Speaker 1: And Caroline hired up Blougs World headquarters in New York,
Speaker 1: and I made Lovelow in San Francisco. This is Bloomberg Technology.
Speaker 1: Three giants of global technology, Caroline three very disappointing earnings
Speaker 1: reports and will that put an end to quite the
Speaker 1: run up in tech stocks that we've been seeing. Ed,
Speaker 1: let's get to it. The juggernaut that is Apple. It
Speaker 1: reports its first revenue declines fully short, almost across the
Speaker 1: board product wise, plus the rally stores. As Caroline said
Speaker 1: in after hours, with Alphabet feeling the slowdown in ad spend,
Speaker 1: we speak to the CFO and Amazon projects lackluster sales
Speaker 1: and slower cloud unit growth shares. They're also falling after hours.
Speaker 1: Let's get straight back to Apple and bringing Julia Arsk,
Speaker 1: principal analysts at Forrester Research. You look at the numbers,
Speaker 1: the sort of more deep weak this in that holiday
Speaker 1: quarter for Apple. Perhaps it was that some new products
Speaker 1: weren't released until the new year. What was your takeaway
Speaker 1: from the print? So my takeaway was is, you know,
Speaker 1: I'm not a financial analyst, but are certainly our expect
Speaker 1: Tachens is that sales would be lower. If we look
Speaker 1: at our data from consumers. We have seventy one percent
Speaker 1: of consumers today in the United States that are concerned
Speaker 1: about the general state of the economy. Those numbers are
Speaker 1: even higher in Europe. We have thirty eight percent of
Speaker 1: consumers who are cutting back spending on non essential goods.
Speaker 1: And while we did have a holiday forecast that was
Speaker 1: up in the United States six point one one, a
Speaker 1: lot of that was still fueled by inflation. So all
Speaker 1: you know, savings rates are down. There's a lot of
Speaker 1: economic concerns that consumers have today. So that's that's one
Speaker 1: of the factors that's impacting the near term. And talk
Speaker 1: to us about whether really this is a focus on
Speaker 1: services that will eventually bear fruit in that respect overall
Speaker 1: g because we have despite some of the misses that
Speaker 1: we're seeing compared to analyst expectations. The CEO, Tim Cook,
Speaker 1: the CFO really trying to talk about the strength and resilience,
Speaker 1: the amount of two billion products in people's hands, the
Speaker 1: fact that services a record revenue rate. Is that something
Speaker 1: to be optimistic about. I think it's there's act absolutely
Speaker 1: it's something need to be optimistic about because one of
Speaker 1: the other long term factors we haven't talked about is
Speaker 1: very intentionally Apple, like other smartphone manufacturers, right, these smartphones
Speaker 1: is their number one source of revenue, are intentionally building
Speaker 1: devices that consumers can keep for longer. Right, There's more
Speaker 1: focus on sustainability, There's more focus on a consumer's right
Speaker 1: to repair the device, their supporting devices for longer periods
Speaker 1: of time. So as we focus on some of these
Speaker 1: environmental factors, as we look into the future, consumers are
Speaker 1: going to have also slower upgrade times. So Apple will
Speaker 1: have to look to building out an ecosystem and products
Speaker 1: and being more focused on their services revenue, which granted
Speaker 1: is a smaller proportion of their overall revenue, but certainly
Speaker 1: their highest margin business. Julie, I want to go back
Speaker 1: to this idea of new products and timing. Right, we
Speaker 1: write in our Bloomberg News story that it's a tough
Speaker 1: comparison because in the holiday quarter of one, Apple would
Speaker 1: come out with a new line of MacBooks. They didn't
Speaker 1: do that in two. How how dependent is Apple and
Speaker 1: churning out generation off the generation of new hardware to
Speaker 1: drive that sales growth, to drive the interest Absolutely they
Speaker 1: are we I mean, I look not only looking at
Speaker 1: let's say the MacBook cycle, whether it's a tablet cycle,
Speaker 1: and most importantly the smartphone cycle, weren't in every six
Speaker 1: months of one of their largest competitors, which is Samsung,
Speaker 1: which had which you know, rolled out a news device yesterday.
Speaker 1: But literally they need to have the next, latest and
Speaker 1: greatest thing every year with every one of these product
Speaker 1: lines because they've got really stiff competition coming from other geographies.
Speaker 1: And Apple has a very strong focus on this profitability.
Speaker 1: It doesn't have as big of a product line as
Speaker 1: some of its competitors can do, where they may be
Speaker 1: able to sell devices, uh not the same profit margins
Speaker 1: or any profit at all. So absolutely, you know, you
Speaker 1: look at factors like R and D and bringing people
Speaker 1: back to the office and innovation like all of that
Speaker 1: is key. Absolutely, product releases, new product releases, not only
Speaker 1: keeping up but like leap frogging ahead of the competition
Speaker 1: with every one of these products is critical. And Urine
Speaker 1: and you're out, and it's critical to be able to
Speaker 1: make these products. Julie, and I know you're much more
Speaker 1: focused on the consumer trends, the demand trends, rather than
Speaker 1: say that my new shives supply chain over in China,
Speaker 1: but supply chain has been a real headache for Apple,
Speaker 1: particularly in the last quarter. We look at actually some
Speaker 1: of their supply chain suffering after hours Skyworks TSMC down
Speaker 1: and they've been down over the year and they're certainly
Speaker 1: falling after hours as well. From your perspective, are you
Speaker 1: hoping this is a company that can remain diversified to
Speaker 1: be able to make the product at the right run
Speaker 1: rate and get it into the hands that can customer. Yeah.
Speaker 1: I think, you know, if you read through the quarter
Speaker 1: of the reports and our reports, I think Apple has
Speaker 1: a very good hand on the risk factors that are
Speaker 1: in place, and I think everything to to you know,
Speaker 1: trusting what Tim Cook is saying. Everything he's saying is
Speaker 1: about diversifying the supply chain and lowering the risk of
Speaker 1: being dependent on you know, one country in one geography
Speaker 1: for so many critical components to go into their core devices.
Speaker 1: I think absolutely it's important. We want to thank you
Speaker 1: for us to research Principal analyst Julie Arsk fascinating across
Speaker 1: the board in terms of all things Apple, and we've
Speaker 1: got to make the pivot now because there were so
Speaker 1: many key names and Daniel Newman is going to join
Speaker 1: us now to dig in to the world of Alphabet
Speaker 1: principal analyst over it for true and Research and just
Speaker 1: we had a conversation this CFI let ed dig into
Speaker 1: that because he really spoke to with poor your initial
Speaker 1: takeaway on Alphabet, the worries about perhaps cloud growth and
Speaker 1: really though trying to talk up their AI prows, right, Yeah,
Speaker 1: I think there was mrs really across the board. And
Speaker 1: this is an adjusted down guided silver lining though, Caroline
Speaker 1: is I believe the fan wants to see things break
Speaker 1: and so if we like that devish talk for the market,
Speaker 1: we need to first see big companies that have been
Speaker 1: running pretty successfully even through this downturn over the last
Speaker 1: year or start to miss And so that's the silver lining. Um,
Speaker 1: the AI talk is a massive consideration right now. You
Speaker 1: can absolutely tell that Google is going to have to
Speaker 1: lean in to deal with what Microsoft is doing with
Speaker 1: its open AI commitment. UM, the cloud business, the advertising business, UM,
Speaker 1: every part of the company is at risk if they
Speaker 1: don't figure out a way to combat what Microsoft is doing.
Speaker 1: So this is definitely gonna be part and you saw
Speaker 1: that they even have new reporting that they're planning to
Speaker 1: start in their new uh the reports coming up around
Speaker 1: AI to give more clarity to their investors about how
Speaker 1: that is is transpiring. So it was a tough quarter
Speaker 1: for all these big tech names. But like I said,
Speaker 1: I think the silver lining is in the fact that
Speaker 1: starting to miss is the indication that we really have
Speaker 1: maybe hit this bottoming period that people have been waiting for. Dan.
Speaker 1: We're grateful to have you on the program and get
Speaker 1: this quick reaction. As Karenine said, I've been on the
Speaker 1: phone with CFO Reef Parratt, and you know she framed
Speaker 1: this pretty quick, quickly and clearly, this is a reset.
Speaker 1: We are committed to re engineering our cost base to
Speaker 1: long term profitable growth. That was kind of her response
Speaker 1: to the layoffs. Are you convinced by that? Is this
Speaker 1: alphabet basically saying, Okay, this is the year of discipline.
Speaker 1: I think this is a theme across tech. I think
Speaker 1: these reduction and forces in layoffs. I think it's in
Speaker 1: a moment where all the companies are taking to reset.
Speaker 1: I think throughout the pandemic, we hired uh, the tech
Speaker 1: industry hired to aggressively. I think it was trying to
Speaker 1: meet that rapid onset of demand and a lot of
Speaker 1: the digital transformation projects that we heard companies were doing.
Speaker 1: We're really more bodies being thrown at growth and revenue
Speaker 1: and demand. The spiked UH during the pandemic. So now
Speaker 1: companies are looking at some of those uh those hires
Speaker 1: they had to make it way over market values. They're
Speaker 1: trying to reset some of those and trying to get
Speaker 1: back to a more favorable outfact situation, which as we've seen,
Speaker 1: as companies have announced reduction in forces and laots, the
Speaker 1: markets actually favoring these decisions because these are getting back
Speaker 1: to the roots of running these businesses. And so I
Speaker 1: see this as a moment. Is it enough? I mean,
Speaker 1: the size of Google is still significantly larger than it
Speaker 1: was a year ago, even after twelve and that's the
Speaker 1: case of most of these tech comes. So they are
Speaker 1: reducing enforced, but there's still larger than they were a
Speaker 1: year ago, as many of them did a lot of hiring.
Speaker 1: So it's a start. But if the next quarter doesn't
Speaker 1: look good, I would expect to see more. All right, Yeah,
Speaker 1: Alphabet confirming it will book a charge of one point
Speaker 1: nine billions two point three billion dollars as a result
Speaker 1: of those layoffs. I guess the fighting talk was about AI,
Speaker 1: and I think we knew this was coming right Dan,
Speaker 1: that executives would be quizzed on AI. What Roofport told
Speaker 1: me was basically a flex. It was basically defense saying
Speaker 1: we've been working on AI for a long time. We're
Speaker 1: excited about momentum as, breakthroughs coming from their research team,
Speaker 1: like in language models, generative AI. A big emphasis on
Speaker 1: research because for Alphabet it's not yet out there in
Speaker 1: the real world. Do you expect Alphabet to become a
Speaker 1: real commercialized AI player this year? I think anything that
Speaker 1: was behind the curtain is going to have to start
Speaker 1: to become more exposed. I think the p A commitment,
Speaker 1: I think chat, GPTs popularity and the general concerns to
Speaker 1: what this can mean for search for instance, or workspaces
Speaker 1: is going to force Google and Alphabet to start to
Speaker 1: reveal all of the research it's done. Now. To be clear,
Speaker 1: as you know, technology industry analysts, we are continuously impressed
Speaker 1: by what Google is capable of in the AI space.
Speaker 1: They've been inventive, they've been innovative, but they haven't necessarily
Speaker 1: done a great job of coming out in front recently
Speaker 1: and explaining how they plan to combat what others are doing,
Speaker 1: and in the case of the open Ai came on
Speaker 1: very quickly, Microsoft's large commitment and investment, and now Google
Speaker 1: is in a situation where they have to be able
Speaker 1: to show the market, yes, we have a plan, we
Speaker 1: have technology. We are not going to let a chat
Speaker 1: bot or what open eye is doing significantly disrupt our
Speaker 1: advertising business. Uh. And that's that's what the market's gonna
Speaker 1: want to hear, is that there isn't a big risk
Speaker 1: to that part of the business that's so critical to
Speaker 1: its long term success. But down what is the risk
Speaker 1: to that part of the business from regulation rather than
Speaker 1: perhaps competition. Yeah, I'm really glad you asked that question.
Speaker 1: I think the regulators across the board continue to look
Speaker 1: at Google and of course the disproportionate amount of ads spending.
Speaker 1: I still don't think it's the biggest challenge that regulators
Speaker 1: actually have. I still find a lot of of what
Speaker 1: Apple does with its uh you know, it's captive app ecosystem,
Speaker 1: for instance, is a bigger issue. I mean, you see
Speaker 1: Amazon coming out with growth and its advertising business right now.
Speaker 1: Like I said, you see what chat GPT could potentially
Speaker 1: due to the everyday search that feeds so much of
Speaker 1: our ads that isn't really commerce demanded search, and you
Speaker 1: suddenly say, you know, does Google's long term um, you know,
Speaker 1: market strength? I don't dominance is the right word prevail
Speaker 1: with all this new AI and technology that's coming into
Speaker 1: the marketplace. Look, regulators are going to continue to regulate.
Speaker 1: Europe will always, for instance, continue to be very tough
Speaker 1: on big technology, and of course in the US we've
Speaker 1: got leadership in the FTC that's constantly looking to regulate.
Speaker 1: Having said that, I don't think Google is its biggest focus,
Speaker 1: nor should it be, and I don't think regulators will
Speaker 1: be doing any favors to the market by harming Google
Speaker 1: because I also think with all the Apple I D
Speaker 1: you know, the I D f A Apples and other
Speaker 1: scary you know, entrent to have a really dominant opportunity
Speaker 1: in advertising as it controls so much of the flow.
Speaker 1: Is what we saw with Meta. Well, many say Amazon
Speaker 1: is also competitive in advertising, and Amazon of course the
Speaker 1: juggnal when it comes to cloud services AWS, so some slowdown.
Speaker 1: We'll talk about that in a minute with our next guest,
Speaker 1: But talk to us about Alphabet and it's cloud offering.
Speaker 1: I mean, should it be committing this much, there's another loss. Yeah,
Speaker 1: well the losses are narrowed. And I do believe that
Speaker 1: Google has the opportunity with its customer base. It's uh,
Speaker 1: you know, it's BROADUS user base, and it's a lot
Speaker 1: of its technologies around data that it's become part of
Speaker 1: the enterprise's larger cloud ecosystem. So in what we talk
Speaker 1: called the multi cloud ecosystem. Google has been a consistent
Speaker 1: growth engine. You saw they grew up this quarter, which
Speaker 1: was right in part with with Azure and you know,
Speaker 1: faster than AWS. And I know you're gonna kick over
Speaker 1: to a w S, but you gotta look at a
Speaker 1: w S as an over eighty billion dollar business, and yes,
Speaker 1: slowing to is significant, but the business is so much
Speaker 1: larger than you know, some of the other cloud providers
Speaker 1: that I still think it WUS is in a really
Speaker 1: good position. Going back to Google, Google needs to continue
Speaker 1: to grow. It's going to have to hit an economy
Speaker 1: of scale right get profitable. I don't sense that making
Speaker 1: money is its biggest focus, but I think in this
Speaker 1: time of austerity, they're gonna have to get there quicker
Speaker 1: than they maybe wanted to. Future and research analyst d
Speaker 1: and human digesting breaking down a big nings report from
Speaker 1: out Bed, Thank you very much. Now coming out, we've
Speaker 1: got to state with earnings, and we're going to dive
Speaker 1: into Amazon's lackluster results. I just want to get a
Speaker 1: quick check on Qualcom ches and how they're looking in
Speaker 1: after hours training. We're actually down to and a half
Speaker 1: well four percent. Now that's Amazon, but I'm talking about
Speaker 1: Qualcolm the largest theory two and a half percent lower,
Speaker 1: a pretty weak forecast. At first, it was not that
Speaker 1: much of a decline because we saw this coming a
Speaker 1: slowdown in the smartphone market. But again the market listening
Speaker 1: to what executives are having to say on the call,
Speaker 1: and those losses accelerating in post market. This is Bloomberg.
Speaker 1: All the earnings come thick and fast on Thursday, and
Speaker 1: Amazon was among them of course as well. Earnings well
Speaker 1: showing some lack luster forecasts coming through. We're down three
Speaker 1: point immediately after hours, Slower cloud unit growth as well
Speaker 1: a w S, which is the profit center in many ways.
Speaker 1: Let's talk to Minissa Verdict, because she's not only co
Speaker 1: found in president of pack for You, which of course
Speaker 1: all about making the best of your e commerce provisions
Speaker 1: and marketing but also a tenure Amazon veteran. You know
Speaker 1: this business, particularly on the e commerce side. So let's
Speaker 1: start their overall, Melissa. When you're looking at what they're offering,
Speaker 1: the macroeconomic headwind all, they navigating it. All. They focusing
Speaker 1: and AFL and trimming costs, sudden growing growth and the
Speaker 1: way you'd like to see them. Uh, they're definitely focusing
Speaker 1: on that. I would say that they're focusing on profit
Speaker 1: at this point. Um. Amazon is famous for, you know,
Speaker 1: changing their knobs pretty quickly and they can go from
Speaker 1: driving brow to driving profit and that's what they're doing now. UM.
Speaker 1: Q four was a really interesting kind of quarter. There
Speaker 1: was definitely a slowdown in demand. UM consumers that were
Speaker 1: coming in, they're actually coming in to buy deals and discounts. Uh.
Speaker 1: And the good news is that Amazon is always known
Speaker 1: for having the greatest prices and so that that's something
Speaker 1: that was definitely going for them. But um, you know,
Speaker 1: unlike in years past, Amazon and Q four actually had
Speaker 1: more inventory. UM consumers wanted to buy on deals, so
Speaker 1: they came in, they bought during Black Friday's every Monday. UM.
Speaker 1: But you know, Amazon is really focused on cost cutting
Speaker 1: at this point, being efficient profit margin um in the
Speaker 1: face of having a lot of slower demand consumer demand.
Speaker 1: It's interesting on the cool Brander's abscie the CFOs talking
Speaker 1: about the layoffs and saying this round of layoffs is
Speaker 1: over and talking about the charges and impairments which they took.
Speaker 1: But Amazon is still kind of bloated. It seems still
Speaker 1: a big beast. Do you expect the company to be
Speaker 1: more nimble in terms of how it kind of adds
Speaker 1: and flows in hiring and reduction going forward. Absolutely, they
Speaker 1: hired half a million people and they have over one
Speaker 1: five million employees, so eighteen thou employees is not a
Speaker 1: huge amount. And in the face of slowing growths and
Speaker 1: slowing demand, you know, it's it's something to think about,
Speaker 1: which is they will have to look at their bottom line.
Speaker 1: Where do they lean into at the moment? When so,
Speaker 1: where are they able within the focus on profit to
Speaker 1: decide to allocate cash for growth? Well, the through the
Speaker 1: two businesses at Amazon that are very profitable are advertising
Speaker 1: and AWS. Uh So those are definitely areas that they
Speaker 1: plan on continue to invest in. The AWS is slowing
Speaker 1: what you worried by about. They're definitely both slowing um
Speaker 1: and absolutely. Uh. You know, AWS market share has dropped
Speaker 1: from forty three percent thirty four percent. They have a
Speaker 1: lot of competition with Microsoft and Google, and right now
Speaker 1: all companies unit hards are looking at cutting costs, and
Speaker 1: one of the first places you go to is AWS.
Speaker 1: So I think that is going to be a big
Speaker 1: challenge this year because companies are looking to cut be
Speaker 1: efficient themselves, and that will impact AWS. I guess my question,
Speaker 1: Melissa is how long does AWS be the sort of
Speaker 1: bankroller of the rest of the business, Because that's the
Speaker 1: situation right where Amazon has this sort of ginormous commerce business.
Speaker 1: There's the prime subscription element, the video and content element,
Speaker 1: but it's all kind of dependent on this cash cat.
Speaker 1: How you've been inside that that company, you know how
Speaker 1: it operates. Do you think they'll have a change, They'll
Speaker 1: have a snap snap free of that business model? Um,
Speaker 1: I mean serve the services business. Amazon has become a
Speaker 1: services business. It's over of their revenue across AWS, advertising
Speaker 1: and subscriptions, and so that will continue. And I think
Speaker 1: that you know, one thing that Amazon is well known
Speaker 1: for is innovation. The thing that can't control is the
Speaker 1: demand and the cost cutting part that other people are
Speaker 1: doing and that impacts AWS. UM, I think advertising is
Speaker 1: a bright star. They're doing so many things there. Crime
Speaker 1: video for the first time surpassed as Netflix is the
Speaker 1: top streaming service. Amazon talked about a hundred million viewers
Speaker 1: watching a Lord of the Rings. Um, more people watching
Speaker 1: streaming means more advertising revenue to Amazon, and so that
Speaker 1: is a big star for them. Very briefly. We've touched
Speaker 1: on it with Alphabet, but the regular story overhang anything
Speaker 1: that worries you with Amazon. Uh, the DJ definitely has
Speaker 1: Amazon as a target. It's really hard to call them
Speaker 1: and monopoly with so much competition. They actually have slipping
Speaker 1: market share in AWS. But that's not to say that
Speaker 1: it's not going to be a distraction and something that
Speaker 1: they're going to have to answer. So you know, this
Speaker 1: happened before with private label UM and they had to
Speaker 1: answer to that. So it'll continue to be something that
Speaker 1: all these tech companies are dealing with. But I see
Speaker 1: less of kind of a like to stand on pact
Speaker 1: for your co founder and president, Melissa birt It, thank
Speaker 1: you so much for breaking down again and now they're challenging.
Speaker 1: Earnings report from Amazon now is one of the most
Speaker 1: read stories on the terminal amongst our clients, at least today,
Speaker 1: because some major hedge funds they've been asked by US
Speaker 1: regulators to review certain employees personal mobile phones. Why because
Speaker 1: it's all part of this big probe that continues to
Speaker 1: mushroom of Wall Street's use of unofficial messasaging platforms, basically
Speaker 1: the use of WhatsApp to be able to do deals,
Speaker 1: broker potentially M and A and that sort of thing.
Speaker 1: And ultimately we're hearing that the SEC has our Steve
Speaker 1: Cohen's points on only two Ken Griffin's Citadel other firms
Speaker 1: as well. But what about the liability here? What about
Speaker 1: people's phones? What sort of data might we end up
Speaker 1: sort of unfolding here in terms of health, in terms
Speaker 1: of finance, Well, we should say those hedge funds you name,
Speaker 1: no one's been accused of any wrongdoing, but they are
Speaker 1: literally asking them to review the devices for any transactional stuff,
Speaker 1: that business stuff that's being done on them inappropriately. That's
Speaker 1: the reality of what's playing out on Wall Street. We've
Speaker 1: already seen the fines being exerted upon the brokerages and
Speaker 1: the actual banks. We see asset managers kind of pushed
Speaker 1: back at the moment, I'll come back to Bluemo technology.
Speaker 1: I'm Caroline had in New York, and let's get you
Speaker 1: up to speed with some of cost cuts, some of
Speaker 1: the layoffs, whether they're done or not. Lumbag intelligence put
Speaker 1: on oil and pieces says with us Rumas Tech Executive
Speaker 1: editor Tom Jailes as well, start with you and on
Speaker 1: Amazon because ed talking about this reset and alphabet, this
Speaker 1: focus on being more disciplined and on cost cuts, the
Speaker 1: layoffs Amazon's used to be saying, look the cost cuts, Well,
Speaker 1: certainly the layoffs are done. Are they right sizing in
Speaker 1: the way that the market wants to see? Well, they're
Speaker 1: there are laborers down for a percent and a year
Speaker 1: or a year basis, So they did right size a little.
Speaker 1: Now you can argue that could they do more? Sure,
Speaker 1: but maybe they're just waiting to see how things unfold.
Speaker 1: And remember Amazon's a business where many parts of it
Speaker 1: are still in rapid growth mode, whether that's advertising a
Speaker 1: WS or um even on the three P side where
Speaker 1: they really are growing much faster than expected, or the
Speaker 1: overall retail business despite resolve all down. Sorry it interrupts
Speaker 1: you out, Tom, I actually want to pivot to Apple
Speaker 1: because we kind of saw this coming, you know, we
Speaker 1: knew that December would be really tasked. They missed estimates
Speaker 1: basically across all the products, and the markets reacting as
Speaker 1: you'd expect, pretty negatively. But is that a surprise. I mean,
Speaker 1: we thought they'd be weak. We saw the headlines out
Speaker 1: of China. We knew that there were going to be
Speaker 1: supply chain constraints, We saw the lockdowns, and we saw
Speaker 1: the impact, and and Apple is absolutely feeling it. In
Speaker 1: addition to supply chain concerns, Tim Cook talked about currency
Speaker 1: headwinds that has to be taken into consideration. But also
Speaker 1: remember back the saying when Clinton was running for pred
Speaker 1: it's the economy, stupid, it's the economy. The economy is
Speaker 1: hurting Apple. It's hurting demand for iPhones. The economy is
Speaker 1: affecting demand for ads on Alphabet, and the economy is
Speaker 1: affecting demand for a WS, the cloud services at Amazon,
Speaker 1: all of those things. That's the theme running between all
Speaker 1: of these three companies today. I love how you bring
Speaker 1: them all together and this discipline, this focus. What's interesting
Speaker 1: is rule for Apple, in particular, their supply chain headaches.
Speaker 1: Did they speak to that in any way? Have we
Speaker 1: got an idea as to whether the China issues, whether
Speaker 1: they're now trying to broaden out of just Fox Con,
Speaker 1: whether that was what was hindering some of the sales,
Speaker 1: particularly on iPhone sales. Well, a couple of things, Caroline,
Speaker 1: great questions. First and foremost, Obviously, things have changed dramatically
Speaker 1: in China since we had the lockdowns late last year.
Speaker 1: You've seen this opening up. Uh, So you're not seeing
Speaker 1: the headlines of like of of people just locked in
Speaker 1: their homes literally not going out, not buying um, and
Speaker 1: people not even being being able to get to work
Speaker 1: to actually manufacture the phones. So that's changing. What isn't changing, however,
Speaker 1: is these questions about, you know, just how quickly is
Speaker 1: demand overall globally going to come back. It's not roaring back. Um.
Speaker 1: You know they've had to take they've had to slow
Speaker 1: down their hiring. Um. Everybody's taking different kinds of us
Speaker 1: theority measures. Um. You know, I sort of put out
Speaker 1: a tweet about how all these companies maybe they should
Speaker 1: be talking about, just like Zuckerberg did, is going to
Speaker 1: be the year of austerity. You're not quite hearing it
Speaker 1: as aggressively as you heard with with Meta, and remember
Speaker 1: Meta also talked about authorizing a buyback of as much
Speaker 1: as forty billion dollars. Another reason why you may not
Speaker 1: be seeing quite the rally in the stocks that you
Speaker 1: saw with Meta earlier today. Okay, let's go back to Amazon,
Speaker 1: but also kind of links what Tom was talking about
Speaker 1: about the broader economy. You're you've written about a bifurcation
Speaker 1: in trends and particularly focus on that AWS drag. Right,
Speaker 1: You wanted to know about the macroeconomic environment. You wanted
Speaker 1: to know about cost saving progressions. Well, what did you
Speaker 1: learn so far from Amazon's commentary? Sure, I mean the
Speaker 1: call starting as we speak, but what I've seen them
Speaker 1: say just recently on the call is that consumers are
Speaker 1: trading down. And that's obviously a concern because when you
Speaker 1: start to see a trade down, you kind of get
Speaker 1: the first signal that the economy is softening. So there
Speaker 1: are pockets of weakness that we do need to look
Speaker 1: out for as we move forward into three But overall,
Speaker 1: when I think about Amazon, Amazon is just not a
Speaker 1: one P business. It's also a three P business, and
Speaker 1: their third party business is very very strong. It remains
Speaker 1: an attractive platform for new businesses. And existing businesses to
Speaker 1: really get the eyeballs that they want. So it's it's
Speaker 1: it's kind of a mixed story when you think about
Speaker 1: Amazon's total g m B, where one P may struggle
Speaker 1: a little, but three P is still very much on fire.
Speaker 1: Three P third party. We love the lingo. We love
Speaker 1: the fact that both of you could draw all of
Speaker 1: these juggernauts together and sort of tell us the thread
Speaker 1: across it all, which is, of course, efficiency, efficiency, efficiency,
Speaker 1: stupid Bloomberg intelligence pot and goil. Bloomg Executive editor Tom Giles,
Speaker 1: We thank you both so much, great expertise. Meanwhile, coming up,
Speaker 1: I'm gonna pivot a little bit. Let's get out of
Speaker 1: the world of earnings. Let's go back to the world
Speaker 1: of fts. Because we had an exclusive interview with the
Speaker 1: former f t x U S president Brett Harrison. When
Speaker 1: wrong from an inside of you, that's next and this
Speaker 1: is Greenback. It's been less than three months since f
Speaker 1: t x collapsed and a former top executive is eager
Speaker 1: to get it all behind him. Former f t x
Speaker 1: U S President Brett Harrison insists he didn't have a
Speaker 1: clue what Sam Bankman Freed was up to. He sat
Speaker 1: down with Bloomberg Sinali Bassik in an exclusive interview. M H.
Speaker 1: There were primarily disputes that I would attribute to the
Speaker 1: growing pains of any high growth company, you know, problems
Speaker 1: around internal communication, around structuring the company, for providing better governance,
Speaker 1: especially as we as we were growing larger, around hiring
Speaker 1: enough you know, developers and other senior staff that we
Speaker 1: needed to be able to accomplish many of the goals
Speaker 1: that we were seeking to accomplish. And when I would
Speaker 1: try to bring up these kinds of criticisms internally at
Speaker 1: the company, UM, they were never met well. And at
Speaker 1: some point, you know, we truly weren't really speaking much
Speaker 1: to each other over the course of the last queen
Speaker 1: a part of the time that I was there. Now,
Speaker 1: you had mentioned these disputes were not just with Sam
Speaker 1: Big but Free you had mentioned these disputes were with
Speaker 1: other members of his staff, his deputies. Who else did
Speaker 1: you find those disputes with? Yeah, you know, they were
Speaker 1: primarily with Sam, but you know, I think many of
Speaker 1: the people around Sam really agree with him on most
Speaker 1: of the internal decisions, especially around trying to kind of
Speaker 1: grow and separate the staff. Um, there was very much
Speaker 1: sort of a separation between the group of people who
Speaker 1: were the executives in the Bahamas, sort of around them,
Speaker 1: living together, who were making those kinds of decisions, versus
Speaker 1: the people on the U S side, who are you know,
Speaker 1: I guess I said, we're systematically left out of many
Speaker 1: of those decisions. Um to the extent that you believe.
Speaker 1: You know, the number of his deputies have already come
Speaker 1: up and pled guilty to some of the charges that
Speaker 1: we're seeing against f t X. What do you think
Speaker 1: about those charges and do you think that there's anybody
Speaker 1: else that will be brought into them. I'm not sure
Speaker 1: if there's going to be anybody else at this point. UM.
Speaker 1: I do think that the charges are they're damning, and
Speaker 1: they're truly shocking to see sort of the depths that
Speaker 1: um Sam and his close associates went to to try
Speaker 1: to conceal this fraud from the public and the private
Speaker 1: UM and you know, as as a customer of the exchange, myself,
Speaker 1: as someone who had worked extremely hard to try to
Speaker 1: build out this great business on the U S side,
Speaker 1: who had hired extremely talented individuals into the U S
Speaker 1: Company to be able to accomplish those goals. It was
Speaker 1: really really sad to see all this come to light.
Speaker 1: Now you had said fraud, but this is still an
Speaker 1: alleged fraud. He has not been convicted yet, although others
Speaker 1: have played guilty. I'm wondering what you think about the
Speaker 1: go forward path here? I mean, do you have any evidence?
Speaker 1: Are you cooperating with authorities at this time? You know,
Speaker 1: I can't speak to whether I am or I'm not,
Speaker 1: you know, involved in the investigation. I am very happy
Speaker 1: to cooperate in any way that I can, But at
Speaker 1: this point it's really just sort of a wait and see.
Speaker 1: You know, We're going to see if there are more
Speaker 1: details that come to light, if there are anyone else
Speaker 1: that's sort of brought in, who ends up leading guilty
Speaker 1: or not, you know, whether this case actually ends up
Speaker 1: making it to trial. It's something that I'm kind of
Speaker 1: watching and waiting and interested in the way that kind
Speaker 1: of everyone else is in the public. Have you been
Speaker 1: in touch with Sam since you've left? No, In fact,
Speaker 1: you know, I think we were last in touch several
Speaker 1: months before I left the company. Even have you been
Speaker 1: in touch with any of his other deputies that you
Speaker 1: had said you had disputed with and if you had
Speaker 1: the opportunity to talk to Sam, would you want to
Speaker 1: and what would you say? Um? No to the first question,
Speaker 1: and then the second one. I think nothing. You know,
Speaker 1: I think at this point it's best for me and
Speaker 1: for everyone, the media, the public, investors, everyone to sort
Speaker 1: of to move on from from Sam and find a
Speaker 1: way path forward, to be able to move forward with
Speaker 1: with crypto in this industry. UM, I think you know
Speaker 1: we're time to turn the page. M Brett Harrison, their
Speaker 1: former f t X US president and ED is great
Speaker 1: that Shannale is staying late to talk to us about
Speaker 1: this extraordinary conversation. And I think ultimately Shannali just give
Speaker 1: us your take on the fact that he is trying
Speaker 1: to turn a page. People are handing him money, not
Speaker 1: as much money as he hoped to raise, but five
Speaker 1: millions a lot from some interesting players. Do you think
Speaker 1: he can move on? You know, it's interesting, as you said,
Speaker 1: it's not as much as he initially went out to raise.
Speaker 1: He started that process after leaving f t X, before
Speaker 1: it had imploded. And then you look at who he
Speaker 1: raised money from, the likes of Anthony Scaramucci, who himself
Speaker 1: felt wronged by f t X. Given that Anthony Scaramucci
Speaker 1: had selt sold a part of his own firm to
Speaker 1: f t X Ventures, can he move on? It's interesting
Speaker 1: he's trying to hire former employees of f t X.
Speaker 1: He's hired about five, he said, and the road. He
Speaker 1: says he wants to move on, But how long does
Speaker 1: that take? The questions that still remain are should he
Speaker 1: have known? He says he was misled. He says he's
Speaker 1: kept records of how he was misled. But at the
Speaker 1: end of the day, this will take a long time.
Speaker 1: Even just the responses on Twitter, people won't feel like
Speaker 1: they can move on from f TX until they start
Speaker 1: to get their money back and they get some resolution
Speaker 1: to some of the answers that are so brewing about
Speaker 1: the situation. Snali triffic interview, Just great timing around that conversation.
Speaker 1: The other big headline of the day is, according to
Speaker 1: Bloomberg sources, Silver Gates is facing d o J probes
Speaker 1: over what happened with f t X and Alimta. What
Speaker 1: do we know? A few things? This is US prosecutors
Speaker 1: in the Justice departments fraud Unit. According to Bloomberg's Tom Schoenberg,
Speaker 1: this is a criminal investigation according to his report, and
Speaker 1: it is started fairly recently. Remember when you look at
Speaker 1: silver Gate and its relationship with Alameda, it started in
Speaker 1: two thousand and eighteen. Silvergate was really the bank of
Speaker 1: choice for a lot of crypto large crypto companies. But
Speaker 1: when you take a look here at this investigation itself,
Speaker 1: it comes off the heels of criticism from lawmakers as well.
Speaker 1: To describe more of the relationship between silver Gate, f
Speaker 1: t X and Alometa and what silver Gate really knew
Speaker 1: about what was going on and whether they had appropriate disclosures. Remember,
Speaker 1: silver Gate is a bank here, California based bank that
Speaker 1: is still using a depression era backstop for the way
Speaker 1: that it operates. It has short term funding that really
Speaker 1: allows it to operate in the way it does. So
Speaker 1: it is one of the more clear links to the
Speaker 1: traditional financial system when you're looking at how the crypto
Speaker 1: industry is financed generalie. What's interesting whether or not people
Speaker 1: can move on. Some people are trying to move on
Speaker 1: by the fact that prices are rallying again. They're not
Speaker 1: in anywhere near the heady heights six, but still Bitcoin
Speaker 1: the o G is climbing higher. We've just had some
Speaker 1: numbers out of micro Strategy, which was once upon a
Speaker 1: time a software company and basically became a bitcoin vet.
Speaker 1: How are we seeing these companies still suffering from last year?
Speaker 1: But looking forward, one thing that's interesting is on the
Speaker 1: way down, so many people lost so much money last
Speaker 1: year that when you're looking at places like micro Strategy
Speaker 1: or coin base, or places that are linked to the
Speaker 1: crypto industry, you have an instance in where people are
Speaker 1: looking at, Okay, have we bottom should we get in now?
Speaker 1: As prices of bitcoin start to recover. If you're linked
Speaker 1: to bitcoin, it's an easier way to play the industry
Speaker 1: through infrastructure than it is to really bet on other
Speaker 1: tokens and coins if you're an institutional investor. Micro Strategy
Speaker 1: is still publicly traded stock. So it's interesting. You know,
Speaker 1: we're talking about being in Miami and seeing a lot
Speaker 1: of these big crypto players. I saw Scared Mucci. No
Speaker 1: progress is there as well. There is still an industry
Speaker 1: that is severely bruised. But that balance that you're talking
Speaker 1: about is giving people power to come up and say
Speaker 1: we're surviving basic terrific reporting, Thank you very much. I
Speaker 1: actually want to stick with the conversation around crypto arc
Speaker 1: investment managements. Kathy would spoke to Bloomberg earlier about why
Speaker 1: she's sticking to her bitcoin strategy. You have a listen.
Speaker 1: The confidence actually was strengthened last year. Now, last year
Speaker 1: was was a terrible year for everything crypto. But if
Speaker 1: you think about what happened, it was the centralized opaque
Speaker 1: players who went bankrupt f T x Celsius three hours
Speaker 1: Capital Um and and what did we see from bitcoin?
Speaker 1: Bitcoin is completely decentralized and transparent. It started because of
Speaker 1: oh eight oh nine, the lack of transparency in the
Speaker 1: traditional financial services ecosystem. And I remember when we did
Speaker 1: our research and Art Laugher I mentioned him. I mentioned him.
Speaker 1: The first was on your show. Um. She took us
Speaker 1: through what bitcoin meant to him and it was wow. Art.
Speaker 1: So this is a a rules based momentary. It's a
Speaker 1: rules based digital monetary system, and it's global and and
Speaker 1: there's no human intervention. Uh, it's very disciplined. It's mathematically
Speaker 1: metered to top out at twenty one million units. Well
Speaker 1: in the last year. The response to the last three years,
Speaker 1: the responses to COVID that the fiscal and monetary responses
Speaker 1: that you know in many countries are causing hyperinflation and
Speaker 1: you know fiscal crises. We're seeing protests and riots all
Speaker 1: over the place. Um, well, where do these people go
Speaker 1: for an insurance policy against an implosion in their purchasing
Speaker 1: power and wealth. It is in something like bitcoin. Happy
Speaker 1: with that Netflix password sharing? Why are we all freaking
Speaker 1: out about it? Okay, let's get to the facts. Because
Speaker 1: last year Netflix told us more than a hundred million
Speaker 1: households currently use memberships and Netflix that don't pay for it,
Speaker 1: and they wanted to crack down on this password sharing,
Speaker 1: probably coming into effect in the end of the first quarter,
Speaker 1: that means by March. Now, why are we all freaking
Speaker 1: out right here right now? Or they've already been trying
Speaker 1: ways to curtail password sharing over in Latin America in
Speaker 1: three key countries in fact, Peru, Chili, Costa Rica, and
Speaker 1: they put out a helpful article to tell users in
Speaker 1: those countries about some of the changes. That they published
Speaker 1: it in every single region, So that's why we're all
Speaker 1: worrying about it. So what are we seeing being trialed
Speaker 1: in those three countries. Well, the users are being asked
Speaker 1: to set a primary location for where they use Netflix
Speaker 1: on their devices, and then Netflix will track a mixture
Speaker 1: of IP addresses or device ideas account activity to see
Speaker 1: if anyone outside the wholesehold is using that password. And
Speaker 1: you're going to be incentivized to add members to your
Speaker 1: own household. If you want them to be using it,
Speaker 1: You've got to pay up now right here in the US.
Speaker 1: Take a deep breath. Nothing is exactly happening at this moment,
Speaker 1: but what's clear is Netflix is going to have to
Speaker 1: use all of its storytelling skills to get you and
Speaker 1: I on board with these changes. Oh and the fewer
Speaker 1: the outrage that was across Instagram, that was across Twitter
Speaker 1: as people got this the wrong way around, thought it
Speaker 1: was being enacted in the US immediately. And what was
Speaker 1: so ironic, I suppose is actually Netflix had some strong
Speaker 1: news coming out on Wednesday. They wanted to talk about
Speaker 1: Netflix Spatial audio are better, an amount of more devices
Speaker 1: if you have the premium Netflix subscription, and instead it
Speaker 1: got drowned out by this. We thought this would be
Speaker 1: adds the story for Netflix right add supported tier about
Speaker 1: password sharing and Greg Peters before he was promoted to
Speaker 1: co CEO, that was his project. He was out there
Speaker 1: trying to crack this problem, whether he does it or not.
Speaker 1: I mean, this was a really fascinating reaction, It really was.
Speaker 1: And I think now we're going to have to hear
Speaker 1: from Netflix about how this might be enacted, the trials
Speaker 1: that were going on, and what it's actually going to
Speaker 1: mean for you and me eventually in the US. Remember
Speaker 1: back in they were saying it was all about passwords sharing.
Speaker 1: Now it's a very different matter when it comes to numbers.
Speaker 1: But talking in numbers, the earnings today, I mean, what's
Speaker 1: the afterno ours reaction looking like? Now? Yeah, I mean
Speaker 1: we're still lower across all of those mega caps. And
Speaker 1: what's so interesting is we asked our audience, did you
Speaker 1: think after meata this was us turning the corner for
Speaker 1: tech tech stocks? Actually, everyone on Twitter at least was
Speaker 1: pretty bearish. No, this is a tad cat bounce. Well,
Speaker 1: there's right. It would see that they're pre improved, right,
Speaker 1: although we're coming off our lows, aren't we? After hours?
Speaker 1: And so we'll all go tune into tomorrow what exactly
Speaker 1: the numbers look like, how we perform in terms of
Speaker 1: tech stocks. But this addition of bl technology, do not
Speaker 1: forget to Tune in to Twitter spaces Friday midday. That's
Speaker 1: twelve noon, right head, Yeah, I got the crew of
Speaker 1: me and a special guest. This is Bloomberg.