WEBVTT - Spotify's Revenue Miss and Musk Weighs In on X 0:00:01.480 --> 0:00:03.840 From the heart where Innovation of Money and. 0:00:03.920 --> 0:00:08.959 Power Collie in Silicon Valley, NBN. This is Bloomberg Technology 0:00:09.039 --> 0:00:11.119 with Caroline Hyde and Ed Ludlow. 0:00:25.040 --> 0:00:27.560 I'm Caroline Heinde, a Bloomberg's World headquarters in New York. 0:00:27.640 --> 0:00:30.920 Ed Ludlow is off today. This is Bloomberg Technology coming up. 0:00:31.000 --> 0:00:34.640 Full earnings coverage ahead. We wrap Spotify's results and push 0:00:34.680 --> 0:00:37.479 your head to the all important alphabet Microsoft and Snap 0:00:38.240 --> 0:00:41.199 Plus what does Twitter's change to x I mean for 0:00:41.240 --> 0:00:44.880 the company's brand value? Will break down the potential implications 0:00:45.479 --> 0:00:48.519 and how is AI rewriting the rules for the two 0:00:48.640 --> 0:00:51.360 hundred billion dollar gaming industry. We'll sit down with Super 0:00:51.440 --> 0:00:54.480 League Gaming CEO and a hand for her thoughts. The 0:00:54.600 --> 0:00:56.840 first big week for earnings. What is one hundred and 0:00:56.880 --> 0:00:59.319 seventy companies reporting this week? But the two who want 0:00:59.320 --> 0:01:01.760 to keep an eye on to Microsoft alphabet is also 0:01:01.800 --> 0:01:04.319 going to be Snap as cool as well. Let's let's 0:01:04.319 --> 0:01:06.360 dig into some of the key AI plays with Anna 0:01:06.400 --> 0:01:08.760 Agrana from Roomberg Intelligence, who I'm pleased to say is 0:01:09.400 --> 0:01:11.480 on the all important week right here in the New 0:01:11.560 --> 0:01:15.280 York studio and the rallies have been hard. What forty 0:01:15.280 --> 0:01:17.600 five percent at least for Microsoft so far this year. 0:01:17.959 --> 0:01:20.280 The valuations must make a few people question whether they 0:01:20.319 --> 0:01:21.000 can live up to it. 0:01:21.400 --> 0:01:21.640 Yeah. 0:01:21.640 --> 0:01:23.840 I think that's why, you know, we'll see tonight when 0:01:23.880 --> 0:01:26.399 the cloud results come out, is whether there is any 0:01:26.480 --> 0:01:29.240 kind of a push from the increased use do chat 0:01:29.280 --> 0:01:33.480 GPD or is that offset by week corporate spending. And 0:01:33.520 --> 0:01:36.200 I think that remains the biggest question for Microsoft. They 0:01:36.200 --> 0:01:38.320 have to come out and defend their cloud numbers and 0:01:38.360 --> 0:01:41.080 showcase that there should be an improvement in that over 0:01:41.120 --> 0:01:44.080 the next twelve months for you know, this valuation to. 0:01:44.040 --> 0:01:47.880 Hold and so maybe looking forward to when AI can 0:01:47.880 --> 0:01:50.480 start to be revenue generating. But when we look at Alphabet, 0:01:50.760 --> 0:01:53.440 everyone's been worried about whether it's been a competitive threat 0:01:53.480 --> 0:01:54.480 to their search business. 0:01:55.080 --> 0:01:56.880 Yeah, but I think that's too soon to call that. 0:01:56.960 --> 0:01:58.800 It's going to take a while before all of these 0:01:58.840 --> 0:02:02.120 things really, you know, play out. Microsoft is behind on 0:02:02.160 --> 0:02:04.000 search and I don't think that they can catch up 0:02:04.000 --> 0:02:06.600 in a quarter or so. You know, it's it's very 0:02:06.600 --> 0:02:09.160 impressive to see what the chat GPT has been able 0:02:09.200 --> 0:02:11.239 to do, but you know, habits are not going to 0:02:11.320 --> 0:02:13.200 change overnight. It's going to take some time for that 0:02:13.240 --> 0:02:15.880 to happen. But as I said, cloud business is where 0:02:15.960 --> 0:02:19.639 it really gets defined for Microsoft because if you look 0:02:19.680 --> 0:02:22.360 at it, Azure's growth was forty seven percent a year ago, 0:02:22.720 --> 0:02:25.160 It's going to be around twenty six twenty seven percent today, 0:02:25.320 --> 0:02:28.040 So it's a massive drop from that high bar. But 0:02:28.120 --> 0:02:30.639 the question is is this the quarter where this we 0:02:30.800 --> 0:02:32.840 know we see the bottom and we start to see 0:02:32.840 --> 0:02:34.800 a U turn next quarter or is it going to 0:02:34.840 --> 0:02:36.760 take another quarter or two for that to play out. 0:02:36.880 --> 0:02:39.000 And I think that will be driven by comments from 0:02:39.040 --> 0:02:42.600 the CEO and the CFO, is that the new AI 0:02:42.639 --> 0:02:45.680 workloads are they really coming, you know, with a lot 0:02:45.720 --> 0:02:47.600 of momentum, or we are still going to be a 0:02:47.600 --> 0:02:48.560 while before we see that. 0:02:49.320 --> 0:02:52.000 Looks at Microsoft, of course we're anticipating hopefully that the 0:02:52.000 --> 0:02:54.200 bottom is in for advertising when we look at what 0:02:54.280 --> 0:02:56.640 Alphabet's going to be pulling in great setup for US 0:02:56.680 --> 0:02:59.120 and Agarana on all things Microsoft and of course some 0:02:59.120 --> 0:03:01.760 of the other big beasts all love you out there, 0:03:01.840 --> 0:03:04.040 is that actually maybe these big beasts to run too far, 0:03:04.240 --> 0:03:05.840 Maybe you need to be cautious on some of the 0:03:05.880 --> 0:03:08.680 magnificent seven Cafmoon Navaria is one of those voices. Chief 0:03:08.680 --> 0:03:12.640 Market stretchgist over at Stonext Group and Catherine, how are 0:03:12.720 --> 0:03:16.040 you trading? How are you thinking ahead of these big, 0:03:16.200 --> 0:03:17.280 all important results. 0:03:18.560 --> 0:03:21.560 Well, we have earnings this week coming up with some 0:03:21.639 --> 0:03:26.119 of the major powerhouses and Microsoft and Visa and Verizon 0:03:26.480 --> 0:03:30.200 across the board. You have some big names reporting earnings, 0:03:30.240 --> 0:03:33.280 some which are ech between twenty and twenty three percent 0:03:33.320 --> 0:03:37.960 of their respective ETF and indexes within the communications sector, 0:03:38.040 --> 0:03:40.600 within technology. So it's going to be very important that 0:03:40.640 --> 0:03:44.080 these beat for the market to continue to move higher. 0:03:44.360 --> 0:03:45.440 They are likely to do so. 0:03:45.480 --> 0:03:48.720 But what I would say is that we're at the precipice, 0:03:48.840 --> 0:03:50.040 or we're at the very. 0:03:49.880 --> 0:03:51.800 Peak of where we are. 0:03:52.000 --> 0:03:56.240 Anticipating the Fed to stay on hold. Everyone's expecting twenty 0:03:56.280 --> 0:03:58.960 five basis points tomorrow and then on hold for a 0:03:58.960 --> 0:04:02.119 good amount of time. My expectation, however, is that if 0:04:02.160 --> 0:04:04.520 the consumer remains as strong as it has Caroline, we 0:04:04.560 --> 0:04:07.440 had consumer confidence commit at the highest in two years today, 0:04:07.560 --> 0:04:09.520 then it's going to be very difficult for the FED 0:04:09.560 --> 0:04:11.920 to get to that two percent target with service sector 0:04:11.920 --> 0:04:14.600 inflation as robus as that is and will continue to be. 0:04:15.000 --> 0:04:17.080 If that's the case and the FED has to hike again, 0:04:17.279 --> 0:04:20.080 then this is negative for those highly interest rate sensitive 0:04:20.720 --> 0:04:25.400 sectors and stocks which are the biggest heavyweights in the indices. 0:04:26.360 --> 0:04:29.200 So good that you put it in the macro context. 0:04:29.400 --> 0:04:32.440 I'm therefore interested in if you have ridden this wave, 0:04:32.839 --> 0:04:35.880 the Magnificent seven, the big AI trade, do you have 0:04:35.960 --> 0:04:38.960 to now protect the downside? Do you stop profit taking? 0:04:40.520 --> 0:04:42.800 Well, it's a good moment to at least play the laggards, 0:04:42.800 --> 0:04:45.400 and what we've seen is some of those laggards catch up. 0:04:45.440 --> 0:04:47.560 This is the catch up trade is the definition of 0:04:47.600 --> 0:04:50.240 so so it's really been tech and specifically AI that 0:04:50.279 --> 0:04:52.440 has led the market rally year to date. We have 0:04:52.560 --> 0:04:57.479 not seen material appreciation in materials or banks or industrials 0:04:57.680 --> 0:05:00.920 until today, so we are seeing industrials jump quite a bit. 0:05:01.160 --> 0:05:03.640 We at stoneacks have a really big commodity section, and 0:05:03.680 --> 0:05:07.360 the guys are more enthusiastic with regard to possible demand 0:05:07.400 --> 0:05:10.560 for these materials. If China does in fact come with 0:05:10.720 --> 0:05:15.520 a material or a significant infrastructure or stimulus package of 0:05:15.560 --> 0:05:18.960 some sort, so I would say, play the catch up trade, 0:05:18.960 --> 0:05:22.839 Play the laggards, the cyclical laggards that will benefit from 0:05:22.960 --> 0:05:26.280 what could be a very good print on Friday. If 0:05:26.279 --> 0:05:29.000 we get core PC coming at less than four point six, 0:05:29.000 --> 0:05:31.799 where it's kind of been for a significant period of time, 0:05:32.000 --> 0:05:34.520 maybe four point one four point two. Then that's going 0:05:34.600 --> 0:05:38.520 to be additional boost for the the for the long 0:05:38.600 --> 0:05:41.360 risk trade, which is in my view, the most overcrowded 0:05:41.400 --> 0:05:44.760 trade today. So yes, there are potential to still play 0:05:44.760 --> 0:05:49.680 this rally, but I would advise clients that everything is cyclical. 0:05:49.960 --> 0:05:52.360 We are in an economic cycle, and in my view, 0:05:52.400 --> 0:05:55.039 the next phase of the economic cycle is going to 0:05:55.080 --> 0:05:57.680 be recession. Timing is the tricky point. 0:05:58.240 --> 0:05:59.800 And it's that global recession. 0:06:02.480 --> 0:06:05.080 Well, you know, I think it's meaningful to talk about 0:06:05.120 --> 0:06:10.080 different stages. So perhaps the US enters recession after Europe does, 0:06:10.200 --> 0:06:13.279 or China enters slow down, So there's different phases, so 0:06:13.320 --> 0:06:14.920 it doesn't have to all happen at once, and we 0:06:14.960 --> 0:06:17.719 shouldn't expect it to. But I do believe that these 0:06:17.839 --> 0:06:21.320 delayed impacts, and everyone talks about the infast, infamous, long 0:06:21.400 --> 0:06:26.760 and long and prolonged impact of monetary policy in a 0:06:26.839 --> 0:06:30.520 data dependent FED doesn't really mesh. So what I would 0:06:30.560 --> 0:06:33.040 say is, look on Friday's number. Friday's number is probably 0:06:33.040 --> 0:06:34.720 going to be very good, and I would say Thursday 0:06:34.760 --> 0:06:37.760 and Friday with second quarter, GDP, Caroline and core PC 0:06:37.839 --> 0:06:40.200 coming in respectively Thursday and Friday are going to need 0:06:40.279 --> 0:06:44.719 more important data points than Wednesday's very well expected twenty 0:06:44.720 --> 0:06:47.840 five basis point hike. If the United States is or 0:06:47.880 --> 0:06:50.560 if the Federal Reserve is really serious about its two 0:06:50.600 --> 0:06:53.960 percent target doesn't change, it isn't complacent with a three 0:06:54.080 --> 0:06:57.200 handle or a high two handle, then we could get 0:06:57.240 --> 0:06:59.800 an additional additional hike. And if that's the case, then 0:06:59.800 --> 0:07:03.320 we're talking five hundred and fifty basis points maybe more 0:07:03.360 --> 0:07:07.240 in total rate hikes that will start to affect the 0:07:07.279 --> 0:07:10.240 credit cycle. We're already seeing some difficulty with regard to 0:07:10.280 --> 0:07:11.960 payments in the real economy. 0:07:12.080 --> 0:07:15.440 Causin just how many of your clients are wanting to 0:07:15.440 --> 0:07:18.640 play the AI tech trade, how many of them feel 0:07:18.760 --> 0:07:21.200 they've missed it, how many of them feel that there's 0:07:21.240 --> 0:07:23.160 other names they could look at, other than some of 0:07:23.160 --> 0:07:24.600 the really big tech heavyweights. 0:07:26.040 --> 0:07:28.280 Well at so next, we do cover a wide breath. 0:07:28.280 --> 0:07:32.240 So it's everything from commodities to tech, to securities to 0:07:33.280 --> 0:07:35.640 globle payments and clearing. So it's a massive company. We 0:07:35.680 --> 0:07:38.040 have four thousand people and it's a fortune one hundred 0:07:38.040 --> 0:07:40.200 and that is deck listed actually, but a lot of 0:07:40.240 --> 0:07:43.320 clients are keen on following this trend, and you know, 0:07:43.560 --> 0:07:45.680 they follow the buck. So what I would say is 0:07:45.840 --> 0:07:48.160 there's a lot of interest with regard to the laggards, 0:07:48.200 --> 0:07:51.120 looking at the small caps which have lagged, for example, 0:07:51.200 --> 0:07:54.400 the triple ques in a very meaningful way. So there's 0:07:54.480 --> 0:07:58.480 interest in finding ways to play this momentum driven multiple 0:07:58.480 --> 0:08:02.280 expansion driven rally without getting into the high flyers at 0:08:02.320 --> 0:08:06.080 exorbitant multiples. And my contention on Caroline is that the 0:08:06.120 --> 0:08:10.800 growth sector, specifically AI in tech, is trading at exorbitant multiples. 0:08:11.320 --> 0:08:13.400 And I sort of asked a little bit about hedging. 0:08:13.480 --> 0:08:16.320 You sort of gave this very thoughtful response about well, 0:08:16.400 --> 0:08:19.040 them playing some of the laggards in different industries, But 0:08:19.080 --> 0:08:22.440 what about volatility gauges? What about looking at ways to 0:08:22.440 --> 0:08:24.600 protect your downside? Is there a way of doing that 0:08:24.720 --> 0:08:27.640 for some of these well, very lofty valuations. 0:08:28.320 --> 0:08:30.320 And that's another way that our clients are playing this 0:08:30.480 --> 0:08:33.000 with our options desk against stone cks. What they're doing 0:08:33.200 --> 0:08:37.400 is they are buying vxx options, or they're buying puts 0:08:37.480 --> 0:08:40.720 on the S and P five hundred index. These are 0:08:40.760 --> 0:08:42.920 ways to protect in a cheap way. Of course, because 0:08:42.960 --> 0:08:45.520 the market is so exuberant and complacent at the current levels, 0:08:46.040 --> 0:08:49.360 making this kind of a countercyclical portfolio policy. And this 0:08:49.400 --> 0:08:51.520 is something that I published in my piece last week. 0:08:51.720 --> 0:08:54.439 It's important to think counter cyclically when the market is 0:08:54.480 --> 0:08:58.120 so exuberant and so powerfully positive, to protect yourself, and 0:08:58.160 --> 0:09:00.679 you can do so in a cheap way. You can 0:09:00.760 --> 0:09:03.480 hold a nice portion in cash, buy some gold by 0:09:03.520 --> 0:09:07.160 defensive sectors which are very cheap at current levels because 0:09:07.200 --> 0:09:09.600 no one's really anticipating and I think that the recession 0:09:09.679 --> 0:09:13.960 risk is massively underappreciated currently. So that's staples, that's utilities, 0:09:13.960 --> 0:09:18.199 that's healthcare. These are sectors that are defensive and value 0:09:18.240 --> 0:09:21.080 driven in nature, and that's also where clients are focused. 0:09:21.559 --> 0:09:25.160 Great to get the perspective diversifications where it's at. Katin Manivera, 0:09:25.240 --> 0:09:28.920 thank you so much, Chief market strategist at stoneA X Group. Meanwhile, 0:09:28.920 --> 0:09:31.360 coming up, we've got more on the earning theme. Spotify 0:09:31.440 --> 0:09:33.600 look at misses on estimates on revenue, but it does 0:09:33.640 --> 0:09:36.520 give a strong monthly active US account. We're going to 0:09:36.559 --> 0:09:39.839 dig into the details speaking of earnings as well. Actually, 0:09:39.920 --> 0:09:43.680 Katra mentioned the name Verizon. We're watching shares up Percenter's 0:09:43.720 --> 0:09:46.720 point largest US wildless carrier actually reported earnings that beat 0:09:46.880 --> 0:09:49.600 estimates of profits for subscribers after a rid of a 0:09:49.600 --> 0:09:52.920 surprising turnaround in that customer growth from New York. This 0:09:52.960 --> 0:10:05.320 is Bloombg technology. Let's take a look at Spotify because 0:10:05.320 --> 0:10:08.079 the reported earnings before the market open this morning. And look, 0:10:08.559 --> 0:10:10.160 the shares are getting beaten up off the back of 0:10:10.200 --> 0:10:14.080 it because second quarter revenue and third quarter revenue well forecast. 0:10:14.160 --> 0:10:17.600 They missed expectations. So look the forecast for monthly active 0:10:17.679 --> 0:10:20.400 users was better than expected. We're trying to gauge the 0:10:20.440 --> 0:10:24.079 analyst reaction to this one city in particular, dean spotifyer 0:10:24.120 --> 0:10:26.760 by saying that given their revenue miss quote, we would 0:10:26.800 --> 0:10:29.880 not be surprised to see the shares trading lower. Shares 0:10:30.000 --> 0:10:33.120 currently down as you see what fourteen percent almost on 0:10:33.160 --> 0:10:35.320 this day of trade, Sunday sharmar and pleased to say 0:10:35.320 --> 0:10:37.120 it's another analyst we can turn to with this moment. 0:10:37.200 --> 0:10:40.200 Third Bridge joining for more and look, it's the worst 0:10:40.240 --> 0:10:42.920 days is February twenty twenty two for this particular stock. 0:10:43.320 --> 0:10:45.800 Were you as concerned by the forecast as the market 0:10:45.800 --> 0:10:46.160 seems to. 0:10:46.160 --> 0:10:49.720 Be again calin' going to have going to be on again. 0:10:49.920 --> 0:10:51.360 A couple of things over you, I think when you're 0:10:51.360 --> 0:10:54.199 thinking about this longer term, right, yes, the market is 0:10:54.240 --> 0:10:56.920 clearly being a life spot of five because of certain misses, 0:10:56.960 --> 0:10:59.400 and I think this is mostly around their issue with 0:10:59.600 --> 0:11:02.800 slightly missing their gross profit margin targets. But if you 0:11:02.800 --> 0:11:05.360 look at the bigger picture over here, right THEMAU as 0:11:05.400 --> 0:11:07.560 well as a premium subscriber editions that they were able 0:11:07.600 --> 0:11:10.240 to achieve in this last quarter really shows that their 0:11:10.280 --> 0:11:14.200 overarching strategy of gaining more subscribers in developed markets and 0:11:14.280 --> 0:11:17.640 developing markets is beginning to play our play out. I 0:11:17.640 --> 0:11:19.440 think the big thing over here to bear in mind 0:11:19.480 --> 0:11:23.680 for retail and institutional investors is Spotify is executing on 0:11:24.000 --> 0:11:26.600 rationalizing its cast space. It's really trying to be a 0:11:26.679 --> 0:11:29.760 leaner machine across the entire board. But such things do 0:11:29.840 --> 0:11:32.160 take some time to materialize in terms of earning. So 0:11:32.760 --> 0:11:37.480 while we are seeing a yd really substantial shareprise rally 0:11:37.600 --> 0:11:39.560 versus the slash that we saw in twenty twenty one 0:11:39.559 --> 0:11:43.479 to twenty twenty two, I think, based on our observations 0:11:43.480 --> 0:11:47.120 and the expressive interviewed at Third Bridge, the penalization right 0:11:47.160 --> 0:11:49.800 now might be more of a short term reaction as 0:11:49.840 --> 0:11:52.720 everybody's getting used as this information and sort of getting 0:11:52.720 --> 0:11:55.040 prepared for what QT and Q four holds for them. 0:11:55.120 --> 0:11:58.520 Okay, so push ahead the premium price height that we 0:11:58.640 --> 0:12:01.839 found finally catching up with other offerings out there from 0:12:01.880 --> 0:12:04.400 Amazon and the like. Do you think that will in 0:12:04.440 --> 0:12:07.600 any way crimp back on that user uptick? 0:12:07.679 --> 0:12:10.640 We've seen such a great question, right, So that's something 0:12:10.640 --> 0:12:12.720 that everybody is waiting to see how it's going to 0:12:12.720 --> 0:12:15.520 play out based on the observations and the analysis we 0:12:15.640 --> 0:12:16.160 have done. 0:12:16.640 --> 0:12:17.840 Music as well as music. 0:12:17.760 --> 0:12:20.839 Streaming is quite a commodity and people tend to not 0:12:21.000 --> 0:12:23.160 hurn as much as they would expect. If you think 0:12:23.160 --> 0:12:26.120 about Spotify's timing with this as well, they're doing it 0:12:26.160 --> 0:12:28.920 after majority of other players have already taken this move, 0:12:28.960 --> 0:12:30.760 so it's kind of defensive on their path to do 0:12:30.880 --> 0:12:33.839 this and also imperative of them to do it as well. Again, 0:12:34.000 --> 0:12:36.160 difficult to say currently at the stage whether it's going 0:12:36.160 --> 0:12:38.280 to lead it to a huge amount of churn, of 0:12:38.320 --> 0:12:39.520 substantial slow down. 0:12:39.400 --> 0:12:40.680 An uptic of new consumers. 0:12:41.040 --> 0:12:43.840 But if the price that they're playing right now versus 0:12:43.840 --> 0:12:46.560 other players, it's more or less in line or slightly competitive, 0:12:47.120 --> 0:12:51.680 it shouldn't be as negative and impact as everybody's anticipating. Also, 0:12:51.840 --> 0:12:54.040 fair enough, Spotify has indicated it's going to be doing 0:12:54.120 --> 0:12:57.520 this for a while, so it shouldn't necessarily be such 0:12:57.520 --> 0:12:59.880 a shock to the markets across the board because they 0:13:00.120 --> 0:13:01.800 pushing for this for a long time as well. 0:13:02.120 --> 0:13:04.480 This is a stock, as you say, that's rallied hard 0:13:04.520 --> 0:13:07.880 on the year up now seventy seven percent. I'm interested 0:13:07.920 --> 0:13:11.600 to standing on whether it's been the AI exuberance that 0:13:11.640 --> 0:13:13.520 has been caught up. And we know that they have 0:13:13.559 --> 0:13:17.200 an AIDJ for example, but how much can artificial intelligence 0:13:17.240 --> 0:13:18.600 add to the bottom line in any way? 0:13:19.480 --> 0:13:21.360 So you know, great thing over here. A couple of 0:13:21.360 --> 0:13:23.280 things when it comes to AI right. First off, the 0:13:23.280 --> 0:13:25.160 share price value, if you really think about it, it 0:13:25.240 --> 0:13:28.200 has been driven because of the huge layoffs that they 0:13:28.200 --> 0:13:29.959 had they got out of down our staff as well. 0:13:29.960 --> 0:13:32.400 They've really been trying to clean out their operations and 0:13:32.400 --> 0:13:35.160 build out that oppec space, which is what investors have 0:13:35.200 --> 0:13:37.280 been asking for over that time. I don't think that 0:13:37.360 --> 0:13:39.800 this is that much of an AI play in terms 0:13:39.840 --> 0:13:42.480 of what's driving the share price valuy. I think around 0:13:42.559 --> 0:13:45.400 artificial intelligence a big thing that everybody wants to understand 0:13:45.440 --> 0:13:47.960 right now, Yes, it's a buzzword, but Spotify has been 0:13:48.000 --> 0:13:50.720 implementing AI and mL for a substantial period of time, 0:13:51.000 --> 0:13:52.960 even when they recommend their music to us, right so, 0:13:53.000 --> 0:13:56.320 they have already dipped us into this water. There is 0:13:56.360 --> 0:13:59.800 some contentious issues coming out right now between the music 0:14:00.040 --> 0:14:03.319 the record labels as well as the digital streaming platforms, 0:14:03.320 --> 0:14:05.559 but they've always had a contextuous relationship. 0:14:05.800 --> 0:14:08.679 When we're thinking about AI and mL. 0:14:08.120 --> 0:14:09.760 A big thing over here is just going to be 0:14:10.440 --> 0:14:12.800 how much more technology do they need to acquire, how 0:14:12.880 --> 0:14:14.880 much more money do they need to spend on this? 0:14:15.240 --> 0:14:18.560 And then how does that story play into their cash constraints, 0:14:18.600 --> 0:14:21.360 on into their profitability constraints. That, of course, is something 0:14:21.400 --> 0:14:24.200 that hasn't been directly addressed so quickly, And perhaps the 0:14:24.240 --> 0:14:27.240 next quarter or two will tell us about how Spotify. 0:14:26.960 --> 0:14:28.680 Is going to think about investments in this. 0:14:29.200 --> 0:14:31.480 So only then will we get to know exactly how 0:14:31.520 --> 0:14:33.320 the market's going to react to those costs or the 0:14:33.360 --> 0:14:34.280 investment costs for that. 0:14:34.480 --> 0:14:36.920 I mean, meanwhile, go back to the cost cutting. We 0:14:36.960 --> 0:14:39.440 are anticipating further job cuts, I think they said in 0:14:39.480 --> 0:14:42.600 the next quarter of the CFO and don Astrov you mentioned, 0:14:42.720 --> 0:14:45.960 I mean a big talent loss from a podcasting perspective, 0:14:46.520 --> 0:14:49.520 But is this the right direction to be trimming costs 0:14:49.560 --> 0:14:51.120 when it comes to talent and people? 0:14:52.480 --> 0:14:54.960 So I think the big thing with don Astrov as well, right, 0:14:55.000 --> 0:14:57.640 so quite creative in terms of the content that was 0:14:57.680 --> 0:15:01.880 being created podcasting, especially back into twenty twenty two, was 0:15:01.920 --> 0:15:04.320 the buzz where that Spotify was going for at that time. 0:15:04.600 --> 0:15:07.160 But it's been pretty evident so far that monetization and 0:15:07.200 --> 0:15:10.720 podcasting is pretty hard. Despite an increase in consumption across 0:15:10.720 --> 0:15:13.680 the board, the technology that they had, or the entire 0:15:13.720 --> 0:15:17.920 situation of how music streaming or podcast advertising works, it 0:15:18.000 --> 0:15:20.480 doesn't really lend itself at the current moment to create 0:15:20.520 --> 0:15:23.360 monetization opportunities. What they're going to be doing over here 0:15:23.440 --> 0:15:25.280 is going to be getting smarter in terms of the 0:15:25.320 --> 0:15:27.200 content that they have. They're going to be trying to 0:15:27.200 --> 0:15:30.040 monetize that a lot better. And if that requires them 0:15:30.040 --> 0:15:33.640 to take a certain amount of hits or have a 0:15:33.680 --> 0:15:36.200 certain degree of losses to curtail and get a bit leaner, 0:15:36.680 --> 0:15:39.480 they're still providing that story of profitability which the market 0:15:39.480 --> 0:15:42.080 cares about. Again, right, they've shifted or the market is 0:15:42.080 --> 0:15:45.320 shifted from that story of podcasting growth towards a story 0:15:45.360 --> 0:15:48.040 of a bit more of a conservative company with better margins. 0:15:48.600 --> 0:15:51.080 Sundy. Great to catch up with you. Thank you, Sandy 0:15:51.200 --> 0:15:54.200 Shehama working at five pm over there in Europe. Third 0:15:54.200 --> 0:16:04.240 Bridge Analyst time now for Talking Tech. First up show 0:16:04.360 --> 0:16:07.320 Me plans to focus on five G smartphones and Alena 0:16:07.360 --> 0:16:10.880 product portfolio in India. Now that what's dominating, Chinese manufacturer 0:16:10.960 --> 0:16:13.240 is trying to call back market share lost the rivals, 0:16:13.240 --> 0:16:16.200 including South KOREIZ Samsung. In India, it's, of course, its 0:16:16.200 --> 0:16:20.440 second biggest market. Meanwhile, Adobe's twenty billion dollar takeover of 0:16:20.480 --> 0:16:23.560 design startup Figma is on calls for an investigation from 0:16:23.560 --> 0:16:27.880 EU merger regulators. Purchase is also facing global scrutiny as 0:16:27.880 --> 0:16:31.480 the US Justice Department prepares an antitrust lawsuit seeking to 0:16:31.480 --> 0:16:35.320 block the merger, and Sequoia while it's kind a third 0:16:35.400 --> 0:16:38.160 of its talent division, a sign of continued restructuring in 0:16:38.200 --> 0:16:40.640 the world of Silicon Valley startups and VC now. The 0:16:40.640 --> 0:16:42.760 move comes as the firm parts ways with at least 0:16:42.800 --> 0:16:46.400 five investing partners, two of which the champion Sequi's doomed 0:16:46.480 --> 0:16:50.560 backing of Crypto exchange FTX. Let's go back to the 0:16:50.680 --> 0:16:52.920 M and A theme though, if we're just talking Adobe 0:16:52.920 --> 0:16:57.120 and Figma, what then of Amazon's deal for its acquisition 0:16:57.240 --> 0:17:00.280 of I Robot. Now I robot is actually now going 0:17:00.320 --> 0:17:02.280 to come at a lower price point for Amazon, it 0:17:02.320 --> 0:17:04.520 would seem for the rumor maker. It's now going to 0:17:04.560 --> 0:17:07.040 be fifty one dollars seventy five per share, down from 0:17:07.200 --> 0:17:09.959 sixty one per share when it was originally agreed. Change. 0:17:10.080 --> 0:17:13.560 We understand off sets some rather expensing debt that I 0:17:13.720 --> 0:17:17.720 robot is taking on. Let's go to Spencer Solaper, who 0:17:17.760 --> 0:17:19.840 is oman on the ground when it comes to Amazon 0:17:20.359 --> 0:17:25.200 and Spencer, I'm interested in this pretty hefty price car. 0:17:25.840 --> 0:17:28.200 I mean, were you anticipating it because it is a 0:17:28.320 --> 0:17:30.320 pretty expensive debt deal that they've struck. 0:17:31.520 --> 0:17:35.200 Yeah, and it actually it seems like the regulatory scrutiny 0:17:35.240 --> 0:17:38.960 is slowing the steal down is actually benefiting Amazon because 0:17:39.280 --> 0:17:41.960 you know, this is I Robot's an example of another 0:17:41.960 --> 0:17:45.120 one of these kind of pandemic darlings that people were 0:17:45.160 --> 0:17:47.399 just snatching them up right and left when everyone was 0:17:47.440 --> 0:17:49.120 locked at home and trying to keep their holms nice. 0:17:49.160 --> 0:17:54.919 And now they're struggling from people returning to normal habits, 0:17:54.920 --> 0:17:57.800 which I guess includes keeping a messy house or cleaning 0:17:57.800 --> 0:18:01.920 the house yourself. And so yeah, so they're able to 0:18:02.720 --> 0:18:04.440 cut their price in response to this debt that I 0:18:04.560 --> 0:18:07.200 Robot had to take on because the market is softer. 0:18:07.960 --> 0:18:10.879 We've been naming ours various things back at home. But 0:18:11.359 --> 0:18:15.399 I'm interested, Like for Amazon, there's another key price point 0:18:15.600 --> 0:18:17.840 for them and cost base, which is of course as people, 0:18:17.880 --> 0:18:19.920 and we know that Amazon have been trimming on that people. 0:18:19.960 --> 0:18:22.840 There's an interesting news point today that well, the deal 0:18:23.200 --> 0:18:28.200 between UPS and teamsters, so their own delivery force seems 0:18:28.200 --> 0:18:30.240 to have been struck. Now what does that mean for Amazon, 0:18:30.280 --> 0:18:31.920 because of course we know that they have tension with 0:18:32.000 --> 0:18:33.040 labor unions. 0:18:33.880 --> 0:18:36.800 Yeah, that it is interesting. So in your term, Amazon 0:18:36.840 --> 0:18:39.880 wasn't sweating a UPS strike too much, even though Amazon 0:18:39.960 --> 0:18:43.280 is UPS's largest customer. I think one in ten UPS 0:18:43.280 --> 0:18:47.160 packages actually come from from Amazon in the US. But 0:18:47.200 --> 0:18:49.040 still Amazon wasn't sweating it too much because they have 0:18:49.080 --> 0:18:51.639 their own delivery network. They have, you know, their branded 0:18:51.720 --> 0:18:53.840 vans out there run by small businesses, and they also 0:18:53.880 --> 0:18:57.560 have like this flex army of drivers like kind of 0:18:57.560 --> 0:19:00.280 like Uber that you can deliver Amazon packages in your 0:19:00.280 --> 0:19:02.840 own van, so they've definitely diversified that, and also at 0:19:02.840 --> 0:19:04.639 summertime so things aren't slow if there was like a 0:19:04.640 --> 0:19:07.639 summertime strike, that's actually a good time for Amazon to 0:19:07.680 --> 0:19:09.800 see a to see a labor strike for its delivery 0:19:09.800 --> 0:19:11.520 people because there's just not as much demand to say 0:19:11.520 --> 0:19:16.119 the holidays. But longer term, this is an interesting development 0:19:16.160 --> 0:19:18.359 because the teamsters have said, we're going to focus on 0:19:19.040 --> 0:19:21.359 UPS and get our contract and then we're coming for 0:19:21.400 --> 0:19:24.960 you Amazon, because Amazon does have thousands of these delivery 0:19:25.000 --> 0:19:28.920 service partners that employ hundreds of thousands of drivers, and 0:19:28.960 --> 0:19:32.119 the teamsters don't like how little those drivers are getting 0:19:32.160 --> 0:19:34.719 paid and the conditions that they're working in. And so 0:19:34.760 --> 0:19:36.399 now they're going to take this contract that they have 0:19:36.480 --> 0:19:38.760 with UPS and try to dangle it in front of 0:19:38.760 --> 0:19:42.520 those drivers who are delivering packages for Amazon and say, hey, 0:19:42.280 --> 0:19:44.640 you guys deserve a lot better, why don't you come 0:19:44.640 --> 0:19:46.680 on board with us? So I think we're going to 0:19:46.720 --> 0:19:50.120 see more of a fight between the teamsters and Amazon 0:19:50.480 --> 0:19:52.440 now that the UPS situation has resolved. 0:19:52.560 --> 0:19:54.880 Interesting UPS getting a bit of a boost on well 0:19:54.920 --> 0:19:57.080 some clarity at least from that deal, But it's a 0:19:57.160 --> 0:19:59.760