Speaker 1: From Mahard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed loved Love.
Speaker 2: Live from New York.
Speaker 3: This is Bloomberg Technology coming up a victory for Micron
Speaker 3: as the company gets it's a weighted six billion dollar
Speaker 3: grant from the US government.
Speaker 2: We discuss us, We break down the.
Speaker 3: Tech earnings with Oracle falling the most in a year
Speaker 3: after posting lukewarm quarterly revenues, and we sit down with
Speaker 3: the CEOs of Omnicon and Into Public to dissect the
Speaker 3: deal creating the world's largest advertising company. But first we
Speaker 3: check in on these markets. The key points contributor to
Speaker 3: the upside on the Nasdaq, which does hold in the
Speaker 3: green is up three point seven percent.
Speaker 2: It's all about Alphabet.
Speaker 3: Look, actually, we had that head of Quantum AI on
Speaker 3: the show yesterday discuss saying the breakthroughs they're making in
Speaker 3: quantum computing in the Willow chip and this really feeds
Speaker 3: into a well virtuous cycle as to whether it's about
Speaker 3: quantum AI and cloud All eyes on Alphabet move on
Speaker 3: as someone to look at the drags to the downside
Speaker 3: note of them in the chips name Space, but software
Speaker 3: also we're looking at cloud and software, with Oracle off
Speaker 3: by seven percent at one point, down as much as
Speaker 3: ten percent as look, an eighty percent ramp up in
Speaker 3: these shares so far this year, therefore, had a high
Speaker 3: bar for its earnings, and look, the forecast didn't beat expectations.
Speaker 3: Neither did the nine percent growth in revenue, even though
Speaker 3: they did delivering cloud Infrastructure'm looking at TSMC, also, a
Speaker 3: name that's up eighty percent so far this year. We're
Speaker 3: down one point seven percent, even though they show that
Speaker 3: November sales are ramping ever high and more than thirty percent.
Speaker 3: We dig into that in a minute. Micron as well,
Speaker 3: off by two point two percent. Although finally they get
Speaker 3: certainty around that six billion dollar grant coming from the
Speaker 3: Chipsack coming from the US government to be able to
Speaker 3: expand memory offering and manufacturing here in the United States.
Speaker 3: It's a relief. Let's talk about it with Peter Elstrom
Speaker 3: and Peter.
Speaker 2: I'm in to. This is a relief.
Speaker 3: It was an overhang on the stock because we're worried
Speaker 3: that maybe the Trump administration would deny it.
Speaker 1: Yeah, that's exactly right.
Speaker 4: This is a program where the Biden administration has tried
Speaker 4: to rebuild the semiconductor industry in the United States. The
Speaker 4: Chips Act is one of the landmark programs that the
Speaker 4: administration had, and they wanted to make sure that they
Speaker 4: locked down this money because Trump personally had criticized these
Speaker 4: agreements is so bad and the Republicans that even floated
Speaker 4: the idea that maybe they try to repeal this even
Speaker 4: though it was passed with bipartisan support. So the Commerce
Speaker 4: Department is trying to lock down these agreements now and
Speaker 4: finalize the details as much as they can before there's
Speaker 4: this transition in January. So Micron, the really big US
Speaker 4: maker of memory chips, won this award more than six
Speaker 4: billion dollars. That's going to help them build out facilities
Speaker 4: in Idaho and New York to very key states and
Speaker 4: try to build up their ability to develop more advanced
Speaker 4: memory chips, including these HBM memory chips that are used
Speaker 4: with AI from Nvidia to be able to train AI models.
Speaker 5: Well.
Speaker 3: The manufacturing king is of course TSMC, and they're just
Speaker 3: showing how still that focus on AI is a living,
Speaker 3: breathing thing. Even though we'd have perhaps been worried about
Speaker 3: the buildout of data bass and more broadly slowing down.
Speaker 4: That's right, TSMC sits in an unusual market in Taiwan.
Speaker 4: Companies have to report their monthly sales, so we get
Speaker 4: little drips and drabs of information throughout the quarter before
Speaker 4: we get the final results. So these are mostly just
Speaker 4: revenue that the company puts out there. But what we
Speaker 4: did see from TSMC is that revenue is up more
Speaker 4: than thirty percent. As you said, they are a bell
Speaker 4: weather for AI because they make the most advanced chips
Speaker 4: in the industry, including the chips that Nvidia uses to
Speaker 4: be able to sell to the likes of Microsoft and
Speaker 4: open Ai and Google. So it gives us an early
Speaker 4: indication of how that demand is holding up. One of
Speaker 4: the big questions overhanging the whole AI boom at this
Speaker 4: point is whether companies are going to be able to
Speaker 4: figure out whether there's a profitable way to deploy these models,
Speaker 4: whether they can actually makes some money after investing really
Speaker 4: tens of billions of dollars. At this point, TSMC is
Speaker 4: getting a lot of that benefit right now. The question
Speaker 4: is whether it's a long term trend that TSMC and
Speaker 4: others are going to be able to benefit from or
Speaker 4: whether there's some tapering that comes up if the profits
Speaker 4: don't materialize pretty soon, what is the killer application?
Speaker 3: Putilstrom thanks so much breaking down chip makers. Meanwhile, let's
Speaker 3: stick with Chinese president using pain saying that China has
Speaker 3: full confidence in achieving its five percent economic growth target
Speaker 3: this year. He also told international economic organizations gathered in
Speaker 3: Beijing that China is willing to maintain and promote the
Speaker 3: development of relations with the US.
Speaker 2: Just take a listen.
Speaker 6: I have repeatedly emphasized that human beings are a community.
Speaker 1: Of shared future.
Speaker 6: We should treat each other's developments as an opportunity rather
Speaker 6: than a challenge. We should see each other as partners
Speaker 6: rather than rivals. Let's so leadarity, unity, cooperation, mutual benefits
Speaker 6: and win win progress become the main theme of the times.
Speaker 3: Locally, Chain and of course Micron and and Vidio have
Speaker 3: been under pressure with rising tensions, for example, between the
Speaker 3: US and China and what that means for some US
Speaker 3: chip makers. Let's dig in to those tensions and indeed
Speaker 3: edtagomic economic growth more broadly with Janet Munit. It's just
Speaker 3: head of market analysis at RBC bruin Dolphin and interestingly.
Speaker 2: You've been.
Speaker 3: I wouldn't say full out positive, but leaning on some
Speaker 3: interest in Chinese names and Chinese economic stimulus that seems
Speaker 3: to be being promised more forcefully.
Speaker 7: Oh hi, Caroline, thanks for having me so. Primarily, our
Speaker 7: strongest conviction is US stocks, particularly because of the US exceptionalism.
Speaker 7: I think this thing is still going to trade into
Speaker 7: the new year, and the fact that US companies are
Speaker 7: just so much more profitable, so we still much creit
Speaker 7: for US stars versus the rest of the world. However,
Speaker 7: for Chinese stocks, I think, you know, sentiment has been
Speaker 7: very depressed. I think, you know, investors are still doubtful
Speaker 7: on the scale of the stimulus and whether it is
Speaker 7: going to work, so it is not that much of
Speaker 7: a consensus trade. I think this trade is having still
Speaker 7: a lot of resistance, and we feel that sentiment has
Speaker 7: been way too negative and you know, evaluations are very cheap.
Speaker 7: There is a case to make that there could be
Speaker 7: more stumulous coming and the fact that economic data is stabilizing,
Speaker 7: so I think there's a case for investors to diversify
Speaker 7: a bit into the Chinese stocks as well.
Speaker 3: Small overweight in Asia extra Pan on the back of that,
Speaker 3: what of therefore, the daily deluge we get on ramping
Speaker 3: up China US tensions. Yesterday it was about in video
Speaker 3: being investigated by Chinese regulators. There's a longgoing narrative around
Speaker 3: Micron as well. How have you been trying to price
Speaker 3: that in?
Speaker 7: Well, I have to say it is very difficult to
Speaker 7: price it. I do believe that institutional investors have somewhat
Speaker 7: been more prepared this time, and you can see that
Speaker 7: in some of the sell off in the trade exposed
Speaker 7: stock for example European x UK stocks for instance. So
Speaker 7: I think industrials I've already been making some adjustments and
Speaker 7: thoughts on the trade tariff issue is very difficult to
Speaker 7: press in, but I guess some of that is already
Speaker 7: reflected in market and overall speaking our views that the
Speaker 7: trade tariff's likely going to be.
Speaker 1: Added for TAT and negotiation tactics.
Speaker 7: Doubtful that the full extent of the threat is going
Speaker 7: to be fully implemented, although it is acknowledged.
Speaker 1: That some of that will be through.
Speaker 7: So keeping out of that, but it's not necessarily a
Speaker 7: deturn to the ongoing rally in the US equity market
Speaker 7: for example.
Speaker 3: Okay, so the likes of an Nvidia that has got
Speaker 3: an enormous valuation continue to rally throughout twenty twenty four?
Speaker 3: Does that continue into twenty twenty five? Come we vindicate
Speaker 3: these value which is the run up that we've seen
Speaker 3: in stocks like an eight percent up on Oracle, an
Speaker 3: eighty percent up on the list of depository notes of TSMC.
Speaker 7: Yeah, using gold out Nvidia there. I'm not going to
Speaker 7: make a specific comment, but this is obviously a great stock,
Speaker 7: huge profit margins, and still very strong guidance of the
Speaker 7: black Well chip architecture. And I think, I mean, this
Speaker 7: is a great company. Obviously investors have is dubbed on
Speaker 7: the high valuation. I think it can the rally can
Speaker 7: still go on given that you know, investors still like
Speaker 7: strong quality growth. So I would feel that investors will
Speaker 7: still be very much leaning on the semiconductor sector and
Speaker 7: then tech in general, life chap in general. In the US,
Speaker 7: I also feel that investors are more shifting and rotating
Speaker 7: into more software related stocks instead of just the semi's hardware.
Speaker 7: I think that makes sense because that there is likely
Speaker 7: to be more commercialization potential and realization as aiimals for it,
Speaker 7: from the infrastructure built out to the influencing and to
Speaker 7: the applications.
Speaker 3: Will have names like Palenta. Coming up in the show
Speaker 3: a little bit later, Januinally, great to.
Speaker 2: Get your expertise.
Speaker 3: Head of market analysis at LBC brun Dolphin, thank you.
Speaker 2: Coming up.
Speaker 3: C three AIS focused on General to AI. Well, the
Speaker 3: products there are helping drive revenue, but at what cost?
Speaker 3: Company CEO Tom Siebel joins us next. Meanwhile, let's just
Speaker 3: check it back in on alphabet, which we'd said had
Speaker 3: been rallying almost four percent, having its best day on
Speaker 3: one point since April twenty twenty four. Here's what Google
Speaker 3: Quantum AI founder Hartman Navin told us yesterday.
Speaker 1: FENM computing, It's definitely not that field.
Speaker 8: There's steady progress, and our new chips if you just
Speaker 8: released a willow, will form the basis to start doing
Speaker 8: useful computations that will enable or solve problems that humankind has.
Speaker 3: Let's get to another set of ownings for you. C
Speaker 3: three AI raising its full year sales forecast. General to AI,
Speaker 3: of course helping drive sales, but almost kind of cautioning
Speaker 3: of the lack of profitability in some areas. Joining us
Speaker 3: for more. C three AI CEO Tom Cebill, Look, your
Speaker 3: shares are down a little bit, but boy, they've ramped
Speaker 3: up sixty percent in less than a month. So a
Speaker 3: lot of optimism going into these numbers.
Speaker 2: What drove you to raise the forecast?
Speaker 9: Well, it was a it was a great quarter. If
Speaker 9: the year to day it has been great. I think
Speaker 9: our revenue growth year over your last quarter was twenty
Speaker 9: nine percent, which is huge. I think most importantly we informed.
Speaker 9: We formed this massive strategic alliance with Microsoft, the largest
Speaker 9: software company in the world, and all of Microsoft, as
Speaker 9: there are salespeople worldwide, will be selling C three AIS
Speaker 9: enterprise AI software solutions, you know, on their price list,
Speaker 9: getting ported credit being compensated, and so we C three
Speaker 9: AI goes from order of one hundred salespeople in September
Speaker 9: to order perhaps tens of thousands of salespeople in November.
Speaker 9: So that is a very strong tailwind that builds extraordinary
Speaker 9: well for C three AI.
Speaker 3: That is this slight worry about the profitability, saying that
Speaker 3: basically revenue, you're prioritizing growth rather than profitability.
Speaker 2: What do you say to that.
Speaker 9: Time In the short term, we're prioritizing growth. You know,
Speaker 9: I have this huge enterprise sales engine in the in
Speaker 9: the form of Microsoft that now we need to enable
Speaker 9: and for really to not invest in that channel to
Speaker 9: get thousands of people productive selling and servicing our product
Speaker 9: and not invest in that is crazy goodness, Caroline. We
Speaker 9: have three quarters of roughly three quarters of a billion
Speaker 9: dollars cash in the bank. And what am I going
Speaker 9: to do with that if not invest in growth, not
Speaker 9: invest in market share, and not invest if not invest
Speaker 9: in market leadership. And I assure you the cash flow
Speaker 9: and profitability follows.
Speaker 3: Okay, So how profitable, for example, would a deal like
Speaker 3: Microsoft the extension there be because you're obviously digging in
Speaker 3: on that partnership. They help distribute your offerings. But how
Speaker 3: much revenue do you have to give up for that?
Speaker 5: You do?
Speaker 9: Actually virtually one hundred percent of the revenue from the
Speaker 9: C three AI sales a cruise to C three AI.
Speaker 9: So it's you know, Microsoft gets the benefit of selling
Speaker 9: their infrastructure and cloud services. C three gets the benefit
Speaker 9: of selling the C three I applications. But uh, you know,
Speaker 9: a very small portion.
Speaker 1: Of the revenue is given up.
Speaker 9: And this is just a dramatic revenue accelerator. This is
Speaker 9: the largest software company in the world and they have
Speaker 9: chosen C three AI as their preferred enterprise AI solutions
Speaker 9: provider Strategic partnerships just don't get bigger than this.
Speaker 3: They don't and Sertny Piper and the analysts over there
Speaker 3: saying this potentially drives material upside. There are though, and
Speaker 3: I hate to keep going back to some of the
Speaker 3: flies in the ointment, but Key Bank just worrying about
Speaker 3: the differentiation here, Tom of your AI offering. How do
Speaker 3: you make clear your USP versus rivals out there?
Speaker 9: There is one company on the planet Earth, Carolion, that
Speaker 9: offers over one hundred turnkey enterprise AI applications for utilities,
Speaker 9: for oil and gas, for defense, for intelligence, for pharmaceutical
Speaker 9: Fortalit one company on the planet Earth, Okay that offers
Speaker 9: these kinds of solutions, and that is our differentiation.
Speaker 2: And federal strength.
Speaker 3: You enlisted a lot there within defense and with ultimately
Speaker 3: you've got a government focus in many ways that has
Speaker 3: seen a lot of selling it to federal Will that
Speaker 3: continue any issues about the administration coming on in twenty
Speaker 3: twenty five under Trump?
Speaker 9: There are our business in the defense intelligence in federal
Speaker 9: community has been very strong. I expect that to accelerate
Speaker 9: in the Trump administration with people like elon getting involved.
Speaker 9: I think their priorities if we listen to their conferences
Speaker 9: and we go to, for example, the Reagan Defense Forum
Speaker 9: that took place last week, there is one topic on
Speaker 9: the agenda, and that is AI applications, AI applications, AI applications,
Speaker 9: and then they also talk about cyber But this is
Speaker 9: clearly going to be a huge priority for making government
Speaker 9: more efficient okay making, and it is the future of
Speaker 9: our defense and intelligence community. So this votes extraordinarily well
Speaker 9: for the commercial software providers like C three AI, and
Speaker 9: perhaps votes less well for the traditional kind of beltway
Speaker 9: systems integrators. I think that the tide might be going
Speaker 9: out for those guys.
Speaker 3: Tom Siebel ultimistic on CVAI. Of course, the CEO thanks
Speaker 3: for joining yesterday. Let's stick with earnings and let's just
Speaker 3: check out what's happening with Oracle, because it has been
Speaker 3: on a tear of late, up eighty percent in terms
Speaker 3: of share price this year, and therefore its optimism didn't
Speaker 3: live up to well. The height was there, but the
Speaker 3: numbers didn't quite meet that height. We're down seven percent
Speaker 3: after we saw nine percent increase in revenue. There was
Speaker 3: strong cloud infrastructure growth though Anna rag Grana breaks it
Speaker 3: down from Blomberg Intelligence. It just wasn't enough, was it.
Speaker 10: See they did beat on constant currency, So in the
Speaker 10: reported there were slightly you know, slightly below, but that
Speaker 10: was effics oriented. But at the same time, you know,
Speaker 10: I think, as you mentioned, the expectations are really getting
Speaker 10: high for some of these names, that the beat has
Speaker 10: to be of a material enough, you know, rage we
Speaker 10: think the demand is still there. It's a question is
Speaker 10: whether the second half growth rate is going to be
Speaker 10: in the high fifties.
Speaker 1: Or the low fifties.
Speaker 10: But still that's a pretty impressive number.
Speaker 1: All said and.
Speaker 3: Done, That fifty percent is a fifty two percent increasing
Speaker 3: cloud infrastructure sales that you sort of reference.
Speaker 2: What about the rest of the business.
Speaker 3: How is just cloud continuing to perform for them?
Speaker 2: How is software sales going?
Speaker 10: Yeah, see, when you look at Oracle, before the Oracle
Speaker 10: cloud infrastructure really push happened, this company was growing in
Speaker 10: that four five six percent range. So when you look
Speaker 10: at their SaaS business, so the cloud applications business that
Speaker 10: grew about ten percent, which is generally in line with
Speaker 10: what's happening with salesforce and workday workday slightly better than
Speaker 10: that but that space has been under pressure over the
Speaker 10: last twelve months. The real area of growth is cloud
Speaker 10: infrastructure or because of AI workloads, and that's where bulk
Speaker 10: of the interest lies at this point.
Speaker 3: Any mentioned around TikTok because they're a key client.
Speaker 10: Yeah no, that wasn't really discussed, you know, on the call,
Speaker 10: But we think if there is an impact next year.
Speaker 10: First of all, that's not going to be immediate. It's
Speaker 10: going to take some time. But because of the backlock
Speaker 10: that they have, they should be able to offset that
Speaker 10: for with that, you know, maybe a quarter or two
Speaker 10: of some dent there, but you know, overall, we think
Speaker 10: the backlog is there for that.
Speaker 3: And they mentioned new clients Meta in particular and increasing
Speaker 3: focus on that particular area. Anyone else that we were
Speaker 3: impressed by that they managed to snag that they're managing
Speaker 3: to woo in with the fact that it is a
Speaker 3: key offering now in cloud, whereas we've doubted it previously.
Speaker 1: Yeah.
Speaker 10: So one of the things I would say is almost
Speaker 10: all major clients out there, you know, whether that's Meta
Speaker 10: or any other vendor, is going to go out and
Speaker 10: try to tap into all cloud providers. I mean, unless
Speaker 10: they have some adversisdial relationship just because there is there
Speaker 10: isn't that much of capacity out there. In Oracle's case,
Speaker 10: it's actually getting work from Microsoft right now because Microsoft
Speaker 10: is fulfilling the needs or the workloads that are coming
Speaker 10: from open Ai and it's subleasing to Oracle to get
Speaker 10: some of that work done. So there is you know,
Speaker 10: the entire space is going up. It's not just one
Speaker 10: or two vendors.
Speaker 3: Anna Agrana on all things Oracle. We thank you of
Speaker 3: newberga intelligence time now for talking out tech first up.
Speaker 3: A door Dash funded study in Pennsylvania found that most
Speaker 3: of its gig workers preferred to remain independent contractors. This
Speaker 3: after the company began offering extra payments instead of benefits
Speaker 3: normally reserved for salaried employees. Class TikTok Shop comes to
Speaker 3: Europe after the in app shopping feature went live for
Speaker 3: users in Spain. The roll out reflects TikTok's push to
Speaker 3: seek out alternative markets in the face of potential US
Speaker 3: shutout and the shares of food delivery firm and Talabat.
Speaker 3: It lost ground after a two billion dollar IPO in Dubai,
Speaker 3: the girl's biggest initial public offering this year. This adds
Speaker 3: to a slate of recent disappointing debuts of listings in
Speaker 3: the Middle East.
Speaker 2: Now, let's just talk geopolitics a little bit more.
Speaker 3: Now, because despite US and ally sanctions following Russia's invasion
Speaker 3: of Ukraine, Moscow has continued its ability to procure American tech,
Speaker 3: including chips from Intel analog Devices Ti Bloomberg reporting that
Speaker 3: it's discovered that the supply chain path which Russia has
Speaker 3: been able to secure those components, unknownst to the companies
Speaker 3: making it has been pretty easy for Morelos Alberta Nadelli joins.
Speaker 2: US and now it's an extraordinary deep dive.
Speaker 3: Nolberto, just how easy is it to order these sorts
Speaker 3: of pieces of equipment from Russia right now?
Speaker 11: It's relatively simple if you think about the fact that
Speaker 11: you know, it's been a few years now that the
Speaker 11: war has been ongoing in Ukraine and the effort that
Speaker 11: governments have put on to crack down on these practices.
Speaker 11: There are websites within Russia where companies that are working
Speaker 11: to produce missiles and other weapons.
Speaker 1: They can see.
Speaker 11: The catalogs of companies like Texas Instruments on their own
Speaker 11: websites or stocks available prices and details like that, and
Speaker 11: then they're able to place order requests with Russian distributors,
Speaker 11: and then the goods are ordered by intermediaries, they get
Speaker 11: sent to third countries, other countries, and from there they
Speaker 11: get to Russia. So overall, that's pretty simple, given the
Speaker 11: fact that the war has been going on for years now.
Speaker 3: Precisely, and the US government has time and time again
Speaker 3: been warning these sorts of suppliers to crack.
Speaker 2: Down on this.
Speaker 3: In fact, Shannon Thompson, the company's assistant general counsel that's
Speaker 3: or Texas Instruments, said, I want to be very clear,
Speaker 3: TI strongly opposes the use of our chips in Russian
Speaker 3: military equipment.
Speaker 2: How are they able to stop this?
Speaker 11: Well, that's a very good question from your questions for
Speaker 11: the companies more than for me. I think companies are
Speaker 11: trying to stop these practices from happening, and when issues
Speaker 11: are flagged, they do intervene. There was, however, for example,
Speaker 11: earlier this year, a Senate report that came out that
Speaker 11: suggested that companies.
Speaker 1: Aren't doing enough. So they are.
Speaker 11: Doing certain practices that would allow them to probably better
Speaker 11: detect these types of transactions before they actually happen.
Speaker 1: So lots of the actions.
Speaker 11: Happen later on in the sales process rather than early
Speaker 11: on trying to identify bad actors and things like that.
Speaker 3: I'm Berta Nadelli. Extraordinary peace, Thank you for talking us
Speaker 3: through it. Welcome back to BLUEBG Technology. I'm Karen Hyde
Speaker 3: in New York. If we want to welcome our TV
Speaker 3: and radio audiences worldwide now to bloom Meg Technology. Because
Speaker 3: Omnicom has announced that they'll be buying into Public Group
Speaker 3: in a move that will create the world's largest advertising
Speaker 3: company with an annual revenue more than twenty five billion dollars.
Speaker 3: Here to discuss in an exclusive interview, John Wren, Omnicon
Speaker 3: CEO and Philip Klekowski into Public Group CEO.
Speaker 2: Gentlemen, Welcome, Thank you, erl, Thank you John. I'm sat
Speaker 2: here on.
Speaker 3: The Technology Show thinking about the technological disruption that has
Speaker 3: happened to advertising. Is this response to that, is this
Speaker 3: to take on alphabet meta and call that more of
Speaker 3: that global revenue?
Speaker 1: Well, it is. Technology does play a role in this,
Speaker 1: and both Philip and I have focused on that in
Speaker 1: our conversations over the course of the last year. When
Speaker 1: you cut through quite a bit of what we're discussing
Speaker 1: if you look at our industry five years ago, ten
Speaker 1: years ago, the barrier to entry was very low. It
Speaker 1: was you just had to be a brilliant person right
Speaker 1: with the great with a great idea. Now, in order
Speaker 1: to properly service clients in this new era, it's key
Speaker 1: to have those very very bright, very talented people, but
Speaker 1: it's incumbent upon us to enable them with the best
Speaker 1: tech in data that we possibly can for them to
Speaker 1: garner the insights the information at scale so they can
Speaker 1: react to the environment as they need. And we've each
Speaker 1: been on that journey, I guess, as all of our
Speaker 1: competitors have as well. From an Omnium point of view,
Speaker 1: we made great strides with the creation of omni and
Speaker 1: earlier in the year when we acquired Flywheel the commerce
Speaker 1: stature that we've been able to put together, and that
Speaker 1: progresses and today we're working even beading all the generative
Speaker 1: AI possibilities to create tools for our folks. Philip on
Speaker 1: the other side, can talk to it as well, because
Speaker 1: he's had a very strong avenge. Sure.
Speaker 12: I mean, I think to John's point, technology is playing
Speaker 12: so much more important a role in our sector, and
Speaker 12: that's because for our clients, the consumers they need to
Speaker 12: reach expect a high degree of personalization and the messaging
Speaker 12: they get, and a high degree of engagement in the
Speaker 12: experiences we deliver. So to John's point, he brought Flywheel
Speaker 12: into the family. It's a company that has this quite
Speaker 12: distinctive ability to understand everything that's happening in the digital
Speaker 12: retail ecosystem down to the individual transaction level. And then
Speaker 12: for US, Axiom, as John said, is likely the largest
Speaker 12: consumer database.
Speaker 1: Outside of the walled gardens.
Speaker 12: So if you put those two together, and if we
Speaker 12: co invest in General of AI, we're very very strongly positioned,
Speaker 12: we believe to help our clients navigate this tech enabled world.
Speaker 2: How does it strip out costs?
Speaker 3: You clearly identified opportunities for seven hundred and fifty million
Speaker 3: dollars in annual cost savings, But the talent when it
Speaker 3: comes to General to AI's expenses is how do you
Speaker 3: strip out those costs?
Speaker 12: Well, I think John's been really clear and I think
Speaker 12: we are fully in agreement a year in that it's
Speaker 12: about enabling the folks who interact with the clients, so
Speaker 12: those brilliant people.
Speaker 1: Giving them more tools. There are ways in.
Speaker 12: Which We're not going to invest more than once. We
Speaker 12: are going to look at infrastructure that is perhaps legacy
Speaker 12: infrastructure in businesses like ours, So there is a meaningful
Speaker 12: opportunity there to put the money against the future.
Speaker 3: John, some of the concern maybe being priced in at
Speaker 3: the moment because as combined market capitalizations, they're now lower
Speaker 3: than they were on Friday.
Speaker 2: People trying to digest how this deal works.
Speaker 3: City Bernstein's saying the potential for revenue disynergy, rival agencies,
Speaker 3: stealing accounts, talent.
Speaker 2: How do you make sure that people stay on board
Speaker 2: with you?
Speaker 1: Sure, We've always always been the place for the best
Speaker 1: talented people to come to. Naturally, there's churn in everybody's
Speaker 1: business every year, fortunately or unfortunately. I've been through this
Speaker 1: movie once before, but did it badly and didn't complete
Speaker 1: it ten years ago. This one is a bit more
Speaker 1: thought a lot more thoughtful.
Speaker 3: You're referring to the public steal back at twenty fourteen.
Speaker 1: Clients who listen to us and see the capabilities that
Speaker 1: we've developed between us already, the power of what we're
Speaker 1: going to be able to continually bring to the marketplace,
Speaker 1: the changes and the focus and the single point of
Speaker 1: entry and investment that we're going to make to enable
Speaker 1: that talent to succeed. I'm not nearly as concerned as
Speaker 1: the nay sayers are looking for somebody to knock on
Speaker 1: the deal that we may be challenged by the odd
Speaker 1: clients or two. I suspect not, because I think the
Speaker 1: offerings that we have and the response to those clients
Speaker 1: is at the core of what we've been discussing for
Speaker 1: the last year, and that's been first and foremost. So
Speaker 1: we've been focused on what is this going to mean
Speaker 1: for our clients, What is this going to mean for
Speaker 1: our talent? What is it going to mean for us
Speaker 1: attracting talent going forward and enabling those people and most
Speaker 1: very talented people want to work with and for the
Speaker 1: very best and brightest and have available to them the
Speaker 1: most state of the art tools, and that's what we'll
Speaker 1: be provided. And progress is every day. I mean, I
Speaker 1: haven't even focused in on what the advances that are
Speaker 1: very familiar with sorrow about what was going on this
Speaker 1: morning open and that has a positive impact used as
Speaker 1: a tool made available to our knowledge workers and so
Speaker 1: others will try. Someone will succeed, but we'll wind up
Speaker 1: at the end of the day, with the very best
Speaker 1: talent in the industry. I think, as we always have.
Speaker 3: And Phillip, that talent wants to be enabled with the
Speaker 3: latest and greatest tools. John was though, talking about how
Speaker 3: the barriers for entry were very low and now they've
Speaker 3: got higher, but general to AI makes the barrier to
Speaker 3: entry for new upstarts incredibly low, do you not believe.
Speaker 12: I'm not sure that I would agree with them, because ultimately,
Speaker 12: what you have to have is connectivity to a very
Speaker 12: very broad range of capabilities. And so I think that
Speaker 12: if you're thinking about it in a very reductive sense
Speaker 12: and you're saying, well, anybody can create a piece of content, sure,
Speaker 12: but the reality is that unless that content is connected
Speaker 12: to a very sophisticated platform with a great deal of
Speaker 12: technology and a lot of data, then fundamentally it's not
Speaker 12: really very useful to the clients who need accountability, need outcomes,
Speaker 12: and are very sophisticated themselves.
Speaker 3: We are, of course, speaking with Philip Krakowski of Interpublic
Speaker 3: Group and John Wren of Omnikrom and John going back
Speaker 3: to ultimately this pie that at the moment is being
Speaker 3: redistributed among new players. It's not just meta and alphabet
Speaker 3: I mean byte dancers in their taking space Amazon as well.
Speaker 3: Do you think ultimately the agencies that four that become
Speaker 3: three will own as much as the one trillion of
Speaker 3: the market that it does it today or will that
Speaker 3: continue to erode?
Speaker 1: Well, many of these players have been competitives of ours
Speaker 1: now for quite a while. I mean, so it's not new.
Speaker 1: Some of the tools, some of the capabilities that are
Speaker 1: being created today, on one hand, would be very welcome
Speaker 1: and usable by smaller marketers, but larger marketers I refer
Speaker 1: to Felipa's talented mentioning a minute ago, are going to
Speaker 1: have to be a bit. You have to bring brand
Speaker 1: safety into considerations as you do this. You have to
Speaker 1: bring in considerations do you have the right to use
Speaker 1: your image and your voice my next commercial, even though
Speaker 1: it might be a perfect setting for what I'm trying
Speaker 1: to accomplish. So there are a lot of considerations. Europe
Speaker 1: is different than the US, Chinese is going to be
Speaker 1: different than everybody else, So that competitive set has always
Speaker 1: been out there. We with the resources that we have
Speaker 1: defending ourselves in this environment have been very successful and
Speaker 1: we will continue to be successful, will be more successful
Speaker 1: now this will be more focused and we will have
Speaker 1: more resources to respond to things that change.
Speaker 3: Things that change are like a new administration Phllip And
Speaker 3: everyone's been saying, what about the regulatory outlook? I mean,
Speaker 3: if you are it's global jurisdictions here, how confident are
Speaker 3: you that this deal actually gets through?
Speaker 1: Well?
Speaker 12: To John's point, it's been a long time in the making.
Speaker 12: We've been very deliberate, So you can assume that you know,
Speaker 12: we took advice as we were heading into this because
Speaker 12: to your point, we're going to be looking at a
Speaker 12: dozen or more jurisdictions in which this will need to
Speaker 12: clear that hurdle, and we have a high degree of
Speaker 12: confidence that that's something that we can achieve.
Speaker 3: Do you have a high degree of confidence judged in
Speaker 3: your client in the macro perspective that they currently have.
Speaker 3: How willing are people to commit to big campaigns in
Speaker 3: this macro environment as we do have so much geopolitical uncertainty.
Speaker 1: Sure, clients still wake up in the morning. They're running
Speaker 1: their businesses, and they're running their factories and have to
Speaker 1: sell their products. Maybe the nature of what they're advertising
Speaker 1: or the channel in which they're trying to reach their
Speaker 1: customer change, but that's what we're best at and the
Speaker 1: velocity of that change, and people will do different things
Speaker 1: to respond to the market approach differently. I think the
Speaker 1: change the administration is probably a positive thing. I suspect
Speaker 1: the new administration is going to be more business friendly
Speaker 1: than anyone's complained about the existing administration. So I'm not
Speaker 1: anticipating and we've been well advised, but we have to
Speaker 1: go through the process. But there are a lot of
Speaker 1: competitors out there, so that won't be an issue in
Speaker 1: the final days. Now, the whole focus is on the
Speaker 1: flexibility and the agility. Even though people who want to
Speaker 1: tend to look at size and look at the negative
Speaker 1: aspects of size, we see sizes empowering because it will
Speaker 1: give us more resource. And what's key is to keep
Speaker 1: the agility and lead creativity to the talented people that
Speaker 1: we both have in our employee and responsible for us
Speaker 1: both being here today, but enabling them with the best tools,
Speaker 1: cutting edge so they can go into the largest advertisers
Speaker 1: in the world and with great confidence tell them that
Speaker 1: it's always changing. Nothing yesterday doesn't exist anymore. It's what's tomorrow.
Speaker 1: But where the place to come.
Speaker 3: To Thanks for coming to us today, John Man of Omnicom.
Speaker 3: I thank Philip Berkowski of Into Public Group. We appreciate it. Meanwhile,
Speaker 3: of course today Blue Meg Television is having live coverage
Speaker 3: of an inaugural women Money and Power event. It's convening
Speaker 3: influential women voice says in finance to discuss.
Speaker 2: The future of business.
Speaker 3: Look, they've got to talk AI, they've got to talk
Speaker 3: fintech in global finance.
Speaker 2: Just take a listen to what the panel is happening underway.
Speaker 2: Then when you.
Speaker 13: Come to a data dwiffen selection of customers, and this
Speaker 13: is something that is no border, we love for it
Speaker 13: for all the insights that we can provide information about
Speaker 13: the market that you know buyers and sell it from
Speaker 13: different regions in the country, can be can can benefit
Speaker 13: from it.
Speaker 2: All of you have talked.
Speaker 5: About this idea of kind of assessing risks and as
Speaker 5: we were walking on stage, I heard, you know, folks
Speaker 5: from deep Miving, we worry about everything the existential crisis
Speaker 5: of AI. Whose values are encoded in these things, whether
Speaker 5: it's like misinformation at scale or whatever that might be.
Speaker 1: What are the.
Speaker 5: Risks of the scenarios that you all are describing, What
Speaker 5: are the risks of having your AI look at a
Speaker 5: contract and be like, seems good.
Speaker 14: What there are great risk but can something what And
Speaker 14: it's kind of not not that me say. They've been
Speaker 14: discussed a lot about, right I think for me think
Speaker 14: I keep thinking system.
Speaker 2: There is an effect which apparently.
Speaker 14: Now is uncontroversial, which is in fears from now twenty
Speaker 14: fifty AI will be the most intelligent being on on
Speaker 14: on the planet. It's no doubt mosk of at nights yeah, yeah,
Speaker 14: but by a factor of there's not even ten. Right,
Speaker 14: So when you think about that, this is the first
Speaker 14: time in ISS that's ever happened. All of a sudden
Speaker 14: can be very scary, right, So in the risk associdity
Speaker 14: there are a lot because all of a sudden we
Speaker 14: can lose control all of a sudden in the in
Speaker 14: the short term even we can delegate too much and
Speaker 14: know and lose a sense of reality.
Speaker 2: What's real? What's real?
Speaker 14: And the contra is the contral done well or not?
Speaker 14: But if you project in the in the long term,
Speaker 14: it could be even bigger risks in that, right, So
Speaker 14: it's about losing control. And so how do we put
Speaker 14: some boundaries, How can we still make sure, we're control,
Speaker 14: we're in charge, and I think.
Speaker 2: I don't think there's a solution yet.
Speaker 14: But there are probably two ways and needs to be
Speaker 14: explored in parallel. So one is the usual way of
Speaker 14: controls and boundaries. So now for example, which is you know,
Speaker 14: quality ssurance, limitation of the level of delegation. For example,
Speaker 14: if we now use AI for a contract, cause somebody
Speaker 14: should review it, and of course it.
Speaker 5: Should uman be a human should review A human should review.
Speaker 14: It right in the short and maybe we get to
Speaker 14: a point where we'll have another reviewing it. It's already happening,
Speaker 14: you know, on applications, but that needs to happen.
Speaker 2: And the other side is.
Speaker 14: And we'll be more and more is heataches because as
Speaker 14: sort of boy, you know, as the model gets very advanced,
Speaker 14: you need to ingrain the rules so behavior in the
Speaker 14: model itself. And that's why I think there's a lot
Speaker 14: of not all the discussion, but starting now about how
Speaker 14: can you make it happen?
Speaker 2: Right, I think that's the main risk.
Speaker 14: How do you maintain control without leveraging the power AI?
Speaker 14: And it will fascinating in the next few years to
Speaker 14: see what kind of solutions come in place.
Speaker 5: I'm putting in terms of the deployment of you know,
Speaker 5: digital solutions, in terms of people using their phones.
Speaker 1: For all these things. One of the.
Speaker 5: Realities I'm thinking about the Apple context. You know, to
Speaker 5: use AI on an iPhone, you have to have the
Speaker 5: very latest, most expensive version of what is already a
Speaker 5: very expensive smartphone. All of you kind of operating in
Speaker 5: context where not all of your customers might have the
Speaker 5: very latest, most expensive versions of things. How are you including,
Speaker 5: you know, the hundreds of millions of people who don't
Speaker 5: have access to spend twelve hundred dollars on a device
Speaker 5: to take advantage of some of the technology that we're
Speaker 5: talking about.
Speaker 15: I think it's very dependent on the community that you're
Speaker 15: operating in and what we found. I think certainly when
Speaker 15: you look at the African continent with products such as Empesa,
Speaker 15: which is a product that provides access to financial services
Speaker 15: to people on the African continent, it works on the
Speaker 15: most basic of mobile phones, and so anybody through the
Speaker 15: use of mobile telephony can be able to you know,
Speaker 15: transfer capital or whatever the case is. And in that case,
Speaker 15: actually it just shows the extent to which FINTACH at
Speaker 15: its most basic level has been able to actually you know,
Speaker 15: hit through many many levels of industry that were actually
Speaker 15: not even there because financial industry has not been very
Speaker 15: robust in many countries on the African continent, and so
Speaker 15: mobile money has ensured.
Speaker 1: That you can leapfrog that.
Speaker 15: But you know, so, so from that perspective, you can
Speaker 15: use the most basic phones for some of the most
Speaker 15: basic products that you can make available because in terms
Speaker 15: of sophistication, the level of sophistication in terms of technology
Speaker 15: is not the same everywhere, certainly where we oppor data access,
Speaker 15: data access absolutely absolutely, so, you know, so we we
Speaker 15: found it to still we're able to use it as
Speaker 15: it's applicable across the African continent. In South Africa where
Speaker 15: mobile telephony is very high and you have access to
Speaker 15: a lot of more sophisticated phones there, you're able to
Speaker 15: make access to a number of products with the use
Speaker 15: of AI to consumers that are using whether it's our
Speaker 15: e commerce platform or they're using any of our platforms,
Speaker 15: our payments platforms are classifieds platforms.
Speaker 2: Yeah, to excess our products.
Speaker 5: Michelle. When you know, you've talked a lot about focusing
Speaker 5: on solving the needs of your SMPS entrepreneurs, what has
Speaker 5: been like the weirdest problem that they have had in
Speaker 5: trying to adapt to all of these many changes that
Speaker 5: seem to be happening at light speed.
Speaker 2: Yeah, definitely.
Speaker 13: When we talk about SMBs, sometimes we're talking about company
Speaker 13: with less than ten people already entrepreneurs.
Speaker 2: They are multitask.
Speaker 13: I think one of the challenge for us is first
Speaker 13: to develop technologies and innovations and AI solutions.
Speaker 2: I mean, this is targeting for what they need.
Speaker 13: And that's why we have been working for over twenty
Speaker 13: five years and we're very happy to have been, you know,
Speaker 13: supporting these.
Speaker 2: Can catch more bluebags, women, money.
Speaker 3: And power evenom right here on Bloomberg Television and for
Speaker 3: now we check in on these markets, says the NASDAK
Speaker 3: tennds into the red. A key contributor to the downside
Speaker 3: in the SMP, for example, has been Oracle of by
Speaker 3: more than seven percent after it's forecast did not live
Speaker 3: up to expectations. And in general we're seeing nine percent
Speaker 3: growth in revenue, not enough to vindicate the eighty percent
Speaker 3: ramp up in the shares we've seen so far this year.
Speaker 3: Move on to other individual movers that we're seeing, notable
Speaker 3: ones to the downside include Mongo dB off by thirteen percent,
Speaker 3: shares declining significantly. Databased software company reporting pretty strong third
Speaker 3: call results, but they also announce the departure of their
Speaker 3: CFO and COO, Michael Gordon. Markets worrying about that despite
Speaker 3: the strong results. I'm looking at at microstrutuy off by
Speaker 3: one and a half percent, Pallenteer up by seven ten
Speaker 3: percent in a down market. This is we understand that
Speaker 3: maybe these names could be the ones next added to
Speaker 3: the Nasdaq one hundred. So we keep a keen eye
Speaker 3: on whose in and out of these benchmarks. But meanwhile,
Speaker 3: coming up, we go to the private markets. V see
Speaker 3: investing trends in cybersecurity sector and nu K Salam.
Speaker 2: Is going to be joining us.
Speaker 3: But in capital ventures this is Bloomberg technology. In the
Speaker 3: first half of this year, Palo Alto Networks forty two
Speaker 3: reported in one the four percent increase in ransomware victims
Speaker 3: compared to the first half of twenty twenty three. Higher
Speaker 3: level of activity observed last year was no fluke. This
Speaker 3: makes cybersecurity a hot sector to invest in if you're
Speaker 3: a venture capitalist.
Speaker 2: We got one of them.
Speaker 3: Enrickie Salem, partner at being Capital Ventures and former CEO Simantec,
Speaker 3: and we're all about this on VC Spotlight continued focus
Speaker 3: on cyber Does ransomware make a keen interest for you?
Speaker 16: Well, obviously it's one of the biggest attack vectors today
Speaker 16: and what we're seeing is no one's immune. You've basically
Speaker 16: got small businesses, hospitals, governments. You saw recently that at
Speaker 16: Starbucks the baristas couldn't access their schedules because of a
Speaker 16: ransomware attack, and you're seeing it pretty prevalent across all industries.
Speaker 3: Today, affecting one in ten companies each year according to
Speaker 3: JP Morgan.
Speaker 2: What are the best ways of preventing this?
Speaker 3: How is the technology changing to ensure that we're getting
Speaker 3: one of a kind founders coming to the space.
Speaker 16: Well, so we're always looking to find new solutions to
Speaker 16: how do you prevent an attack from happening? And that's
Speaker 16: the key is first try to prevent it, and what
Speaker 16: that means is try to understand what is the activity
Speaker 16: or behavior that a ransomware attack will do, which is
Speaker 16: ultimately try to encrypt the data on your computer and
Speaker 16: also exfiltrated. But the most important thing now is be
Speaker 16: prepared to recover. How do you make sure that you
Speaker 16: can decrypt it successfully and get all your data back
Speaker 16: without having to pay the ransom, which is what they're
Speaker 16: targeting to try to get you to do.
Speaker 3: Has that been some of the most fruitful areas allocating
Speaker 3: right now?
Speaker 2: There's also just cyber is just so prevalent.
Speaker 3: More generally, we're worrying about supply chain threats as well.
Speaker 3: Where else have you seen opportunities to be putting money
Speaker 3: to work?
Speaker 16: Well, you talked about supply chain security. We saw the
Speaker 16: major attack on solar winds which hit eighteen thousand companies,
Speaker 16: and what we saw then was an executive order for
Speaker 16: President Biden that said every company needs to take supply
Speaker 16: chain security very seriously, and ultimately that gave rise to
Speaker 16: a whole new set of companies, companies like Stacklock, chain Guard,
Speaker 16: and a number of others that are now actively providing
Speaker 16: solutions to businesses to protect their supply chains.
Speaker 3: We find you so interesting because of course you were
Speaker 3: a CEO yourself. You're also appointed to President Barack Obama's
Speaker 3: Management Advisory Board. You understand how politics works at hand
Speaker 3: in hand with leading businesses. How are you advising your
Speaker 3: portfolio companies now? As we start to look towards the
Speaker 3: next administration in twenty twenty five.
Speaker 16: Well, I think it's going to be an interesting opportunity
Speaker 16: for a lot of companies. The biggest trend that we've
Speaker 16: all been talking about is AI, and AI is going
Speaker 16: to completely change how many of our businesses work. The
Speaker 16: attackers we've talked about security, what we're seeing is they
Speaker 16: can be so much more aggressive now on targeted phishing
Speaker 16: attacks that are custom made to really get somebody to react.
Speaker 1: You know, we're seeing deep fakes.
Speaker 16: And so we're telling all our companies how do you
Speaker 16: take advantage of AI? And then the new administration I
Speaker 16: think will give us opportunities to drive potentially consolidation M
Speaker 16: and A. And we're hoping that the IPO market comes
Speaker 16: back in twenty twenty five.
Speaker 3: Riki Salem, have you back when an IPO market starts
Speaker 3: to creak open partner capital ventures?
Speaker 2: We thank you.
Speaker 3: Let's talk about geopolitics a little bit more. Huawei suppliers
Speaker 3: are facing more limitations this as a US lawmakers are
Speaker 3: moving to restrict the Pentagon from doing business with companies
Speaker 3: that sell chips and services to the Chinese company who
Speaker 3: mergs Mike Sheppard joins US for now, for more, this
Speaker 3: continues to be the narrative China US facilities dialing up.
Speaker 3: From a tech perspective, already, it is pretty hard if
Speaker 3: you were supplying to Huawei, but not hard enough clearly.
Speaker 17: Well, apparently not for lawmakers on Capitol Hill who want
Speaker 17: to bar defense contractors from doing any sort of business
Speaker 17: whatsoever with Huawei, which is a national champion in China,
Speaker 17: but here in Washington it's considered an outcast and pariah.
Speaker 17: It's been subject to a growing list of US sanctions
Speaker 17: and export controls that have limited American companies greatly from
Speaker 17: doing business with Huawei already, and now we're seeing more
Speaker 17: restrictions coming their way, this time through the Pentagon. This
Speaker 17: is likely to become law. The provision is attached to
Speaker 17: must pass defense policy legislation that we will see action
Speaker 17: on in coming weeks before lawmakers leave town for the holidays.
Speaker 17: So this is something coming down the piking. Companies will
Speaker 17: have to deal with it within a nine month span
Speaker 17: that is when the provision actually takes effect, and there
Speaker 17: are very rare exemptions granted under the law that would
Speaker 17: allow companies to continue to do business with Huawei and
Speaker 17: the Pentagon at the same time.
Speaker 3: Mike Shepherd breaking it all down in the latest tit
Speaker 3: for tat tech trade tensions China US.
Speaker 2: We appreciate it.