Speaker 1: I'm Caroline Hyde, mugs Welda Carders in New York, med
Speaker 1: Ludlow in San Francisco. This is Bloomberg Technology, and boy
Speaker 1: do we have a lot to digested, a particularly on
Speaker 1: the Disney front. In his front and center, as company
Speaker 1: cuts seven thousand jobs and Disney Plus subscribers actually drop.
Speaker 1: We bring you full coverage throughout the hour and Google
Speaker 1: shares tumbling by the most in October as doubts rise
Speaker 1: over the accuracy of the search giants. AI technology will
Speaker 1: bring you the details, plus Hermes wins out versus Meta Perkins.
Speaker 1: We'll discuss the first ever trademark trial examining n f
Speaker 1: t s as the case tests the line between art
Speaker 1: and consumer products. All that and so much more coming up.
Speaker 1: One name that everyone wants to hear about is Disney
Speaker 1: Shares really accelerating their game means in after hours, not
Speaker 1: necessarily on the beat on the bottom line, but on
Speaker 1: what they had to say about going forward, targeting five
Speaker 1: point five billion dollars in cost reductions, cutting around seven
Speaker 1: thousand jobs, but reiterating that profit guidance for the direct
Speaker 1: consumer or streaming business in those are kind of the
Speaker 1: main takeaways as the stock push high. Let's go deeper
Speaker 1: on Disney and get reaction with rosscov A, co founder
Speaker 1: and CEO of Gerber Kawasaki Wealth Management, which overseas two
Speaker 1: point two billion dollars and holds Disney shares. Ross, what
Speaker 1: was the most important bit for you? What is it
Speaker 1: that you think driving these shares higher and after hours? Well,
Speaker 1: I think that they showed that their business is not
Speaker 1: only stable, but has the potential for a lot of growth. Actually,
Speaker 1: so when you actually look at the sublasses, let's say
Speaker 1: at Disney Plus, it was really at hot Star and
Speaker 1: in the Indian area part of their business hot Star,
Speaker 1: and it was really a minimal amount of people and
Speaker 1: the lowest cost subscribers. So when you actually look at Disney,
Speaker 1: plat sen their ability to hopefully make money off of
Speaker 1: this in the future and then the cost cuts, but
Speaker 1: then how strong the parks and resorts business continues to be.
Speaker 1: And with Iger back at the HELM, it really gives
Speaker 1: confidence that they can get the rest of their business
Speaker 1: is all working together at some point in the next
Speaker 1: twelve months and and really get some earnings momentum back.
Speaker 1: So so I love the report what I've seen so far,
Speaker 1: and I'm very confident about Disney's future, EPs b in
Speaker 1: the in the fiscal fourth quarter and then reiterating that
Speaker 1: guidance to hit profit in the DTC business by how
Speaker 1: much of you for you? Is that Iger doing this?
Speaker 1: The sort of short term effect of him coming back in, well,
Speaker 1: I think there there's a psychological effect, and then there's
Speaker 1: a real effect because the bottom line is Chapek was
Speaker 1: was a bad manager for Disney and didn't do a
Speaker 1: good job. And with Iger back at the helm Um,
Speaker 1: Disney is really driven by content and and it's something
Speaker 1: I think a lot of people forget that making great
Speaker 1: movies is what ultimately drives everything at Disney, whether it's
Speaker 1: consumer products, or the parks or or Disney Plus. And
Speaker 1: so Iger's focus on content in its relationships in Hollywood
Speaker 1: UM to get better content and to make better content
Speaker 1: really bodes well for Disney over the short and medium term.
Speaker 1: Longer term, can they square that circle of cost, custs
Speaker 1: and great production. How as the restructuring of the business
Speaker 1: and perhaps giving more power back to the creatives going
Speaker 1: to ensure they can have that balance. Well, I think
Speaker 1: this is a lot of businesses are dealing with this.
Speaker 1: Where they grew a lot of people over the last
Speaker 1: three or four years, and now everybody's trying to right
Speaker 1: size their businesses, especially the mega cap stocks like Disney
Speaker 1: and so I think having of you're going to see
Speaker 1: this in a lot of companies. Real cost conscious focus
Speaker 1: and making sure that all of their employees are contributing
Speaker 1: the amount necessary to get the results needed from a
Speaker 1: financial perspective is really important. But it's also predicated upon
Speaker 1: not hurting your own core business, and I think Iger
Speaker 1: is the person to implement that strategy for Disney and
Speaker 1: and that's why I think the markets like it. Yeah,
Speaker 1: currently looking at new toy stories, new frozens, my children
Speaker 1: will be thrilled. I'm looking also at what buy Biger
Speaker 1: has been saying on the call. Just take a little
Speaker 1: listen to what he's saying. In terms of curation, we
Speaker 1: will aggressively curate our general entertainment content. We will reassess
Speaker 1: all markets we have launched in and also determine the
Speaker 1: right balance between global and local content. Will adjust our
Speaker 1: pricing strategy, including a full examination of our promotional strategies. Russ,
Speaker 1: you reminded us of how big Disney Plus or generally
Speaker 1: DTC is in India. Just how much of a focus
Speaker 1: does Disney need internationally at the moment, because we can
Speaker 1: get very myopic about what's happening here in the United States. Yeah,
Speaker 1: So it's it's really interesting because you know, Netflix, for example,
Speaker 1: is a global business and you look of the content
Speaker 1: today and you're getting content from like all over the place,
Speaker 1: and a lot of it's really good and they've been
Speaker 1: doing really well with subtitles, and I think Disney needs
Speaker 1: to do the same thing. And especially India is a
Speaker 1: huge market for Disney plus hot Star, and it's a
Speaker 1: very you know, deep movie focused UM consumer there. So
Speaker 1: you know, we've got to make content that really serves
Speaker 1: the different audiences UM that are are paying for Disney.
Speaker 1: But we also have to do it in a way
Speaker 1: that makes economic sense as well. And I think that
Speaker 1: is a real challenge that streamers face on an international level. UM.
Speaker 1: But for Disney's UM core UM movie and and production,
Speaker 1: most people around the world like that content, Americans and
Speaker 1: everyone else. So Disney has a great position to leverage
Speaker 1: their content in every market. Russ Well, this news plaque
Speaker 1: hates Pelts. Well, he stepped back from what he's trying
Speaker 1: to do. Well, I think Pelts is misguided, and I
Speaker 1: wish him well, but he's attacking the wrong people and
Speaker 1: he's wrong about his basic premise of what's he's He's
Speaker 1: has Disneys in crisis, and I'm like, what are you
Speaker 1: talking about? Disney is about to take off. I don't
Speaker 1: think he has the skill sets that he would add
Speaker 1: anything to the Disney board. And and I think he's
Speaker 1: going to make money anyways owning Disney, and we're long
Speaker 1: Disney and my fun g K as well as at
Speaker 1: my firm, and it's a top holding. But having I
Speaker 1: go back and the team that they have um at Disney, Uh,
Speaker 1: this is the ideal situation. And and I don't think
Speaker 1: breaking up the business like spinning off ESPN makes any sense.
Speaker 1: I love the sports business, So you know, I think
Speaker 1: Tiger is the right person to do this, and Pelts
Speaker 1: is barking up the wrong tree. We wait for that
Speaker 1: share price recovery to follow suit. Then still fully four
Speaker 1: percent off as highs, but there's an optimistic Rosco over there.
Speaker 1: We thank you co Fouan Racio gober Kawasaki Wealth and
Speaker 1: Investment Management. Meanwhile, let's talk about the competitor Netflix, because
Speaker 1: today said it's rolling out it's paid sharing feature to
Speaker 1: for new markets and the streaming services, announcing that Canada,
Speaker 1: New Zealand, Portugal and Spain can now add an extra
Speaker 1: member account for up to two people that they don't
Speaker 1: live with at a cost though, and that's of course,
Speaker 1: as it looks to stamp out password sharing outside of
Speaker 1: the household. Netflix has not yet rolled out paid sharing
Speaker 1: here in the United States, but is expected to do
Speaker 1: so by the end of the first quarter. Read Yeah,
Speaker 1: I think that's a really specific micro look. Let's get
Speaker 1: back though and talk a bit more macros. Carry said
Speaker 1: earlier in the show. When it comes to tech, you know,
Speaker 1: a down day, but we're giving back what's been a
Speaker 1: pretty long run of gains. So let's look at the
Speaker 1: historic performance and bring in Fidelity Director of Quantitative Market
Speaker 1: Strategy Denise Chisholm, who's been tracking this historical database going
Speaker 1: back to the nineties sixties. Her research informs the firm
Speaker 1: strategy across its portfolios, and of course Fidelity Asset has
Speaker 1: more than three point six trillion dollars in assets under management.
Speaker 1: It's really interesting, Denise, to to kind of sit here
Speaker 1: with Airline. Each day we go through the blow by
Speaker 1: blow of the markets, what's driving the narrative on any
Speaker 1: given day. But even if you go back to just
Speaker 1: the start of the year, we've gone from this position
Speaker 1: of kind of worse to first the technology sector. Yet
Speaker 1: some of the fundamentals don't really back that up. Yeah, well,
Speaker 1: that often happens, especially you can see it through history
Speaker 1: where stocks follow earnings a lot of the time, but
Speaker 1: not all of the time, and a lot of cyclical
Speaker 1: sectors can discount bad news in advance. And I think
Speaker 1: that this is what you're starting to see in technology now.
Speaker 1: What we saw last year, essentially downside leadership was really
Speaker 1: not just the rationale behind the fact that interest rates
Speaker 1: went up, inflation went up a hawkish, a more hawker
Speaker 1: shederal reserve. It was also your starting point on relative
Speaker 1: valuation so versus the overall market, technology was really in
Speaker 1: the top quartile of its history, since we haven't seen
Speaker 1: anything like that back till two thousand and five, and
Speaker 1: that was really one of the key, you know, down
Speaker 1: to the key catalysts for the correction that we've seen
Speaker 1: last year. A lot of that valuation on a relative
Speaker 1: basis has been worked off and left in this sort
Speaker 1: of muddy middle zone where technology is not the dominant
Speaker 1: sector that we've seen over the last decade, which were
Speaker 1: very supportive on relative free cash flow. But it's also
Speaker 1: not in that very very expensive land versus the market either. Okay,
Speaker 1: so what when it is relative where then gives up?
Speaker 1: Do we need to see the rest of the market
Speaker 1: and by that we mean basically not the growth stocks
Speaker 1: but more of your energy names. And when we tried
Speaker 1: entrusted value companies to get a high evaluation, or do
Speaker 1: we need more pain to come in technology valuations? I
Speaker 1: think that there's a lot of different ways that you
Speaker 1: can work it off. You could also have a positive catalyst,
Speaker 1: meaning that the downside in margins is less than investors
Speaker 1: actually expect. And one of the catalysts historically is something
Speaker 1: that investors might be missing out on now, which is disinflation.
Speaker 1: When inflation and decelerates, what you usually have is margins
Speaker 1: better than expectations. This is true in the overall working
Speaker 1: this is also true in technology. That's one of the
Speaker 1: reasons why you hear people say in a high inflationary environment,
Speaker 1: usually earnings recessions are less bad. It's not necessarily that
Speaker 1: inflation is good for margins, but it's because inflation is
Speaker 1: high and can decelerate that can provide a tail when
Speaker 1: for margins that isn't typical and the rest the rest
Speaker 1: of history. Let's just talk. It's interesting. We've been talking
Speaker 1: to those that manage certain stock exchanges and we understand
Speaker 1: that perhaps not many I p O is becoming thick
Speaker 1: and fast or exits in the world of technology, but
Speaker 1: maybe performances there from some of these key companies. And
Speaker 1: we spoke to a deed of Freedman Nichals and just
Speaker 1: taking listen to what she had said about her optimism.
Speaker 1: I think that the big technology companies are have huge
Speaker 1: opportunities in front of them. I think that they're leaning
Speaker 1: in as hard as they can. I think that they
Speaker 1: also are bringing the entire economy forward. So I'm a
Speaker 1: big believer in tech and big tech. So clearly, well,
Speaker 1: I'm sure it's a job which is ever seeing the
Speaker 1: ANSDAC to be a big believer in big tech. But ultimately,
Speaker 1: Denay's what about is the international big tech that you
Speaker 1: want to see out perform or do you think you
Speaker 1: can be domestically focused. I'm interested on what you think
Speaker 1: as to whether dollar is going to be a driver
Speaker 1: or not go for it. I do think that you
Speaker 1: want to be domestically focused, and it's in part because
Speaker 1: of the dollar, but it's in part because, as you know,
Speaker 1: we just heard, they're better companies. When I hear a
Speaker 1: lot of comparisons going back to the dot com era,
Speaker 1: what's really important for investors to understand is during that
Speaker 1: time before the recession even hit, net margins were negative.
Speaker 1: So not only our net margins positive even after the contraction,
Speaker 1: but there's still at the highest levels they've been since
Speaker 1: the nineteen sixties and my data set, so these are
Speaker 1: much much better companies and that secular trend is dominant
Speaker 1: in the US, so each cycle they've made more and
Speaker 1: more profit for cash flow, and I expect that that
Speaker 1: trend will greet convenience. Fidelity Director of Quantitative Market Strategy,
Speaker 1: Denise Chisum, a data cruncher chart watcher. Thank you for
Speaker 1: going with my chart. If you didn't like it, I
Speaker 1: was going to blame John Author's, our markets editor, who
Speaker 1: I borrowed it from, but I think it was a hit,
Speaker 1: so we'll have you back on. Thank you very much
Speaker 1: for your time. Now coming up, Google's AI ambitions facing
Speaker 1: hurdles as concerns rise over its accuracy. Will bring you
Speaker 1: the details next. And another stock we're watching Carriers. We
Speaker 1: had to break robin hood shares, interesting fourth quarter net sales,
Speaker 1: missing some interesting financials, and yet here we are five
Speaker 1: percent higher and after hours. The big takeaway from me
Speaker 1: has got to be how the co found as are
Speaker 1: counseling what half a billion each of their share share
Speaker 1: based compensation, so clearly feeling that they have to pull
Speaker 1: back in terms of their own winds through this stock
Speaker 1: at the moment as they are still trying to right
Speaker 1: size this business overall, still losing a little bit in
Speaker 1: terms of a net lost a hundred and sixty six million.
Speaker 1: Given eye on all of these movers for you. Ed
Speaker 1: from New York for San Francisco, visit Broomberg. It's early days,
Speaker 1: but Google's Bard has already hit a snack Shares a
Speaker 1: parent alphabet sank Wednesday after reports that a video posted
Speaker 1: two days earlier demonstrating Bard's AI powered search had an inaccuracy.
Speaker 1: In the clip posted by Google, Bard is ask what
Speaker 1: new discoveries from the James Webb Space telescope can I
Speaker 1: tell my nine year old about? In response, it says
Speaker 1: JWST took the very first pictures of a planet outside
Speaker 1: of our own solar system, but that's not true. The
Speaker 1: first pick taking of a planet outside of our solar
Speaker 1: system was taken by the very large telescope array in
Speaker 1: Chile in two thousand four. Web was deployed at the
Speaker 1: end of one It is a setback for Google's challenge
Speaker 1: to Microsoft's work with open ai using the tech behind
Speaker 1: chat GPT to improve bing. Google's told me in a state,
Speaker 1: then this highlights the importance of rigorous testing, which you
Speaker 1: will start this week. Will also take on external feedback.
Speaker 1: I mean the external feedback I was talking about is
Speaker 1: probably the market reaction right shares falling by the most
Speaker 1: since October. But there's kind of two key things, like
Speaker 1: this video came out on Monday and it took two
Speaker 1: days for journalists and the market to notice. But also,
Speaker 1: I mean, Alphabet and Google have always said this is
Speaker 1: experimental right now, but the market's impatient. They're impatient, and
Speaker 1: it's funny that they let open ai own the fact
Speaker 1: that we're likely to see a lot of problems and inaccuracies.
Speaker 1: But Google always has a victim of its own success.
Speaker 1: It's the big brand. It doesn't want a front run
Speaker 1: and and go too quickly. It's interesting when we asked
Speaker 1: our own audience said when will Generator A I be
Speaker 1: fully accurate? I thought most of actually say three to
Speaker 1: six months, because there's my own impatience, But actually most
Speaker 1: people are more sensible and they say, look, give it
Speaker 1: five to ten years. We've got to let them chew
Speaker 1: the data and get the accuracies out there. It sir, well,
Speaker 1: let's just get more details and bringing Bloomberg's Dave the
Speaker 1: album because I've been working with Davy on this all
Speaker 1: day long. Davy, we went over the basics of the story,
Speaker 1: around the answer, around the telescope. But I guess let's
Speaker 1: start with what does this mean right now? For Alphabet
Speaker 1: and Google. What's their response been to what's been a
Speaker 1: pretty nuts market day and some skepticism around bard. Yeah,
Speaker 1: I mean I think Google's response has been Look, this
Speaker 1: is still in sort of testing mode right now. It's
Speaker 1: only open to a few trusted testers UM that have
Speaker 1: access with the company, and it's still ironing out the kinks.
Speaker 1: You know. UM We've done some reporting that this is
Speaker 1: just not something that UM seems ready for prime time
Speaker 1: quite yet, which is why they're keeping it sort of
Speaker 1: under wraps um to the wider public at least for now.
Speaker 1: And sort of the irony and all of this is
Speaker 1: the reason perhaps open ai stole the oxygen in November
Speaker 1: and ran and able to sort of leave what it
Speaker 1: felt like Google for dust for a bit, was because
Speaker 1: Google realized the pr headache it might have if it
Speaker 1: puts something into the open and it got it a
Speaker 1: bit wrong. The brand impact is far bigger. But now
Speaker 1: do you think the code read that they pulled is
Speaker 1: going to have to be still pulled and they're going
Speaker 1: to have to keep iterating in public. Yeah, I think
Speaker 1: to some extent the market pressures are something that they
Speaker 1: can't ignore anymore. At this point. Um, you know, there's
Speaker 1: a huge threat from open ai, and uh, you know,
Speaker 1: in the last day we found that it's not just
Speaker 1: you know, sort of the chat GPT, but they're integrating.
Speaker 1: Microsoft is integrating a cousin of chat GPT into its
Speaker 1: search as well, so Microsoft Bing and its edge browser,
Speaker 1: and so this is already hitting at Google's core business
Speaker 1: search and they have to respond. So this is what
Speaker 1: what they're doing. The timing of this day is strange
Speaker 1: UM partly because this video was published two days ago, right,
Speaker 1: but there was also this big event in Paris today.
Speaker 1: What do we actually learn about the strategy from Google
Speaker 1: around AI? From that event? It seems like Google is
Speaker 1: being very careful about rolling this out. So the event
Speaker 1: sort of gave a little bit more by way of
Speaker 1: demonstrations and examples of BARD. Uh. You know, we we
Speaker 1: saw it UM sort of showing what constellations you can
Speaker 1: look for in the sky for instance, or just like
Speaker 1: advice UM on very low stakes situations. So right now,
Speaker 1: BARD isn't a place where it can't give something like
Speaker 1: medical or legal advice responsibly. And Google is really sort
Speaker 1: of clamping down on the examples that it is willing
Speaker 1: to show publicly. I think, you know, the key point
Speaker 1: for people to understand is that this these large language models,
Speaker 1: they're not really good for um consistently true statements. They
Speaker 1: only spit out statistically consistent statements, so phrases that appear together.
Speaker 1: And so that's kind of where we're at right now. Davy,
Speaker 1: you break it down beautifully. Thank you. Davey alba Omas
Speaker 1: has won a lawsuit it filed against the digital artists
Speaker 1: behind meta broke in n f T s. That's after
Speaker 1: convincing a Manhattan federal jury that the sale of the
Speaker 1: non functual tokens violated earners as rights to the broken trademark.
Speaker 1: Now the announcement could be a bit of a setback
Speaker 1: for the n f T industry. Is the case tested
Speaker 1: the blurry line between our or consumer products And ultimately
Speaker 1: this is all about a company trying to understand really
Speaker 1: who wins out digital artistry in the first Amendment, not
Speaker 1: so as manages to win out in this case. Welcome
Speaker 1: back to Bloomberg Technology. I'm Caroline hard in New York
Speaker 1: and i'md Lovelow in San Francisco and ad Uber shares today,
Speaker 1: who up as much as seven percent earlier after reporting
Speaker 1: revenue climbing and up meat amass estimates. How has Uber
Speaker 1: been able to define in fraation fees while the CEO Darcosa,
Speaker 1: he talked all about it with Bloomberg earlier. Well, for us,
Speaker 1: what we're seeing is while there has been a downturn
Speaker 1: in terms of companies meet being more conservative in terms
Speaker 1: of their spend, the consumer is staying strong. Consumers spend
Speaker 1: continues to be strong. And also we're benefiting from a
Speaker 1: shift of consumers spent from retail buying stuff when you're
Speaker 1: home to actually spend on services, going out to restaurants, traveling, etcetera.
Speaker 1: So Uber is absolutely benefiting from that, and that's why
Speaker 1: you've seen growth, bookings growth of on a constant currency basis,
Speaker 1: with the mobility business growing at record rates, getting to
Speaker 1: record levels, and delivery continuing to be strong as well.
Speaker 1: So as long as the consumers say strong, I think
Speaker 1: Uber will continue to add on top of that the
Speaker 1: power of our platform, are being the number one brand
Speaker 1: of the business and are having the strongest tech team
Speaker 1: out there. It adds up to pretty good progress for us,
Speaker 1: and the indications that we gave going forward are of
Speaker 1: continued strengthree is off to a really great start. That's
Speaker 1: at j Pal said. Inflation is going to take a
Speaker 1: significant time to fight, no uncertain terms. What about when
Speaker 1: prices catch up with consumers? What are you dar cause
Speaker 1: with Shaw he worried about when it comes to the
Speaker 1: bumpy parts of the road ahead. Well, we saw prices
Speaker 1: increase last year for Uber pretty significantly, but we're seeing
Speaker 1: the price increases modulate pretty significantly as we get into
Speaker 1: our surge levels are down. So in the US, for example,
Speaker 1: less than of our trips are surging. Our E t
Speaker 1: A s are much faster now, faster than five minutes
Speaker 1: on average in in the U S as well, So
Speaker 1: we have to keep working to improve our service. And
Speaker 1: when we look at inflation, about seventy of our drivers
Speaker 1: are seeing that inflation is playing a factor in terms
Speaker 1: of their coming to earn money on the Uber platform.
Speaker 1: So some ways inflation maybe a tail wind to our supply.
Speaker 1: Better supply means less surge and lower prices for US. Now,
Speaker 1: Uber hasn't had widespread layoffs like some of your counterparts.
Speaker 1: I'm thinking door Dash at this point, would you promise
Speaker 1: that doesn't happen. Well, running a company, you can make
Speaker 1: promises like that, right. We run the company based on
Speaker 1: our performance, as you in this quarter and what we
Speaker 1: indicated for quarters going forward. Our performance has been really robust,
Speaker 1: and we think you will continue to be a robust.
Speaker 1: That was Uber CEO Dara Kostra Shah. He let's continue
Speaker 1: the conversation. D A. Davidson and Co. Senior research analyst
Speaker 1: Tom White joins us with more. Tommy got a by
Speaker 1: rating sixty dude on a price target it was interesting
Speaker 1: to see the upside on the bottom line, you know,
Speaker 1: a nice ebit dar beat. But they also talked about
Speaker 1: how they're kind of doing less on the incentive side
Speaker 1: for drivers. Are they getting the mix right now or
Speaker 1: is this just about improving macro conditions. Yeah, first off,
Speaker 1: thank thanks for having me. You know, the quarter was
Speaker 1: really nice, um solid upside on both the top and
Speaker 1: bottom line, and specifically in both the mobility segment and
Speaker 1: the delivery segment. The first quarter guidance was also very
Speaker 1: strong and positive, um, you know, particularly on ebitda uh this.
Speaker 1: You know, if if they put up the number in
Speaker 1: the first quarter that we think they can, you know,
Speaker 1: it will be the seventh eight quarter where Uber has
Speaker 1: been able to show sequential improvement in in evin dot
Speaker 1: dollars um. And you know, I think that's really kind
Speaker 1: of the super high level takeaway from the quarters that
Speaker 1: these guys are really executing on and certainly on on
Speaker 1: revenues of modnetization, but particularly on kind of costs and
Speaker 1: efficiencies um you know, so much so that they also
Speaker 1: gave the street um you know, a new kind of
Speaker 1: profitability milestone or objective to focus on this year, which
Speaker 1: is which is gap operating profit. You know, that's that's
Speaker 1: after depreciation, as amorization, after stock based comp so you know,
Speaker 1: a real sort of high quality profit metric. Um, you know,
Speaker 1: relative to what they've shown so far, you know, in
Speaker 1: terms of positive ebada Oh Tom, for so many years
Speaker 1: we got hung up on ebitda when it came to
Speaker 1: Uber and left. You're saying, now forget about it, we're
Speaker 1: back to gap. Interesting. Um. Of course he's saying the
Speaker 1: company taking market share. Do you believe him? Yeah, Look,
Speaker 1: would appear that that that's what's happening, uh in in mobility, uh,
Speaker 1: and maybe even in delivery too. You know, I think
Speaker 1: the mobility business group something like thirty seven percent FX
Speaker 1: neutral in the quarter. Um. You know, we'll see what
Speaker 1: Lift puts up in terms of their growth rate when
Speaker 1: they report here shortly, but you know we're forecasting I
Speaker 1: think something close to growth in lifts business. Obviously it's
Speaker 1: a little bit apple st oranges because Uber's got an
Speaker 1: international presence in in in mobility, but it would appear that, uh,
Speaker 1: you know, they are gaining some categories share in in mobility,
Speaker 1: and then on the delivery side again, you know, Uber's
Speaker 1: geographically kind of far Flung in terms of its delivery business,
Speaker 1: but you know that accelerated the year over your growth
Speaker 1: rate accelerated in the fourth quarter of about a hundred
Speaker 1: basis points to fourteen percent growth um. And you know
Speaker 1: all the underlying KPI s for that business were strong too,
Speaker 1: So it looks like that they're probably taking a category
Speaker 1: share kind of in both of those segments. Talk to
Speaker 1: us about your price target, because it is sixty two.
Speaker 1: That's well off where we are today, but it is
Speaker 1: actually where basically the price topped out up back in
Speaker 1: what takes us there? Is it the here that now
Speaker 1: the macro the reality or do we have to go
Speaker 1: back to the big sky thinking the autonomous vehicles in
Speaker 1: the life. Yeah, look, it's it's a little bit of both.
Speaker 1: Not to cut out on the on the question there.
Speaker 1: But you know what, when we look at Uber, what
Speaker 1: we see is a a large local commerce online marketplace
Speaker 1: business that is has established, you know, clear category leadership
Speaker 1: in in the mobility product, in that core mobility product,
Speaker 1: and you know on its way to you know, a
Speaker 1: long term kind of competitive strength in delivery as well.
Speaker 1: And generally speaking, online marketplace businesses once they achieve scale
Speaker 1: and and and hopefully category leadership. You know, they can
Speaker 1: be highly profitable businesses, you know, EBITDA margins you know,
Speaker 1: well into the teens and and potentially higher. So you know,
Speaker 1: the sixty two dollar target I think gives them, you know,
Speaker 1: maybe a little bit advanced credit on kind of on
Speaker 1: on getting there, um, but on on revenue multiple. You know,
Speaker 1: it's only three and a half times next year's this
Speaker 1: year's revenues. I should say, you know, not um, you know,
Speaker 1: not horribly aggressive. We don't think bring us back to
Speaker 1: reality of regulatory issues to how much of a concern
Speaker 1: are they how much is there an overhang for this year? Yeah, look,
Speaker 1: it's it's it's always a concern. Um. You know, I
Speaker 1: think generally speaking, um uh, you know, the risk is
Speaker 1: that you know that it that it's going to increase
Speaker 1: costs formed by Uber, and therefore Uber is gonna have
Speaker 1: to get more and more creative about how it um
Speaker 1: passes those costs on to consumers in the in the
Speaker 1: form of higher prices. So far, when we look at
Speaker 1: markets or cities where there's been um higher costs or
Speaker 1: sort of a regulatory burden that's resulted in higher fees
Speaker 1: or search charges. We haven't really seen much of a
Speaker 1: detectable negative imp act down the business. You know that
Speaker 1: that won't us for you know, like they won't us
Speaker 1: forever if if if you use kind of continue to
Speaker 1: go up or the consumer starts to feel a pinch.
Speaker 1: But you know, so far, so good on that front.
Speaker 1: You know, I'd say one thing I think mitigating the
Speaker 1: upward pressure on costs from some of these higher kind
Speaker 1: of regulatory burdens is just what's happening in the labor
Speaker 1: market and the fact that you know that there are
Speaker 1: people more people out there looking for gig work and
Speaker 1: and that's you know, cutting the coming to places like
Speaker 1: Uber and left to you know, to find earnings apportunities.
Speaker 1: Tom White, Great House in time with the d A.
Speaker 1: Davidson and come senior research analysts. Thanks for your time. Meanwhile,
Speaker 1: coming up, we're gonna be talking about regularly overhanging Elsewhere,
Speaker 1: a major setback for microsoft sixty nine billion dollar takeover
Speaker 1: of Activision Bizzard. We discussed the hurdles it currently is
Speaker 1: facing in the UK, and you're going to look at
Speaker 1: a key company as well on the move. Yeah, I'm
Speaker 1: looking at so no shares in after hours up reiterating
Speaker 1: its fiscal twenty three outlook and beat on the top
Speaker 1: line and beat on the bottom line. Interesting given how
Speaker 1: much competition there is in this space from the likes
Speaker 1: of Amazon through the Apple and Samsung now moving into
Speaker 1: home audio equipment and kind of these docking stations as well.
Speaker 1: But good performance in the quarter are just gone, which
Speaker 1: is their fiscal first shares up. This is Bloomberg. I
Speaker 1: want to bring you another Bloomberg scoop from earlier. One
Speaker 1: of the world's largest cryptocurrency exchanges, Cracking, is embroiled in
Speaker 1: a probe by the SEC over whether it broke securities
Speaker 1: rules related to certain offerings to clients. The probe is
Speaker 1: in advanced stages, with announcements expected as soon as this week.
Speaker 1: According to sources, any action against Cracking could have significant
Speaker 1: ramifications for the industry. Caroline talking to ramifications, there are
Speaker 1: some big ones. When it comes to a big deal
Speaker 1: at Microsoft billion dollar takeover of Activision Blizzard, it's hanging
Speaker 1: in the balance or because of UK regulators they're challenging
Speaker 1: the proposed deal. Shares of Activision have actually been falling
Speaker 1: as much as four percent after the news of US
Speaker 1: announced Let's stick into the details. Cecilia Dinastasio is here
Speaker 1: with us in the studio when we thank her hugely
Speaker 1: for it. What's the UK hung up on here? More
Speaker 1: than others? The UK has hung up on the idea
Speaker 1: that allowing Microsoft to acquire Activision Blizzard would harm competition,
Speaker 1: particularly of competitors like Sony who compete with Activision Blizzard
Speaker 1: in the council market. To that end, are we seeing
Speaker 1: the fact that they are talking more directly about selling
Speaker 1: off certain labels Call of Duties that everyone thinks that
Speaker 1: would be forced to sell. Would they do you think?
Speaker 1: Is that what's going to be a rallying cry from
Speaker 1: other regulators. One of the potential remedies that the CMA
Speaker 1: UM shared today was the idea that Activision Blizzard would
Speaker 1: divest from Call of Duty, which is its blockbuster video game.
Speaker 1: It brought in one billion dollars the latest installation in
Speaker 1: October within ten days of its release, and um, boo
Speaker 1: weed Activision Bills are doing a really tough earning season
Speaker 1: for a lot of gaming companies, so um, it's safe
Speaker 1: to say that Activision Bizard is not happy about that
Speaker 1: suggestion at all. Cecilia, nice to see you, busy morning.
Speaker 1: For you and I, we've both seen that memo from
Speaker 1: CEO Bobby co Take Ryan. What's so interesting is he's
Speaker 1: clearly trying to normalize this as being just another step
Speaker 1: in an M and A process. That's a pretty consistent
Speaker 1: message from him. The other thing that jumped out at
Speaker 1: me is him talking about competition from the likes of
Speaker 1: Apple and Facebook, not other publishers. Why do you think
Speaker 1: that is? It's really tough. I mean, gaming companies were
Speaker 1: for a long time considered their own segments away from
Speaker 1: tech companies broadly. But over the last decade, gaming companies
Speaker 1: and tech companies have more and more in common as
Speaker 1: they expand their businesses into I p into advertising, into
Speaker 1: all sorts of areas traditionally associated with companies like Apple
Speaker 1: and Facebook, even social media. People socialize over video games, um,
Speaker 1: in some cases just as much as they do over Instagram, Snapchat, etcetera.
Speaker 1: We've just come out of a busy week of earnings
Speaker 1: in the in the video game industry, not just here
Speaker 1: in the US, but over in Japan. Was cernay as well.
Speaker 1: Activision was actually a bright spot. How did they perform?
Speaker 1: Activision performed alright? Um, Like I said before, a Call
Speaker 1: of Duty really buoyed UM Activision's revenue last quarter because
Speaker 1: the last installment of the game really broke records, selling
Speaker 1: one billion within ten days of its release, and Activision
Speaker 1: had a forty three percent jump in bookings partially as
Speaker 1: a result of that during a time that's been really
Speaker 1: tough for a lot of other gaming companies. So, cecil
Speaker 1: As we asked you to work a little later to
Speaker 1: come on the show with us, just talk to us
Speaker 1: about where next for this show. When next to the storyline?
Speaker 1: Are we waiting for other regulators to parle on the
Speaker 1: waiting for the US? Yeah, the US Federal Trade Commission
Speaker 1: did also sue to block the deal, so there are
Speaker 1: a lot of roadblocks in site for Active and Blizzard
Speaker 1: going forward. UM So the c m A is scheduled
Speaker 1: to issue a final ruling in April, and Microsoft can
Speaker 1: then actually appeal that decision. But the deal was scheduled
Speaker 1: to close in June, so it's possible that and maybe
Speaker 1: even likely at this point that their deadline will get extended. Bloomberg,
Speaker 1: Cecilia d n Stasio, thank you so much for joining
Speaker 1: us the latest reporting. Let's get more on this story
Speaker 1: of John Freeman of c f R A. C f
Speaker 1: R A maintains a hold rating on the shares of
Speaker 1: Activision with the twelve month price target eighty three dollars
Speaker 1: a shared. John, you heard me talking to Cecitar about
Speaker 1: Bobby Kotak trying to normalize this, telling his staff this
Speaker 1: is just another step in the m M and a
Speaker 1: timeline the procedure. Why then did shares full? Because I
Speaker 1: think that's a really great way to put ite. He
Speaker 1: tried to normal it, right, But this is not a
Speaker 1: normal situation. Um, I mean there, you know, I'm a
Speaker 1: covered a lot of heck, and there's been a lot
Speaker 1: of regulatory you know, opposition to things that I thought
Speaker 1: were over the top or unnecessary. This one's a pretty
Speaker 1: good argument though. Microsoft does have a monopolistic position at dwopoli,
Speaker 1: you know, with Sony, so that you can argue that
Speaker 1: they have a monopolistic position, and they're why there is
Speaker 1: justification they want to use a third party that rests
Speaker 1: on that platform. Um, that's why they're buying Activision. So
Speaker 1: you're not allowed to use a platform of monopolistic position
Speaker 1: on a platform to unfairly compete against others. You know,
Speaker 1: Uh that our third parties on that platform or to
Speaker 1: use it against other platforms unfairly. So that's the crux
Speaker 1: of it, and I think that's a pretty good argument
Speaker 1: right now, John, I appreciate you and not to merge
Speaker 1: arbitrage specialists per se that there is a premium right
Speaker 1: for your price target above where we're trading. Does any
Speaker 1: of this change your view on the likelihood of the deal? No,
Speaker 1: And think in fact, I think I've never seen such
Speaker 1: a large thread umban. He doesn't mean I think that
Speaker 1: it's a signal, it's a the deal might not go
Speaker 1: through um because I've never seen a spread like this,
Speaker 1: an acquisition that's this large. You know, the share price
Speaker 1: offer was not about dollars a share, and it's been
Speaker 1: treating that it's treating down in the low seventies. So
Speaker 1: obviously there's a lot of you know, if you go
Speaker 1: by the wisdom of crowds right then you know there's
Speaker 1: obviously a lot of people who are betting against this
Speaker 1: deal getting done. It was interesting talking about just how
Speaker 1: expensive would be if this deal did fall apart. It's
Speaker 1: it it's notable that they get a nice cast cash
Speaker 1: injection if it did all fall apart, but really Bobby
Speaker 1: Coat it clearly wants it to go through. He sees
Speaker 1: this as the right direction for his company. He does,
Speaker 1: and I think he and and very much so, but
Speaker 1: I'm not sure he's gonna get there. Um you know,
Speaker 1: I I think that if there is you know, the
Speaker 1: concession of selling off call of Duty, that I think
Speaker 1: it's a non starting because how call of Duty is
Speaker 1: why Microsoft is buying it. The look at it as
Speaker 1: kind of a real proto metaverse kind of uh, you know,
Speaker 1: a way to build all the metamors, just the technology,
Speaker 1: but also the users and so forth. Um and and
Speaker 1: obviously it's it's you know, an incredibly profitable and popular
Speaker 1: uh title. You know, the results speak for themselves. In
Speaker 1: the last quarter, you know, e A and take to
Speaker 1: Struggle well called them Duty you know, did really well.
Speaker 1: But you know, so I think that but for Microsoft
Speaker 1: to understanding their payment of three billion would be nothing
Speaker 1: for them. I mean they have over underbillion right in
Speaker 1: in growth cash, so you know, but it would be
Speaker 1: significant for Activision. So I think it's a you know,
Speaker 1: it's it's not a bad consolation process. And Whision goes
Speaker 1: John Joey, having you one of the best backdrops, fill
Speaker 1: in a world of academia with you, Thank you, Joan Freeman,
Speaker 1: a c f R, A stay well nebron Zone. He's
Speaker 1: got a lot of titles, and now he has a
Speaker 1: new one, all time leading scorer in the NBA. Last night,
Speaker 1: the Lakers start surplassed the mark of thirty eight thousand,
Speaker 1: three eight seven points that was held by Kareem Abdul Jabar.
Speaker 1: Now James has another impressive accomplishment apart from this. According
Speaker 1: to Bloomberg Billionaires Index, he's worth about one point one
Speaker 1: billion dollars. Now that's due to his basketball earnings plus sponsorships, investments,
Speaker 1: his own consumer and entertainment business and it's called spring Hill.
Speaker 1: But King James, he's really been reeling in, not only
Speaker 1: in some of the congratulations have come from what the
Speaker 1: likes of Rhianna, but also the fact that he managed
Speaker 1: to manage his money, not just in e ts. Yeah,
Speaker 1: and it's a game recognizes game moment our beloved Warriors,
Speaker 1: Golden State Warriors here acknowledging that success. It's good for
Speaker 1: the l A Lakers as well because when Jabbar broke
Speaker 1: the record four he was playing for the Lakers as well.
Speaker 1: It's a double victory. But he's a king on the
Speaker 1: court and a king off it in terms of his business.
Speaker 1: And also start up Empire is really keen. I suppose
Speaker 1: Bench Capital investor. Yeah, if you look at it's Springhill Company.
Speaker 1: What is it now about? Moments done? Hund an eighty
Speaker 1: million dollars is where it's valued at. He set that
Speaker 1: up with Maverick Carter. It's a video production company. I
Speaker 1: forgot that. Of course, he made a load of money
Speaker 1: in Beats as well that sold out to Apple. It's
Speaker 1: such an amazing amount. Yeah. And also just the brand image, right,
Speaker 1: you see him everywhere and this, frankly, is what everyone's
Speaker 1: been talking about on Twitter, TikTok and been searching for
Speaker 1: on Google. No surprise, it's going viral. Well, meanwhile, that
Speaker 1: does it for this addition of bloombog technology. Come back tomorrow.
Speaker 1: We're going to be breaking down so many earnings for
Speaker 1: you from lift to PayPal, Expedia, ed and don't forget
Speaker 1: a lot to recap. Check out our podcast. You can
Speaker 1: get it on Apple Podcast, Spotify, iHeart and of course
Speaker 1: on the Bloomberg platforms. A lot for you to catch
Speaker 1: up on. This is Bloomberg