Speaker 1: From Mahard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, Nbon. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and ed Luod love.
Speaker 2: No from New York and San Francisco. This is Bluemberg Technology.
Speaker 3: ARM.
Speaker 2: It's interested in Intel's product division, but Intel turns down.
Speaker 2: ARMS advances and.
Speaker 4: China stocks in the US are set for their best
Speaker 4: week since twenty twenty two, and money is green.
Speaker 2: When it comes to database and nuclear build out. US
Speaker 2: Energy Secretary Grandhome supports the USAI efforts to expand even
Speaker 2: with foreign investment, and bring you her perspective. But first
Speaker 2: we start with the latest chip story. ARM. We understand
Speaker 2: approaching Intel about potentially buying the chip makers product division,
Speaker 2: only to be told that the business isn't for sale,
Speaker 2: according to a source who points out that ARM didn't
Speaker 2: express interest in Intel's manufacturing operations. Now representatives representatives both
Speaker 2: ARM and Intel declined comment. Let's break it all down,
Speaker 2: Bloomberg Intelligence senior analyst Manley saying, the rationale here for
Speaker 2: a company that designs chips is what Mandy.
Speaker 5: Well. So when you think about you know, Armed, they
Speaker 5: provide the IP blocks, they don't design or manufacture their chips,
Speaker 5: and in this case, look, Intel has a lot of
Speaker 5: IP within the company, it's tied to the X eighty
Speaker 5: six architecture. Obviously ARM has a different architecture.
Speaker 6: But when you think about you.
Speaker 5: Know, alterra side or any other business that's adjacent, that's
Speaker 5: where you know, ARM may be interested in acquiring some
Speaker 5: of that instruction set or adjacent clients, whether it's FPBA
Speaker 5: or something along those lines.
Speaker 4: That will be my guest the mandate we resrate that
Speaker 4: according to this Bloomberg ARMS approach to Intel was rebuffed.
Speaker 7: But it's the same logic with Qualcomm.
Speaker 4: Right, they've had success on ARM based processes, why go
Speaker 4: to X eighty six. I note your colleagues had interesting
Speaker 4: research overnight as well that let's say Intel gets even
Speaker 4: deeper into distress and they start looking at options. How's
Speaker 4: ARM going to finance such a thing?
Speaker 6: Well, I mean, look at ARMS valuation.
Speaker 5: It's creating almost fifty percent above Intel's marketcap. And look
Speaker 5: when you do this some of the parts. Obviously, Intel
Speaker 5: has got a lot more businesses that they could divest,
Speaker 5: but in the case of ARMED, their stock is currently
Speaker 5: at probably the best premium within the semi space. So
Speaker 5: it could be stark. I would imagine, you know, it
Speaker 5: will be a buyout of some of the portion of
Speaker 5: Intel's business.
Speaker 6: So clearly we're talking about a.
Speaker 5: Much smaller pie within Intel that ARM is interested in.
Speaker 5: In the case of Qualcom, I mean they were us
Speaker 5: said at least based on the rumors in the bulk
Speaker 5: of Intel's business. So I think it's a different transaction
Speaker 5: if you are looking at ARM versus Pollcom here and.
Speaker 2: All of this, as we say, thus far has just
Speaker 2: been people familiar, particularly with the Qualcom as you called
Speaker 2: it rumor, but we call reporting. I'm interested in Mandy
Speaker 2: more broadly about how benefits in any scenario here or not,
Speaker 2: as the case may be. What if Intel went with
Speaker 2: a Qualcom, for example.
Speaker 5: Well, in the case of ARM, I mean they are
Speaker 5: at a four billion dollar run rate when you look
Speaker 5: at in VideA, you know, over one hundred billion dollar
Speaker 5: in data center revenue built on ARM designs. So clearly
Speaker 5: ARMED has to find a way to expand into adjacent
Speaker 5: categories without really competing with their customers, which in this
Speaker 5: case are the likes of with Video and Apple. So
Speaker 5: that's where I think the IP blocks are probably the
Speaker 5: right way for them to expand into new categories. And
Speaker 5: I don't think they are getting into design or chip manufacturing.
Speaker 5: I mean that I won't be very well received in
Speaker 5: the market.
Speaker 4: Mandeep Intel seventy percent revenue product, about thirty percent manufacturing
Speaker 4: away from approaches to takeover. There is a plan that
Speaker 4: Gelsinger outlined. What does Bloomberg Intelligence make of that plan?
Speaker 5: Well, not all pieces of the plan are viable, and
Speaker 5: that's where you know, doing foundry manufacturing for chips that
Speaker 5: are outside of Intel is so hard because they have
Speaker 5: that like everyone has that perception that Intel will end
Speaker 5: up competing with their customers.
Speaker 7: That's why the likes.
Speaker 5: Of you know, Nvidia or any server chip maker, it's
Speaker 5: very hard to convince them to use Intel's fabs. So
Speaker 5: that's where the foundry businesses where all the struggles are.
Speaker 5: I do think the PC business will come back because
Speaker 5: X eighty six still has a mode and when there
Speaker 5: is a PC repairs se that's the one part of
Speaker 5: the business that will recover nicely. So I'm betting on
Speaker 5: the PC side. We just have to figure out how
Speaker 5: to catch up on the server side, and obviously on
Speaker 5: the foundary side, they really need to partner with hyperscalers
Speaker 5: to improve the margin profile.
Speaker 7: Of their business.
Speaker 4: Bloomberg Intelligence analyst man Deep Singh, thank you very much.
Speaker 4: Now sticking with semiconductors, Tokyo Electron seeks to build a
Speaker 4: team of chip engineers in India to better ride the
Speaker 4: Modi government's push for more semiconductor manufacturing. In an exclusive
Speaker 4: interview with Bloomberg, Tokyo Electron CEO said the company plans
Speaker 4: to hire and train local engineers in or around twenty
Speaker 4: twenty six, with their first task to provide technical services
Speaker 4: to Tata Electronics. He also spoke about where he sees
Speaker 4: AI demand going in the years to come.
Speaker 7: Listen to this.
Speaker 8: Demo. A.
Speaker 9: I think the market has just crossed the threshold of
Speaker 9: the second phase of AI. Our projection is that overall
Speaker 9: chip demand will double in the next five year is
Speaker 9: to a trillion dollars in twenty thirty, boosted by artificial
Speaker 9: intelligence as well as augmented reality, virtual reality and autonomous driving.
Speaker 2: Meanwhile, Chinese equities kept their biggest weekly rally since two
Speaker 2: thousand and eight. Well they burst of trading that overwhelmed
Speaker 2: the Shanghai Stock Exchange, underscoring a shift in investor sentiment
Speaker 2: of course, after Beijing ramped up its economic stimulus, and
Speaker 2: the shift has been felt in Chinese stocks in the
Speaker 2: US as well, where they're set for their best week
Speaker 2: since twenty twenty two. Bloomberg's Emini Grafeo joins US for more.
Speaker 2: Now we're seeing some real risk on Is there a
Speaker 2: fomo trade going on here? As David Tepp has been outlining.
Speaker 8: I think there absolutely is, But we have to remember
Speaker 8: that when you kind of zoom out here, a lot
Speaker 8: of these US listed Chinese stocks are still in negative
Speaker 8: territory on a one to three and five year basis,
Speaker 8: something like you know, Black Rocks, China, ETF. It's still
Speaker 8: a negative territory. But at least for this week, it's
Speaker 8: been an incredible week. And you do have David Tepper
Speaker 8: coming in saying he's going longer on China stocks after
Speaker 8: the both monetary and fiscal stimulus. He said he's snapping
Speaker 8: up shares of Ali Baba and by Do on valuation
Speaker 8: still being low even after these weeks like double digit
Speaker 8: gains in these stocks, and we're also one of the
Speaker 8: most read stories quant hedge funds in China have shorted
Speaker 8: that have shorted Index futures have seen heavy losses this week.
Speaker 8: If you look at a chart of the CSI three
Speaker 8: hundred index and what it's done this week literally a
Speaker 8: horizontal line or a vertical line up, and that has
Speaker 8: really kind of hammered these quant hedge funds that have
Speaker 8: been going short these funds.
Speaker 7: But it's been an incredible week. Yeah, that is vertical
Speaker 7: life crazy, look at that.
Speaker 4: Indeed, Bloomberg Technology loves charts, Emily Graffeo loves charts.
Speaker 7: But why is it so crazy?
Speaker 4: I mean, what is the factors behind the volatility?
Speaker 7: I guess you know to the upside in the case.
Speaker 8: Well, so earlier this week, we had kind of the
Speaker 8: Chinese government coming in finally after kind of refusing to
Speaker 8: bring in stimulus, and they brought in stimulus not just
Speaker 8: on the fiscal side, but also on the monetary side,
Speaker 8: and it continued all week. Just earlier in the week,
Speaker 8: we had seen that the Chinese central banks kind of
Speaker 8: pull back the reserve requirements for banks, so on both
Speaker 8: the monetary and the fiscal side. It was a stimulus
Speaker 8: that investors had been not seeing all year, and that's
Speaker 8: why you had seen those stock market losses all year
Speaker 8: and now when you look at the CSI three hundred,
Speaker 8: the mainland shares, they've erased all the losses for the year.
Speaker 8: So it's all around been kind of investors reacting to
Speaker 8: the macro news. And now it seems like there's kind
Speaker 8: of this momentum trade as the quant hedge funds that
Speaker 8: were short get kicked out, we're seeing a little bit
Speaker 8: of a short squeeze. I mean, I think that chart
Speaker 8: just speaks for itself.
Speaker 2: About the momentum.
Speaker 8: We'll have to see if it continues, because there have
Speaker 8: been some kind of like surprise rallies that don't always
Speaker 8: hold up. And the markets are off next week for
Speaker 8: the holiday, so good point.
Speaker 2: Great context. Also context is reten investors are interesting in
Speaker 2: the Chinese space.
Speaker 8: Yeah, and they've been crushed at least just looking at
Speaker 8: the ETF flows. I go back to MCCHI. That's the
Speaker 8: ticker of the Blackrock China ETF, which we've seen flows into,
Speaker 8: and oftentimes in ETF world, the flows follow the performance,
Speaker 8: so people see these big rallies and then they flow
Speaker 8: in and they kind of miss the top of that trade.
Speaker 8: So we've seen that happen in this particular ETF just
Speaker 8: over the years and again it's still down on the year,
Speaker 8: two year.
Speaker 2: Five year basis.
Speaker 8: So even though there's a big rally today, I think
Speaker 8: a lot of investors have been in the trade for
Speaker 8: a while are still feeling like this is not good enough.
Speaker 7: Bloomberg's Emily Graffair bringing us crazy charts. Thank you, Happy Friday.
Speaker 4: I want to keep the discussion going with City Index
Speaker 4: senior analysts Fionas and Kota, And it's kind of simple story, right,
Speaker 4: Chinese governments, stimulus and those kind of more downtrodden consumer
Speaker 4: facing Chinese technology companies react, particularly the ADRs. How many
Speaker 4: phone calls have you had across your desk this week
Speaker 4: about China and that corner of the market.
Speaker 10: Ah, huge. I mean that's been the main story this week.
Speaker 1: It's followed on as well, obviously from the Federal Reserve
Speaker 1: the previous week, so we've quickly swung attention over to
Speaker 1: China and as you said, those ADRs.
Speaker 10: I mean, we've seen some phenomenal moods.
Speaker 1: Just take for example JD dot Com that's up thirty
Speaker 1: four percent this week, up nine percent today. I mean,
Speaker 1: we've seen some really strong moods and the market's been
Speaker 1: when investors have been keen to pick up on those,
Speaker 1: especially given the sort of downbeat mood that they had been.
Speaker 10: Towards China prior to this week.
Speaker 1: You know, there's really had been that sense that Beijing
Speaker 1: wasn't going to get its act together to really.
Speaker 10: Pull out that that bazooka type.
Speaker 1: Sized a stimulus that the market was actually looking for.
Speaker 1: And this week we actually got a sense that perhaps
Speaker 1: that's actually going to be happening.
Speaker 10: That's what we've seen.
Speaker 1: I mean, the big question here, I think now is
Speaker 1: is this a stabilization move or is this something that
Speaker 1: we're going to see you know, the Chinese authorities really
Speaker 1: support going through the rest of the year.
Speaker 4: If you're just joining us here on Bloomberg Technology, our
Speaker 4: top tech story today is a Bloomberg report that arm
Speaker 4: made an approach to Intel that Intel rebuffed, all according
Speaker 4: to a single source. When you woke up to that
Speaker 4: news this morning, Fiona, what was your reaction, Well.
Speaker 1: I mean Intel's definitely been in the news, hasn't it
Speaker 1: this week? I mean, you know what, this is a
Speaker 1: stock that's really down in the doldrums. It's really been struggling.
Speaker 1: It's obviously been approached by several suitors and.
Speaker 10: This is just the latest now.
Speaker 1: I mean, it all seems a little bit murky and
Speaker 1: unknown where this might be going as far as we
Speaker 1: know that there, it's not moving forward yet. But I think,
Speaker 1: you know, if we consider what's happened to the valuation
Speaker 1: of Intel, obviously down in the dumps right now, and
Speaker 1: it doesn't really look like the turnaround plan is really
Speaker 1: going to do the job that it needs to.
Speaker 10: So that does mean that Intel remains vulnerable.
Speaker 2: We're showing a long term year to day hhart down
Speaker 2: fifty two percent. I want to take that step back, Fiona,
Speaker 2: because it is extraordinary that the icon, one of the
Speaker 2: icons of chip making, would ever be being discussed as
Speaker 2: an acquisition or merger target, Intel, of all names. Fiona,
Speaker 2: how much does that sharpen your investors' minds that this
Speaker 2: current move of AI is so swift you've got to
Speaker 2: be on top of it.
Speaker 10: Yeah, that's a really good point. And I mean, you know,
Speaker 10: if we just think.
Speaker 1: About where Intel was compared to for example, it's appears,
Speaker 1: you know, it was always the riding high, the strong horsemen,
Speaker 1: and that's no longer the case.
Speaker 10: And it has been a relatively rapid decline.
Speaker 1: This year as you pointed out, you know, fifty percent
Speaker 1: of its value lost, and at the same time we've
Speaker 1: seen a huge rally in the valuations of those more
Speaker 1: AI focused stocks, and so that just really highlights that
Speaker 1: point that, you know, this AI trade, it's a rapid
Speaker 1: moving one and you have to be on the ball
Speaker 1: with it. And you know what I think as Intel's
Speaker 1: just lost the edge as far as its tech edge
Speaker 1: is concerned. It's just losing the ball there, and that
Speaker 1: really obviously hasn't helped the share price at all.
Speaker 2: Therefore, your clients, do they want single name exposure, do
Speaker 2: they want to be stop players in this market? Stop pickers,
Speaker 2: or do they want to go broader? They don't want
Speaker 2: to have index exposure so they don't get caught out
Speaker 2: if the wind turns.
Speaker 1: Yeah, do you know we have seen a lot of
Speaker 1: preferential preference towards index stocks just for exactly inducey is sorry,
Speaker 1: just for that reason, in order to be able to
Speaker 1: mitigate risk. There is always that concern of being caught out. Now,
Speaker 1: obviously there are some favorites where our traders and our
Speaker 1: investors are sort of, you know, happy to go into
Speaker 1: the single stocks, but more broadly speaking, we have seen.
Speaker 10: More of a focus on.
Speaker 1: Indices and that also allows for when we sort of
Speaker 1: move towards rotations. You know, I think, particularly with what's
Speaker 1: going on with China this week and what we've seen
Speaker 1: of those concerns in the US previously about sort of
Speaker 1: you know, moving towards the potential hard landing in some
Speaker 1: cases with the weaker than expected job later at the
Speaker 1: start of the summer.
Speaker 10: You know that idea that we might see rotation.
Speaker 1: If you're in an index, that does allow you to
Speaker 1: benefit from those rotations potentially out of tech into EM's
Speaker 1: assets or out of tech into for example, more defensive stocks.
Speaker 10: If we find that the data goes the wrong way, well.
Speaker 2: Data going the right way. On CPI today, City Index
Speaker 2: Senior Analyst Fiona Sincotta, thank you for joining us. Coming up,
Speaker 2: Morale at Germany's largest company is plunging as it goes
Speaker 2: through a major restructuring plan. Details on SAPNX. This is
Speaker 2: Blue Meg Technology. An internal survey shows how morale has
Speaker 2: plunged at Germany's most valuable company, SAP. Only thirty eight
Speaker 2: percent of employees have full trust in the software firm,
Speaker 2: but you never know it as a shareholder look. The
Speaker 2: stock a surge to a record high this year. Bloomberg's
Speaker 2: Jake Ridinski joins us for more. So, what is grinding
Speaker 2: on the employees?
Speaker 7: Jake Well, I think.
Speaker 3: Part of what since shares soaring is the fact that
Speaker 3: they've dot this massive restructuring plan going on at SAP
Speaker 3: that's going to affect about one in ten of workers.
Speaker 3: So you can imagine if you're being forced to be
Speaker 3: either retrained or potentially laid off, you'd not be a.
Speaker 11: Pick that the management's doing doing a great job. This
Speaker 11: is this is the lowest we've We've been tracking this
Speaker 11: number for about three years, and this is the lowest
Speaker 11: since twenty twenty one, So it's it's clear that, you know,
Speaker 11: employees are quite worried about their future at I say,
Speaker 11: despite the really high share price.
Speaker 4: The restructuring was announced in January, and like all software
Speaker 4: companies around the world, it's a pivot to AI.
Speaker 7: I guess there might be.
Speaker 4: A cultural difference between where I am in Silicon Valley
Speaker 4: and where you are in Germany and Europe. And is
Speaker 4: it stock comp like if the stock is doing what
Speaker 4: we're showing on the screen, are don't the employees happy?
Speaker 4: Because they're going along for the ride.
Speaker 11: Well, this is a survey of kind of the rank
Speaker 11: and file employees. So I think a lot of these
Speaker 11: guys are not not really getting getting much in the
Speaker 11: way of conversation from from the strange spit share prices,
Speaker 11: so that also, I imagine would influence how they feel
Speaker 11: about the company. Maybe maybe you see the company's share
Speaker 11: pace storing and piguing. Why am I not getting a raise?
Speaker 4: Invokes Jake Ridinsky. Great to have you on from Germany,
Speaker 4: Thank you very much.
Speaker 2: On Thursday, I caught up with Energy Secretory Jennifer Grahholm
Speaker 2: in Washington at a conference hosted by the Special Competitive
Speaker 2: Studies Project. I asked her about well Open AI CEO
Speaker 2: Sam Altman's efforts to raise a lot of money overseas
Speaker 2: for costly AI infrastructure projects in the United States and
Speaker 2: if there should be any concerns. Here's what she had
Speaker 2: to say.
Speaker 12: Money is green, but I do think it's important to
Speaker 12: have you know, what's the access I guess for those
Speaker 12: who are funding two very sensitive IP right, I mean
Speaker 12: these advanced chips are you know, the g pus for
Speaker 12: AI can be used for a variety of things, and
Speaker 12: we want them to be used in the right way,
Speaker 12: and so does the funder Does that mean you get
Speaker 12: access to the IP that's a question. But but we
Speaker 12: want these data centers built in the US, as I mentioned,
Speaker 12: So however they get funded, as long as that there's
Speaker 12: some boundaries on it, I think it's perfectly fine.
Speaker 2: Money is green. However, I followed up by asking if
Speaker 2: there's any more regulation of AI in general needed his
Speaker 2: her response.
Speaker 12: It's about national security, but it's also about competition, right.
Speaker 12: We want to we want to lead the world in
Speaker 12: in AI, and we are and we want it to
Speaker 12: stay that way, and so we don't want to, you know,
Speaker 12: we don't want to create constraints on that. However, we
Speaker 12: recognize that un constrained AI could also be used in
Speaker 12: a very negative way, and so we want to we
Speaker 12: want to channel that in the right direction.
Speaker 4: Sticking in the realm of hardware and AI, Meta unveiled
Speaker 4: new models of its Quest headset and Meta Connect on Wednesday,
Speaker 4: but also it's augmented reality glass is called Ohryan.
Speaker 7: I sat down with metas CTO.
Speaker 4: Andrew Bosworth to discuss the technology behind those glasses and
Speaker 4: how the company plans to expand on it.
Speaker 7: Listen to this.
Speaker 13: We already have the next two products in development based
Speaker 13: on the technology we developed for Oryan, and we think
Speaker 13: this is just a proof of how exciting the future
Speaker 13: is going to be as these technologies become consumer ready.
Speaker 4: You may or may not guess, so you know, speak
Speaker 4: some of the team and know that that's part of
Speaker 4: the origin story. My understanding is that this is a
Speaker 4: future behavioral change that humans have to make right right now.
Speaker 4: I have a smartphone, I have a laptop, and that's
Speaker 4: the price point you want to come in at. One
Speaker 4: day a Ryan or its next generation sibling will be
Speaker 4: priced to the high end laptop PC.
Speaker 7: What is that price point?
Speaker 4: And is you know, give me something here, you know,
Speaker 4: will I be coming back to Menlo in ten years
Speaker 4: and finally looking at it in a consumer form or
Speaker 4: is it something more real than.
Speaker 13: That long before ten years. Yeah, I think we're more
Speaker 13: than one year away, less than ten years away. But
Speaker 13: we have a very clear line of sight to a
Speaker 13: consumer product.
Speaker 7: The price isn't clear to us yet.
Speaker 13: One of the big things going from a prototype like
Speaker 13: this is understanding what can we learn that allows us
Speaker 13: to simplify or what do we need to keep in
Speaker 13: future designs and that's going to control where the price lands.
Speaker 13: But we really want to get this into a price
Speaker 13: point of form factor that not just consumers use it,
Speaker 13: but developers want to build for it.
Speaker 4: The breakthrough in technology is actually in a material silicon
Speaker 4: carbide that allows for all of this in the lenses.
Speaker 7: How does the supply chain look like a silicon carbide
Speaker 7: for somebody that wants to do consume attach.
Speaker 13: Yeah, silicon carbide was you know, the first place we
Speaker 13: looked for super high indexed glass that's refractive and that's
Speaker 13: really important for what we do for these lenses. I
Speaker 13: will say it's an incredibly difficult material to produce and
Speaker 13: to work with, and so we are also looking at
Speaker 13: multiple materials that we could use to replicate this functionality
Speaker 13: and again at a hopefully more competitive price point.
Speaker 7: That was meta CTO Andrew Bosworth.
Speaker 2: Welcome back to Bluebog Technology and Caroline Hyde in.
Speaker 7: New York in San Francisco.
Speaker 2: Quick check on these markets, because well, we have had
Speaker 2: a strong week not only for the NASDAK and the
Speaker 2: text talks, but also for some other risk assets. Bitcoin
Speaker 2: on Fire are up another five percent for the week,
Speaker 2: and we're seeing basically the highest since July of this year,
Speaker 2: but we're also seeing the highest of July this year
Speaker 2: for the NASDAK two three straight weeks of gains. Move
Speaker 2: on and have a look at what ultimately the risk
Speaker 2: on action means for individual names. Looking at micro strategy
Speaker 2: to the higher side. Add surprisingly with Crypto moving and
Speaker 2: managing to have a really good month of September in general,
Speaker 2: PDD extraordinary week, biggest move on record for these ADRs
Speaker 2: those names that are traded here in the United States.
Speaker 2: Of course, why well, all of that money being pumped
Speaker 2: into Chinese economy means good news for the Chinese stocks
Speaker 2: I signal one out here. Meanwhile, Intel on the downside
Speaker 2: now off by four tens percent, following the rest of
Speaker 2: the socks and the chip industry more broadly well, once
Speaker 2: again being sniffed around by various competitors or frenemies in
Speaker 2: the space. This time aren't potentially analyzing and being rebuffed
Speaker 2: according to sources, but Intel currently to the lower side.
Speaker 2: Ed what if you've got Let's.
Speaker 7: Go to another top story out of Europe.
Speaker 4: Amazon's four billion dollar investment pack with Aifirmanthropic was cleared
Speaker 4: by the UK's competition and Markets Authority, which has been
Speaker 4: increasingly hawkish on big tech. Let's go out to our
Speaker 4: tech editor in London, Amy Thompson, and the CMA explained
Speaker 4: their reasoning for letting this pass.
Speaker 7: What was that reasoning, Amy, Yeah, it.
Speaker 14: Was basically, the anthropic doesn't have enough of a market.
Speaker 2: In the UK for them to have jurisdiction.
Speaker 14: And we've kind of seen this with a few of
Speaker 14: the cases that they've taken on were I think they
Speaker 14: looked at UH Microsoft Inflection for example, and they came
Speaker 14: to a similar conclusion. So they're having a lot of
Speaker 14: look at these UH, these big tech slash AI deals,
Speaker 14: but there's not a whole lot of UH regulation happening.
Speaker 2: I guess that's a theme across here too. Amazon's investment
Speaker 2: is also being considered by the US FTC. How much
Speaker 2: is it giving these big tech companies polls?
Speaker 14: I mean, it's it's part of the same concern that
Speaker 14: we've seen from regulators UH not just in the UK,
Speaker 14: UH but in the US and Europe about the dominance
Speaker 14: that these UH big tech platforms have. And the latest
Speaker 14: iteration is a concern about I think what the CMA
Speaker 14: called UH web of connections UH with some of these
Speaker 14: buzzy AI startups and whether all of these connections we're seeing, uh,
Speaker 14: you know, Microsoft up and AI, uh Amazon anthropic, Google
Speaker 14: anthropic Microsoft inflection is uh hurting the market. But I
Speaker 14: don't think we've really seen anybody land a blow on
Speaker 14: big tech so far.
Speaker 2: The FDC hasn't.
Speaker 14: Really given an update since January. The UK's investigation into
Speaker 14: the Google anthropic relationship, you know, would appear to be
Speaker 14: based on the same premises as the Amazon one. The
Speaker 14: EU had to let the Open Ai Microsoft's deal go
Speaker 14: as well because I didn't qualify as a merger, you know.
Speaker 14: So you know, I don't think they've really landed a blow.
Speaker 4: It begs the question then, about the pipeline for deals,
Speaker 4: either where you are in the UK and Europe or
Speaker 4: where I am in the States.
Speaker 7: What is in the pipeline?
Speaker 14: Amy, Oh, what is in the pipeline for deals? I mean,
Speaker 14: I think I think if you're a startup in Europe,
Speaker 14: for example, you're not sad to see results like this.
Speaker 14: You're you're happy to see big tech companies being able
Speaker 14: to come in and throw their weight around and give
Speaker 14: you billions of investment and give you some compute and
Speaker 14: give you access to chips, you know, but it does
Speaker 14: leave us with the same problem out in the UK
Speaker 14: and Europe that we've had for a while, which is,
Speaker 14: you know, our tech scene is still dominated by big
Speaker 14: US players.
Speaker 2: Amy Thompson really on top of the European tech side.
Speaker 2: We thank you. Meanwhile, five Tran, a data movement company
Speaker 2: which helps power open AIS products, is announcing it just
Speaker 2: to past three hundred million dollars in annual recurring revenue,
Speaker 2: up from two hundred million in twenty twenty three, but
Speaker 2: also striking new deals and relationships with some KEYAI players.
Speaker 2: CEO five trans George Fraser, joins us. Now let's just
Speaker 2: dwell on the numbers. Thus far six and a half
Speaker 2: thousand businesses around the world you now serve doing exactly
Speaker 2: what George.
Speaker 15: Yeah, very nice to be with you. So what via
Speaker 15: trend does is simple. On the outside, our customers are
Speaker 15: businesses that use tools like Salesforce, like Azure, like Oracle,
Speaker 15: like Workday like SAP, lots of tools to run their businesses.
Speaker 15: And what five Trend does is we gather all that
Speaker 15: data together in one place and they're able to use
Speaker 15: it to understand what's happening in their business, how their
Speaker 15: customers are using their product, optimize supply chains, all kinds
Speaker 15: of things. But the crux of what fivetrend does is
Speaker 15: it gets all your data in one place.
Speaker 2: And that is pretty helpful for large language models. I'm
Speaker 2: assuming how does it benefit open Ai?
Speaker 15: Yeah, so open ai is a great five trend customer.
Speaker 15: They're a very comprehensive use case. We centralize data about
Speaker 15: all aspects of open AI's business from all kinds of
Speaker 15: data sources, and the primary thing they do with it
Speaker 15: is use it to understand how people are using their
Speaker 15: products and guide the next generation product development.
Speaker 7: George Witch, executive or leader at open Ai, did you
Speaker 7: negotiate the partnership with We.
Speaker 15: Work with a lot of people at open Ai. We
Speaker 15: have a Slack channel with them where there's and activities.
Speaker 15: Sometimes it's a little hard to tell, you know, who
Speaker 15: is whose counterparty. I joke that I am the chief
Speaker 15: customer support agent of the open ai account. I'm in
Speaker 15: there every week. But there's a lot there's a lot
Speaker 15: of people at opening that.
Speaker 7: We work with.
Speaker 15: I don't know who would be the one that I
Speaker 15: would name.
Speaker 4: So the reason I ask is you explained how the
Speaker 4: sort of contract relationship works and how the data works.
Speaker 4: But as you will have seen the reporting, you know
Speaker 4: Mira Marati has decided to leave and there's consideration about
Speaker 4: a transfer for a nonprofit with a for profit subsidiary
Speaker 4: to a B corp. As a company doing business with
Speaker 4: open Ai, what does that make you think?
Speaker 15: I think we're going to continue to have a great relationship.
Speaker 15: I think open Ai is a great company. I think
Speaker 15: they've had a complicated history because the their their product
Speaker 15: took off so explosively, unlike anything that's ever happened before.
Speaker 15: We saw it because we were replicating data for them
Speaker 15: back then. We saw their account go to the go
Speaker 15: to the moon in data volumes. So I think it's
Speaker 15: it's very exciting everything that's happening in open Ai. There's
Speaker 15: some drama that has come with it, but I think
Speaker 15: from where I said, the people I interact with they're
Speaker 15: navigating it very well.
Speaker 2: What are their accounts are going to the moon?
Speaker 15: George, some big some big customers that have been growing
Speaker 15: with us a lot recently. For example, LVMH. We were
Speaker 15: just talking about what's going on in Europe a moment
Speaker 15: ago on the previous segment. So LVMH is a big customer.
Speaker 15: There a different kind of use case. They're mostly centralizing
Speaker 15: data from earps from SAP in order to do supply
Speaker 15: chain optimization and things like that. But that's another great
Speaker 15: example of a big customer right now.
Speaker 4: Yes, we've been covering that company during the show today.
Speaker 4: On your ar R growth, it's really interesting companies like yours,
Speaker 4: it's year on year quite to jump. What did you
Speaker 4: have to do to get there? A big sort of
Speaker 4: hiring effort on the sales team. What is the kind
Speaker 4: of cost of that revenue growth?
Speaker 15: You know, in the last year, Like a lot of
Speaker 15: technology companies, the last couple of years, we have discovered
Speaker 15: rediscovered efficient growth and so the headcount of five Tran
Speaker 15: has not grown a ton in the last couple of years.
Speaker 15: We've been able to grow the revenue and grow the
Speaker 15: number of customers and do more with more or less
Speaker 15: the same amount of people at the company. I think
Speaker 15: it's just it's a lot of hard work by the team.
Speaker 15: It's a lot of word of mouth out there in
Speaker 15: the market that five Tran works. Five Tran solves what
Speaker 15: can be a very ugly problem for companies of getting
Speaker 15: their data from all these systems wrangled together, and I
Speaker 15: think that's what's driving our growth.
Speaker 2: I mean speaking to of vcs George, and a lot
Speaker 2: of them will say. The hard thing is to understand
Speaker 2: how long these customers are locked in for, how repeatable
Speaker 2: this sort of growth is, to decide really where the
Speaker 2: return on aim vestment is coming, George, of this run rate,
Speaker 2: do you think it will increase a similar sort of level.
Speaker 15: The market for what we do is enormous. Most data
Speaker 15: centralization is do it yourself. It's not mostly other companies
Speaker 15: that we compete with, its internal pipelines that people build
Speaker 15: themselves and convincing them that they don't have to do
Speaker 15: that anymore. So the total market for centralizing data in
Speaker 15: the way that we do is tens of billions of dollars.
Speaker 15: So in principle we have the ability to grow at
Speaker 15: a high rate for decades. There are challenges, there are
Speaker 15: things we need to make better about our products, there
Speaker 15: are things we need to execute better on, but we
Speaker 15: believe that the ceiling for us is very high.
Speaker 4: George Fraser, CEO of five trand really appreciate you being
Speaker 4: here on bloomber Technology doing business with some very interesting
Speaker 4: names in the world's tech Now coming up our conversation
Speaker 4: with tech entrepreneur Alexis Ohanian of seven seven six and
Speaker 4: his latest investment is in the field of sports. Really
Speaker 4: interesting one that's next. This is Bloomberg Technology. Alexis o'hanian.
Speaker 4: You know him as an entrepreneur, a tech titan, an investor,
Speaker 4: and now more than ever a heavyweight in supporting female athletes,
Speaker 4: once invested in Angel City Football Club and now betting
Speaker 4: big on professional track and field with his company AFLOSS.
Speaker 4: Here's Alexis on how Athlos seems to be lucrative for athletes.
Speaker 16: Ten percent of all the revenue spent four AFLOS. So
Speaker 16: that's broadcast, that's tickets, that's merchant, it's hot dogs, goes
Speaker 16: indoor pool and is divided evenly among every one of
Speaker 16: the thirty six women who lines up to compete tonight.
Speaker 16: And that's in addition to the record breaking person. And
Speaker 16: it's just the start. And so how long will it take?
Speaker 16: I don't know, but I believe this sport, it's the
Speaker 16: original professional sport. This sport can and should be as
Speaker 16: big outside of the Olympics as it is during. And
Speaker 16: if we can do that, then there's no reason why
Speaker 16: we can't have purses and prizes that well.
Speaker 4: As Alexis, and yet track and Field stars are underpaid.
Speaker 4: You know, that is kind of commonly held belief. And
Speaker 4: then I think about a lot of what you just
Speaker 4: touched on. So take Angel City FC. My relationship with
Speaker 4: Angel City is I have a friend that plays in
Speaker 4: the squad, Megan Reid.
Speaker 7: Right, That's how I was exposed to them.
Speaker 4: But I also was exposed through Apple TV. I don't
Speaker 4: see the same level with track and Field on the
Speaker 4: streaming platforms.
Speaker 7: What does a.
Speaker 4: Media deal not yet? But what does a media deal
Speaker 4: for track and field look like?
Speaker 16: Well, I think we got phase one from our friends
Speaker 16: at Box to Box, who produced a show called Sprints
Speaker 16: that captivated us on Netflix. And when we looked at
Speaker 16: partners for Athletis, remember this is today, it's just one
Speaker 16: event happening yearly. We want it to be the biggest
Speaker 16: spectacle of the sport of entertainment. We got DJD Nice,
Speaker 16: We've got Megnae Stallion performing. This is going to be
Speaker 16: one of the best events any New York sports fan
Speaker 16: will have been to. That that was our goal, and
Speaker 16: when we looked at streaming partners, we said, Okay, this
Speaker 16: is a global sport. The fan base is everywhere. They
Speaker 16: want access, so we need to make it accessible. So
Speaker 16: we wheeled and deal with different partners who understood that
Speaker 16: was our goal, and we were able to get to
Speaker 16: a place where, yeah, you can watch on an ESPN
Speaker 16: plus awesome. You can also watch it on x you
Speaker 16: can watch it on YouTube, you can watch it on
Speaker 16: his own and so access, especially globally was so important.
Speaker 16: But again this is still phase one. I'm going to
Speaker 16: tell you a much different story come Monday morning, because
Speaker 16: we have a re air on ESPN two on Sunday.
Speaker 16: Exactly the number of people who watched, who tuned in,
Speaker 16: who tweeted, who posted, who talked about it, and those
Speaker 16: are the numbers. That's the first step is to say, look,
Speaker 16: here is the thing. What if we invested real money
Speaker 16: outside of the Olympics into one of these track events?
Speaker 6: Will people show up?
Speaker 16: Will people tune in? I think they will because these
Speaker 16: women are no less excellent when the Olympics end, right
Speaker 16: and so putting them on the stage, giving them this
Speaker 16: high profile attention, I think they'll deliver.
Speaker 2: An exos Hanian of seven seven six. Now, DirectTV and
Speaker 2: Dish are said to be in advanced talks to merge
Speaker 2: in a move that will create the largest US PayTV provider.
Speaker 2: According to sources, the agreement could be announced as soon
Speaker 2: as the coming days. For more by Michelle Davis joins US. Now,
Speaker 2: why combine eleven million subscribers on one side eight million
Speaker 2: on the other.
Speaker 17: So this is a deal that's been a really long
Speaker 17: time coming. The two of these companies attempted this merger
Speaker 17: more than twenty years ago, regulators blocked it, and it
Speaker 17: seems like now the stars or the planets are aligning
Speaker 17: for them because the world has changed so much in
Speaker 17: the past twenty years. The way that you and me
Speaker 17: view content has changed completely. It used to be twenty
Speaker 17: years ago that PayTV was the thing, you know, cable
Speaker 17: satellite Now streaming as we all know, has really taken over,
Speaker 17: and so a deal like this is really about survival
Speaker 17: for these two comppanies.
Speaker 4: Michelle, reading your story, it sounds like this is close,
Speaker 4: right close to getting over the line, at least from
Speaker 4: a sort of deal perspective.
Speaker 7: What are you hearing about how it came together?
Speaker 17: So you know, it's been an off and on situation
Speaker 17: for more than two decades, but there are a couple
Speaker 17: of things that had to happen recently for it to
Speaker 17: be the perfect time for it to be coming soon.
Speaker 17: We're hearing that the deal could get announced as soon
Speaker 17: as Monday. Some of those things include, you know, TPG
Speaker 17: and AT and T both own Direct TV through a
Speaker 17: JV and as part of the deal that they struck
Speaker 17: a few years ago, there was a provision that said
Speaker 17: AT and T could not exit it's seventy percent stake
Speaker 17: until this past summer. And now that that has passed,
Speaker 17: it gives direct TV, you know, the corporate governance ability
Speaker 17: to do something like this. And on the dish side,
Speaker 17: Charlie Ergan, the billionaire who controls Dish Echo Star, he
Speaker 17: has been dealing with some issues on the dead side.
Speaker 17: He's spent a ton of money trying to buy Spectrum
Speaker 17: to build out the wireless business, and he has some
Speaker 17: big debt maturities coming due. And so the view is
Speaker 17: that all of this coming together at the same time
Speaker 17: could help solve both of these problems at once.
Speaker 2: EchoStar, TPG, AT and T the names behind some big
Speaker 2: stakes here. Do they remain committed to investing in the
Speaker 2: future business.
Speaker 17: So everything is still in flux, but Our understanding is
Speaker 17: that at this point it does sound like the stakeholders
Speaker 17: will remain stakeholders. There might be a way for some
Speaker 17: folks to take money off the table. DirecTV does generate
Speaker 17: a lot of cash flow for AT and T and TPG,
Speaker 17: so the assumption would be they would want to keep
Speaker 17: some of that, but you know, something like this would
Speaker 17: help them exit a bit if they wanted to sow.
Speaker 2: Thanks for breaking it down and what you're looking at.
Speaker 4: More news in today's Talking Tech and First Up. Ireland
Speaker 4: has fined Meta nearly one hundred and two million dollars
Speaker 4: this after Meta notified the country's Data Protection Commission that
Speaker 4: quote inadvertently stored passwords of some users in its internal
Speaker 4: system without encryption or protection. Plus, game developer Virtuous is
Speaker 4: set to acquire a Japanese studio in the coming months
Speaker 4: as it plans to expand its presence in the country.
Speaker 4: According to its CEO, Virtuous is inactive talks with multiple studios,
Speaker 4: focusing on targets that have one hundred or fewer staff
Speaker 4: but a track record of reliability and TikTok owner Bike
Speaker 4: Dance is set to sign a ten point eight billion
Speaker 4: dollar loan. That's according to sources, About twenty lenders comprised
Speaker 4: of international and Chinese banks are said to be funding
Speaker 4: the deal, and it would mark the largest loan in
Speaker 4: Asia on record.
Speaker 2: Apple shares on the month continuing to outperform and from
Speaker 2: avoiding volatility despite growing concern around iPhone sales growth. Now
Speaker 2: a Bloomberg Intelligence survey has found that the iPhone sixteen
Speaker 2: did not excite consumers enough to warrant a smartphone super cycle,
Speaker 2: and sales growth will be just three percent year over
Speaker 2: year instead of previously projected five percent. Yesterday, analysts Morgan
Speaker 2: Stanley in UBS both noted that iPhone sixteen lead times
Speaker 2: are tracking lower than previous years discussed at all BLOMG
Speaker 2: Intelligence senior analyst Anna Ragrana, did these numbers catch you
Speaker 2: by surprise?
Speaker 6: Yeah.
Speaker 18: I think the surprising factor was we thought it will
Speaker 18: at least match last year's refresh rate, but it's declined slightly.
Speaker 18: So when you look at it and you ask people, like,
Speaker 18: you know, how in the next twelve months, how many
Speaker 18: people are going to upgrade their phones?
Speaker 6: And that number was somewhere around fifty five percent.
Speaker 18: Last year, it was around sixty the year before it
Speaker 18: was sixty four so every year we are seeing a
Speaker 18: decline in that number, which means people are keeping their
Speaker 18: phone for a longer period of time. Now, whether that's
Speaker 18: driven by cost or whether that's driven by the phone
Speaker 18: being much better than previous years, but you know, one
Speaker 18: would have thought with AI features you could have seen
Speaker 18: a slight bump in that.
Speaker 4: ANARAG survey data has been a big focus for Apple
Speaker 4: investors recently. Could you kindly explain the methodology of the
Speaker 4: Bloomberg Intelligence survey for the iPhone sixteen and also kind
Speaker 4: of the breadth and depth of the data that you obtained.
Speaker 18: Yeah, in this case, we go out and look at
Speaker 18: US consumers and see what kind of phone are they
Speaker 18: looking to buy, whether they are looking to buy the
Speaker 18: Promax phone or the prophone, what are the reasons they
Speaker 18: want to upgrade, how many of them want to upgrade,
Speaker 18: how many of them want to switch over? And one
Speaker 18: thing was clear, whether it was Android users or Apple users,
Speaker 18: both said that they're going to keep the phone for
Speaker 18: a longer period of time. Apple intelligence actually fell really
Speaker 18: low in the ranking of the reasons they want to upgrade.
Speaker 18: The reason still remains the same that the last few years,
Speaker 18: whether it's storage, processing, power or camera, which was in
Speaker 18: line with what we were expecting. Now, one reason for
Speaker 18: this could be that we haven't really seen the soft
Speaker 18: gare upgrade in terms of any UAI features that consumers
Speaker 18: are using. These phones are capable of doing it, but
Speaker 18: we don't have those features, and that will be launched
Speaker 18: over the next twelve months. So I think that sentiment
Speaker 18: could change as we see these features launch over the
Speaker 18: next year or so, and that.
Speaker 2: Is where the tension lies investors looking towards the longer
Speaker 2: term adoption here, perhaps not this particular moment of frenzy
Speaker 2: outside the stores.
Speaker 18: I agree with you, and in fact, we think next
Speaker 18: year's model is going to be a bigger upgrade or
Speaker 18: the reason for if people to upgrade, because.
Speaker 6: It's going to look different the hard ware.
Speaker 18: Mark Goverman has done a very good job of telling
Speaker 18: people that iPhone seventeen is where you should see some
Speaker 18: improvement in that and hopefully by that time.
Speaker 6: We will see all the AI features launched.
Speaker 18: So those two factors I think would be compelling enough
Speaker 18: for Apple iPhone sales to go up dramatically.
Speaker 4: Blueberg intelligence scene around there, Santa Agvrana with an important
Speaker 4: piece of survey data in Carra. I'm just going to
Speaker 4: reflect on sign real quick, which is word of mouth.
Speaker 4: Think back to metaconnect and Ryan and the small number
Speaker 4: of people that got to see it. It might never
Speaker 4: see that light of day. But with Apple Intelligence that's
Speaker 4: not out yet. Maybe seeing is believing. So when it
Speaker 4: does come out, people say, oh, I'd quite like to
Speaker 4: try that out, maybe they go buy a new iPhone.
Speaker 4: I just always think about that in the context of tech.
Speaker 2: I'm always questioning the demographics of who's actually playing with
Speaker 2: it is as well. Is it everyone that's based in
Speaker 2: Silicon Valley versus the rest of the world. Is it
Speaker 2: men versus women? Is it young versus old? Who is
Speaker 2: actually playing with the meta AI or chatchpt and wanting
Speaker 2: to do it? On Apple Intelligence as well? So much
Speaker 2: to debate. It's been a big week. Boy, that does
Speaker 2: it for this sedition of Bloomberg Technology.
Speaker 4: You know where to recap on the podcast and exactly
Speaker 4: where to find it from New York and SF. This
Speaker 4: is Bloomberg Technology.