Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York. This is Bloomberg Technology. Coming up.
Speaker 3: Apple hit with analyst downgrades as tariff.
Speaker 2: And growth warriors they increase.
Speaker 3: Will break down the company's latest earnings plus roadblocks.
Speaker 4: Daily users jump twenty six percent mid efforts to bring
Speaker 4: in new players. We had the CEO later this.
Speaker 3: Hour and a conversation with the US Energy Secretary after
Speaker 3: one hundred days of Trump policies.
Speaker 2: But first we check in on these markets. Look, we've
Speaker 2: got enough of gains.
Speaker 3: We are bouncing back from our April cell off. We're
Speaker 3: up three point two percent over the last five training days.
Speaker 3: We add a cool almost five hundred billion dollars in
Speaker 3: terms of market cap to this key tech benchmark. And
Speaker 3: once again it's the second week of gains. We are
Speaker 3: seeing this risk on attitude return with the macro data,
Speaker 3: those jobs ratings overall ed, but also maybe a sign
Speaker 3: of thuring in China US relations.
Speaker 2: What have you got under the herd?
Speaker 4: Right in that upward pressure at the next level interesting
Speaker 4: because there's downward pressure in the biggest names and technology.
Speaker 4: Apple is off by almost four percent. Very simply, it
Speaker 4: is a tariff stories earnings. There was weakness in China
Speaker 4: in the quarter, gone outperformance on iPhone, but Tim Cook
Speaker 4: told us there is going to be a nine hundred
Speaker 4: million dollar impact from tariffs in the current period. What
Speaker 4: does that even mean in the context of what Apple
Speaker 4: does around the world. Amazon forecasting for the current period
Speaker 4: operating income that's billions of dollars below what the street
Speaker 4: for uncertainty in tariffs, It's a very clear story in
Speaker 4: both socks arounder pressure.
Speaker 3: They are and we're going to have so much great
Speaker 3: analysis on both individual names as a whole. We go
Speaker 3: to Blue It's round for Stellca and Look earnings. Thus
Speaker 3: far the big megacap four we had this week. Microsoft
Speaker 3: Meta managed to bounce through these trade headwinds, but Apple
Speaker 3: and Amazon, with tangible goods do not.
Speaker 5: Yeah, thanks for having me so, I'd say overall, this
Speaker 5: earning season has been pretty positive for big tech. At
Speaker 5: least it was until yesterday afternoon. Apple in particular, people
Speaker 5: were already worried how much is tariff going to impact them?
Speaker 5: What is this going to mean for their growth, which
Speaker 5: was already sort of stalled relative to other big tech companies.
Speaker 5: What is this going to mean for its multiple which
Speaker 5: was already elevated relative to other big tech companies.
Speaker 4: And it really I.
Speaker 5: Don't think this was exactly the worst case scenario, but
Speaker 5: certainly it was a disappointment, and it just underlines a
Speaker 5: lot of the concerns that people already had about the stock.
Speaker 4: Let's focus on Apple in the context of the stock.
Speaker 4: How has the cell side reacted? What do we see
Speaker 4: in terms of downgrades on the stock from the street.
Speaker 5: Well, we had at least two downgrades this morning. One
Speaker 5: of them is a cut to a cell rating, which
Speaker 5: is pretty rare for Apple. There's a lot of concern
Speaker 5: that maybe we haven't yet fully seen the impact of tariffs.
Speaker 5: Maybe this is going to be something that continues to
Speaker 5: build over the rest of the year. That was Jeffrey's
Speaker 5: downgrading the stock to an underperformed rating. We also had
Speaker 5: Rosenblatt which cut the stock to a neutral rating, warning
Speaker 5: just in general about you know, what is it going
Speaker 5: to take for a real inflection of growth? It says
Speaker 5: anai iPhone sort of supercycle upgrade is needed, and it
Speaker 5: says that it is becoming less likely as time goes.
Speaker 4: By the most Rhyan for Selica, thank you very much,
Speaker 4: stay with Apple earnings and bring in the Vila po
Speaker 4: power see a research director at IDC. I want to
Speaker 4: think about this in terms of all of the consumer
Speaker 4: electronics that Apple has built and moves around the world.
Speaker 4: If the company tells us that the impact of tariffs
Speaker 4: is nine hundred million dollars in the current period, what
Speaker 4: does that really mean? Is that significant? Is it a
Speaker 4: small hit? And how do you model for it? Yeah?
Speaker 6: Now that's a great question. Thanks for having me. I
Speaker 6: think you know, if you look in for Apple, that
Speaker 6: number of the grand scheme of things isn't much, right,
Speaker 6: It's still less than two percent or h of their
Speaker 6: of their revenue, right. But I think a bigger question
Speaker 6: will be how will because they could still push that
Speaker 6: in with other like their revenue from coming from other
Speaker 6: product lines and for profitability from other places. But I
Speaker 6: think the bigger question for will be what will Apple
Speaker 6: do with prices? And that's what a question that Tim
Speaker 6: Cook didn't address, right? Will they increase prices on their devices?
Speaker 6: And that's traditionally something Apple hasn't done historically. They've never
Speaker 6: raised prices on their products mid cycle. So I'm, you know,
Speaker 6: very curious and I think everyone's really looking to see
Speaker 6: how Apple does that. But the but the other challenge,
Speaker 6: you know, is how they are going to navigate with
Speaker 6: their supply chain. And we've already seen that, right Apple's
Speaker 6: already demonstrated incredible flexibility in moving their supply chain already
Speaker 6: in q On ramping it up significantly, and they confirmed
Speaker 6: that right. There were earlier last week about them wrapping
Speaker 6: it up very fast from moving from India, but Tim
Speaker 6: Cook just confirmed that they moved about half of their
Speaker 6: nebula of the West market from India. Y.
Speaker 3: Yeah, can I jump in because you make such a
Speaker 3: clear case in the supply chain and the way in
Speaker 3: which that is being navigated.
Speaker 2: But we're looking right now at the demand side.
Speaker 3: In China there was weakness once again despite some of
Speaker 3: those subsidies. How did Tim Cook manage to deflect what
Speaker 3: seems to be once again just a story they can't
Speaker 3: turn around?
Speaker 6: You know, China has been an area that they are
Speaker 6: you know, recently have been challenging. And that's what I'm saying.
Speaker 2: Before even the terrist story.
Speaker 6: They've been these This weakness in China has been something
Speaker 6: that they've been dealing with and they will continue to
Speaker 6: deal We were already you know, baking this in our forecast,
Speaker 6: but this year the challenge from Huawe continues to grow.
Speaker 6: But at the same time there they are continued to
Speaker 6: be the leader in China in terms of the premium segment.
Speaker 6: They still have seventy percent share. But the silver lining
Speaker 6: for Apple is still not maybe not be in China
Speaker 6: this year, but they're still going in emerging markets. They
Speaker 6: are probably going to increasingly have more of their models
Speaker 6: move over to their you know, in house modem, which
Speaker 6: will help their profitability.
Speaker 2: So there are still.
Speaker 6: Some silver lining in again as they scale their production
Speaker 6: in India, that will really help them deal with the
Speaker 6: teriff challenges as well. And hopefully once we hear it
Speaker 6: more you know in WWBC in terms of the announcements.
Speaker 4: With before we hear about it WWDC right like, because
Speaker 4: Tim Cook did not speak about a lot of this
Speaker 4: stuff on the call. You make a good point though.
Speaker 4: The other news headline is that Apple is going to
Speaker 4: source starting right now, apparently millions more chips from the
Speaker 4: TSMC fab in Arizona. How does that impact the cost
Speaker 4: of production of a handset and how do you model
Speaker 4: for it being taken out of their hands that they
Speaker 4: have to raise prices or not.
Speaker 2: You know, it's just it's.
Speaker 6: Just very you know, we don't have visibility in terms
Speaker 6: of exactly how many chips are going to come from where,
Speaker 6: but we do know that they are really trying. I mean,
Speaker 6: the thing is with Apple, right, they have been.
Speaker 7: So they're really good.
Speaker 6: And what their biggest strength is there how they navigate
Speaker 6: through all of these the way they negotiate with their
Speaker 6: supply chain, and they have a lot of strength right
Speaker 6: in terms of where they want to move things around.
Speaker 6: They are able to even with prices, with logistics and tipicos.
Speaker 6: Background is an operations guy, right, and on top of
Speaker 6: his strength in terms of geopolitics, he has strength and
Speaker 6: you know history with navigating and negotiating with both administrations.
Speaker 6: So I do have faith that he will be able
Speaker 6: to take you know, whether through the storm. It will
Speaker 6: just take some time, whether it's through the supply chain
Speaker 6: or whether he does it through internal you know, changing
Speaker 6: of going through more in house or changing the supply
Speaker 6: chain and manufacturing, whether it's through India or through to
Speaker 6: the US, but it just takes some time, and we
Speaker 6: do expect this to be a challenging year for Apple well,
Speaker 6: but in the long term I do see that you know,
Speaker 6: they will be able to come through it.
Speaker 3: Really, popol, it is always so great to speak with you,
Speaker 3: senior director at IDC. We shift from Apple to Amazon
Speaker 3: now shares as we see reacting to its own report,
Speaker 3: we're down about three tenths of a percent. The company
Speaker 3: did want of a tougher business climate, of course, amid
Speaker 3: global trade tensions. Let's get more brad ericson Internet analysts
Speaker 3: for RBC Capital Markets. Before I go to the AWS
Speaker 3: side of it, come to the geopolitics of it all.
Speaker 3: How much are we able to see Amazon survive and
Speaker 3: weather this at the moment by having brought in inventory
Speaker 3: but ultimately be able to change up their supply chain too.
Speaker 8: Yeah, so I think you know, they're definitely working the situation.
Speaker 8: They would acknowledge that it's very uncertain. We spoke with
Speaker 8: them last night and there was definitely that was the
Speaker 8: message on all of this.
Speaker 7: But I think the idea is is that you know, we.
Speaker 8: Think about it kind of the guns for the war
Speaker 8: picks and shovels type of dynamic.
Speaker 7: Here. Amazon has millions of sellers. There will absolutely be
Speaker 7: sellers that are.
Speaker 8: Impacted by this in terms of having supply chain exposure
Speaker 8: to China, but there are others that don't. And when
Speaker 8: you think about people you know, looking for deals trying
Speaker 8: to save money already, they're going to go to Amazon
Speaker 8: and they're still going to find sellers that are not
Speaker 8: exposed to those China supply chain headwins, and they're going
Speaker 8: to find decent prices and they're going to buy.
Speaker 7: So I think under almost.
Speaker 8: Any macro scenario, right, we're not saying we know the downside,
Speaker 8: but under any any scenario Amazon games.
Speaker 4: Share, I want to go to the fundamental basics of
Speaker 4: how Amazon's business works. Half of the audience watching GMOT technology, No,
Speaker 4: it is Amazon dot Com an e commerce business that's
Speaker 4: the vast volume of sales, but the vast majority of
Speaker 4: operating income is AWS cloud. So when Amazon tells us
Speaker 4: that be in the current period, operating income will be
Speaker 4: billions of dollars below what you guys on the street
Speaker 4: had forecast, is that singularly a tariff's issue on dot com?
Speaker 4: Or is it also reflecting softness in cloud spending.
Speaker 8: I don't think it's reflecting softness and cloud spending.
Speaker 7: In fact, I expect that to kind of continue.
Speaker 8: I think the issue is more just that well, one
Speaker 8: thing I would clarify is that, yes, the midpoint of
Speaker 8: the guidance was below the street, but typically Amazon hits
Speaker 8: or exceeds the high end of the guidance, and so
Speaker 8: I think really when you think about where the quarter
Speaker 8: likely ends up, it was probably closer to in line.
Speaker 8: I'm sure they're building in some risk around you, just
Speaker 8: the terror situation and the impact that that could have,
Speaker 8: But the ad business drives a huge portion of that
Speaker 8: that operating income as well, and that's still growing really
Speaker 8: well too.
Speaker 7: That grow eighteen percent in the quarter.
Speaker 8: So I think there's less sort of discounted in and
Speaker 8: there less concern in there than you might think.
Speaker 3: And they're still very focused on all the innovation, whether
Speaker 3: it be o ver aws, whether it be in space,
Speaker 3: whether it be on what they're doing in terms of
Speaker 3: getting your product too faster. All of that, though, takes costs,
Speaker 3: and I'm interested that meta signal. Look, we're sticking to,
Speaker 3: for example, our CAPEX and we're raising it because of
Speaker 3: infrastructure spends going to go up because of tarifs. Do
Speaker 3: you think that's going to affect the cost of doing
Speaker 3: business at AWS in any way?
Speaker 4: Brad?
Speaker 7: It could yeah.
Speaker 8: I mean I think the comment we made earlier in
Speaker 8: the week on Meta was that, you know, they called
Speaker 8: out equipment infrastructure, equipment and component costs are going up. Technically,
Speaker 8: what that means for the industry is that structurally, return
Speaker 8: on investment capital is lower today than it was ninety
Speaker 8: days ago.
Speaker 7: So sure, that's not great. I think in Amazon's case.
Speaker 8: You know, Meta probably came out a little bit even
Speaker 8: more unscathed from tariffs based on what we know at
Speaker 8: this point. So I think Amazon's probably having a little
Speaker 8: bit more measured caution. Ie they didn't take the Capex
Speaker 8: guide up, but I think they sound every bit is
Speaker 8: bullish on the cloud business and their growth they're going forward.
Speaker 4: What did Amazon do well in the quarta?
Speaker 7: What did they do well? They grew ads eighteen percent.
Speaker 8: They did not miss on ads, which they had been
Speaker 8: in prior quorders, so that was probably the best one
Speaker 8: of the standouts.
Speaker 2: Can I don't pen that, Brad.
Speaker 3: I'm really interested in the ads side because you said
Speaker 3: that now really clearly twice. How much of a headwind
Speaker 3: is that going forward if third party sellers become that
Speaker 3: little bit weaker, if we do see the knock on
Speaker 3: effects of tensions in trade.
Speaker 7: Yeah, for sure.
Speaker 8: So I go back, so ads basically have a one
Speaker 8: to one relationship with volume, right units essentially, And so
Speaker 8: back to what I said earlier, with that seller density,
Speaker 8: you might a seller might who has a China supply
Speaker 8: chain exposure, might lose some volume, but there's going to
Speaker 8: be another seller that's going to step in there and
Speaker 8: probably still move that unit. If they do, they're still
Speaker 8: going to be spending those AD dollars. So we think
Speaker 8: that actually can be more resilient here.
Speaker 4: Project Kaiper has got off to a rocky start. I
Speaker 4: think it's fair to say, do you even model that
Speaker 4: into your model for Amazon? Any meaningful contribution for space
Speaker 4: based internet business that takes on starlink?
Speaker 8: Yeah, it's hard, That's what I'll say. For Q two,
Speaker 8: you know, it's embedded in the guidance. They launched a
Speaker 8: rocket earlier in April, they're going to launch more in
Speaker 8: Q two, So clearly there is cost, and you know,
Speaker 8: I think we're thinking about maybe one hundred million on
Speaker 8: average per rocket that goes up. So that's kind of
Speaker 8: the magnitude we're talking about, and they've talked about kind
Speaker 8: of somewhere in the range of eighty rockets or maybe
Speaker 8: ten billion dollars of total outlay related to the Constellation
Speaker 8: project overall. So the good news is what they said
Speaker 8: last night was they are going to have commercial service
Speaker 8: up for that by the end of the year, so
Speaker 8: they're actually gonna be driving revenue. It's not just a
Speaker 8: cost headwind, which is nice as we think about twenty
Speaker 8: twenty six. But yeah, the math on it in our
Speaker 8: model very difficult at this point.
Speaker 4: I'd say pad Ericson obviously Capital Markets, thank you very much.
Speaker 4: Now coming up, ADP's Nella Richardson joins us on the
Speaker 4: efforts to address the widening skill gap in labor markets.
Speaker 4: This has been bo technology.
Speaker 3: The US labor market is stronger than perhaps expected for April,
Speaker 3: shrugging off those trade tensions, one hundred and seventy seven
Speaker 3: thousand jobs added, but there is still uncertainty, and it's
Speaker 3: about tariff impact. It's also perhaps about the longer time
Speaker 3: effects of advances in technology here to address well the
Speaker 3: skills gap in particular is Neila Richardson.
Speaker 2: She's the chief economist and the SG officer.
Speaker 3: At ADP, and you've done some fascinating research and ontology.
Speaker 3: You call it about perhaps what is facing the current
Speaker 3: labor market and the skills gap that is missing when
Speaker 3: it comes to tech. Is that in any way being
Speaker 3: reflected in jobs numbers right now.
Speaker 2: A little bit?
Speaker 9: But if we raise up our view, if we change
Speaker 9: your aperture to the big picture, the long term picture,
Speaker 9: what you see is an aging US workforce that's being
Speaker 9: complemented by an aging Chinese in an Asian aging euree workforce,
Speaker 9: and then you see all these nascent new technologies that
Speaker 9: companies have yet to fully embrace. And so as this
Speaker 9: plays out, there's going to be a gap between the
Speaker 9: tech and the skills, and until that chasm is closed,
Speaker 9: you're going to see a hit to productivity. So our
Speaker 9: focus is really aligning all the new jobs and the
Speaker 9: in demand jobs with the in demand skills so that
Speaker 9: we can bring the workforce along to all this technological
Speaker 9: change and all the promise.
Speaker 2: That it holds.
Speaker 4: The calculus for the tech industry is that the job's
Speaker 4: numbers and aggregate show that there isn't this impact from
Speaker 4: uncertainty in tariff's overall in that market? But if there
Speaker 4: is a skills gap. You look at some of the
Speaker 4: headlines in tech, metalaid off about one hundred people in
Speaker 4: reality labs. But I know that those companies are doing
Speaker 4: that in small trims because there are places they desperately
Speaker 4: need people that aren't really available. They've got to free
Speaker 4: up the salary, the stock and the head count. How
Speaker 4: much do you exp that to continue in this market?
Speaker 4: Make little trims but overall higher.
Speaker 9: You know, companies and tech companies in particular, made big
Speaker 9: bets throughout this pandemic recovery, and sometimes they've had to
Speaker 9: pull back on those bets and reshuffle their headcount. If
Speaker 9: you look at the April numbers that information tech sector,
Speaker 9: which has a lot of people and companies that create
Speaker 9: and publish software, it was flat in April. It was
Speaker 9: negative the month before and flat again the month before that.
Speaker 9: So there's this disconnect between the people and the tech
Speaker 9: where all these people with tech is the future. And
Speaker 9: I think what you're seeing is a couple things. First,
Speaker 9: that talent is being subsumed elsewhere, and also that talent
Speaker 9: is evolving, So at ADP. What we're trying to do
Speaker 9: is show where the talent is, how it's moving, maybe
Speaker 9: from industries that you would expect, like the tech sector
Speaker 9: to manufacturing, to healthcare, to these other industries where tech
Speaker 9: is becoming even more important than it has been historically.
Speaker 3: And how much are we starting to see headcount less
Speaker 3: necessary because of technological innovation AI. For example, this week,
Speaker 3: everyone's been talking about the Gio Lingo announcement. AI first
Speaker 3: means we're segno to contractors, We're not giving you headcount
Speaker 3: unless you can automate it and show that you can't
Speaker 3: get any more automation done.
Speaker 2: Is that starting to show through?
Speaker 4: You know?
Speaker 9: At the edges, I think there is some change in
Speaker 9: how companies are hiring knowing that they have this advanced technology.
Speaker 9: It's commonly said your job won't be replaced by tech,
Speaker 9: it will be replaced by someone.
Speaker 2: Who knows AI very well.
Speaker 9: I want to unpack that a little bit to show
Speaker 9: you what that means. There are skills associated to job titles.
Speaker 9: So at ADP we've identified one hundred thousand skills associated
Speaker 9: with nine thousand job titles. It doesn't mean that the
Speaker 9: jobs are changing. It means that the tasks and the
Speaker 9: skills required for those jobs are changing. So when you
Speaker 9: look at these company announcements, it's also stating that the
Speaker 9: jobs as they have been in the past, have you
Speaker 9: volved And what does it mean for a worker, Well,
Speaker 9: it means that you may have the same job, but
Speaker 9: what you do your skills required has changed, and companies
Speaker 9: are trying to figure that out, whether it is reducing
Speaker 9: headcount and rehiring the skills they need or and what
Speaker 9: here's where I think is really the opportunity training the
Speaker 9: current workforce to have those skills.
Speaker 4: Neila richardson the ADP, thank you very much, shares of
Speaker 4: Take two Interactive under pressure after the company announced its
Speaker 4: highly anticipated Grand Theft Auto six game is being delayed
Speaker 4: again until May of twenty twenty six bloombax. Jason Schreyer
Speaker 4: is here a Jason. For some people, this is like
Speaker 4: the worst possible news in their personal gaming lives they
Speaker 4: could have happened for Take two. The stockdown six percent?
Speaker 4: What are the details, what accounts for the delay?
Speaker 10: Ed is just going to be a sad Christmas for
Speaker 10: you not getting to play the new Grand.
Speaker 4: Theft Definitely and many others.
Speaker 10: Yeah, it's I don't think there's any sort of like
Speaker 10: crazy secret or alter your motive behind this. I've been
Speaker 10: hearing for a little while now people at Rockstar did
Speaker 10: not believe Fall twenty twenty five it was a real
Speaker 10: release window. There's just too much work left to do,
Speaker 10: not enough time to do it, and the company has
Speaker 10: really been trying pretty hard to avoid the kind of
Speaker 10: brutal overtime that they had traditionally put people through on
Speaker 10: their games. They've really been shaping up over the last
Speaker 10: few years, as Bloomberg has been reporting, So this was inevitable.
Speaker 10: I feel like we talked about this a little bit
Speaker 10: earlier in the year. We predicted on our game on
Speaker 10: Bloomberg newsletter that this was going to happen. To me,
Speaker 10: it's always felt more like a when than an if.
Speaker 3: Yeah, I'm straus Zelnik coming out saying we fully support
Speaker 3: Rockstar games, and you've got analysts coming out Jason saying
Speaker 3: that this doesn't wipe away the profitability. Up to fifty
Speaker 3: percent profit is what I think webbush have it down as,
Speaker 3: but you just push it back.
Speaker 10: It is bonkers to me that their stock is taking
Speaker 10: a hit this morning. This game is still going to
Speaker 10: be the biggest thing on the planet. It is still
Speaker 10: going to make a kajillion.
Speaker 4: Dollars technical question.
Speaker 10: The last game, Grand Theft out of Five, has sold
Speaker 10: two hundred and ten million copies, which makes it the
Speaker 10: second best selling game of all time, second to Minecraft,
Speaker 10: which is on phones. So that's apples and oranges. To
Speaker 10: put that in perspective, that Grand Theft out of Five
Speaker 10: alone has sold more than the entire Assassin's Creed series,
Speaker 10: an entire public trade and publisher Ubisoft It's flagship series
Speaker 10: has under sold GTA five alone. This is going to
Speaker 10: be the biggest entertainment launch ever. And the fact that
Speaker 10: investors are now spooked because it's coming a few months later,
Speaker 10: maybe moved fiscal years, that is bonkers to me.
Speaker 3: I think the bonker's element though, is trip away. It's
Speaker 3: just once again anxiety, isn't it. The people's eyeballs go elsewhere?
Speaker 3: Where does it go?
Speaker 2: Jason?
Speaker 3: If you're not you're still sticking with Grand Theft Auto
Speaker 3: five or are you playing other games you're getting more
Speaker 3: excited about the switch to what happens?
Speaker 10: Yeah, I mean this game is such an anomaly. I
Speaker 10: think a lot of games have to worry about that.
Speaker 10: A lot of multiplayer games, especially that are coming out,
Speaker 10: have to worry. Oh no, Bungee's Marathon is coming later
Speaker 10: this year. Is that going to compete with our new
Speaker 10: online game that is coming. It's a very competitive landscape.
Speaker 10: GTA is a class.
Speaker 7: Of its own.
Speaker 10: This is a game that everybody is going to play
Speaker 10: no matter what. So again, it seems a little silly
Speaker 10: to me that investors are worried about a delay when
Speaker 10: the game is still going.
Speaker 4: We're showing that data right now, right. You were just
Speaker 4: talking about two hundred and ten on GTA five. Just
Speaker 4: real quick, just explain the basics of what the game is.
Speaker 4: You have thirty seconds because the audience might not know.
Speaker 7: Yeah, GTA.
Speaker 10: So GTA six is going to be two components. One
Speaker 10: is going to be the single player part of it,
Speaker 10: which is a big open world game where you drive
Speaker 10: around a fictional version of Miami and you do crimes
Speaker 10: and you follow a story and it's all very beautiful
Speaker 10: and cinema and I really love that. The second part
Speaker 10: is an online component where you do similar sort of
Speaker 10: things heists and crimes and online driving, except with your friends.
Speaker 3: I just I still can't get over the first that
Speaker 3: screen cris data, Tetris data like five hundred million.
Speaker 4: People pick it up another time based worry.
Speaker 3: One of our producers a clean lover of Tetris, Jason Tryer,
Speaker 3: We adore having you. Thank you, Welcome back to Blue
Speaker 3: Med Technology.
Speaker 2: I'm Caroenine Hide in New.
Speaker 4: York and I med Ludlow also in the Big Apple.
Speaker 4: What is the technology sect you're doing?
Speaker 2: It's higher, and it's higher on macro perspective.
Speaker 3: Actually, if you're look at NASNAK more broadly, look if
Speaker 3: five days of gains, we're up more than three point
Speaker 3: six percent. That's the second week of gains, and we're
Speaker 3: at one point three percent. Because the jobs market thus
Speaker 3: far not too impacted by tariffs, and indeed maybe there's
Speaker 3: some cooling intensions between US and China. But we also
Speaker 3: look at some individual movers. I want to get under
Speaker 3: the hood and show you what's happening. Airbnb off by
Speaker 3: a quarter of percent. Look, they post almost eight percent
Speaker 3: sales growth for the court just gone, but they push
Speaker 3: forward that that's going to moderate. I mean this economic anzoniety.
Speaker 3: We look a PDD up three point four percent. Look,
Speaker 3: TIMU is going to go local. They're not going to
Speaker 3: be giving you everything from China. They're going to source
Speaker 3: it in the US and more locally. And then there's
Speaker 3: Nvidia two point seven percent higher. Interesting reporting coming from
Speaker 3: the information. Could they be inventing yet a new type
Speaker 3: of chip A's tailor made to the Chinese H twenty
Speaker 3: can't go there, but can they service them with something else?
Speaker 10: Ed?
Speaker 2: It stock is higher?
Speaker 4: It is. As President Trump marked his first one hundred
Speaker 4: days in office this week, the Department of Energy is
Speaker 4: also celebrating one hundred days of American energy what it's
Speaker 4: calling victories, including in manufacturing and innovation. Joining us now
Speaker 4: is US Energy Secretary Chris Wright, Secretary right, thank you
Speaker 4: for your time in joining us here on Bloomberg Technology.
Speaker 4: There is one question that that Americans that watch this
Speaker 4: show have for you, which is, how have you changed
Speaker 4: policy in that period of time for energy in a
Speaker 4: way that supports you manufacturers.
Speaker 11: Well, here, I am at a plant in Griffin, Georgia,
Speaker 11: about forty miles southeast of Atlanta that makes low cost, tankless,
Speaker 11: non condensing.
Speaker 4: Hot water heaters.
Speaker 11: A little too technical there, These are low cost heaters.
Speaker 11: Over a million Americans today take showers and wash their
Speaker 11: hands from water heated from a device made in this
Speaker 11: plant just in the last three years, and of course
Speaker 11: millions more interested in this technology because it's very low cost.
Speaker 4: And this was going to be illegal.
Speaker 11: On December twenty sixth, the Biden administration passed a rule
Speaker 11: through the Department of Energy, my predecessor, that would have
Speaker 11: made the manufacture of these devices illegal. Hundreds of people
Speaker 11: here in Georgia would have lost their jobs, and millions
Speaker 11: of Americans wouldn't have had a low cost choice to
Speaker 11: put into their house, their apartment, their you know, wherever
Speaker 11: it is. They want hot water, their restaurant, their business.
Speaker 11: And so we're through to see this factory, hum and
Speaker 11: along and excited workers that they have the future and
Speaker 11: their products have the future.
Speaker 4: Secretary, right fifty miles away from where you're standing, Rivian
Speaker 4: is building an electric vehicle plant in Georgia. Rivian had
Speaker 4: secured a six point six billion dollar loan from the
Speaker 4: Department of Energy agreed under the prior administration. What is
Speaker 4: your assessment of that loan, will it proceed and are
Speaker 4: you reviewing the issuance of those funds?
Speaker 11: So we will review the issuance of all the funds,
Speaker 11: loans and grants from the Department of the Energy. To
Speaker 11: give you one reason for the serious concern. We have
Speaker 11: about eighty percent of the loan money and the grant
Speaker 11: money put out by the Biden percent Biden administration, eighty
Speaker 11: percent went out after President Trump was elected and before
Speaker 11: his inauguration day.
Speaker 4: If they had great, rock.
Speaker 11: Solid, make American lives better opportunities, wouldn't they have done
Speaker 11: that in the previous two and a half years. But instead,
Speaker 11: so much of the money was rushed out the door
Speaker 11: after election day and before inauguration. So we've got a
Speaker 11: lot of reasons to be worried and suspicious about that.
Speaker 11: We're stewards of the American taxpayer's money. And the goal
Speaker 11: the Department of Energy is to improve our energy system,
Speaker 11: to make energy more affordable, reliable, and secure. Everything that
Speaker 11: serves that agenda we will carry through. So we want
Speaker 11: to we want to carry out the president's agenda, follow
Speaker 11: the rule of law, and so some of these loans
Speaker 11: will go forward, some of them it's too late to
Speaker 11: change courses. A lot of them won't go forward. But
Speaker 11: that's a very careful review process, yes, that we've just
Speaker 11: put in place and just got the team to execute on.
Speaker 4: Secretary Right it's not just the company's manufacturing. If you
Speaker 4: think about the infrastructure, particularly from the utilities point of view,
Speaker 4: there is a lot of concern about storage of capability.
Speaker 4: Tesla is the leader in energy storage, right but the
Speaker 4: frank reality is that for the energy storage products it
Speaker 4: relies on prismatic LFP cells that are one hundred percent
Speaker 4: manufactured in China by catl. If there is a need
Speaker 4: to build out storage products at the commercial scale, are
Speaker 4: you evaluating any exemptions in the context of tariff or
Speaker 4: any work with Tesla so that they can get moving
Speaker 4: on building out energy storage infrastructure in this country.
Speaker 11: Well, look at well it's talk on specific things right here,
Speaker 11: but we are looking very careful at everything we can
Speaker 11: do to resure the manufacturing of critical systems like the
Speaker 11: ones you've talked about here in the United States. We've
Speaker 11: just become way too dependent on China for things that
Speaker 11: are in our defense systems, that are in our electric grids,
Speaker 11: that are in our automobiles, that are in our space systems.
Speaker 4: We need to bring.
Speaker 11: That kind of manufacturing, those technologies, and those materials back
Speaker 11: into the United States. It is a high priority of
Speaker 11: the Trump administration.
Speaker 3: Secretary, right You spend a lot of time talking to executives,
Speaker 3: as does the President. I just want you to rehear
Speaker 3: what the Nvidia CEO said on the hill just this week.
Speaker 2: Take a listen.
Speaker 12: In order for this industry to thrive, we need to
Speaker 12: build these systems, of course, but we also need a
Speaker 12: progressive growth and industry oriented energy policy, which this president
Speaker 12: has really put his way behind. I really appreciate that
Speaker 12: without energy we can't possibly have new growth industries.
Speaker 3: An industry focused energy policy for AI Secretary, right, what
Speaker 3: does that industry policy look like?
Speaker 11: That means getting the barriers out of the way of
Speaker 11: energy production. The Bidy administration spent four years in sort
Speaker 11: of an all of government approach to impede the production
Speaker 11: of hydrocarbons in the United States for all energy sources.
Speaker 11: But hydrocarbons are over eighty percent of US energy when
Speaker 11: I was born and they are today.
Speaker 4: So if you stand in the way of.
Speaker 11: Our main energy system, guess what you get higher prices.
Speaker 11: We grew our electricity production only two percent twenty percent
Speaker 11: price rise.
Speaker 4: So to achieve in Videos.
Speaker 11: And America's dream to win the AI race, we've got
Speaker 11: to produce a lot more electricity, a lot more energy
Speaker 11: of all sorts in the United States, and all the
Speaker 11: government needs to do is get out of the way
Speaker 11: a little bit of common sense. There's American businesses, American capital,
Speaker 11: and American technologies ready to roar, and President Trump's goal
Speaker 11: is to unleash that American energy, that American capital and
Speaker 11: let American energy production grow sexually.
Speaker 3: Right though, is there a potential that you're accidentally getting
Speaker 3: in the way because of geopolitics and trade issues? Because
Speaker 3: the energy lack of in many ways is an infrastructure
Speaker 3: and supply chain issue. You don't have the turbines to
Speaker 3: be able to bring the energy at the infrastructure rate
Speaker 3: that the CEOs want to see. There's not enough equipment.
Speaker 3: Is there enough time to pivot to make that in
Speaker 3: the US?
Speaker 4: Oh.
Speaker 11: I've spoken to the turbine manufacturers and they are in
Speaker 11: huge demand right now. But ge Vernova made twenty seven
Speaker 11: of them last year. They'll make eighty of them next year.
Speaker 11: So the Americans are ingenious and with a little bit
Speaker 11: of regulatory common sense, they can ramp up their capacity rapidly.
Speaker 11: So no, I'm quite excited about how much new energy
Speaker 11: production capacity we'll see in the United States under construction today.
Speaker 11: And a lot more will be under construction by the
Speaker 11: end of this year. I think we will ramp it
Speaker 11: up in time. But you're right, it's going to be
Speaker 11: a race. It's going to be a race, but we
Speaker 11: must lead in AI and that means we must rapidly
Speaker 11: grow our energy production. But we're up for the job.
Speaker 4: Secretary, right, how reliant will the AI boom in this
Speaker 4: country be on fossil fuels? And while we have you,
Speaker 4: what is the plan for the SPR Please?
Speaker 11: Well, foss the natural gas is by far the big
Speaker 11: source of electricity in the United States, followed by nuclear
Speaker 11: and coal. So that's what's going to power THEI race.
Speaker 11: It's slow to build coal plants and nuclear plants are
Speaker 11: very slow.
Speaker 4: We want to change that.
Speaker 11: But in the short term, the main source of additional
Speaker 11: electricity that will power AI arms race is going to
Speaker 11: be expanded natural gas electricity production. That'll be the workhourse
Speaker 11: of winning the AI race. But a lot of solars
Speaker 11: getting built, transmission, energy storage, all of the above that works,
Speaker 11: that'll add to it. Your last question, sorry, repeated again.
Speaker 4: The status of the SPI Please.
Speaker 11: Hey, the SPR was half drained for the twenty twenty
Speaker 11: two mid term elections. So we are filling it slowly
Speaker 11: right now, but we're going to try to get money
Speaker 11: through Congress to fill it more rapidly. But unfortunately, you
Speaker 11: can only fill it at a much slower pace than
Speaker 11: you can drain it, so it will take us years
Speaker 11: to fill it back. But we will entirely fill it
Speaker 11: because it's a strategic reserve. You got to have that
Speaker 11: because you never know what's coming.
Speaker 3: We appreciate your time outside, of course, for in I
Speaker 3: America Corporation US Energy Secretary Chris Wright, we love a
Speaker 3: high vis jacket on this show.
Speaker 2: Meanwhile, let's get to the breaking news for you.
Speaker 3: Potential IPO coming as soon as next week. Etro is
Speaker 3: said to be weighing actually going forward with its initial
Speaker 3: public offering, having delayed it back in last month.
Speaker 2: They could be eyeing as soon as next week.
Speaker 3: No decision is yet finalized, but it's certainly been considered.
Speaker 2: Meanwhile, coming up.
Speaker 3: Roadblocks sees much better than expected jump in active users
Speaker 3: will be speaking with the CEO, say Bazooki, that's next,
Speaker 3: stick with us.
Speaker 2: This is Blue Meg Technology.
Speaker 3: Once again video game platform roadblocks. The shares on the
Speaker 3: up and up. Of course, the company reported large and
Speaker 3: expected jumping users for the first quarter with its daily
Speaker 3: active players jumping twenty ninety seven point eight billion now
Speaker 3: and that was for the first three months ending in March.
Speaker 3: Dave Pazuki Redlox CEO joins us and Dave, are you
Speaker 3: economic anxiety proof?
Speaker 2: You recession proof.
Speaker 10: Ed?
Speaker 13: Carolyn? Thank you for having me on the program. I
Speaker 13: want to highlight significant performance in Q one. We just
Speaker 13: shared yesterday on our Ernie's Call on our really mission
Speaker 13: to get ten percent of the global gaming software market
Speaker 13: running on the platform. Roadblocks is virtual, roadblocks is digital.
Speaker 13: We do not have any supply chain issues. There is
Speaker 13: no shortage of roadblocks, and we are contributing to the
Speaker 13: US trade import export ratio. We're bringing cash into.
Speaker 3: The US and you're paying some of those content creators,
Speaker 3: in particular developers. Dave, I'm interested in that ten percent figure,
Speaker 3: Like what sort of timeframe are we talking here? Because
Speaker 3: what you're at about three percent now?
Speaker 2: Am I right?
Speaker 13: We're at about two and a half to three percent.
Speaker 13: We have shared consistently that we believe can grow at
Speaker 13: greater than twenty percent year on year. We highlighted in
Speaker 13: Q one growth rates much higher than that, including revenue
Speaker 13: growth rates of twenty nine percent year on year, daily
Speaker 13: active user growth rates of twenty six percent year on year,
Speaker 13: and a couple really interesting highlights. Over thirteen users on
Speaker 13: the platform, DAUS grew by thirty six percent year on
Speaker 13: year and India huge market grew by seventy seven percent
Speaker 13: year on year. So we really think it's attainable.
Speaker 4: Dave, I'm a passionate gamer in the over thirty category,
Speaker 4: and I'd say that the biggest headlines right now are
Speaker 4: the delay of GTA six high fidelity game and the
Speaker 4: delay of switch to on the console side. Is that
Speaker 4: where you think you're going to compete when you aim
Speaker 4: ten percent market share? How did those two headlines impact
Speaker 4: roadblocks and the platform.
Speaker 13: We have shared a roadmap including highlighting genre expansion into RPG,
Speaker 13: sports and racing battle games on the platform. We are
Speaker 13: seeing more of this on the platform. For example, we
Speaker 13: recently NASCAR has teamed up with Driving Empire, Paramount teamed
Speaker 13: up with SpongeBob simulator, PGA Tour has teamed up, so
Speaker 13: we're seeing more and more of this. We shared that
Speaker 13: these three genres which will contribute to us getting to
Speaker 13: ten percent of the gaming space, We believe grew over
Speaker 13: sixty percent year on year on the platform.
Speaker 4: Growing revenue. What role is advertising going to play.
Speaker 13: We think we already have some creators on our platform
Speaker 13: who are making more money on advertising than they are
Speaker 13: with virtual currency. We believe it's a natural complement. What
Speaker 13: it's not big enough yet for us to break out
Speaker 13: the numbers. We just released a partnership with Google that
Speaker 13: will provide more video advertising for some of our developers.
Speaker 13: So it's part of building an economic ecosystem, you know.
Speaker 13: We also shared that over one hundred creators on the
Speaker 13: platform made over a million dollars in the last twelve months,
Speaker 13: So there's a huge variety of creators starting to make
Speaker 13: good businesses.
Speaker 3: And look Wedbush for example, the analyst, they're saying that payment,
Speaker 3: when it improves the content, it draws more people there, Dave.
Speaker 3: But you'll also say, look, when you actually tell us
Speaker 3: exactly you break out the numbers advertising, that's the next
Speaker 3: catalyst for roadblock shares. Any timeframe on when you will
Speaker 3: be able to break out the advertising numbers.
Speaker 13: We want to break out those numbers sooner as soon
Speaker 13: as we can. They are growing, Stay tuned. We're looking
Speaker 13: forward to that. That said, we're growing at enormous rates
Speaker 13: with the core business of virtual currency, both on engagement
Speaker 13: and on users, really significant outperformance in Q one.
Speaker 3: I'm going to go to the delicate side because last
Speaker 3: time you joined us, Dave, it was all about parental controls.
Speaker 3: It's all about the focus on safety. Now since we
Speaker 3: last spoke, there's been a couple more legal cases come
Speaker 3: your way. Look, these lawsuits aimed at you and at Discord,
Speaker 3: and once again is about alleged grooming, sexual exploitation using
Speaker 3: the platforms. How are you dealing and responding to those
Speaker 3: particular lawsuits.
Speaker 2: How you feeling, Dave? As well as I know you
Speaker 2: have your.
Speaker 3: Own family using it and you think seriously about this stuff,
Speaker 3: I would.
Speaker 13: Say both optimistic and as well a humility for the
Speaker 13: responsibility we have. You know, any single incident on our
Speaker 13: platform is one too many, and you know there's almost
Speaker 13: one hundred million daily users on the platform every day.
Speaker 13: We take this as an enormous responsibility. We are taking
Speaker 13: leadership here in that all communication on our platform is
Speaker 13: filtered and goes through AI filters, which are getting enormously better,
Speaker 13: including voice. There's no image sharing on our platform, so
Speaker 13: there's less risk of some of the things that happen
Speaker 13: in that area, and more and more we're focusing not
Speaker 13: just on under thirteen, but on thirteen through seventeen year olds.
Speaker 13: That's also a delicate age. We're starting to lean into
Speaker 13: age verification around this. We work very heavily with local, state,
Speaker 13: and federal law enforcement. Roadblocks is a dangerous place for
Speaker 13: bad actors, so we have a big responsibility here.
Speaker 4: Dave, you talked about M and A actually in the
Speaker 4: Roadblocks ecosystem during the call. Give me some solid numbers
Speaker 4: on what that looks like and some MNA for the
Speaker 4: company as well. Going forward.
Speaker 13: We have shared that there are over there's now three
Speaker 13: creators on a run rate of over fifty million a year.
Speaker 13: You can put some multiples on top of that and
Speaker 13: estimate what their businesses might be worth. At our Developer
Speaker 13: conference last year, we shared a prediction there'll be a
Speaker 13: billion dollar valuation studio on the platform. We think that's very,
Speaker 13: very possible. Internally, we haven't announced any M and A,
Speaker 13: but we are generating a fair amount of cash. You know,
Speaker 13: we have well north of three billion dollars of cash,
Speaker 13: but no Roadblocks M and A plans right now.
Speaker 4: Deveyzekier roadblocks. Thank you very much for joining us on
Speaker 4: Bloomberg Technology. Another social media platform or online platform we're
Speaker 4: watching is Reddit. The social media site said it expected
Speaker 4: revenue in the current quarter to be better than estimates,
Speaker 4: with Q two sales between four hundred and ten and
Speaker 4: four hundred and thirty million dollars. I spoke we've Reddit
Speaker 4: Coogen Wong earlier today.
Speaker 14: On the user side, Reddit is becoming more accessible outside
Speaker 14: of the US for non English speakers, and we do
Speaker 14: that a couple ways. The first is using machine translation
Speaker 14: to take universal conversations things like life, experience, parenting, fandom,
Speaker 14: and translate that into local language so that folks in
Speaker 14: France and Germany, et cetera can enjoy it in local language.
Speaker 14: The second thing we're doing is recruiting moderators in those
Speaker 14: countries and developing thriving local communities, because Reddit is great
Speaker 14: when it's global and it's local, and so those communities
Speaker 14: are creating a very local feel for you know, redditors
Speaker 14: in France and Germany and our focused countries. Right now,
Speaker 14: we have eight focused markets that are getting this treatment,
Speaker 14: and they're growing two times as fast as the rest
Speaker 14: of international daily Active uniques, which is great to see,
Speaker 14: and we'll be expanding that. So we have Brazil, we
Speaker 14: have parts of countries in Southeast Asia, but that treatment
Speaker 14: will expand to the rest of the year. On the
Speaker 14: revenue side, what's interesting is I just came back from
Speaker 14: visiting our Australian and European teams and there's really tremendous
Speaker 14: momentum there and there's a lot of new advertisers coming
Speaker 14: on and obviously that's reflected in the growth that I
Speaker 14: mentioned before.
Speaker 4: Jenny, the other part of the business is data data
Speaker 4: licensing in the AI context, right that the pitch that
Speaker 4: you give to those developing frontier models is that Reddit
Speaker 4: is contemporaneous, there is new and genuinely human contribution to
Speaker 4: the platform, and that therefore the data is valuable. You know,
Speaker 4: we know about all the big names that are working
Speaker 4: on next gen models throughout the calendar year. How do
Speaker 4: you ensure that your data licensing deals and your targets
Speaker 4: for new deals line up with them starting the training
Speaker 4: process on their next model.
Speaker 14: Well, I think when we talk about data licensing, what
Speaker 14: we're really talking about is the fact that Reddit data
Speaker 14: is really valuable, and it's valuable for others to build
Speaker 14: products around, and it's valuable for us to build products around.
Speaker 14: I would say we're open for conversations, and we're really
Speaker 14: you know, we're pleased with the partnership so far, and
Speaker 14: we're really excited about what.
Speaker 7: We can build, what we can build.
Speaker 14: I mean, you see this with Reddit answers, which we released,
Speaker 14: you know, globally this week. We don't have anything new
Speaker 14: to share on this right now, but I'd say we're
Speaker 14: open for conversations. We're excited about the products that we
Speaker 14: can build.
Speaker 2: Gen Wong there, Reddit COO.
Speaker 4: Time for talking tech. First up, the EU slapping a
Speaker 4: six hundred million dollar fine on TikTok owner Byte Dance
Speaker 4: for illegally sending user data to China. TikTok saying it
Speaker 4: would appeal the decision, claiming it never received a request
Speaker 4: from Chinese authorities. Plus Timus shifting to a local fulfillment model,
Speaker 4: planning to sell goods only from local US merchants to
Speaker 4: American consumers. It's a move aimed at avoiding tariffs to
Speaker 4: keep prices lower, and Oios delayed IPO plans yet again,
Speaker 4: holding off into its earnings are stronger. Market turbulence is
Speaker 4: also a factor. This is the third time the company's
Speaker 4: put off its IPO.
Speaker 3: Meanwhile, we get that news, of course that eToro is
Speaker 3: still going ahead with it potentially next week. That does
Speaker 3: it for this edition of BlueBag Technology. What joy to
Speaker 3: have you here next to me.
Speaker 4: It's been an intense earnings We've got a lot done earning.
Speaker 4: Still the story in markets, right, let's have a look
Speaker 4: at what is moving. And you know the names that
Speaker 4: we've covered throughout the show, they're idiosyncratic Apple. That's a
Speaker 4: big decline for Apple, right if you look at historic norms.
Speaker 4: And then what about take two carracter, Well, I'm.
Speaker 2: Sorry, you'll probably go shed a tear.
Speaker 3: Crime theft auto six so you're too emotional for you
Speaker 3: to talk about of by six point six percent, another delay,
Speaker 3: but look, profits still go coming the mentionally in video
Speaker 3: up to two point seen percent. Don't forget about the podcast.
Speaker 3: This is the Bloomberg Technology