1 00:00:02,480 --> 00:00:05,880 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,920 --> 00:00:09,000 Speaker 1: dot Com, the Radio plus Mobile Act and on your radio. 3 00:00:09,280 --> 00:00:13,680 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Handquarters. 4 00:00:13,680 --> 00:00:17,560 Speaker 1: I'm Charlie Pallett. Stocks have rebounded from a morning sell off. 5 00:00:17,640 --> 00:00:20,840 Speaker 1: They are fluctuating near US six week high. Treasuries advancing 6 00:00:20,840 --> 00:00:24,319 Speaker 1: as investors await tomorrow's jobs data for clues about the 7 00:00:24,360 --> 00:00:27,880 Speaker 1: timing of the federal reserves next policy move. Oil trading 8 00:00:27,920 --> 00:00:30,080 Speaker 1: their forty nine dollars a barrel. We've got the tenure 9 00:00:30,160 --> 00:00:33,720 Speaker 1: up eight thirty seconds. Heal there one point eight percent, 10 00:00:34,080 --> 00:00:36,600 Speaker 1: gold down to doll rated the ounce to twelve twelve, 11 00:00:36,680 --> 00:00:39,199 Speaker 1: a drop there of two tenths of one percent. Stocks 12 00:00:39,240 --> 00:00:43,160 Speaker 1: now higher across the board, SMP five index at one one. 13 00:00:43,479 --> 00:00:46,000 Speaker 1: It is up two points, a gain of point one percent. 14 00:00:46,320 --> 00:00:49,240 Speaker 1: Down industrials up twenty points, also a gain of point 15 00:00:49,280 --> 00:00:52,000 Speaker 1: one percent, and as stack up seven points, a gain 16 00:00:52,080 --> 00:00:55,400 Speaker 1: of point one percent. I'm Charlie Pellett, and that's a 17 00:00:55,400 --> 00:01:02,480 Speaker 1: Bloomberg Business Flash. Is taking stock with Kathleen Hayes and 18 00:01:02,520 --> 00:01:07,600 Speaker 1: Prim Fox on Bloomberg Radio. Two days. Two significant deals 19 00:01:07,640 --> 00:01:12,360 Speaker 1: in the enterprise software space. Yesterday it was salesforce and 20 00:01:12,360 --> 00:01:16,680 Speaker 1: demand wear. Today it's click technologies and Toma Bravo. A 21 00:01:16,760 --> 00:01:18,880 Speaker 1: lot of money being thrown around, and it seems like 22 00:01:18,920 --> 00:01:24,119 Speaker 1: the paces quickening. Let's find out why and why investors 23 00:01:24,160 --> 00:01:26,920 Speaker 1: should be focused on this. I'm joined now here in 24 00:01:26,920 --> 00:01:30,479 Speaker 1: our New York studio by man Deep Singh, software analysts 25 00:01:30,480 --> 00:01:35,840 Speaker 1: for Bloomberg Intelligence. Bloomberg Intelligence, of course, gives you unique 26 00:01:35,840 --> 00:01:38,720 Speaker 1: real time research and context on all kinds of industries 27 00:01:38,760 --> 00:01:41,279 Speaker 1: and all the market and government factors that impact business. 28 00:01:41,319 --> 00:01:44,120 Speaker 1: And if you're a terminal customer access Bloomberg Intelligence it 29 00:01:44,240 --> 00:01:49,040 Speaker 1: b ico. So, Mandy, let's start here. Software industry continues 30 00:01:49,080 --> 00:01:52,600 Speaker 1: to go through all kinds of disruption and now cloud. 31 00:01:52,840 --> 00:01:55,120 Speaker 1: We've been hearing this more and more and more, a 32 00:01:55,200 --> 00:01:59,560 Speaker 1: big technological shift that's changed in the way company use software. 33 00:02:00,680 --> 00:02:03,520 Speaker 1: Why is that so significant and and what why is 34 00:02:03,560 --> 00:02:06,440 Speaker 1: it now leading to a bunch of deals? Sure, so, 35 00:02:06,800 --> 00:02:09,840 Speaker 1: like you said, Kathleen, this is a big technological shift 36 00:02:09,880 --> 00:02:13,480 Speaker 1: that takes place once in ten years. And what happens 37 00:02:13,520 --> 00:02:17,840 Speaker 1: typically in cycles like this is companies do change the 38 00:02:17,919 --> 00:02:21,239 Speaker 1: way they use software, but it happens over a period 39 00:02:21,280 --> 00:02:24,480 Speaker 1: of time. So that's why the disruption happens early on 40 00:02:24,600 --> 00:02:28,720 Speaker 1: the small companies. They tend to disrupt the market kind 41 00:02:28,760 --> 00:02:32,600 Speaker 1: of take market share from the small from the larger players, 42 00:02:32,639 --> 00:02:34,880 Speaker 1: but do it in a way where they will grow 43 00:02:34,960 --> 00:02:38,240 Speaker 1: very quickly in the first couple of years, and after 44 00:02:38,320 --> 00:02:41,800 Speaker 1: a while their growth starts to taper. So once that happens, 45 00:02:41,840 --> 00:02:47,639 Speaker 1: investors focus on the profitability given we see the profitability 46 00:02:47,680 --> 00:02:51,440 Speaker 1: aspect showing up more now, I think it's timing is 47 00:02:51,560 --> 00:02:55,080 Speaker 1: right for companies who sell themselves or do something. Okay, 48 00:02:55,160 --> 00:02:57,440 Speaker 1: So the cloud, we know that Microsoft is pushed into 49 00:02:57,440 --> 00:03:00,040 Speaker 1: the cloud. Amazon has pushed in the cloud, and in 50 00:03:00,040 --> 00:03:02,720 Speaker 1: a company could never really actually technically say it was 51 00:03:02,760 --> 00:03:06,520 Speaker 1: making money. That's helping them move in that direction. So Click, 52 00:03:06,600 --> 00:03:09,400 Speaker 1: for example, tell me about Click what they do and 53 00:03:09,440 --> 00:03:12,200 Speaker 1: what they do in the cloud that so many people 54 00:03:12,200 --> 00:03:16,760 Speaker 1: are clamoring for. Great question. So Click is an analytics company. 55 00:03:16,800 --> 00:03:19,520 Speaker 1: If you look at their functionality, all they do is 56 00:03:19,680 --> 00:03:23,400 Speaker 1: help visualize your data. Now that makes a lot of 57 00:03:23,480 --> 00:03:25,919 Speaker 1: excuse me, visualize my data? In other words, that got 58 00:03:25,960 --> 00:03:28,000 Speaker 1: my all my cluster data. By visualize it, do you 59 00:03:28,040 --> 00:03:30,320 Speaker 1: mean sort of map it out, ands organized it just 60 00:03:30,480 --> 00:03:33,560 Speaker 1: kind of it's it's a better way to picture your 61 00:03:33,639 --> 00:03:36,680 Speaker 1: data draw than just looking at an Excel chart. And 62 00:03:36,720 --> 00:03:40,400 Speaker 1: it can use that data from any type of source, 63 00:03:40,520 --> 00:03:42,720 Speaker 1: so it doesn't have to be a spreadsheet. It could 64 00:03:42,760 --> 00:03:46,600 Speaker 1: be uh like an unstructured data source. So you calve 65 00:03:46,600 --> 00:03:48,120 Speaker 1: an example of a kind of company or what kind 66 00:03:48,120 --> 00:03:51,440 Speaker 1: of data click would be so visualizing. A good example 67 00:03:51,600 --> 00:03:55,200 Speaker 1: is you have all these cloud applications now Salesforce, dot 68 00:03:55,200 --> 00:04:00,080 Speaker 1: Com Demand, where these are standalone applications. Obviously the is 69 00:04:00,080 --> 00:04:03,280 Speaker 1: our transactional systems, so they capture a lot of data 70 00:04:03,320 --> 00:04:06,160 Speaker 1: over a period of time. But if you're a company 71 00:04:06,240 --> 00:04:09,560 Speaker 1: using these applications, you have to find a way to 72 00:04:10,200 --> 00:04:13,160 Speaker 1: analyze this data because this is critical. That's how you're 73 00:04:13,160 --> 00:04:16,960 Speaker 1: going to be making your decisions, and and to build 74 00:04:16,960 --> 00:04:20,000 Speaker 1: a tool which can basically pull in data from different 75 00:04:20,000 --> 00:04:24,520 Speaker 1: transactional systems and aggregated. So what a retailer uses with 76 00:04:24,600 --> 00:04:32,920 Speaker 1: a hospital absolutely absolutely, all different verticals, retailers, hospitals, manufacturing, companies, logistics, 77 00:04:33,560 --> 00:04:37,719 Speaker 1: any system that captures data or a period of time, 78 00:04:38,040 --> 00:04:40,960 Speaker 1: they need to aggregate it and you need to visualize 79 00:04:40,960 --> 00:04:44,240 Speaker 1: that data so that your management can make decisions. And 80 00:04:44,279 --> 00:04:48,039 Speaker 1: I think this is a good tool to really combine 81 00:04:48,080 --> 00:04:51,520 Speaker 1: all your data from different systems and help visualize it, 82 00:04:51,560 --> 00:04:55,160 Speaker 1: and that includes cloud systems. Now, the problem here is 83 00:04:55,720 --> 00:04:58,760 Speaker 1: they grew very rapidly. Now it's off of like six 84 00:04:59,240 --> 00:05:03,719 Speaker 1: million will run rate, They're still not profitable. They spend 85 00:05:03,800 --> 00:05:07,200 Speaker 1: more their fifty of their revenue on sales and marketing, 86 00:05:08,160 --> 00:05:11,440 Speaker 1: and once your growth slow So they were growing in 87 00:05:11,480 --> 00:05:15,839 Speaker 1: excess of every quarter. Now it's slowing to like teens 88 00:05:16,000 --> 00:05:19,320 Speaker 1: eighteen seventeen eighteen percent, and expectations are it's going to 89 00:05:19,400 --> 00:05:23,240 Speaker 1: slow down further because competition is rising, because the numbers 90 00:05:23,240 --> 00:05:26,200 Speaker 1: are getting bigger. At scale, you just can't keep growing 91 00:05:26,200 --> 00:05:29,080 Speaker 1: twenty plus. You can do that when you're a two 92 00:05:29,160 --> 00:05:31,640 Speaker 1: hundred million dollar company, but it gets tougher when you're 93 00:05:31,640 --> 00:05:35,520 Speaker 1: a six hundred million dollar company. And investors they give 94 00:05:35,600 --> 00:05:38,760 Speaker 1: you all the benefits of growth as long as you 95 00:05:38,880 --> 00:05:42,599 Speaker 1: keep delivering on the numbers. Once the growth slows, they 96 00:05:42,640 --> 00:05:46,080 Speaker 1: start questioning your profitability. And I think that's what is 97 00:05:46,120 --> 00:05:51,720 Speaker 1: happening with Are there investment opportunities in this space? Yes, absolutely. 98 00:05:51,760 --> 00:05:54,960 Speaker 1: I think as a large company you would want to 99 00:05:55,000 --> 00:05:57,760 Speaker 1: wait for a time like this when valuations have come down. 100 00:05:57,839 --> 00:06:00,840 Speaker 1: So they were at their peak last year, now they 101 00:06:00,880 --> 00:06:04,800 Speaker 1: have come down this year. After the February decline we had. 102 00:06:05,240 --> 00:06:08,840 Speaker 1: And if I'm a Microsoft or and IBM, I'm always 103 00:06:08,880 --> 00:06:11,440 Speaker 1: looking to kind of fill the gaps in my portfolio. 104 00:06:11,760 --> 00:06:13,840 Speaker 1: And there are a lot of smaller companies that are 105 00:06:13,880 --> 00:06:16,200 Speaker 1: out there that are trading cheaper than where they were 106 00:06:16,279 --> 00:06:18,400 Speaker 1: last year, and it's a good time to buy. Of course, 107 00:06:18,440 --> 00:06:22,560 Speaker 1: tom a Bravo, Uh privactly snapped up Click. But then 108 00:06:22,560 --> 00:06:24,120 Speaker 1: who knows, maybe they'll be ready to sell it to 109 00:06:24,160 --> 00:06:26,680 Speaker 1: somebody for more money. But what about this story about 110 00:06:26,800 --> 00:06:30,680 Speaker 1: the Microsoft board pushing Saty Develo for a faster move 111 00:06:30,720 --> 00:06:34,360 Speaker 1: into the cloud. They're not going fast enough. I mean Microsoft, 112 00:06:34,480 --> 00:06:38,520 Speaker 1: It's really a tale of three different segments. One of 113 00:06:38,560 --> 00:06:42,800 Speaker 1: them has accelerated, it's moved to the cloud doing very well. 114 00:06:43,360 --> 00:06:46,599 Speaker 1: The other couple the Windows piece, the operating system piece 115 00:06:46,640 --> 00:06:49,880 Speaker 1: which we are used to on our desktop. Once that 116 00:06:49,960 --> 00:06:53,160 Speaker 1: moves to the cloud, that will really hurt them big time. 117 00:06:53,160 --> 00:06:55,440 Speaker 1: And I think what the board is drawing its attention 118 00:06:55,560 --> 00:06:59,279 Speaker 1: is what is the game plan to move the Windows 119 00:06:59,320 --> 00:07:02,920 Speaker 1: piece to the PLoud? How do we make offset the 120 00:07:02,960 --> 00:07:06,400 Speaker 1: revenue that Windows is generating now when pinks all moved 121 00:07:06,400 --> 00:07:09,000 Speaker 1: to the cloud. And I don't think, uh, the board 122 00:07:09,080 --> 00:07:12,200 Speaker 1: is satisfied with the way company has outlined its strategy. 123 00:07:12,280 --> 00:07:14,040 Speaker 1: It has, like I said, it's done very well in 124 00:07:14,080 --> 00:07:17,680 Speaker 1: the other two segments, the office suite and the infrastructure side. 125 00:07:17,680 --> 00:07:21,000 Speaker 1: It's really the Windows that is the concern, and I 126 00:07:21,040 --> 00:07:25,640 Speaker 1: think rightfully so well active, a lot of activity in 127 00:07:25,640 --> 00:07:28,480 Speaker 1: this space. And Youth Thank you so much. She's software 128 00:07:28,480 --> 00:07:32,720 Speaker 1: almost for Bloomberg Intelligence, kind of bringing us noncloud people 129 00:07:32,800 --> 00:07:35,560 Speaker 1: into the cloud business with him. Thank you so much. 130 00:07:35,600 --> 00:07:39,040 Speaker 1: As Click a very important company is purchased by Toma 131 00:07:39,120 --> 00:07:42,040 Speaker 1: Bravo today. I'm Kathleen Hayes. This is taking Stock on 132 00:07:42,040 --> 00:07:50,800 Speaker 1: Bloomberg Radio. Coming up next oil Opec. They met, but 133 00:07:50,880 --> 00:07:54,240 Speaker 1: they couldn't agree on a production quota. So it's the 134 00:07:54,320 --> 00:07:57,400 Speaker 1: bottom of oil prices really in we'll find out now 135 00:07:57,440 --> 00:07:58,280 Speaker 1: on Bloomberg Radio.