WEBVTT - Snap Earnings and AT&T Slumps 0:00:02.200 --> 0:00:05.520 From the heart of where innovation, money and power Colli 0:00:06.320 --> 0:00:10.880 in Silicon Vallet and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:26.640 Emily Jay. I'm only changing San Francisco, and this is 0:00:26.640 --> 0:00:30.080 Bloomberg Technology coming up in the next hour. Snap misses 0:00:30.280 --> 0:00:33.440 and big and even CEO Evan Spiegel says he's not 0:00:33.479 --> 0:00:37.360 happy about the results. Plus, the company gives no third 0:00:37.440 --> 0:00:41.279 quarter forecast. Just how deep are advertisers slashing their budgets? 0:00:41.440 --> 0:00:46.000 We will discuss. Plus, consumers are so strapped for cash 0:00:46.080 --> 0:00:48.479 they're pushing back cell phone payments and that's hurting A 0:00:48.560 --> 0:00:51.680 T and t s bottom line, chairs dropping the most 0:00:51.800 --> 0:00:54.880 in two decades. I'll ask a T and T CEO 0:00:55.040 --> 0:00:58.080 John Stanky what this tells him about the state of 0:00:58.120 --> 0:01:01.560 the economy. And big tech is on a health kick. 0:01:01.680 --> 0:01:03.560 Amazon is buying one Medical in a three and a 0:01:03.560 --> 0:01:06.919 half billion dollar deal. The news a day after Apple 0:01:06.959 --> 0:01:10.160 published a sixty page report about its own dominant in 0:01:10.160 --> 0:01:12.560 the sector. We will head to the front lines of 0:01:12.600 --> 0:01:15.200 a new showdown all of that in a moment, But 0:01:15.240 --> 0:01:16.560 I do want to talk a little bit more about 0:01:16.600 --> 0:01:20.920 Snap now bringing Jasmine Edinburgh, principal analyst at Insider Intelligence. 0:01:21.600 --> 0:01:24.200 Look Jasmine just had a bad How bad a signal 0:01:24.600 --> 0:01:29.800 does this send? Well, this isn't totally unexpected. I think 0:01:29.800 --> 0:01:32.040 the big question was how big of a slump it 0:01:32.080 --> 0:01:35.440 would be, And now it's just become increasingly clear that 0:01:35.520 --> 0:01:39.200 all these macro economic challenges are really putting pressure on 0:01:39.360 --> 0:01:43.039 Snap's ad business. Now. Snap has staked its future on 0:01:43.200 --> 0:01:47.080 augmented reality, which holds promise, but it is still very 0:01:47.200 --> 0:01:50.240 niche as an advertising and an e commerce tool. And 0:01:50.280 --> 0:01:53.720 at the same time we also have Apple's privacy changes 0:01:53.760 --> 0:01:58.080 which have disproportionately affected performance advertiser. So it's really creating 0:01:58.120 --> 0:02:02.600 this one to punch um to snapchats ad business. Now, Snap, 0:02:02.640 --> 0:02:05.880 of course is a small player in the digital ad market. 0:02:05.960 --> 0:02:09.160 At Insider Intelligence, we expect Snap to make up just 0:02:09.320 --> 0:02:12.640 one percent of worldwide digital ad revenues this year, which 0:02:12.680 --> 0:02:14.760 means it could be more susceptible to a lot of 0:02:14.800 --> 0:02:19.040 these challenges than bigger players, for example. Well, that's a question, 0:02:19.280 --> 0:02:21.600 is this just Snap or is this going to impact 0:02:21.600 --> 0:02:23.360 everyone else? And are we going to see this in 0:02:23.440 --> 0:02:26.280 the results of Facebook and Meta excuse me, and Google 0:02:26.360 --> 0:02:28.720 and Twitter for example? Stocks of all of these companies 0:02:29.160 --> 0:02:32.240 dropped on the back of Snaps results as well? How 0:02:32.440 --> 0:02:36.520 much how contagious if you will, is this? Yeah, I 0:02:36.520 --> 0:02:38.920 think we'll be hard pressed to find any social platform 0:02:38.960 --> 0:02:42.720 that hasn't struggled in Q two. I'm not expecting fantastic 0:02:42.760 --> 0:02:45.000 results for any of these companies, but again it's the 0:02:45.040 --> 0:02:47.520 smaller players that tend to be more vulnerable to a 0:02:47.520 --> 0:02:51.880 lot of these challenges than the larger ones. How much 0:02:51.919 --> 0:02:55.720 competition do you foresee from streaming services in the ad business? 0:02:55.760 --> 0:03:00.800 With Netflix, Disney, HBO all exploring these ad support in models. 0:03:01.639 --> 0:03:06.120 Is that now a new battleground? So I cover social 0:03:06.120 --> 0:03:09.320 media companies and I don't cover Netflix and other streaming companies, 0:03:09.320 --> 0:03:11.760 but I will say that the more consumer attention is 0:03:11.800 --> 0:03:16.359 divided onto these different platforms, and the more options advertisers 0:03:16.360 --> 0:03:18.840 have on where to spend their ad dollars, especially with 0:03:18.880 --> 0:03:21.960 a lot of these issues like the app like Apple's 0:03:22.000 --> 0:03:25.080 privacy changes that are impacting the social media companies, the 0:03:25.120 --> 0:03:27.800 more likely it is that they will diversify their spending 0:03:27.919 --> 0:03:32.359 and perhaps spend elsewhere. What can we anticipate from Twitter 0:03:32.480 --> 0:03:36.680 results coming out tomorrow? Obviously we know Twitter one Round 0:03:36.760 --> 0:03:39.600 one in core and that side show is gonna be 0:03:39.680 --> 0:03:43.640 going on now for several more months at least. Yeah, 0:03:43.680 --> 0:03:47.360 I'm not expecting really great things for Twitter tomorrow. Um. 0:03:47.400 --> 0:03:50.000 It has been distracted from most of Q two with 0:03:50.080 --> 0:03:53.040 the whole Musk ordeal, and that has made it harder 0:03:53.080 --> 0:03:56.080 for it to really focus on growing its business and 0:03:56.240 --> 0:03:59.840 its revenues. Um. Twitter is also a small player in 0:03:59.840 --> 0:04:02.440 the digital ad market. It will also make up around 0:04:02.440 --> 0:04:05.840 one percent of total worldwide digital ad revenues this year 0:04:05.880 --> 0:04:08.480 per our podcast, So it is vulnerable to a lot 0:04:08.520 --> 0:04:11.760 of these necro economic challenges as well as other changes 0:04:11.800 --> 0:04:16.000 and online privacy and shifts them consumer behavior. All right, 0:04:16.120 --> 0:04:20.320 Jasmine Emberg, Insider Intelligence principal analyst, thank you as always 0:04:20.320 --> 0:04:23.200 for your insights. Will continue to listen. In two snaps call, 0:04:31.640 --> 0:04:34.279 it was a strong earnings report, but oblique outlook. A 0:04:34.360 --> 0:04:36.880 T and T just had its worst open in twenty 0:04:36.960 --> 0:04:41.360 years as rising prices from gas to groceries way on customers. 0:04:41.480 --> 0:04:43.600 A T and T cut it's free cash full forecast 0:04:43.640 --> 0:04:46.360 by two billion dollars, saying more people are putting off 0:04:46.360 --> 0:04:49.599 paying their bills. Joining me now, John Stanky, the CEO 0:04:49.960 --> 0:04:52.240 of A T and T, So John look, investors were 0:04:52.240 --> 0:04:55.120 a little spooked by what they saw today what's your 0:04:55.160 --> 0:04:59.120 response to their response. Well, I think the investors looked 0:04:59.120 --> 0:05:01.640 at the cash number and they were you know, certainly 0:05:01.680 --> 0:05:03.799 it was a bit out of pattern for our second quarter, 0:05:03.880 --> 0:05:07.080 and I acknowledge it. It is, and as I described 0:05:07.200 --> 0:05:09.880 this morning during the call, that a lot of it 0:05:09.920 --> 0:05:12.440 was by our choice. One. You know, we had record 0:05:12.680 --> 0:05:15.799 customer growth and we had to fund that customer growth, 0:05:15.800 --> 0:05:18.719 and that requires cash out the door, and that's not 0:05:18.800 --> 0:05:21.360 business I'm going to walk away from. And and frankly, 0:05:22.279 --> 0:05:25.440 the numbers and the economy is a bit stronger right 0:05:25.440 --> 0:05:28.320 now that we had anticipated last year when we set 0:05:28.360 --> 0:05:30.840 the plan. And I think it's a good thing we've 0:05:30.880 --> 0:05:32.920 got the customers coming in the door, but it did 0:05:32.960 --> 0:05:36.839 have a negative impact on CAST. Secondly, we're investing at 0:05:36.880 --> 0:05:39.520 record levels in the business, and we front endloaded our 0:05:39.560 --> 0:05:42.920 capital plan this year, which from our perspective is probably 0:05:42.920 --> 0:05:44.919 a good thing. It allows us to sell into that 0:05:45.000 --> 0:05:48.440 inventory and and drive more broadband subscribers, and we were 0:05:48.440 --> 0:05:50.359 able to get more five G coverage out there to 0:05:50.400 --> 0:05:53.560 our customers on midband spectrum than what we had planned. 0:05:53.600 --> 0:05:56.159 That also took cash. The one element that I think 0:05:56.160 --> 0:05:59.400 you're referring to is we did see customers take a 0:05:59.400 --> 0:06:01.160 little bit longer to pay their bills, and that how 0:06:01.240 --> 0:06:04.240 working capital impact. But we were pretty clear that we 0:06:04.240 --> 0:06:06.880 weren't saying customers weren't paying their bills, and we weren't 0:06:06.880 --> 0:06:10.200 saying that activity was slowing down. We just said simply 0:06:10.240 --> 0:06:12.560 that we've got customers taking a little bit longer to 0:06:12.600 --> 0:06:14.839 pay their bills, and there was a working capital impact. 0:06:15.480 --> 0:06:18.080 And in a business our size, you know, when you 0:06:18.400 --> 0:06:20.200 end up seeing them take a day or two longer 0:06:20.560 --> 0:06:24.640 to pay, that's a significant impact to the cash flow. Now, 0:06:24.640 --> 0:06:26.800 what's also recently really interesting here is this is a 0:06:26.800 --> 0:06:29.000 fairly recent trend that you've been seeing just over the 0:06:29.080 --> 0:06:32.680 last several weeks. A day or two maybe not a 0:06:32.760 --> 0:06:36.000 huge deal, but what are the chances these delays get 0:06:36.080 --> 0:06:40.039 longer or are you expecting some of these customers potentially 0:06:40.040 --> 0:06:45.240 to cancel. I think we don't expect these customers to cancel. 0:06:45.400 --> 0:06:47.560 We've we've had, you know, a lot of experiences going 0:06:47.600 --> 0:06:52.479 through economic downturns, probably depending on what point of view 0:06:52.480 --> 0:06:54.680 you hold of the economy in the future right now, 0:06:54.800 --> 0:06:59.280 looking at looking at projections, certainly people are talking to 0:06:59.360 --> 0:07:03.720 either saw landing or avoiding a recession. Altogether. Um, So, 0:07:03.920 --> 0:07:06.400 you know, we've been through much more severe cycles. And 0:07:06.440 --> 0:07:09.200 what we know is that customers really want to keep 0:07:09.200 --> 0:07:12.240 their connectivity services. They stick through. And that's why I said, 0:07:12.240 --> 0:07:14.960 we don't view this as a cataclysmic problem at all. 0:07:15.000 --> 0:07:17.840 We see customers choosing to take a couple more days 0:07:17.840 --> 0:07:21.320 to pay their bills, creating a working capital problem, not 0:07:21.440 --> 0:07:24.120 a bad debt issue. Uh. And you know whether or 0:07:24.120 --> 0:07:26.400 not it gets more severe. I mean, I'm not a 0:07:26.440 --> 0:07:29.800 fortune teller. I wouldn't anticipate that in the economy right 0:07:29.800 --> 0:07:31.600 now based on the numbers are seeing. But we do 0:07:31.680 --> 0:07:35.960 expect a more tepid environment working looking forward, and that 0:07:36.000 --> 0:07:39.960 tepid environment, you know, could slow down economic economic activity 0:07:39.960 --> 0:07:41.760 a little bit, it could extend things a little bit. 0:07:41.800 --> 0:07:44.840 We've taken a conservative view on our forecast right now. 0:07:44.880 --> 0:07:47.720 We feel pretty comfortable that we've got that under control 0:07:47.760 --> 0:07:50.760 for the balance of this year. You've cut your free 0:07:50.800 --> 0:07:53.640 cash flow forecast, but you've maintained your capital spending plans 0:07:53.680 --> 0:07:55.920 as you've been talking about. You are investing in the business. 0:07:56.920 --> 0:08:00.840 Will you have to cut the dividend. No, we don't 0:08:00.880 --> 0:08:02.760 have to cut the dividend. We have plenty of coverage 0:08:02.800 --> 0:08:06.120 on the dividend. We we adjusted the dividend coming out 0:08:06.120 --> 0:08:10.119 of the Warner Brothers Discovery transaction. We just paid down 0:08:10.200 --> 0:08:12.680 over forty billion dollars of debt on the balance sheet, 0:08:12.760 --> 0:08:15.720 saw a great improvement to our justed net debt to EBITDA. 0:08:16.320 --> 0:08:18.680 As a result of that, we've got a lot of 0:08:18.680 --> 0:08:21.679 free cash flow cushion. We are investing at a record pace, 0:08:21.760 --> 0:08:25.240 both in customer growth and in our networks. As we've 0:08:25.280 --> 0:08:29.760 explained to our investor base, that's not a forever rate 0:08:29.840 --> 0:08:34.679 of investment. Right now. We're repositioning the business, we're penetrating 0:08:34.720 --> 0:08:37.640 with fiber, We're improving some of our internal processes to 0:08:37.679 --> 0:08:41.240 take costs out. Those will start to yield dividends back 0:08:41.280 --> 0:08:44.800 into our business in terms of better operating performance and 0:08:44.840 --> 0:08:48.640 better operating leverage. As we've characterized for the balance of 0:08:48.679 --> 0:08:51.520 this year, we'll have plenty of room to cover the dividend, 0:08:51.679 --> 0:08:53.440 and we have plenty of room to invest in this 0:08:53.480 --> 0:08:56.559 business at a robust clip moving forward. We feel very 0:08:56.559 --> 0:09:00.280 comfortable about that. You had said you were considering raising 0:09:00.320 --> 0:09:03.480 prices again. Are you still considering raising prices and if so, 0:09:03.600 --> 0:09:07.600 by how much? And when, Emily, I think what I said, 0:09:07.720 --> 0:09:11.400 is that any company that gets into an environment where 0:09:11.440 --> 0:09:14.760 there's extended high inflation rates has to be aware of 0:09:14.920 --> 0:09:19.000 running both sides of the equation, not only being vigilant 0:09:19.040 --> 0:09:21.880 about costs and trying to make sure that they're on 0:09:21.920 --> 0:09:24.920 a perpetual cycle to take costs out of the business, 0:09:24.960 --> 0:09:27.040 but also being aware that if you're in a long, 0:09:27.160 --> 0:09:30.679 extended inflationary cycle, sometimes you have to work the revenue 0:09:30.720 --> 0:09:33.720 side of the equation too. And you know, we did 0:09:33.920 --> 0:09:37.600 one of our first actions earlier this year, and we 0:09:37.880 --> 0:09:40.679 I think frankly engineered that as a win win for customers. 0:09:40.720 --> 0:09:43.280 We did have to take some prices up, but we're 0:09:43.320 --> 0:09:45.839 also able to give the customers some more value is 0:09:45.880 --> 0:09:49.200 we took prices up some new features and plans and 0:09:49.240 --> 0:09:52.480 services that they could migrate into. UM I don't know 0:09:52.559 --> 0:09:55.120 what the next twelve months has in store. If it 0:09:55.559 --> 0:09:58.920 extends on while we see nine percent inflation, will we 0:09:59.000 --> 0:10:02.960 have to consider psibly some other actions on pricing. I 0:10:02.960 --> 0:10:05.400 would say that's not off the table right now. We 0:10:05.440 --> 0:10:07.680 haven't made any decisions around that, or we don't have 0:10:07.720 --> 0:10:10.960 any specific plans. Curious, if you think this is an 0:10:11.000 --> 0:10:14.440 industry wide issue, would you be surprised if T Mobile 0:10:14.440 --> 0:10:19.480 and Verizon don't see customers putting off their bills. I 0:10:19.840 --> 0:10:22.360 don't know what T Mobile and Verizon is going to report. 0:10:22.400 --> 0:10:24.360 I know what I reported, and I know what our 0:10:24.440 --> 0:10:27.760 data is, and I can tell you that our customers, 0:10:28.520 --> 0:10:31.280 you know, basically have extended their payment cycle by about 0:10:31.280 --> 0:10:34.319 two days. And as I said, I'm not concerned about 0:10:34.360 --> 0:10:38.160 that given past history. I'm also looking at a relative 0:10:38.200 --> 0:10:42.000 to pre pandemic levels, and it's not grossery grossly out 0:10:42.040 --> 0:10:45.959 of line with pre pandemic levels. Um, what I can 0:10:45.960 --> 0:10:47.640 tell you is a T and T is kind of 0:10:47.640 --> 0:10:51.600 a mini microcosmos society and our customer base. I would 0:10:51.679 --> 0:10:54.760 think what we're seeing is is kind of representative of 0:10:54.800 --> 0:10:57.800 the broader economy. But I don't know that for a fact. 0:10:57.840 --> 0:10:59.880 I just know the data I've got on my customers. 0:11:00.600 --> 0:11:04.120 All Right, You've got a twenty three state footprint in fiber, 0:11:04.120 --> 0:11:06.360 and I know one of your big ambitions is to 0:11:06.520 --> 0:11:08.520 make a T and T the best broadband provider in 0:11:08.559 --> 0:11:12.720 the United States. The competitive landscape is changing here and fast. 0:11:13.040 --> 0:11:16.240 Are you looking to buy or build beyond what you've 0:11:16.280 --> 0:11:20.440 done so far? You know, it's it's a really good question. Emily. 0:11:20.480 --> 0:11:24.079 I think they'll put this in perspective. From January of 0:11:24.120 --> 0:11:29.120 this year to this today, as we've reported, we've grown 0:11:29.320 --> 0:11:32.840 over two million connected locations on our fiber network and 0:11:32.840 --> 0:11:37.120 we're now at eighteen million connected locations. We are the 0:11:37.160 --> 0:11:40.120 scaled fiber provider in the United States, and we are 0:11:40.200 --> 0:11:43.640 building at a rate faster than anybody else. It's deploying fiber. 0:11:44.320 --> 0:11:47.760 Our organic growth is what's powering this business right now. 0:11:47.800 --> 0:11:52.760 Our ability to muscle supply chain, the resources and the 0:11:52.880 --> 0:11:57.040 capabilities to go out and build more infrastructure, and that 0:11:57.280 --> 0:11:59.240 is really the foundation of what we need to do 0:11:59.320 --> 0:12:03.280 moving forward. There are other people that deploy fiber in 0:12:03.320 --> 0:12:06.280 the United States, frankly, most of them are subscale compared 0:12:06.320 --> 0:12:09.079 to us. And when we're having this success for having 0:12:09.280 --> 0:12:12.880 doing the things that we do well, engineering grade fiber networks, 0:12:12.960 --> 0:12:15.800 learning how to penetrate them quickly, working through this on 0:12:15.800 --> 0:12:18.800 an organic basis, frankly, is is probably the right play 0:12:18.840 --> 0:12:21.559 for us right now. Now. A T and T got 0:12:21.600 --> 0:12:24.120 out of the media business with a big sale of 0:12:24.640 --> 0:12:27.920 Time Warner, and since then we've seen streaming giants media 0:12:28.000 --> 0:12:31.160 companies really struggle. What did you and A T and 0:12:31.200 --> 0:12:36.959 T ce that for example, Netflix didn't. Oh. I first 0:12:36.960 --> 0:12:39.160 of all, I think Netflix is you know, to be 0:12:39.240 --> 0:12:42.160 praised and admired for what they've managed to create as 0:12:42.160 --> 0:12:44.720 a business. I mean, they've been a very successful company, 0:12:44.720 --> 0:12:46.640 and they have built a new model that will be 0:12:46.720 --> 0:12:52.200 the dominant model of distributing entertainment content and and all 0:12:52.960 --> 0:12:56.880 consumption of video content for a decade to come. And 0:12:57.240 --> 0:12:59.559 what I would tell you that I think we viewed 0:12:59.600 --> 0:13:02.720 as sibly being a little bit different and a little 0:13:02.720 --> 0:13:05.680 more quickly is many times I said I felt it 0:13:05.760 --> 0:13:08.080 was really important that these streaming platforms have a two 0:13:08.080 --> 0:13:12.760 sided model, both subscription and advertising. And you know clearly 0:13:13.840 --> 0:13:16.800 reports are and the company itself has said Netflix is 0:13:16.840 --> 0:13:20.560 going to actually start to introduce advertising in their platform. 0:13:20.559 --> 0:13:22.360 I frankly think that will be good for them over 0:13:22.400 --> 0:13:24.920 the long haul. It allows them to start thinking about 0:13:24.920 --> 0:13:28.480 other types of content, like sports content that really does 0:13:28.559 --> 0:13:31.680 need to be alongside advertising in order for it to 0:13:31.720 --> 0:13:35.120 be a viable and economic approach. But they had a 0:13:35.120 --> 0:13:39.120 great valuation and it's been tempered a bit. Um. My 0:13:39.200 --> 0:13:41.559 point of view on streaming is is not that it's 0:13:41.600 --> 0:13:44.240 a bad thing. I think what I would like to 0:13:44.240 --> 0:13:47.240 see if I were in David zaslav shoes is that 0:13:48.040 --> 0:13:50.560 he moves a little bit closer to their valuation, and 0:13:50.640 --> 0:13:54.200 maybe they kind of came down to a more realistic valuation, 0:13:54.360 --> 0:13:57.000 and all things considered, I think it's going to be 0:13:57.040 --> 0:14:01.160 a strong and viable business moving forward. Is ultimately the 0:14:01.200 --> 0:14:03.280 early innings of the shakeout and we get into a 0:14:03.280 --> 0:14:07.000 steady state and I think David and Warner Brothers Discoveries 0:14:07.040 --> 0:14:09.800 well positioned for that. And do you think that the 0:14:09.840 --> 0:14:12.640 shutting down of CNN Plus was was the right move 0:14:12.720 --> 0:14:16.400 based on what you knew? I don't know. I wasn't 0:14:16.520 --> 0:14:18.680 in the room at the time. You know, David has 0:14:19.240 --> 0:14:23.080 after the transaction closed a lot of different you know, considerations, 0:14:23.480 --> 0:14:25.760 his own strategies as to where he wants to take 0:14:25.800 --> 0:14:28.520 the business, his own decisions on how he wants to 0:14:28.560 --> 0:14:31.760 allocate capital. I'm not party to those conversations. I don't 0:14:31.760 --> 0:14:34.080 know what they were, and I'm sure within that context 0:14:34.480 --> 0:14:36.440 he made a decision that he felt was best for 0:14:36.480 --> 0:14:40.000 the business. So one last question, John, to wrap this up. 0:14:40.120 --> 0:14:42.400 You know, we also saw your business segment a little 0:14:42.400 --> 0:14:44.480 week and I'm wondering what other companies should be looking 0:14:44.480 --> 0:14:47.720 at for signals here in your report our business is 0:14:47.760 --> 0:14:50.880 pulling back more broadly on spending and should that be 0:14:51.080 --> 0:14:55.280 a warning sign about the economy? You know, I don't 0:14:55.280 --> 0:14:58.200 think so, Emily. I think in our circumstance, you know, 0:14:58.280 --> 0:15:01.160 we have a very unique position and in the business market, 0:15:01.200 --> 0:15:06.400 we are the largest provider of services the large complex organizations, 0:15:06.400 --> 0:15:09.880 and that's an envied position to have. But they're also 0:15:10.200 --> 0:15:13.520 the businesses that are going through the fastest rate of 0:15:13.520 --> 0:15:18.960 technology evolution, and they are orienting themselves away from traditional 0:15:19.320 --> 0:15:23.200 networks that used to be operated and managed exclusively by 0:15:23.240 --> 0:15:27.880 companies like us, to software defined networking, which ultimately shift 0:15:27.960 --> 0:15:31.000 some of the capabilities either to the company itself or 0:15:31.040 --> 0:15:34.680 into a hyper scale or environment. And that changes our 0:15:34.800 --> 0:15:38.960 role in those particular companies, and that's why as a business, 0:15:38.960 --> 0:15:43.000 we're pivoting away from our strong position on the enterprise side. 0:15:43.000 --> 0:15:46.200 Will continue to service those customers and meet their needs 0:15:46.200 --> 0:15:48.400 in the way we can match them, but we we 0:15:48.480 --> 0:15:50.720 really want to strengthen our position in the mid market, 0:15:50.880 --> 0:15:53.320 and our brand is very well positioned to do that. 0:15:53.800 --> 0:15:56.560 They're the types of customers you still need our expertise 0:15:57.080 --> 0:15:59.960 and our owned and operated infrastructure to run their companies, 0:16:00.480 --> 0:16:02.720 and we're under penetrated there, and we have an opportunity 0:16:02.760 --> 0:16:04.840 for a great amount of growth as a result of that. 0:16:05.320 --> 0:16:07.560 So I don't think it's a weakness in business. In fact, 0:16:07.640 --> 0:16:10.320 I think networking is getting more and more important, both 0:16:10.400 --> 0:16:14.160 mobile and fix for all business customers. It's more of 0:16:14.200 --> 0:16:17.280 a pivot on technology and how we're positioning our company 0:16:17.320 --> 0:16:20.840 to line up against that. Interesting. All right, A T 0:16:20.960 --> 0:16:23.400 and T CEO, John staying key, John, great to have 0:16:23.440 --> 0:16:25.600 you here on the show. Thank you for taking the time, 0:16:25.640 --> 0:16:29.080 Thanks for having me and Emily. All Right, coming up 0:16:29.120 --> 0:16:32.280 a probe into one of Tesla's highest ranking executives and 0:16:32.320 --> 0:16:36.320 a number of employees already fired this according to Bloomberg sources, 0:16:36.640 --> 0:16:40.119 we'll talk about their role in a so called secret project, 0:16:40.400 --> 0:16:43.480 a scoop from our own ed Ludlow. Next, this is Bloomberg. 0:16:53.440 --> 0:16:56.000 One of you La Musk's top lieutenant, the executive that 0:16:56.080 --> 0:16:59.040 runs Testla's Texas factory, is now the focus of an 0:16:59.120 --> 0:17:03.080 internal investor stigation. According to Bloomberg sources, Tesla is looking 0:17:03.080 --> 0:17:05.560 into omed off Shar for his role in a plan 0:17:05.680 --> 0:17:09.880 to purchase hard to get supplies that warrant for Tesla. 0:17:10.119 --> 0:17:13.600 Bloomberg's Ludlow broke the story, He joins us. Now, so ed, 0:17:13.960 --> 0:17:17.000 who is Omed Afshar and what did he do? Yes? So, 0:17:17.040 --> 0:17:19.840 Omed af Sha is Elon Musk's right hand man. He 0:17:19.920 --> 0:17:22.560 used to be executive assistant, then he got promoted to 0:17:22.640 --> 0:17:26.360 be the director for Projects of the Office of the CEO, 0:17:26.640 --> 0:17:29.960 and more recently he's basically overseen the construction of the 0:17:30.000 --> 0:17:34.240 Austin plant Giga Texas and now production that's taking place there. 0:17:34.240 --> 0:17:38.119 And according to sources, internally the finance group and Legal 0:17:38.520 --> 0:17:41.280 Audit are looking at a procurement order from earlier this 0:17:41.359 --> 0:17:43.320 year for some glass. They want to know what the 0:17:43.359 --> 0:17:46.440 glass was going to be used for and if Omed 0:17:46.520 --> 0:17:50.560 Afsha knew about it or not um And ultimately, according 0:17:50.560 --> 0:17:53.679 to sources, one of the questions being asked was is 0:17:53.720 --> 0:17:56.040 this glass going to be used by Elon Musk for 0:17:56.080 --> 0:17:59.639 a personal project? Personal use in other words, not for 0:18:00.000 --> 0:18:04.679 Tesla's own construction or a building associated with Tesla. So 0:18:05.720 --> 0:18:07.960 what are we thinking here? Was this for an outside 0:18:08.040 --> 0:18:13.080 quote unquote secret project or a secret project for the CEO? Yes, 0:18:13.160 --> 0:18:16.120 so we don't know. Sources tell us that omedaf Shar 0:18:16.320 --> 0:18:20.800 instructed some Tesla employees to generate this procurement order this 0:18:20.920 --> 0:18:23.760 PO and told them literally that it was for a 0:18:23.840 --> 0:18:28.240 secret project. Beyond that, we don't have much more information. 0:18:28.280 --> 0:18:31.520 We know that the PO has generated much earlier this year, 0:18:32.080 --> 0:18:37.080 um and that the consideration of the suspicion around it 0:18:37.119 --> 0:18:39.160 has been in place for a number of months, through 0:18:39.520 --> 0:18:42.600 first Tesla's finance and internal audit team and more recently 0:18:43.119 --> 0:18:45.320 their head of legal David soul who was kind of 0:18:45.320 --> 0:18:49.960 looking into this and also looking into Ohmed's involvement. A 0:18:50.080 --> 0:18:53.399 number of other employees, according to your reporting, I've already 0:18:53.400 --> 0:18:58.159 lost their jobs over this. Is Omed off Shar You know, 0:18:58.640 --> 0:19:00.280 is he going to is he going to keeping at 0:19:00.280 --> 0:19:01.720 the company? Is he going to go on a leave 0:19:01.760 --> 0:19:04.840 of absence? So what we've been told according to sources 0:19:04.840 --> 0:19:07.520 is that people have been fired in connection to this, 0:19:07.720 --> 0:19:10.520 and we're told by sources that the consideration right now 0:19:11.040 --> 0:19:13.240 is that om Dasha will be put on a leave 0:19:13.320 --> 0:19:15.520 of absence. We don't have any timing of when that 0:19:15.560 --> 0:19:19.400 will take place. We of course asked elon Mask Tesla 0:19:19.600 --> 0:19:23.520 representatives for comment about this, and we haven't heard anything back. 0:19:23.960 --> 0:19:26.840 So we don't, frankly know what Tesla's position is on 0:19:26.880 --> 0:19:29.360 all of this, or you know, the latest that's happening 0:19:30.040 --> 0:19:34.200 inside as of this afternoon. But that's what our reporting is. Okay, 0:19:34.320 --> 0:19:37.760 I'd lead though big scoop from you. Thank you, will 0:19:37.760 --> 0:19:48.719 continue to follow your reporting. Welcome back to lovone. We're 0:19:48.760 --> 0:19:51.480 technology and emily changing in San Francisco. This week, Apple 0:19:51.560 --> 0:19:54.240 published a sixty page report detailing us for into the 0:19:54.240 --> 0:19:57.720 health tech business. This well, Amazon has been building its 0:19:57.760 --> 0:20:01.160 own healthcare presence over the last few years. Now, Amazon's 0:20:01.200 --> 0:20:05.199 latest salvo buying a primary care provider, One Medical, and 0:20:05.240 --> 0:20:07.600 in all cash deal value at three point four nine 0:20:07.760 --> 0:20:11.520 billion dollars. One Medical operates one and eighty two medical 0:20:11.560 --> 0:20:15.280 offices in twenty markets across the United States are Bloomberg 0:20:15.280 --> 0:20:18.760 Deal's reporter Michelle Davis, joins us now for more. So 0:20:19.040 --> 0:20:22.359 obviously we've known about Amazon's healthcare ambitions. This is an 0:20:22.400 --> 0:20:26.280 interesting turn, though. Why is Amazon buying One Medical? Yeah, 0:20:26.320 --> 0:20:29.600 so this is Amazon's third biggest deal after Whole Foods 0:20:29.720 --> 0:20:33.600 and MGM, and uh. With this deal, Amazon gets you know, 0:20:33.680 --> 0:20:36.439 access to One Medicals, hundreds of thousands of customers, it's 0:20:36.480 --> 0:20:40.800 relationships with employers, the app, and uh, this is Amazon 0:20:40.920 --> 0:20:43.840 really an anti Jazzy You know, Amazon's new CEO really 0:20:43.880 --> 0:20:46.720 trying to make its mark and and really pushing into 0:20:46.760 --> 0:20:49.400 healthcare in a big way. They had bought a pill pack, 0:20:49.520 --> 0:20:52.160 you know, they were offering some virtual care through Amazon Care, 0:20:52.200 --> 0:20:54.560 but this is them really getting deep into the primary 0:20:54.560 --> 0:20:57.560 care market. Um. The deal took some people by surprise, 0:20:57.640 --> 0:21:01.320 but I think, you know, knowing how good Amazon is 0:21:01.400 --> 0:21:05.280 with like manipulating data and analyzing it, um, it'll be 0:21:05.320 --> 0:21:07.600 really interesting to see what they do with One Medical. 0:21:07.680 --> 0:21:09.760 You know, how they use the Whole Foods channel, if 0:21:09.760 --> 0:21:12.399 they you know, combine some of those things to offer 0:21:13.000 --> 0:21:15.600 I don't know, memberships or like services where you could 0:21:15.960 --> 0:21:18.000 get i don't know, blood pressure checked at Whole Foods 0:21:18.080 --> 0:21:19.840 or something like that. The way that you could deliver 0:21:20.000 --> 0:21:24.040 or return on Amazon package at Whole Foods. Interesting. Wow, 0:21:24.280 --> 0:21:26.600 never thought of that, which brings me to my next 0:21:26.680 --> 0:21:30.040 question for One Medical customers, what's going to change? So 0:21:30.240 --> 0:21:32.480 there aren't that many details that we know so far 0:21:32.520 --> 0:21:35.080 about what Amazon plans to do with One Medical. We 0:21:35.119 --> 0:21:38.640 do know that One Medical had been burning cash pretty substantially. 0:21:38.640 --> 0:21:40.760 It's stock, as you probably know, you know, has been 0:21:40.840 --> 0:21:43.000 has been on a roller coaster over the past few 0:21:43.080 --> 0:21:44.840 years since the I pod, And so what this will 0:21:44.880 --> 0:21:47.639 do is help it expand a little more quickly UM 0:21:47.720 --> 0:21:50.439 and uh, you know, probably push into new markets. But 0:21:50.560 --> 0:21:53.199 beyond that, we're still waiting on more details from Amazon 0:21:53.359 --> 0:21:56.679 about what it plans to do. Meantime, you've got Apple 0:21:57.359 --> 0:21:59.960 touting its own health tech offerings. Is this is space 0:22:00.119 --> 0:22:02.040 an area where you expect to see M and A 0:22:02.200 --> 0:22:06.239 potentially pick up. Definitely, there's been a huge trend of 0:22:06.400 --> 0:22:10.280 you know, healthcare companies and tech companies converging. Last year 0:22:10.359 --> 0:22:13.120 Loan we saw two mega deals with cern or Oracle 0:22:13.400 --> 0:22:16.600 buying cern Or, a health records company, Microsoft buying Nuanced, 0:22:16.600 --> 0:22:18.399 a data company. A lot of these deals are about 0:22:18.760 --> 0:22:21.600 UM access to data UM and so you know, and 0:22:21.640 --> 0:22:24.720 Google has also signaled ambitions into healthcare. It obviously has 0:22:24.960 --> 0:22:27.600