 4: more broadly, what is the biggest element that US can
Speaker 4: bring to bear? It still seems to be semiconductor, it
Speaker 4: still seems to be the IP when it comes to
Speaker 4: GPU and compute.
Speaker 11: Yeah, I would absolutely agree with that. You know, our
Speaker 11: power is really an intellectual property. We've shown a lot
Speaker 11: of resiliency there, a lot of leadership there. That's our
Speaker 11: key metric for as we move forward, what we bring
Speaker 11: to the table.
Speaker 5: Absolutely have to sort of continue.
Speaker 11: To lean into that and really have these conversations around
Speaker 11: policy to continue to lead in that space.
Speaker 3: Right now, are you seeing any data, primary data or
Speaker 3: secondary data from any economy around the world that tariffs
Speaker 3: in the technology context or export controls are damaging any
Speaker 3: industries that we're talking about here.
Speaker 11: So it's actually been really incredible. Tech has shown an
Speaker 11: amazing resiliency. Our global economy has shown an amazing resiliency
Speaker 11: when we talk about the effect of tariffs right and
Speaker 11: where we would anticipate to see it when we talk
Speaker 11: about especially these relations with China, we would anticipate it
Speaker 11: to see in consumer electronics. Now, the story of twenty
Speaker 11: twenty five so far, and I wouldn't just say this
Speaker 11: for the US book, globally has really been this idea
Speaker 11: of delayed pass through effects. Now, as we get into
Speaker 11: the later half of twenty twenty five into twenty twenty six.
Speaker 11: Very likely that it's going to not continue in that
Speaker 11: we expect inflation to be persistent, really moderately accelerate as
Speaker 11: we go into twenty twenty six, So there will.
Speaker 3: Be an en We're talking about the environment, and some
Speaker 3: of it is about headwinds and risk, But actually, when
Speaker 3: I think about where your research is at, you're looking
Speaker 3: at M and A, you're looking at investment flows, deals
Speaker 3: are getting done at least of the infrastructure wise in
Speaker 3: this country. That's all quite positive.
Speaker 2: Yes, absolutely.
Speaker 11: I mean, in many ways the tech sector has acted
Speaker 11: as a macroeconomic stabilizer for greater economic growth, and it's
Speaker 11: been fascinating to see.
Speaker 4: What's also been fascinating is how we discern where we
Speaker 4: protect talent or not. Look, there's been a lot of
Speaker 4: focus on H one B visas and been a lot
Speaker 4: of focus on trying to make the US more self
Speaker 4: sufficient with its own people, But should we be looking
Speaker 4: more broadly at who the AI talent is in some
Speaker 4: of these big tech companies and where they're coming from
Speaker 4: from a national security and in decent economic perspective, athlete.
Speaker 5: I mean, it is such a fair question right.
Speaker 11: When we take a step back, we see that overall
Speaker 11: the labor market has softened meaningfully. But when we talk
Speaker 11: about the specific talent around AI and machine learning, we
Speaker 11: see a lot of labor market titness, meaning there is
Speaker 11: so much demand. So as we talk about H one
Speaker 11: B visas and the overall impact, it's very likely that
Speaker 11: the demand is absolutely there for AI investment to necessitate
Speaker 11: global talent in this space.
Speaker 4: Natalie, it's been great having some time with the Natalie Gallia,
Speaker 4: principal and economist at Board, appreciated.
Speaker 5: New Mobile.
Speaker 4: It added one million post paid mobile customers, it raised
Speaker 4: its outlook for the year, and the boost is coming
Speaker 4: at a time when we're seeing the deal that was
Speaker 4: done with the US Cellular, the launch of the new
Speaker 4: iPhone seventeen. But interestingly, the market's kind of digesting this
Speaker 4: with perhaps looking a little bit at the revenue expectations,
Speaker 4: potentially missing there a little bit, and it's locked in
Speaker 4: a fist battle of course competition at and T Verizon.
Speaker 4: Who better to speak about all of this as Team
Speaker 4: Obile's chief operating officer, but he's the incoming CEO training
Speaker 4: up plan and I know this is a special day
Speaker 4: with really being there for the first set of earnings
Speaker 4: as the incoming CEO. But the market is kind of
Speaker 4: trying to find the flies in the ointment here. Why
Speaker 4: why do you think that million subscriber to postpaid wasn't enough.
Speaker 12: Look, I don't spend my time trying to predict market
Speaker 12: trading on a day to day basis. My focus is
Speaker 12: on building a solid, robust business, which is what we've got,
Speaker 12: and a business where we're constantly expanding and widening our differentiation.
Speaker 12: That's the core of what we're focusing on. Because when
Speaker 12: you look at this quartters results, you know, T Mobile
Speaker 12: has been the growth leader for thirteen years, and yet
Speaker 12: this quatter we added our highest number of new customers ever.
Speaker 12: And it's not just volume growth that translated into value growth.
Speaker 12: I'm not sure where you got the missing revenue expectations from,
Speaker 12: because we exceeded consensus on service revenue and we delivered
Speaker 12: nine percent service revenue growth along with six percent and
Speaker 12: deep a DA growth, and all of that translates into
Speaker 12: that all important metric cash twenty six percent cash conversion,
Speaker 12: which is the highest in the industry. So we're feeling
Speaker 12: really really good about where the business is.
Speaker 5: Just to go into the nuances.
Speaker 4: For example, service revenue eighteen point twenty four billion, it
Speaker 4: was up nine percent, but the estimate according to Bloomberg
Speaker 4: andsensus was for a little bit less than that eighteen
Speaker 4: point one six. Yes, but the revenue of twenty one
Speaker 4: point ninety six was perhaps slightly shy at the.
Speaker 5: Twenty one point nine to eight.
Speaker 4: As I'm saying, this is flies in the ointment perspective here,
Speaker 4: but I think the average revenue we use perhaps is
Speaker 4: one to look at how it's being pulled down a
Speaker 4: little bit. Because you are in this phase competition, and
Speaker 4: I'm interested as to how much to get over all
Speaker 4: these new subscribers, you are having to go toe to
Speaker 4: toe with some of the more incentives out there.
Speaker 12: So let me pass that question into three bits, right,
Speaker 12: getting new customers. Now, if you look at our cost
Speaker 12: of acquisition of new customers and all of that flows
Speaker 12: through to the bottom line, we added a million post
Speaker 12: paid phone customers and still delivered six percent earnings growth.
Speaker 12: That's because of a lot of the new customers are
Speaker 12: coming to us because there's only one place where you
Speaker 12: can get best network, best value, and best experience in
Speaker 12: that's Team Mobile. So while we talk about you know
Speaker 12: cost of new customers and the rest. When you have differentiation,
Speaker 12: you can drive earnings growth as well as bringing in
Speaker 12: new customers. From a competition perspective, look, this industry has
Speaker 12: always been competitive, and let's just pull back out of
Speaker 12: the detail of promotions in the rest you look at
Speaker 12: it on an industry level. The industry SEA has seen
Speaker 12: a fifty percent growth in free cash flow in the
Speaker 12: last three years, right at the same point as delivering
Speaker 12: more value to customers and your last piece of average
Speaker 12: revenue per user. Our POO actually went up by one
Speaker 12: point eight percent this year. In our guide. We have
Speaker 12: an in built two percent guidance increase on our pooh,
Speaker 12: which was higher than our earlier guide. And so from
Speaker 12: our perspective, you know, some other players have a different problem,
Speaker 12: which is some of the incumbents have their existing customers
Speaker 12: being a high price, so when they try and attract
Speaker 12: new customers, what lands up happening is dilution of our
Speaker 12: We don't have that problem. We've historically been the value
Speaker 12: leader in.
Speaker 3: This Hatriny five ten cycles. Yes, are great for attracting switches.
Speaker 3: You and I have talked about that a lot at
Speaker 3: Apple Park, but the companies those incumbents and you don't
Speaker 3: make any money on those handsets, is it fair to
Speaker 3: say you're sacrificing revenues for higher customer numbers in the
Speaker 3: event of a new product cycle light we're having in
Speaker 3: the iPhone.
Speaker 12: So two parts to that, one I agree with and
Speaker 12: one I debate. I just reject the starting point that
Speaker 12: we don't make money when we do new iPhones. Our
Speaker 12: customer lifetime value, which is the way we think about
Speaker 12: the profitability of a customer over the lifetime, are really
Speaker 12: really strong. Look, if we didn't make money when we
Speaker 12: attracted customers, we couldn't deliver a million new pots spaid
Speaker 12: customers and still grow our EBERDA at six percent and
Speaker 12: still deliver twenty six percent cash conversion. So the premise
Speaker 12: of that question, in my mind, is just false. On
Speaker 12: the other hand, I think you have an excellent point
Speaker 12: on the Switchers piece. Look, every time there's a new device,
Speaker 12: customers reassess the trade offs they've made historically and they
Speaker 12: look for what's the best place for the new iPhone?
Speaker 12: And T Mobile is conclusively the best place for the
Speaker 12: new iPhone. Just to give you some stats which give
Speaker 12: you a sense of that, right on the new iPhone
Speaker 12: on the T Mobile network, you get ninety percent higher
Speaker 12: speeds than one of our competitors and forty percent than
Speaker 12: the other. Right, So this is a great switching moment.
Speaker 12: It's a switching moment when our differentiation has widened, and
Speaker 12: that's why you've seen this outsized and profitable growth.
Speaker 3: Schwinigo Palin T Mobile currently the COO, soon to be
Speaker 3: the CEO.
Speaker 5: Thank you very much, Welcome back to Blueberg Tech.
Speaker 4: Let's take a look at these markets because on the
Speaker 4: last at one hundred, we're shrugging off some of the
Speaker 4: anxiety that you see in the bond market and indeed
Speaker 4: in the oil market, worries about inflatory pressure coming from oil.
Speaker 4: Instead we look at what's perhaps happening underneath the hood
Speaker 4: in terms of earnings and some semiconductors on a roll
Speaker 4: today we're up six tens of percent, but I shine
Speaker 4: a light on some areas.
Speaker 5: That are not doing so well.
Speaker 4: There's this surprise pre announcement coming from super Micro. Now,
Speaker 4: this has been a company well loved in the AI
Speaker 4: trade as they designed some of the servers that are
Speaker 4: going into a lot of these data centers.
Speaker 5: But actually they're.
Speaker 4: Saying that the upgrades aren't going to be happening really
Speaker 4: into their fiscal second quarter. Five billion is what they're
Speaker 4: directing us to in terms of sales, and it's well
Speaker 4: below expectations.
Speaker 5: Of six and a half billion.
Speaker 4: Get more detail later in November when they come out
Speaker 4: with their true earnings date. We're looking at Tesla also
Speaker 4: by one point seent percent, bouncing off of its lows,
Speaker 4: but we see also earnings per share the sacrifice there.
Speaker 4: We're seeing profitability down some thirty percent, even though we
Speaker 4: see all record volumes of deliveries in their quarter. We
Speaker 4: see operating expenses just shooting higher, and we want to
Speaker 4: get into all of that with our auto Zar Cragredell.
Speaker 5: He's joining us now.
Speaker 4: And really this was an earnings where the fundamentals were
Speaker 4: almost ignored on the conference call by the executives. It
Speaker 4: was much more about once again AI robotics in the future.
Speaker 6: Yeah, that's right, And you know, I think we've sort
Speaker 6: of grown accustomed to that right where it doesn't necessarily
Speaker 6: matter what the numbers are. Oftentimes what Musk has to
Speaker 6: say matters more. But I think in this case, you know,
Speaker 6: absolutely there was some expectation that you know, after you know,
Speaker 6: vehicle sales were so much better than a lot of
Speaker 6: people anticipated. You know, I think that that maybe contributed
Speaker 6: to some recovery in you know, consensus for these earnings
Speaker 6: results that we got last night. And yet a lot
Speaker 6: of the you know, a lot of this sort of
Speaker 6: pass through from that strong top line was maybe a
Speaker 6: bit on the disappointing side, and there didn't seem to
Speaker 6: be enough oomph to what must had to say to
Speaker 6: sort of, you know, do much for the stock here.
Speaker 3: You know, you must talk largely about AI and the
Speaker 3: promise of AI in the future. But the CFO and
Speaker 3: in the earning stick gave us more about tariff impact,
Speaker 3: to costs, the environment with policy capex plans in the
Speaker 3: teench Q which you caught this morning. I think as well,
Speaker 3: what were the other things that the market could go on.
Speaker 6: Yeah, you know, I think the four hundred million tariff
Speaker 6: impact just in the quarter was noteworthy. It was hard
Speaker 6: to tell from the call last night, you know, to
Speaker 6: what extent they were alluding just to that, you know,
Speaker 6: being the number and the impact for the energy business
Speaker 6: or if it was energy and autos, because there was
Speaker 6: some possibility there that they were referring to multiple sort
Speaker 6: of you know, parts of the energy business. But in
Speaker 6: any case, we've known that that was going to be
Speaker 6: a problem for Tesla because they do procure battery cells
Speaker 6: from China for that side of the business. I think
Speaker 6: another thing that was very interesting to me was just
Speaker 6: you know, we expected to be a drop there to
Speaker 6: be a drop off in regulatory credit revenue, but already
Speaker 6: we're seeing, you know, a pretty substantial drop from a.
Speaker 2: Year ago in that business.
Speaker 6: And you know, you would think that there's more to
Speaker 6: come in that regard now that we have not only
Speaker 6: tax credits are going away, but also you know, fuel
Speaker 6: economy and emissions regulations having been gutted by the Trump administration.
Speaker 3: Blue Bess crazy Dale, thank you very much. Tesla argued,
Speaker 3: it's expanded its products offering, and it emphasized its most
Speaker 3: affordable models. Yet but many investors just aren't buying it.
Speaker 3: Let's get the engineers take. He was called the teardown Titan,
Speaker 3: decades of experience tearing cars apart and telling auto makers
Speaker 3: how well or how badly they're built. Now retired Sandy
Speaker 3: Munro was once a big Tesla scale, criticizing early model threes,
Speaker 3: but he changed his tune as the company improved its
Speaker 3: cars and offered more models at times. A Tesla shareholder
Speaker 3: and part of the Tesla and Elon Musk fan community online,
Speaker 3: he has been watching closely delighted to say, Sandy Munro
Speaker 3: joins us. Now, Sandy, we wanted you to come on
Speaker 3: the program because we thought there'd be more emphasis on
Speaker 3: this new generation of standard model Y model three. And
Speaker 3: the question I get most for you is what did
Speaker 3: they actually engineer out in terms of the cost.
Speaker 13: Well, at the end of the day, they did quite
Speaker 13: a few things that dropt the price, or let me
Speaker 13: rephrase that the cast are getting the job done.
Speaker 2: At number one.
Speaker 13: They moved back away in some cases from the giant
Speaker 13: cast things. The gigacast things are a great way to
Speaker 13: get rid of componentry and one eye bo okay, Aasionally
Speaker 13: what you do is you wind up in a situation
Speaker 13: where your peace costs are a little exorbitant. So they've
Speaker 13: moved a little bit sideways on it. They still have product,
Speaker 13: some of their product there, but some of it has
Speaker 13: moved away. As far as the what I saw, as
Speaker 13: far as the reduction any amount of costs associated with
Speaker 13: the product, those are all kind of things that you
Speaker 13: do after you've launched a program. So the amount of things,
Speaker 13: if you'd like that that will reduce the amount of
Speaker 13: costs are kind of right now insignificant. But they lay
Speaker 13: a plan for the future. So if you start looking
Speaker 13: at some of the things that they've experimented on with
Speaker 13: the cyber truck and whatnot, where they've gone to steerby
Speaker 13: wire ethernet controls, I mean, that's the stuff you need
Speaker 13: to drop the problems associated with latency. Latency being the
Speaker 13: amount of time you need to control a car in
Speaker 13: a crash.
Speaker 4: Yeah, So will they the right sacrifice is Sandy? Are
Speaker 4: you feeling that they're making the right decisions to get
Speaker 4: to the right price point at the moment?
Speaker 2: Yeah.
Speaker 13: Absolutely. Everything i've seen I like. I'm well, not everything,
Speaker 13: but most everything i've seen I like.
Speaker 12: What you like?
Speaker 2: What do I like?
Speaker 5: Don't you, Sandy? What don't you like?
Speaker 13: What don't I like? The things I don't like are
Speaker 13: kind of like, I don't understand why the heaven brought
Speaker 13: the I'm calling it the model to the cyber taxi.
Speaker 13: Why have they brought that out? I'm ready for that
Speaker 13: right now. I don't need a steering wheel I've already
Speaker 13: been in that via goal several times, and I think
Speaker 13: it's the ideal opportunity to sell for people that are
Speaker 13: my age. Now, I'm kind of agile, I'm not a cripple,
Speaker 13: and I my my, My reflexes are pretty quick. Actually,
Speaker 13: two days ago I caught a fly at the restaurant
Speaker 13: and a shot the daylight out of the waiter. At
Speaker 13: the end of the.
Speaker 2: Day that that.
Speaker 13: Product should have been should have been out in the marketplace,
Speaker 13: like right now, we need it for the baby boomers boomers.
Speaker 2: So that's the thing I don't like. Sandy.
Speaker 3: I don't know if you remain a Tesla shareholder or not,
Speaker 3: but right now you know the company, thank you for clarifying,
Speaker 3: has a lot on its plate. One of the pieces
Speaker 3: of news was that they're building out the assembly line
Speaker 3: for the humanoid robot. You have a deep analysis of
Speaker 3: the things that Tesla does itself as a vertically integrated company.
Speaker 3: Could you just give me your set of how you
Speaker 3: think they'll be able to establish their own supply chains
Speaker 3: and build such a product in line with also delivering
Speaker 3: twenty million EBS over the next decade.
Speaker 13: I let me attack that in a couple of different ways.
Speaker 13: Number One, I believe when Elon said that this is
Speaker 13: going to be the maybe the biggest product ever or something.
Speaker 13: I can't remember exact words, he is absolutely correct. Again,
Speaker 13: I go back to this aging population. It constant that
Speaker 13: that robot should sell for somewhere around one hundred one
Speaker 13: hundred and a quarter each. Okay, if I take a
Speaker 13: look at nursing care, you're looking at each each nurse,
Speaker 13: and you'll need three of them because for twenty four
Speaker 13: hour kind of stuff, each nurse is going to be
Speaker 13: getting about one hundred a quarter. I'd say maybe one
Speaker 13: hundred a year with benefits maybe a little higher. Man,
Speaker 13: this is the best return on investment ever. Not only
Speaker 13: that Grandma won't have to worry about taking her pills.
Speaker 13: Somebody won't have to try and pick grandpap and take
Speaker 13: them to wherever he needs to go. I mean, this
Speaker 13: is a huge opportunity. And I've been working on robots
Speaker 13: since I was sixteen, so that's a long long time.
Speaker 2: That's like.
Speaker 13: Sixty years ago. This is this is a huge thing.
Speaker 13: Wh I'm more up on that than I am the cars.
Speaker 4: Sonny Monroe, the test A Tout and Titan. Maybe it'll
Speaker 4: be a robotics Ted and Titan too. We appreciate your time,
Speaker 4: thank you very much. Indeed, battery recycling startup Redwood Materials,
Speaker 4: has just raised three hundred and fifty million dollars in
Speaker 4: a Series E funding round, pushing its valuation past six
Speaker 4: billion dollars according to sources.
Speaker 5: I'm pleased to.
Speaker 4: Say welcome him to the show. JB Stravel, Redwood material CEO.
Speaker 4: Test of member and JB.
Speaker 5: Why raise? What's the money going to be used for?
Speaker 14: Well, thanks for having me, and the primary purpose for
Speaker 14: this particular Series Z raise is actually to accelerate our
Speaker 14: grid energy storage business. So many people think of us
Speaker 14: as a battery recycler only, but on top of that platform,
Speaker 14: you know, we've built a growing energy storage business that
Speaker 14: is really quite exciting.
Speaker 2: JB.
Speaker 3: I'm recognizing that there's a there's a there's a pivot
Speaker 3: here for Redwood, right, and the question that we get
Speaker 3: a lot for you is what is the viability of
Speaker 3: that legacy recycling business under the Trump administration and the
Speaker 3: policy environment we're in. Could you explain that based on
Speaker 3: the emphasis you're putting on this next gen energy demand
Speaker 3: from data centers.
Speaker 14: Yeah, well, I guess the first thing i'd highlight is,
Speaker 14: you know, there are no federal incentives. There's no sort
Speaker 14: of infrastructure for the federal government to support battery recycling.
Speaker 2: There never has been.
Speaker 14: So what we do and others do is is purely
Speaker 14: driven by economics and being competitive today with mind materials,
Speaker 14: and in this current Trump administration, actually, you know, we've
Speaker 14: seen huge excitement around the critical materials nature of what
Speaker 14: we're working on because you know, very directly we're a
Speaker 14: quite substantial source of cobalt, nickel, and lithium and copper,
Speaker 14: you know, all of which is domestically sourced. It's already here,
Speaker 14: it's already secure. So from that point of view, I
Speaker 14: actually am perhaps even more excited about the core recycling
Speaker 14: business in this administration than I have been in the past.
Speaker 2: Well, JB, just real quick.
Speaker 3: I was of the understanding the IRA did provide for
Speaker 3: incentives for recycling, am I Am I wrong about that?
Speaker 14: No, that the IRA provides, you know, incentives for some
Speaker 14: of the material manufacturing that sort of evolves further downstream
Speaker 14: from recycling, so suber to make it. So that's the
Speaker 14: more the manufacturing side, but in terms of collection, refining,
Speaker 14: and selling those materials back there's no incentives, there's no
Speaker 14: particular premiums for that material.
Speaker 4: And boy, in this moment of electrification, in this moment
Speaker 4: of need for compute and data centers, do we need
Speaker 4: a lot of.
Speaker 5: Those materials that you talk about.
Speaker 4: And with rare earth metals being a concern too, I'm
Speaker 4: interested in just who then gets strategically on the cap
Speaker 4: table to drive that forward. JB Why and Video for example,
Speaker 4: interesting that they're coming on well.
Speaker 14: In Vidia's interest is clearly evolving from our energy storage business,
Speaker 14: and what we're doing is taking old transportation battery packs,
Speaker 14: refurbishing them and then redeploying them, extending their life in
Speaker 14: a very low cost setting to provide these energy storage
Speaker 14: services for data centers, for AI factories, and for the
Speaker 14: expansion of industrial grid electrification. And this is one of
Speaker 14: the cheapest ways to provide grid energy storage. It's far
Speaker 14: cheaper than deploying brand new batteries, and it can be
Speaker 14: a complementary strategy alongside of our materials recycling. So this
Speaker 14: is really what's driven in Video's excitement. I think they
Speaker 14: see that energy access and electricity availability is has become
Speaker 14: a key strategic point for AI factory expansion.
Speaker 4: Can we talk about the money therefore that you neque
Speaker 4: coming and you graise this equity, but we're also depending
Speaker 4: on money coming from a federal perspective, a two billion dollar.
Speaker 5: Loan from the Department of Energy. How is that in status?
Speaker 4: How are you seeing that navigation when it looks as
Speaker 4: though the current administration wants well equity for every time
Speaker 4: they're giving some sort of federal funding.
Speaker 14: Well, everything we're doing is supported by private funding. You know,
Speaker 14: that's something we're pretty proud of. And this round continues
Speaker 14: that focus. You know, the government obviously has you know,
Speaker 14: taken a different approach and looking at the DOE loan program,
Speaker 14: and you know there's a huge amount of interest in
Speaker 14: a lot of these projects. But you know, i'd say,
Speaker 14: you know, from our point of view, we're focused on
Speaker 14: critical materials and energy storage and looking at the applicability
Speaker 14: of that for those interests.
Speaker 2: JB. You are on Tesla's board.
Speaker 3: You recuse yourself from the Special Committee on comp I
Speaker 3: know that Elon's argument is he needs voting control of Tesla.
Speaker 3: Explain that to me as if I were a five
Speaker 3: year old. Please the basics of why the board's position
Speaker 3: is that Elon should have voting control.
Speaker 14: Well, I can't say too much more about Tesla matters today,
Speaker 14: but you know, maybe it just comment that, you know,
Speaker 14: the focus is really on you know, providing shareholder value
Speaker 14: and that's really the sort of first and foremost direction
Speaker 14: that we look at these things from. So I think
Speaker 14: this proposal you know, really does that, and it provides
Speaker 14: you know, potential incredible upside growth to the existing and
Speaker 14: future shareholders.
Speaker 3: And lastly, JB, you're aware of the Bloomberg reporting about
Speaker 3: the manual release mechanism in Tesla car doors. From the
Speaker 3: board's perspective, are you aware of any action Tesla's taking
Speaker 3: to change the design of that mechanism or has it
Speaker 3: been discussed at the board level?
Speaker 14: Well, again, I can't go too deep on these topics,
Speaker 14: especially you know, if there's any ongoing legal proceedings, but
Speaker 14: you know, we take any safety matters incredibly seriously. You know,
Speaker 14: this is this is you know, one of the most
Speaker 14: important issues, and we're constantly watching that, We're constantly looking
Speaker 14: at you know, new events and reports, and you know,
Speaker 14: we'll stay closely aware of any actions going on there.
Speaker 3: Redwood just raising three hundred and fifty million dollars untold
Speaker 3: by sources, the valuation more than six billion, a pivot
Speaker 3: from just recycling to a broader look at what's happening
Speaker 3: in data center and the energy supply chain.
Speaker 2: JB.
Speaker 3: Strawbel Redwood Materials really appreciate your time, Thank you very much.
Speaker 3: IBM reporting disappointing revenue in two key software categories, including
Speaker 3: it's closely watched red Hat units, sparking concern among investors
Speaker 3: who see those businesses as essential to growth. IBM CEO saying, quote,
Speaker 3: I'm going to be upfront on one area where it
Speaker 3: didn't look so good. Red Hat growth slowed from fourteen
Speaker 3: percent loss corder to twelve percent. But I'm not worried
Speaker 3: about that. If I'm looking to twenty six CARO, that
Speaker 3: was your interview. What else did you learn in that conversation.
Speaker 4: Yeah, Iman Krishna was really trying to own the area
Speaker 4: that he knew would be of concern and the sequential
Speaker 4: slow down and that was from a constant currency basis said,
Speaker 4: but he was saying that this is legacy issues. This
Speaker 4: is from like twenty three twenty four era. We're now rectifying.
Speaker 4: I'm now seeing really strong upfront demand for red Hat.
Speaker 4: So he's not worried about twenty twenty six. In fact,
Speaker 4: he's really trying to redirect everyone's focus that they are
Speaker 4: an R and D business. They are super heavy in
Speaker 4: terms of the software side of things. We've got a
Speaker 4: pivot this inflection at what's wanting in terms of consulting.
Speaker 4: But he's very pleased about the revenue growth that he
Speaker 4: keeps seeing, and they're also really thinking about the AI
Speaker 4: Booker business nine and a half billion dollars and is
Speaker 4: really shouting approuding that sort of level. But it was
Speaker 4: interesting also that this is a company that's thinking about quantum,
Speaker 4: and boy is there a lot of quantum that's in
Speaker 4: the news, But I think the AI Booker business is
Speaker 4: one to really be keeping an eye on nine and
Speaker 4: a half billion dollars in just about two years. So
Speaker 4: he was more optimistic than perhaps the share price would
Speaker 4: be weathering on the day would seem to show at
Speaker 4: the moment ed. But I think what's really interesting is
Speaker 4: all of this comes on the heels of all these
Speaker 4: earnings that we're seeing, and we're going to be looking
Speaker 4: at Intel a little bit later. I know you in
Speaker 4: particular are going to be trying and analyze that we're
Speaker 4: off by two point six percent on at IBM. Let's
Speaker 4: look at where we are in terms of where Intel
Speaker 4: trades ahead of its numbers, up seven tens percent, notable
Speaker 4: as we think about where its business is going to
Speaker 4: be for growth when they've also given a ten percent
Speaker 4: equity stake to the US government. Who else is giving
Speaker 4: equity stakes to the US government?
Speaker 5: Maybe quantum stocks.
Speaker 4: Some reporting out there from the Wall Street Journal ed
Speaker 4: that we've got a whole raft of quantum companies maybe
Speaker 4: talking about federal fund and going forward, and of course
Speaker 4: that shares or on the up. We see Ion and
Speaker 4: q up eight percent. But look at that d wave
Speaker 4: about fifteen percent now coming up. Let's talk about what
Speaker 4: else you've been up to. Add rivian z bike spinoff
Speaker 4: also wing its first product. That's not the only news
Speaker 4: coming up with TV maker. More on that next as
Speaker 4: a BlueBag.
Speaker 3: Tech this is the first product from also the micro
Speaker 3: mobility startup spun out from ev maker Rivian. It's called
Speaker 3: the TMB an e bike that starts under four thousand dollars.
Speaker 3: TM stands for Transcendent Mobility. It has a unique pedal
Speaker 3: by wire system, no chains or gears, just sensors and
Speaker 3: software converting pedaling to electric power. Two and a half
Speaker 3: years ago, I broke a story that Rivian, the EV maker,
Speaker 3: was working on a bike.
Speaker 2: We just didn't know what kind of bike.
Speaker 3: Now we did, Rivian saw a chance to reach short
Speaker 3: trip riders and leverage is battery tech.
Speaker 13: Now.
Speaker 3: Also is Independent launching its first gen E bike after
Speaker 3: raising hundreds of millions of dollars. I'm riding the premium
Speaker 3: version of the TMB. There's a touchscreen interface for modes,
Speaker 3: maps and music. The detachable battery pack has USBC fast
Speaker 3: charging and uses the same cells as Rivian's evs. The
Speaker 3: modular seat or top frame adjusts without tools. It can
Speaker 3: be shared adjustable pedal assist with speeds up to twenty
Speaker 3: eight miles an hour. There's also an accelerator that throttles
Speaker 3: up to twenty miles per hour where it's allowed.
Speaker 2: One more thing.
Speaker 3: Also is planning four wheeled variants for families and businesses.
Speaker 3: Reservations are open, but deliveries start next year. Can a
Speaker 3: Rivian spin out really redefine the E bike? Ahead of
Speaker 3: that ride, we spoke to Rivian CEORJ Scarrange about what
Speaker 3: the launch of also Z e bike means for his company.
Speaker 2: Listen to this.
Speaker 15: Aside from the fact that Brivian's and shareholder, it also
Speaker 15: allows us from a mission point view to see to
Speaker 15: seed the market or to see customers with an exposure
Speaker 15: to something that's advanced technology in electrification that has a
Speaker 15: much lower step in price. And let's say a car
Speaker 15: even in our two with a starting price forty five
Speaker 15: thousand dollars, you know a lot of folks maybe want
Speaker 15: to try it, likedictional want and try it in more
Speaker 15: like a seven four.
Speaker 2: Thousand R version.
Speaker 4: Now, in other news on Rivian, we understand today it's
Speaker 4: cutting about six hundred jobs as the company contends with
Speaker 4: an unsteady market.
Speaker 5: For evs in the US. It's all according to a source.
Speaker 4: And we should note that the SoundBite that we just
Speaker 4: heard from Marj Scarrine was part of a conversation that
Speaker 4: took place before the news of the layoffs at Revian.
Speaker 3: Right ed, Yeah, that's right, you know, commercial roles being cut.
Speaker 3: But Rivian on the board, big stakeholder.
Speaker 4: And also what a busy show, extraordinary package. I love
Speaker 4: seeing it on LinkedIn and across very of the social networks.
Speaker 4: Go see more of ed on a bike. But that
Speaker 4: does it for this edition of Bloomberg Tech.
Speaker 3: Yeah, check out the pod. You know where to find it.
Speaker 3: Lots of you listen to it. Thank you very much.
Speaker 3: This is Bloomberg Tech.