Speaker 1: From the heart of where innovation, money and power Colli
Speaker 1: in Silicon Vallet and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm only changing San Francisco, and this is
Speaker 1: Bloomberg Technology coming up in the next hour. Snap misses
Speaker 1: and big and even CEO Evan Spiegel says he's not
Speaker 1: happy about the results. Plus, the company gives no third
Speaker 1: quarter forecast. Just how deep are advertisers slashing their budgets?
Speaker 1: We will discuss. Plus, consumers are so strapped for cash
Speaker 1: they're pushing back cell phone payments and that's hurting A
Speaker 1: T and t s bottom line, chairs dropping the most
Speaker 1: in two decades. I'll ask a T and T CEO
Speaker 1: John Stanky what this tells him about the state of
Speaker 1: the economy. And big tech is on a health kick.
Speaker 1: Amazon is buying one Medical in a three and a
Speaker 1: half billion dollar deal. The news a day after Apple
Speaker 1: published a sixty page report about its own dominant in
Speaker 1: the sector. We will head to the front lines of
Speaker 1: a new showdown all of that in a moment, But
Speaker 1: I do want to talk a little bit more about
Speaker 1: Snap now bringing Jasmine Edinburgh, principal analyst at Insider Intelligence.
Speaker 1: Look Jasmine just had a bad How bad a signal
Speaker 1: does this send? Well, this isn't totally unexpected. I think
Speaker 1: the big question was how big of a slump it
Speaker 1: would be, And now it's just become increasingly clear that
Speaker 1: all these macro economic challenges are really putting pressure on
Speaker 1: Snap's ad business. Now. Snap has staked its future on
Speaker 1: augmented reality, which holds promise, but it is still very
Speaker 1: niche as an advertising and an e commerce tool. And
Speaker 1: at the same time we also have Apple's privacy changes
Speaker 1: which have disproportionately affected performance advertiser. So it's really creating
Speaker 1: this one to punch um to snapchats ad business. Now, Snap,
Speaker 1: of course is a small player in the digital ad market.
Speaker 1: At Insider Intelligence, we expect Snap to make up just
Speaker 1: one percent of worldwide digital ad revenues this year, which
Speaker 1: means it could be more susceptible to a lot of
Speaker 1: these challenges than bigger players, for example. Well, that's a question,
Speaker 1: is this just Snap or is this going to impact
Speaker 1: everyone else? And are we going to see this in
Speaker 1: the results of Facebook and Meta excuse me, and Google
Speaker 1: and Twitter for example? Stocks of all of these companies
Speaker 1: dropped on the back of Snaps results as well? How
Speaker 1: much how contagious if you will, is this? Yeah, I
Speaker 1: think we'll be hard pressed to find any social platform
Speaker 1: that hasn't struggled in Q two. I'm not expecting fantastic
Speaker 1: results for any of these companies, but again it's the
Speaker 1: smaller players that tend to be more vulnerable to a
Speaker 1: lot of these challenges than the larger ones. How much
Speaker 1: competition do you foresee from streaming services in the ad business?
Speaker 1: With Netflix, Disney, HBO all exploring these ad support in models.
Speaker 1: Is that now a new battleground? So I cover social
Speaker 1: media companies and I don't cover Netflix and other streaming companies,
Speaker 1: but I will say that the more consumer attention is
Speaker 1: divided onto these different platforms, and the more options advertisers
Speaker 1: have on where to spend their ad dollars, especially with
Speaker 1: a lot of these issues like the app like Apple's
Speaker 1: privacy changes that are impacting the social media companies, the
Speaker 1: more likely it is that they will diversify their spending
Speaker 1: and perhaps spend elsewhere. What can we anticipate from Twitter
Speaker 1: results coming out tomorrow? Obviously we know Twitter one Round
Speaker 1: one in core and that side show is gonna be
Speaker 1: going on now for several more months at least. Yeah,
Speaker 1: I'm not expecting really great things for Twitter tomorrow. Um.
Speaker 1: It has been distracted from most of Q two with
Speaker 1: the whole Musk ordeal, and that has made it harder
Speaker 1: for it to really focus on growing its business and
Speaker 1: its revenues. Um. Twitter is also a small player in
Speaker 1: the digital ad market. It will also make up around
Speaker 1: one percent of total worldwide digital ad revenues this year
Speaker 1: per our podcast, So it is vulnerable to a lot
Speaker 1: of these necro economic challenges as well as other changes
Speaker 1: and online privacy and shifts them consumer behavior. All right,
Speaker 1: Jasmine Emberg, Insider Intelligence principal analyst, thank you as always
Speaker 1: for your insights. Will continue to listen. In two snaps call,
Speaker 1: it was a strong earnings report, but oblique outlook. A
Speaker 1: T and T just had its worst open in twenty
Speaker 1: years as rising prices from gas to groceries way on customers.
Speaker 1: A T and T cut it's free cash full forecast
Speaker 1: by two billion dollars, saying more people are putting off
Speaker 1: paying their bills. Joining me now, John Stanky, the CEO
Speaker 1: of A T and T, So John look, investors were
Speaker 1: a little spooked by what they saw today what's your
Speaker 1: response to their response. Well, I think the investors looked
Speaker 1: at the cash number and they were you know, certainly
Speaker 1: it was a bit out of pattern for our second quarter,
Speaker 1: and I acknowledge it. It is, and as I described
Speaker 1: this morning during the call, that a lot of it
Speaker 1: was by our choice. One. You know, we had record
Speaker 1: customer growth and we had to fund that customer growth,
Speaker 1: and that requires cash out the door, and that's not
Speaker 1: business I'm going to walk away from. And and frankly,
Speaker 1: the numbers and the economy is a bit stronger right
Speaker 1: now that we had anticipated last year when we set
Speaker 1: the plan. And I think it's a good thing we've
Speaker 1: got the customers coming in the door, but it did
Speaker 1: have a negative impact on CAST. Secondly, we're investing at
Speaker 1: record levels in the business, and we front endloaded our
Speaker 1: capital plan this year, which from our perspective is probably
Speaker 1: a good thing. It allows us to sell into that
Speaker 1: inventory and and drive more broadband subscribers, and we were
Speaker 1: able to get more five G coverage out there to
Speaker 1: our customers on midband spectrum than what we had planned.
Speaker 1: That also took cash. The one element that I think
Speaker 1: you're referring to is we did see customers take a
Speaker 1: little bit longer to pay their bills, and that how
Speaker 1: working capital impact. But we were pretty clear that we
Speaker 1: weren't saying customers weren't paying their bills, and we weren't
Speaker 1: saying that activity was slowing down. We just said simply
Speaker 1: that we've got customers taking a little bit longer to
Speaker 1: pay their bills, and there was a working capital impact.
Speaker 1: And in a business our size, you know, when you
Speaker 1: end up seeing them take a day or two longer
Speaker 1: to pay, that's a significant impact to the cash flow. Now,
Speaker 1: what's also recently really interesting here is this is a
Speaker 1: fairly recent trend that you've been seeing just over the
Speaker 1: last several weeks. A day or two maybe not a
Speaker 1: huge deal, but what are the chances these delays get
Speaker 1: longer or are you expecting some of these customers potentially
Speaker 1: to cancel. I think we don't expect these customers to cancel.
Speaker 1: We've we've had, you know, a lot of experiences going
Speaker 1: through economic downturns, probably depending on what point of view
Speaker 1: you hold of the economy in the future right now,
Speaker 1: looking at looking at projections, certainly people are talking to
Speaker 1: either saw landing or avoiding a recession. Altogether. Um, So,
Speaker 1: you know, we've been through much more severe cycles. And
Speaker 1: what we know is that customers really want to keep
Speaker 1: their connectivity services. They stick through. And that's why I said,
Speaker 1: we don't view this as a cataclysmic problem at all.
Speaker 1: We see customers choosing to take a couple more days
Speaker 1: to pay their bills, creating a working capital problem, not
Speaker 1: a bad debt issue. Uh. And you know whether or
Speaker 1: not it gets more severe. I mean, I'm not a
Speaker 1: fortune teller. I wouldn't anticipate that in the economy right
Speaker 1: now based on the numbers are seeing. But we do
Speaker 1: expect a more tepid environment working looking forward, and that
Speaker 1: tepid environment, you know, could slow down economic economic activity
Speaker 1: a little bit, it could extend things a little bit.
Speaker 1: We've taken a conservative view on our forecast right now.
Speaker 1: We feel pretty comfortable that we've got that under control
Speaker 1: for the balance of this year. You've cut your free
Speaker 1: cash flow forecast, but you've maintained your capital spending plans
Speaker 1: as you've been talking about. You are investing in the business.
Speaker 1: Will you have to cut the dividend. No, we don't
Speaker 1: have to cut the dividend. We have plenty of coverage
Speaker 1: on the dividend. We we adjusted the dividend coming out
Speaker 1: of the Warner Brothers Discovery transaction. We just paid down
Speaker 1: over forty billion dollars of debt on the balance sheet,
Speaker 1: saw a great improvement to our justed net debt to EBITDA.
Speaker 1: As a result of that, we've got a lot of
Speaker 1: free cash flow cushion. We are investing at a record pace,
Speaker 1: both in customer growth and in our networks. As we've
Speaker 1: explained to our investor base, that's not a forever rate
Speaker 1: of investment. Right now. We're repositioning the business, we're penetrating
Speaker 1: with fiber, We're improving some of our internal processes to
Speaker 1: take costs out. Those will start to yield dividends back
Speaker 1: into our business in terms of better operating performance and
Speaker 1: better operating leverage. As we've characterized for the balance of
Speaker 1: this year, we'll have plenty of room to cover the dividend,
Speaker 1: and we have plenty of room to invest in this
Speaker 1: business at a robust clip moving forward. We feel very
Speaker 1: comfortable about that. You had said you were considering raising
Speaker 1: prices again. Are you still considering raising prices and if so,
Speaker 1: by how much? And when, Emily, I think what I said,
Speaker 1: is that any company that gets into an environment where
Speaker 1: there's extended high inflation rates has to be aware of
Speaker 1: running both sides of the equation, not only being vigilant
Speaker 1: about costs and trying to make sure that they're on
Speaker 1: a perpetual cycle to take costs out of the business,
Speaker 1: but also being aware that if you're in a long,
Speaker 1: extended inflationary cycle, sometimes you have to work the revenue
Speaker 1: side of the equation too. And you know, we did
Speaker 1: one of our first actions earlier this year, and we
Speaker 1: I think frankly engineered that as a win win for customers.
Speaker 1: We did have to take some prices up, but we're
Speaker 1: also able to give the customers some more value is
Speaker 1: we took prices up some new features and plans and
Speaker 1: services that they could migrate into. UM I don't know
Speaker 1: what the next twelve months has in store. If it
Speaker 1: extends on while we see nine percent inflation, will we
Speaker 1: have to consider psibly some other actions on pricing. I
Speaker 1: would say that's not off the table right now. We
Speaker 1: haven't made any decisions around that, or we don't have
Speaker 1: any specific plans. Curious, if you think this is an
Speaker 1: industry wide issue, would you be surprised if T Mobile
Speaker 1: and Verizon don't see customers putting off their bills. I
Speaker 1: don't know what T Mobile and Verizon is going to report.
Speaker 1: I know what I reported, and I know what our
Speaker 1: data is, and I can tell you that our customers,
Speaker 1: you know, basically have extended their payment cycle by about
Speaker 1: two days. And as I said, I'm not concerned about
Speaker 1: that given past history. I'm also looking at a relative
Speaker 1: to pre pandemic levels, and it's not grossery grossly out
Speaker 1: of line with pre pandemic levels. Um, what I can
Speaker 1: tell you is a T and T is kind of
Speaker 1: a mini microcosmos society and our customer base. I would
Speaker 1: think what we're seeing is is kind of representative of
Speaker 1: the broader economy. But I don't know that for a fact.
Speaker 1: I just know the data I've got on my customers.
Speaker 1: All Right, You've got a twenty three state footprint in fiber,
Speaker 1: and I know one of your big ambitions is to
Speaker 1: make a T and T the best broadband provider in
Speaker 1: the United States. The competitive landscape is changing here and fast.
Speaker 1: Are you looking to buy or build beyond what you've
Speaker 1: done so far? You know, it's it's a really good question. Emily.
Speaker 1: I think they'll put this in perspective. From January of
Speaker 1: this year to this today, as we've reported, we've grown
Speaker 1: over two million connected locations on our fiber network and
Speaker 1: we're now at eighteen million connected locations. We are the
Speaker 1: scaled fiber provider in the United States, and we are
Speaker 1: building at a rate faster than anybody else. It's deploying fiber.
Speaker 1: Our organic growth is what's powering this business right now.
Speaker 1: Our ability to muscle supply chain, the resources and the
Speaker 1: capabilities to go out and build more infrastructure, and that
Speaker 1: is really the foundation of what we need to do
Speaker 1: moving forward. There are other people that deploy fiber in
Speaker 1: the United States, frankly, most of them are subscale compared
Speaker 1: to us. And when we're having this success for having
Speaker 1: doing the things that we do well, engineering grade fiber networks,
Speaker 1: learning how to penetrate them quickly, working through this on
Speaker 1: an organic basis, frankly, is is probably the right play
Speaker 1: for us right now. Now. A T and T got
Speaker 1: out of the media business with a big sale of
Speaker 1: Time Warner, and since then we've seen streaming giants media
Speaker 1: companies really struggle. What did you and A T and
Speaker 1: T ce that for example, Netflix didn't. Oh. I first
Speaker 1: of all, I think Netflix is you know, to be
Speaker 1: praised and admired for what they've managed to create as
Speaker 1: a business. I mean, they've been a very successful company,
Speaker 1: and they have built a new model that will be
Speaker 1: the dominant model of distributing entertainment content and and all
Speaker 1: consumption of video content for a decade to come. And
Speaker 1: what I would tell you that I think we viewed
Speaker 1: as sibly being a little bit different and a little
Speaker 1: more quickly is many times I said I felt it
Speaker 1: was really important that these streaming platforms have a two
Speaker 1: sided model, both subscription and advertising. And you know clearly
Speaker 1: reports are and the company itself has said Netflix is
Speaker 1: going to actually start to introduce advertising in their platform.
Speaker 1: I frankly think that will be good for them over
Speaker 1: the long haul. It allows them to start thinking about
Speaker 1: other types of content, like sports content that really does
Speaker 1: need to be alongside advertising in order for it to
Speaker 1: be a viable and economic approach. But they had a
Speaker 1: great valuation and it's been tempered a bit. Um. My
Speaker 1: point of view on streaming is is not that it's
Speaker 1: a bad thing. I think what I would like to
Speaker 1: see if I were in David zaslav shoes is that
Speaker 1: he moves a little bit closer to their valuation, and
Speaker 1: maybe they kind of came down to a more realistic valuation,
Speaker 1: and all things considered, I think it's going to be
Speaker 1: a strong and viable business moving forward. Is ultimately the
Speaker 1: early innings of the shakeout and we get into a
Speaker 1: steady state and I think David and Warner Brothers Discoveries
Speaker 1: well positioned for that. And do you think that the
Speaker 1: shutting down of CNN Plus was was the right move
Speaker 1: based on what you knew? I don't know. I wasn't
Speaker 1: in the room at the time. You know, David has
Speaker 1: after the transaction closed a lot of different you know, considerations,
Speaker 1: his own strategies as to where he wants to take
Speaker 1: the business, his own decisions on how he wants to
Speaker 1: allocate capital. I'm not party to those conversations. I don't
Speaker 1: know what they were, and I'm sure within that context
Speaker 1: he made a decision that he felt was best for
Speaker 1: the business. So one last question, John, to wrap this up.
Speaker 1: You know, we also saw your business segment a little
Speaker 1: week and I'm wondering what other companies should be looking
Speaker 1: at for signals here in your report our business is
Speaker 1: pulling back more broadly on spending and should that be
Speaker 1: a warning sign about the economy? You know, I don't
Speaker 1: think so, Emily. I think in our circumstance, you know,
Speaker 1: we have a very unique position and in the business market,
Speaker 1: we are the largest provider of services the large complex organizations,
Speaker 1: and that's an envied position to have. But they're also
Speaker 1: the businesses that are going through the fastest rate of
Speaker 1: technology evolution, and they are orienting themselves away from traditional
Speaker 1: networks that used to be operated and managed exclusively by
Speaker 1: companies like us, to software defined networking, which ultimately shift
Speaker 1: some of the capabilities either to the company itself or
Speaker 1: into a hyper scale or environment. And that changes our
Speaker 1: role in those particular companies, and that's why as a business,
Speaker 1: we're pivoting away from our strong position on the enterprise side.
Speaker 1: Will continue to service those customers and meet their needs
Speaker 1: in the way we can match them, but we we
Speaker 1: really want to strengthen our position in the mid market,
Speaker 1: and our brand is very well positioned to do that.
Speaker 1: They're the types of customers you still need our expertise
Speaker 1: and our owned and operated infrastructure to run their companies,
Speaker 1: and we're under penetrated there, and we have an opportunity
Speaker 1: for a great amount of growth as a result of that.
Speaker 1: So I don't think it's a weakness in business. In fact,
Speaker 1: I think networking is getting more and more important, both
Speaker 1: mobile and fix for all business customers. It's more of
Speaker 1: a pivot on technology and how we're positioning our company
Speaker 1: to line up against that. Interesting. All right, A T
Speaker 1: and T CEO, John staying key, John, great to have
Speaker 1: you here on the show. Thank you for taking the time,
Speaker 1: Thanks for having me and Emily. All Right, coming up
Speaker 1: a probe into one of Tesla's highest ranking executives and
Speaker 1: a number of employees already fired this according to Bloomberg sources,
Speaker 1: we'll talk about their role in a so called secret project,
Speaker 1: a scoop from our own ed Ludlow. Next, this is Bloomberg.
Speaker 1: One of you La Musk's top lieutenant, the executive that
Speaker 1: runs Testla's Texas factory, is now the focus of an
Speaker 1: internal investor stigation. According to Bloomberg sources, Tesla is looking
Speaker 1: into omed off Shar for his role in a plan
Speaker 1: to purchase hard to get supplies that warrant for Tesla.
Speaker 1: Bloomberg's Ludlow broke the story, He joins us. Now, so ed,
Speaker 1: who is Omed Afshar and what did he do? Yes? So,
Speaker 1: Omed af Sha is Elon Musk's right hand man. He
Speaker 1: used to be executive assistant, then he got promoted to
Speaker 1: be the director for Projects of the Office of the CEO,
Speaker 1: and more recently he's basically overseen the construction of the
Speaker 1: Austin plant Giga Texas and now production that's taking place there.
Speaker 1: And according to sources, internally the finance group and Legal
Speaker 1: Audit are looking at a procurement order from earlier this
Speaker 1: year for some glass. They want to know what the
Speaker 1: glass was going to be used for and if Omed
Speaker 1: Afsha knew about it or not um And ultimately, according
Speaker 1: to sources, one of the questions being asked was is
Speaker 1: this glass going to be used by Elon Musk for
Speaker 1: a personal project? Personal use in other words, not for
Speaker 1: Tesla's own construction or a building associated with Tesla. So
Speaker 1: what are we thinking here? Was this for an outside
Speaker 1: quote unquote secret project or a secret project for the CEO? Yes,
Speaker 1: so we don't know. Sources tell us that omedaf Shar
Speaker 1: instructed some Tesla employees to generate this procurement order this
Speaker 1: PO and told them literally that it was for a
Speaker 1: secret project. Beyond that, we don't have much more information.
Speaker 1: We know that the PO has generated much earlier this year,
Speaker 1: um and that the consideration of the suspicion around it
Speaker 1: has been in place for a number of months, through
Speaker 1: first Tesla's finance and internal audit team and more recently
Speaker 1: their head of legal David soul who was kind of
Speaker 1: looking into this and also looking into Ohmed's involvement. A
Speaker 1: number of other employees, according to your reporting, I've already
Speaker 1: lost their jobs over this. Is Omed off Shar You know,
Speaker 1: is he going to is he going to keeping at
Speaker 1: the company? Is he going to go on a leave
Speaker 1: of absence? So what we've been told according to sources
Speaker 1: is that people have been fired in connection to this,
Speaker 1: and we're told by sources that the consideration right now
Speaker 1: is that om Dasha will be put on a leave
Speaker 1: of absence. We don't have any timing of when that
Speaker 1: will take place. We of course asked elon Mask Tesla
Speaker 1: representatives for comment about this, and we haven't heard anything back.
Speaker 1: So we don't, frankly know what Tesla's position is on
Speaker 1: all of this, or you know, the latest that's happening
Speaker 1: inside as of this afternoon. But that's what our reporting is. Okay,
Speaker 1: I'd lead though big scoop from you. Thank you, will
Speaker 1: continue to follow your reporting. Welcome back to lovone. We're
Speaker 1: technology and emily changing in San Francisco. This week, Apple
Speaker 1: published a sixty page report detailing us for into the
Speaker 1: health tech business. This well, Amazon has been building its
Speaker 1: own healthcare presence over the last few years. Now, Amazon's
Speaker 1: latest salvo buying a primary care provider, One Medical, and
Speaker 1: in all cash deal value at three point four nine
Speaker 1: billion dollars. One Medical operates one and eighty two medical
Speaker 1: offices in twenty markets across the United States are Bloomberg
Speaker 1: Deal's reporter Michelle Davis, joins us now for more. So
Speaker 1: obviously we've known about Amazon's healthcare ambitions. This is an
Speaker 1: interesting turn, though. Why is Amazon buying One Medical? Yeah,
Speaker 1: so this is Amazon's third biggest deal after Whole Foods
Speaker 1: and MGM, and uh. With this deal, Amazon gets you know,
Speaker 1: access to One Medicals, hundreds of thousands of customers, it's
Speaker 1: relationships with employers, the app, and uh, this is Amazon
Speaker 1: really an anti Jazzy You know, Amazon's new CEO really
Speaker 1: trying to make its mark and and really pushing into
Speaker 1: healthcare in a big way. They had bought a pill pack,
Speaker 1: you know, they were offering some virtual care through Amazon Care,
Speaker 1: but this is them really getting deep into the primary
Speaker 1: care market. Um. The deal took some people by surprise,
Speaker 1: but I think, you know, knowing how good Amazon is
Speaker 1: with like manipulating data and analyzing it, um, it'll be
Speaker 1: really interesting to see what they do with One Medical.
Speaker 1: You know, how they use the Whole Foods channel, if
Speaker 1: they you know, combine some of those things to offer
Speaker 1: I don't know, memberships or like services where you could
Speaker 1: get i don't know, blood pressure checked at Whole Foods
Speaker 1: or something like that. The way that you could deliver
Speaker 1: or return on Amazon package at Whole Foods. Interesting. Wow,
Speaker 1: never thought of that, which brings me to my next
Speaker 1: question for One Medical customers, what's going to change? So
Speaker 1: there aren't that many details that we know so far
Speaker 1: about what Amazon plans to do with One Medical. We
Speaker 1: do know that One Medical had been burning cash pretty substantially.
Speaker 1: It's stock, as you probably know, you know, has been
Speaker 1: has been on a roller coaster over the past few
Speaker 1: years since the I pod, And so what this will
Speaker 1: do is help it expand a little more quickly UM
Speaker 1: and uh, you know, probably push into new markets. But
Speaker 1: beyond that, we're still waiting on more details from Amazon
Speaker 1: about what it plans to do. Meantime, you've got Apple
Speaker 1: touting its own health tech offerings. Is this is space
Speaker 1: an area where you expect to see M and A
Speaker 1: potentially pick up. Definitely, there's been a huge trend of
Speaker 1: you know, healthcare companies and tech companies converging. Last year
Speaker 1: Loan we saw two mega deals with cern or Oracle
Speaker 1: buying cern Or, a health records company, Microsoft buying Nuanced,
Speaker 1: a data company. A lot of these deals are about
Speaker 1: UM access to data UM and so you know, and
Speaker 1: Google has also signaled ambitions into healthcare. It obviously has
Speaker 1: devices I do think and and you know, the people
Speaker 1: I've talked to say that this is going to continue,
Speaker 1: especially now that Amazon has made this big push. It's
Speaker 1: a signal to the other tech players to you know,
Speaker 1: do something to to punch back. All right, Michelle Davis,
Speaker 1: will continue to watch your reporting on this. Thank you.
Speaker 1: I want to stay with this story. Now. I'm bringing
Speaker 1: Christina far principal investor at Omer's Ventures and a former
Speaker 1: health reporter who had been reporting on Amazon's ambitions and
Speaker 1: healthcare for years. Christy, A lot of people didn't believe
Speaker 1: you that Amazon was really going to go deep here,
Speaker 1: and here they are. What do you make of One
Speaker 1: Medical being added to the portfolio? Oh, it's just absolutely
Speaker 1: massive news, Emily, and it's really a long time coming.
Speaker 1: I first started reporting on Amazon having ambitions in the
Speaker 1: space back in UM pharmacy was really the first leg
Speaker 1: of the stool. And then you saw them tackling telemedicine
Speaker 1: with Amazon Care, and now they've moved into primary care
Speaker 1: with One Medical. UM not not only primary care in
Speaker 1: the sense of consumer cash pay primary care, but One
Speaker 1: Medical has networks and relationships with lots of employers across
Speaker 1: the country. They have their own medical record that they
Speaker 1: built from the ground up, so they also have healthcare
Speaker 1: software that will be amazing for Amazon to access and
Speaker 1: no doubt kind of part of the reasoning behind this deal. UM. So,
Speaker 1: I think where they go from here, they're really the
Speaker 1: sky is the limit and I could see them integrating
Speaker 1: all of these offerings into something very powerful. What exactly
Speaker 1: does that look like to you? I mean, are are
Speaker 1: we going to be getting our blood pressure checked at
Speaker 1: Whole Foods? Do patients even want that? I think all
Speaker 1: of these things are absolute, you possible. I mean, what
Speaker 1: they've fundamentally recognized here is that the future of healthcare
Speaker 1: is hybrid. It's not just tell the medicine. It's not
Speaker 1: just virtual, and it's not brick and mortar either. It's
Speaker 1: something in between, because you can't really do everything from
Speaker 1: home as much as we would love to. Um, But
Speaker 1: eventually you will need to go somewhere to get your
Speaker 1: blood pressure checked if you need it. Um So, yes,
Speaker 1: that's a possibility. Blood pressure checks at Whole Foods? Why not?
Speaker 1: And you know, while we're at it, I could absolutely
Speaker 1: see Whole Foods expanding deeper into pharmacy as well. Um So.
Speaker 1: I just that's just one of the kind of many
Speaker 1: directions that they could go with this with this buy
Speaker 1: up um, I think at the end of the day,
Speaker 1: how I see it is fundamentally about Amazon's obsession with
Speaker 1: the customer. And they've been saying this four decades now,
Speaker 1: you know, first with books, and then they moved into
Speaker 1: other areas of retail and so this this just seems
Speaker 1: so obvious to me because it was really the last
Speaker 1: piece of their retail empire that they hadn't conquered healthcare um,
Speaker 1: so now you know they're they're signal to the industry
Speaker 1: that this is something that they are moving into and
Speaker 1: they're deadly serious about it. There have been some compar
Speaker 1: Harrison's to Kaiser here. Do you think that Amazon could
Speaker 1: could potentially be a competitor to Kaiser? It's a great question.
Speaker 1: I think of Kaiser more in the sense of, you know,
Speaker 1: imagine if Kaiser was starting today, what would they build?
Speaker 1: And that's really kind of the question that Amazon has
Speaker 1: in front of them. They wanted to be one of
Speaker 1: the most innovative healthcare care delivery companies. What would they do?
Speaker 1: And I think that involves having it all, having you know,
Speaker 1: the pharmacy piece, the lab and diagnostic piece, having that
Speaker 1: that primary care piece as well, and then I think
Speaker 1: to you about what they could do with the referral
Speaker 1: networks that they're building with with health systems. How do
Speaker 1: you send patients to the right care at the right time.
Speaker 1: And that really is the promise here, Emily that that
Speaker 1: for years the space has been talking about building a
Speaker 1: true front door to healthcare. You're a patient, you need help.
Speaker 1: What do you do next? How do you access care
Speaker 1: at the right price? And I think that's really what
Speaker 1: Amazon could do, and they could be the first player
Speaker 1: to do it. Well, it hasn't all got and write Amazon.
Speaker 1: For example, that JP Morgan healthcare venture with Berkshire half
Speaker 1: of the way collapsed, it didn't last very long. Meantime,
Speaker 1: you've got Apple pushing into this business. You know, how
Speaker 1: do you see Amazon differentiating itself from let's say an Apple.
Speaker 1: I mean, just yesterday we were asking if Apple might
Speaker 1: buy Peloton, could that be um something of interest to
Speaker 1: Amazon as well? I think Peloton could be of interest
Speaker 1: to both companies. Um. The difference I see with Amazon though,
Speaker 1: is they could really do something in actual healthcare services
Speaker 1: and delivery because they're not afraid of low margin businesses.
Speaker 1: When you look at some of the big tech competitors,
Speaker 1: they're used to kind of sas like software margins. And
Speaker 1: with Apple, it's it's a hardware play um at its core,
Speaker 1: So it doesn't make as much sense to be in
Speaker 1: the actual provision of healthcare that it might for Amazon,
Speaker 1: which is really a supply chain and logistics company. UM. So,
Speaker 1: I think Amazon really has the biggest promise here of
Speaker 1: all of the big tech companies to to do something
Speaker 1: very real. Um, and then you mentioned Haven, which is
Speaker 1: a great point, and that that was not a successful ventia.
Speaker 1: They teamed up with two other big employees that try
Speaker 1: to do something in that in that space. But to me,
Speaker 1: you know, when I was back at the NBC and
Speaker 1: this roll was unveiled, it was kind of felt like
Speaker 1: a little bit of a distraction that maybe the real,
Speaker 1: the real healthcare push would happen behind the scenes. And
Speaker 1: I think that's exactly what's happened. All right, Christina, far
Speaker 1: really interesting to hear perspective here. We'll continue to watch
Speaker 1: where this goes. Investor at Omer's Ventures, thank you for
Speaker 1: joining us. All right, coming up the energy crisis and
Speaker 1: bitcoin mining. We're going to talk to a mining giant
Speaker 1: or scientific about why it had to dump most of
Speaker 1: its bitcoin holdings last month. That's next. This is Bloomberg.
Speaker 1: It's time now for our crypto report, and Bloomberg has
Speaker 1: learned US authorities have arrested a former coin based product
Speaker 1: manager in an alleged insider trading scheme. People familiar with
Speaker 1: the matter say, is Sean Wha He leaked insider information
Speaker 1: to help his brother and a friend by tokens just
Speaker 1: before they were listed on the crypto exchange. I want
Speaker 1: to bring in our crypto contributor Snale Bostic for more
Speaker 1: details on this story, Shanali. What happened? Yeah, this was
Speaker 1: just a massive bloomberg scoop here, Emily, and you have
Speaker 1: both federal prosecutors as well as the SEC taking a
Speaker 1: look at what happened here at coin base with an
Speaker 1: employee who helped oversee listings allegedly tipping off his friend
Speaker 1: and brother. Here about listings, remember when listings of tokens happened,
Speaker 1: that intends to improve liquidity of those tokens and therefore
Speaker 1: is quite material here. I want to point out this
Speaker 1: quote here from the Damien Williams of this um of
Speaker 1: the Manhattan US Attorney's Office, and he's really saying that
Speaker 1: this is a further reminder here that Web three in
Speaker 1: particular here is not a total law free zone. So
Speaker 1: in addition to the SEC here, you now have federal
Speaker 1: prosecutors taking a look at insider trading against the first
Speaker 1: time in crypto currency. So certainly a landmark case that
Speaker 1: affected a coin based employee and coin base itself has
Speaker 1: taken a look at the issue themselves, fraud as fraud
Speaker 1: as fraud there from the Manhattan US attorney. Okay, coin
Speaker 1: Base has been under pressure already because of this crypto route, which,
Speaker 1: by the way, where are we in the markets today?
Speaker 1: Things have actually been looking green, They have been looking
Speaker 1: in green. We are flipping to the green here again
Speaker 1: after a couple of days of weakness. And remember this
Speaker 1: is a month where you've seen crypto actually jump once
Speaker 1: again after declining ending the month uh, ending last month
Speaker 1: less than nineteen thousand dollars in the red. Really, we're
Speaker 1: really had seen a really deep sell off in crypto winter,
Speaker 1: but you are back to seeing gains now back above
Speaker 1: twenty three k. Remember it started last month above thirty k,
Speaker 1: about thirty one k, So we have a while to
Speaker 1: go before recouping all of last month's games, but we
Speaker 1: are indeed to your point climbing back. All right, Shanali,
Speaker 1: thank you, hang on. I want you to join us
Speaker 1: for this next conversation because we're going to talk a
Speaker 1: little bit more about this and the impact of the
Speaker 1: crypto winter on crypto mining. Mike Lovett joining us now.
Speaker 1: He's the CEO and co founder of course, Scientific, which
Speaker 1: is one of the largest publicly traded blockchain data center
Speaker 1: providers and miners of digital assets in North America. Mike,
Speaker 1: thank you so much for joining us. So, first of all,
Speaker 1: what's your take on what's going on in the crypto
Speaker 1: markets right now? Obviously we've seen a lot of red,
Speaker 1: We're seeing a bit of a turnaround. Now. Nobody knows
Speaker 1: if this is a long term, sustainable rally or if
Speaker 1: this is just a blip. Um, I know it's hot
Speaker 1: where you are, but it's certainly feeling cold. If you're
Speaker 1: an investor, what's your take? Well, first, thank you for
Speaker 1: having me, and you're right, it is hot where I am.
Speaker 1: It's about a hundred two degrees here in Austin, Texas.
Speaker 1: Of course, that heat wave is running across the entire South. Um,
Speaker 1: what what I think I would say we really are
Speaker 1: seeing is first of all, a period in our industry
Speaker 1: that happens with many growing and mason industries where in
Speaker 1: fact rationalization and some cleansing occurs. And when you take
Speaker 1: market pressure, macroeconomic pressure, pressure on technology, and the pressure
Speaker 1: in our industries, what you're seeing is a tumultuous period
Speaker 1: of time. That said, and Shenali referenced it. We've seen
Speaker 1: bitcoin come back a bit, and we're very happy to
Speaker 1: see some stability in the pricing of digital assets. Now
Speaker 1: we've seen bitcoin mining companies, which you know they're normally
Speaker 1: big holders, uh, selling their assets. You just dumped a
Speaker 1: huge portion of your bitcoin a month ago. Why and
Speaker 1: do you wish you didn't at this point? Uh? No,
Speaker 1: I I can't say that I regret what we have done. Um,
Speaker 1: but we produce a lot of bitcoin every month or
Speaker 1: currently running at a pace of cooin a month, and
Speaker 1: expect for that to grow considerably over the course of
Speaker 1: this year as we continue to invest in both our
Speaker 1: servers and our infrastructure. There are a couple of considerations
Speaker 1: that are axiomatic when you're running a production business. One is,
Speaker 1: you make sure you have to make sure you've got
Speaker 1: enough capital or cash to pay your bills. Wind and
Speaker 1: we produce bitcoin, but our our obligations are in dollars,
Speaker 1: so we need to make sure we generate enough dollars
Speaker 1: to pay those obligations. Second is, in these distressed or
Speaker 1: tumultuous environments, Uh, liquidity is very important. UH. If you've
Speaker 1: got liquidity, One, you both make sure that your business
Speaker 1: is built to survive. And second, it puts you in
Speaker 1: a position to take advantage of opportunities that arise in
Speaker 1: a distressed marketplace. And so we made a strategic decision
Speaker 1: that it would behoove us to become much more liquid
Speaker 1: on our balance sheet to give us a lot more
Speaker 1: flexibility to take advantage of the situation we see in
Speaker 1: the coming months. Um. Yeah, and the coming months are
Speaker 1: some other issues too, and that is indeed, you guys
Speaker 1: were talking about it before, and it's the weather and
Speaker 1: so the heat wave that you're seeing. How is this
Speaker 1: going to continually impact operations and what can you do
Speaker 1: to get around it? Well, you're right, it is hot.
Speaker 1: It's very hot across the south. It's very hot where
Speaker 1: I live in Austin, Texas. And as as you've probably
Speaker 1: discussed with others before me, one of the beauties of
Speaker 1: our industry is that our production can can be uh
Speaker 1: can be adapted to demand response, and so in situations
Speaker 1: like this, we quite often curtail or down power machines
Speaker 1: to make sure that we're providing the support to the
Speaker 1: grid that's necessary so that consumers and others aren't acted.
Speaker 1: As we sit here in Texas at this very moment,
Speaker 1: we have in fact curtailed our operations for the afternoon
Speaker 1: at the request of air Cut that said, they're roughly
Speaker 1: five thousand excess or reserve megal on hours available of
Speaker 1: five thousand, two hundred to be exact, mega watts available
Speaker 1: right now for the Texas grid. By downpowering, what we
Speaker 1: as a mining industry have done is provided more cushion
Speaker 1: to the system here in Texas. Mm hmm. And I
Speaker 1: also want to talk about liquidity because you see this
Speaker 1: also issue affect others as well. You have Tesla saying,
Speaker 1: for example, that they're selling shouldn't be seen as a
Speaker 1: verdict on bitcoin, but wasn't a concern about liquidity of
Speaker 1: the company overall. But this is so soon after Elon
Speaker 1: Musk also said that Tesla had diamond hands. So how
Speaker 1: do you reconcile both things. That's such a large believer
Speaker 1: and a corporate buyer of bitcoin. Really it could now
Speaker 1: have to sell because of the broader market issues. Well,
Speaker 1: it's although I don't know Tesla's finances, intimately, I do
Speaker 1: happen to own one of their cars, and my son
Speaker 1: was smart at me. And it happens though in their stock.
Speaker 1: But that said, I think it's a smart business move
Speaker 1: to get more liquid in an environment like this. As
Speaker 1: I understand it, both Ellen personally as well as the
Speaker 1: company continue to have considerable holdings. But as I said,
Speaker 1: we decided that it made good business sense to get
Speaker 1: more liquid, and it seems that Tesla decided to do
Speaker 1: the same. These markets have been moving very quickly, the
Speaker 1: conditions have been very uncertain, a lot of volatility, and
Speaker 1: so I understand why they would decide to create a
Speaker 1: little bit more cash on their balanchie All right, Mike Lovett,
Speaker 1: CEO and co founder of Core Scientific and our own
Speaker 1: Chinali boss. Really interesting, Mike, thank you for joining us.
Speaker 1: Amazon is starting to deliver with Rivans, electric vans. Amazon
Speaker 1: has a major investment in the electric car maker and
Speaker 1: plans to use at least a hundred thousand of its
Speaker 1: vans in the United States are at Bludlow sat down
Speaker 1: with Amazon's vice president of transportation to talk about the partnership.
Speaker 1: By the end of the year, we're gonna have thousands
Speaker 1: of electric vehicles delivering to millions of customers in over
Speaker 1: a hundred major US Now, our focus really is an unsustainability.
Speaker 1: Now we bogner with Rivian because we really believe that
Speaker 1: this shed and our mission around decoganization, and we thought
Speaker 1: together we could do something that would reinvent, reimagine what
Speaker 1: a sustainable fleet could look like. Meantime, Rivian CEO R. J.
Speaker 1: Scarne also spoke to add about the rollout because our
Speaker 1: production is continued to ramp and we're building more and
Speaker 1: more vans. Simultaneous to that, Amazon's ramping the number of
Speaker 1: their centers that can accept and gjest all these vans.
Speaker 1: So that's everything from charging infrastructure to making sure the
Speaker 1: drivers already. So it's a really close partnership as we
Speaker 1: plan out. You know what it looks like when you
Speaker 1: go from hundreds to thousands and tens of thousands to
Speaker 1: you know, a hundred thousand bands within their system. How
Speaker 1: is the ramp of riv and Prime Bang going. Because
Speaker 1: at the same time you're ramping all one T introducing
Speaker 1: all one S. Is the van experiencing the same supply
Speaker 1: chain issues that tema vehicles have. The demand and the
Speaker 1: consumer vehicle are are similar in that they have the
Speaker 1: same core technology backbones. So right, the electronic stack, our
Speaker 1: network architecture, elements of the propulsion platform, but obviously the
Speaker 1: rest of its very different the body of the interior,
Speaker 1: so in some of the areas where we're constrained, like semiconductors,
Speaker 1: that has been a challenge over the last six months.
Speaker 1: But with regards to the way the vehicles are produced
Speaker 1: in the plant, we have two separate lines, so it
Speaker 1: almost because has two plants housed on the same campus.
Speaker 1: And so the the R one line produces the truck
Speaker 1: and and now our sub um and the commercial vehicle
Speaker 1: line produces this the seven cubic foot version of it,
Speaker 1: and then there's also a narrower and shorter one, this
Speaker 1: we call the So launching four different vehicles on two
Speaker 1: different lines over the last six months is has certainly
Speaker 1: been challenging with this, uh the supply chain backdrop of course,
Speaker 1: with the pandemic backdrop, but the teams have really come
Speaker 1: together to deliver on that. We've been hyper focused on
Speaker 1: ramp uh you know, living in the plant so to speak,
Speaker 1: to get the production RAMPDUP and we're we're excited about
Speaker 1: the back half of this year. Amazon is a glible
Speaker 1: company and they operate in jurisdictions outside of the US.
Speaker 1: Do you see a future where rivan manufacturers bands in
Speaker 1: the markets where Amazon would hope to deploy them. Yea.
Speaker 1: To start, we have our production facility here in UH
Speaker 1: in Illinois, now far from here, no file, but as
Speaker 1: our commercial business scales, of course, will have to ultimately
Speaker 1: have multiple plants producing commercial dands and to really go
Speaker 1: into those other major markets, having localized or regionally localized
Speaker 1: production is key. So as you think about Europe as
Speaker 1: a market in the long term, will certainly have to
Speaker 1: purt production. Art Bloomberg has reported that Rivian is considering
Speaker 1: around of layoffs or reduction in force, that those roles
Speaker 1: will be outside of manufacturing, that the folks building the
Speaker 1: actual stuff. Have you made any progress on that and
Speaker 1: what is the kind of thinking that. Yeah, that One
Speaker 1: of the things we've talked about even in some of
Speaker 1: our earnings calls, is the need for us to be
Speaker 1: hyper focused on the right set of objectives given the
Speaker 1: economic climate that we're in. So that's ramping our R
Speaker 1: one t R R one s our commercial vehicles in
Speaker 1: our normal facility, that's developing and launching and ramping O
Speaker 1: our two platform. That's building out all of our go
Speaker 1: to market parts of the business. UH and importantly, that's
Speaker 1: also driving profitability into the business or driving a level
Speaker 1: of cost efficiency. And yet so we've gone through the
Speaker 1: rationalization of all the different things we're doing and has
Speaker 1: created operatornies for us to more efficiently structure parts of
Speaker 1: the team, and we're working through that process. These are
Speaker 1: some of the hardest decisions, you know, a leader has
Speaker 1: to take in in running a business, and certainly we're
Speaker 1: trying to be as intentional and as thoughtful in terms
Speaker 1: of what that means for the business, what that means
Speaker 1: for individuals as we work through that process. But as
Speaker 1: you said, this doesn't impact our manufacturing teams. This is
Speaker 1: really more heavily in some or other aspects of the business.
Speaker 1: We're ving CEO R J. Scridge there with our own
Speaker 1: ed Ludlow. You can catch more of that interview, of
Speaker 1: course at Bloomberg dot com. And that does it for
Speaker 1: this edition of Bloomberg Technology Friday. We're gonna be talking
Speaker 1: everything Crypto bit Y CEO Matt Hogan will be joining us,
Speaker 1: including a discussion about their potential lawsuit against the SEC.
Speaker 1: And don't forget to check out our podcast that's always
Speaker 1: wherever you get your podcast. I'm Emily chanting in San Francisco.
Speaker 1: This is Bloomberg,