1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple Coarclay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,520 Speaker 1: or watch us live on YouTube. 6 00:00:24,079 --> 00:00:27,560 Speaker 2: Big story in the tech space today Oracle with some 7 00:00:27,680 --> 00:00:31,080 Speaker 2: news out there talking about maybe pushing back some of 8 00:00:31,440 --> 00:00:33,600 Speaker 2: their rollout. It's been a little bit of a headwind 9 00:00:33,680 --> 00:00:36,000 Speaker 2: for just the last several trading sessions for some of 10 00:00:36,000 --> 00:00:39,360 Speaker 2: these AI names. Oracle stock off five point eight percent today. 11 00:00:39,560 --> 00:00:42,320 Speaker 2: Joining us is Anna rog Ran, a senior techanist for 12 00:00:42,320 --> 00:00:46,080 Speaker 2: Bloomberg Intelligence. Anrag what's the latest from our friends at Oracle. 13 00:00:47,560 --> 00:00:49,680 Speaker 3: Yeah, from what I just heard is that they're having 14 00:00:49,720 --> 00:00:52,640 Speaker 3: some delay in getting the data centers online, and as 15 00:00:52,640 --> 00:00:55,560 Speaker 3: we know, if the data centers don't come online, the 16 00:00:55,920 --> 00:00:59,320 Speaker 3: servers are not let up, you really cannot transform that 17 00:00:59,400 --> 00:01:02,000 Speaker 3: big back walk into sales, and I think that has 18 00:01:02,040 --> 00:01:04,840 Speaker 3: been a big concern for everybody. This just shows that 19 00:01:04,880 --> 00:01:07,000 Speaker 3: it's not going to be a linear line to go 20 00:01:07,160 --> 00:01:10,200 Speaker 3: from funding to get the data centers lined up and 21 00:01:10,240 --> 00:01:12,800 Speaker 3: then recognition. So I think that's a hiccup for them. 22 00:01:12,880 --> 00:01:15,600 Speaker 3: It you know, in our calculations, it does impact that 23 00:01:15,760 --> 00:01:18,679 Speaker 3: FI twenty eight sales, but not the ones that you 24 00:01:18,680 --> 00:01:20,200 Speaker 3: know in the next let's say twelve. 25 00:01:20,040 --> 00:01:22,840 Speaker 4: Months now, Anaag. You know, Paul and I were noting 26 00:01:22,880 --> 00:01:26,480 Speaker 4: earlier that the delay seems to be incited to labor 27 00:01:26,600 --> 00:01:29,680 Speaker 4: and material shortages, right, and so could you just break 28 00:01:29,680 --> 00:01:31,360 Speaker 4: it down a little bit for a listener. So what 29 00:01:31,600 --> 00:01:35,400 Speaker 4: actually is involved in this data center build out? Which 30 00:01:35,959 --> 00:01:39,000 Speaker 4: and why is it so subject to you the potential 31 00:01:39,040 --> 00:01:39,959 Speaker 4: for delay such as this. 32 00:01:41,480 --> 00:01:44,720 Speaker 3: See, it's no different than building any manufacturing, a factory 33 00:01:44,840 --> 00:01:47,480 Speaker 3: or anything else. I mean, you'd have labor the biggest 34 00:01:47,480 --> 00:01:50,800 Speaker 3: bartneck right now for everybody's power. So let's assume that 35 00:01:50,920 --> 00:01:53,680 Speaker 3: these big vendors have figured out they've found like somewhere 36 00:01:53,680 --> 00:01:56,960 Speaker 3: in Wisconsin or someone in Atlanta, they found a place 37 00:01:56,960 --> 00:01:58,800 Speaker 3: where they haven't have power. Then you got to go 38 00:01:58,840 --> 00:02:03,200 Speaker 3: out and build a data center. Cooling, equipment, labored, all 39 00:02:03,240 --> 00:02:05,320 Speaker 3: of that stuff that has nothing to do with technology 40 00:02:05,840 --> 00:02:08,040 Speaker 3: is the one that need is needed for the next 41 00:02:08,120 --> 00:02:10,600 Speaker 3: let's say two years to get the data centers up 42 00:02:10,639 --> 00:02:12,600 Speaker 3: and running. Then you got to put the chips in there, 43 00:02:12,919 --> 00:02:15,600 Speaker 3: and then finally realize that revenue. 44 00:02:16,800 --> 00:02:19,120 Speaker 2: Is there a backlog that they quote, give us a censor? 45 00:02:19,240 --> 00:02:21,359 Speaker 2: Is that a good numbered thing? Representative? 46 00:02:21,440 --> 00:02:25,720 Speaker 3: Oh, it is absolutely spectacular. That number is five hundred 47 00:02:25,760 --> 00:02:28,960 Speaker 3: billion dollars and out of that five billion, three hundred billion, 48 00:02:29,120 --> 00:02:31,720 Speaker 3: over three hundred billion is from open Ai. So if 49 00:02:31,720 --> 00:02:33,800 Speaker 3: you go back a few years, this backlog was to 50 00:02:33,840 --> 00:02:37,079 Speaker 3: be honest in material or not much. But what has 51 00:02:37,160 --> 00:02:40,560 Speaker 3: happened is open Ai has this absolute need to go 52 00:02:40,680 --> 00:02:44,920 Speaker 3: out and build capacity so that they can do both 53 00:02:45,200 --> 00:02:47,720 Speaker 3: inferencing for a lot of the workloads that are coming in, 54 00:02:47,960 --> 00:02:50,800 Speaker 3: but more importantly, they can train their models so that 55 00:02:50,880 --> 00:02:53,760 Speaker 3: their next generation models are better than let's say, what 56 00:02:53,840 --> 00:02:57,079 Speaker 3: Google has produced. So it's an important, you could say, 57 00:02:57,080 --> 00:02:59,760 Speaker 3: strategy for them in order to get that data center 58 00:02:59,800 --> 00:03:02,880 Speaker 3: up and running. And for now they have been partnering 59 00:03:03,000 --> 00:03:05,160 Speaker 3: more with Article than anybody else at this point. 60 00:03:06,720 --> 00:03:09,800 Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this. 61 00:03:13,400 --> 00:03:17,120 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 62 00:03:17,200 --> 00:03:20,240 Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android 63 00:03:20,280 --> 00:03:23,600 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 64 00:03:23,639 --> 00:03:26,440 Speaker 1: you get your podcasts, or watch us live on. 65 00:03:26,320 --> 00:03:30,280 Speaker 5: YouTube the tech story. There's a couple of tech stories here. 66 00:03:30,280 --> 00:03:35,120 Speaker 2: Oracle pushing out some of their plans, Broadcom putting out 67 00:03:35,160 --> 00:03:37,520 Speaker 2: some numbers at the street a little bit disappointed, and 68 00:03:37,560 --> 00:03:39,440 Speaker 2: so it's kind of contributed to himself in some of 69 00:03:39,440 --> 00:03:41,400 Speaker 2: these broader tech names. Let's break it down with Ku 70 00:03:41,480 --> 00:03:44,480 Speaker 2: Johan Subani. He is Bloomberg Intelligence Senior Semiconductor and I 71 00:03:45,120 --> 00:03:48,240 Speaker 2: let's start with Broadcom. Can you break down what's going 72 00:03:48,240 --> 00:03:48,760 Speaker 2: on over there? 73 00:03:48,960 --> 00:03:53,360 Speaker 6: Souper John Cunten, Yeah, I mean, look, fundamentally, it was 74 00:03:53,480 --> 00:03:57,680 Speaker 6: one of the great and very strong AI semis report 75 00:03:57,800 --> 00:04:01,120 Speaker 6: this quarter. I could not find a lot wrong in 76 00:04:01,200 --> 00:04:04,480 Speaker 6: the numbers. I mean they upsided their AI revenue numbers 77 00:04:04,520 --> 00:04:07,760 Speaker 6: by twenty percent above the street for next quarter. They 78 00:04:07,800 --> 00:04:12,800 Speaker 6: even guided their backlog or provided their backlog, which as 79 00:04:12,800 --> 00:04:16,200 Speaker 6: of today would imply an upside from street numbers for 80 00:04:16,279 --> 00:04:19,600 Speaker 6: the next year, even the next eighteen months. So I 81 00:04:19,640 --> 00:04:21,960 Speaker 6: don't know what more better they could have done. 82 00:04:22,320 --> 00:04:22,440 Speaker 2: This. 83 00:04:22,560 --> 00:04:24,840 Speaker 6: By the way, backlog is like the baseline that they 84 00:04:24,839 --> 00:04:28,640 Speaker 6: could continue and building to that backlog and hence moving 85 00:04:28,680 --> 00:04:30,960 Speaker 6: the numbers up as of this morning on the street, 86 00:04:30,960 --> 00:04:32,920 Speaker 6: if we look at it, all the numbers up for 87 00:04:32,960 --> 00:04:35,200 Speaker 6: the next year and the next two years have gone up, 88 00:04:35,320 --> 00:04:38,279 Speaker 6: especially for the key area, which is their AI revenue. 89 00:04:38,320 --> 00:04:42,000 Speaker 6: So nothing wrong fundamentally here. It just seems it's just 90 00:04:42,440 --> 00:04:45,599 Speaker 6: that state in the market when it comes to AI 91 00:04:45,720 --> 00:04:49,600 Speaker 6: valuations and AI sentiment that so sort of no good 92 00:04:49,680 --> 00:04:50,960 Speaker 6: news is good enough right now? 93 00:04:51,320 --> 00:04:53,719 Speaker 4: Yeah, Well, Kunden, a lot of attention being paid to 94 00:04:53,880 --> 00:04:57,159 Speaker 4: that seventy three billion dollar backlog that you're mentioning. It 95 00:04:57,160 --> 00:05:00,080 Speaker 4: seems like the market isn't really rewarding Broadcome for that. 96 00:05:00,160 --> 00:05:02,880 Speaker 4: But what does that actually tell us about the demand 97 00:05:03,520 --> 00:05:06,159 Speaker 4: for these products across the semiconductor supply chain. 98 00:05:07,520 --> 00:05:08,479 Speaker 2: Yeah, a couple of things. 99 00:05:08,520 --> 00:05:10,920 Speaker 6: Look, one thing we are all aware of which every 100 00:05:11,160 --> 00:05:15,000 Speaker 6: AI accelerator company, whether it's in media, IMD, Broadcom or Morble, 101 00:05:15,120 --> 00:05:18,240 Speaker 6: is enjoying, is the rising capex from all the hyperscalers 102 00:05:18,240 --> 00:05:21,160 Speaker 6: in the cloud guys, which is a very well covered story. 103 00:05:21,440 --> 00:05:24,880 Speaker 6: But for specifically for someone like a Broadcom who does 104 00:05:25,000 --> 00:05:30,200 Speaker 6: the A six custom accelerators for the likes of Google Meta. 105 00:05:30,440 --> 00:05:32,400 Speaker 6: Amazon also has their own chip, but that's not what 106 00:05:33,320 --> 00:05:35,839 Speaker 6: they work with Marvel on that the demand for these 107 00:05:35,920 --> 00:05:39,320 Speaker 6: chips is rising much faster. So even if there were 108 00:05:39,360 --> 00:05:42,880 Speaker 6: some concerns that how long can the hyperscalers keep rising 109 00:05:42,920 --> 00:05:47,760 Speaker 6: their capex spending that does not directly impact A six, 110 00:05:47,800 --> 00:05:51,760 Speaker 6: which Broadcom supplies, because the hyperscalers are continuing to move 111 00:05:51,880 --> 00:05:54,640 Speaker 6: their workload on A six. And this is a very 112 00:05:54,640 --> 00:05:57,200 Speaker 6: small scale when you look at the entire like five 113 00:05:57,279 --> 00:05:59,680 Speaker 6: hundred six billion dollars they are going to spend here, 114 00:06:00,000 --> 00:06:02,360 Speaker 6: I mean seventy billion over next eighteen months. Where they're 115 00:06:02,360 --> 00:06:06,240 Speaker 6: going too close to spend trillion bucks is nothing, it's change. 116 00:06:07,560 --> 00:06:10,239 Speaker 5: John. You talk to institutional investors all over the world. 117 00:06:10,440 --> 00:06:13,320 Speaker 2: Has the conversation changed at all in the last two 118 00:06:13,400 --> 00:06:17,359 Speaker 2: to three weeks, Perhaps a little less bullish or people 119 00:06:17,360 --> 00:06:19,480 Speaker 2: concerned about some of these short term sell offs here 120 00:06:19,480 --> 00:06:20,280 Speaker 2: we've seen recently. 121 00:06:22,080 --> 00:06:24,919 Speaker 6: I think the aura that there has been sort of 122 00:06:26,160 --> 00:06:29,520 Speaker 6: a saturation, or you know, there's like how much can 123 00:06:29,680 --> 00:06:32,800 Speaker 6: these numbers and guidances keep going up? I don't think 124 00:06:32,839 --> 00:06:35,520 Speaker 6: the sentiment has changed towards bearish. I think there's much 125 00:06:35,560 --> 00:06:39,720 Speaker 6: more cautious optimism now coming in, so like people are 126 00:06:39,760 --> 00:06:41,960 Speaker 6: trying to be very careful. Also, remember it's that time 127 00:06:42,000 --> 00:06:44,880 Speaker 6: of the year where you've sort of captured the numbers 128 00:06:44,920 --> 00:06:46,919 Speaker 6: for the year mostly right, so you're not going to 129 00:06:46,920 --> 00:06:50,080 Speaker 6: get a significant upside in the remaining time, so people 130 00:06:50,080 --> 00:06:52,400 Speaker 6: are just getting ready for the next year and sort 131 00:06:52,440 --> 00:06:56,200 Speaker 6: of going back looking at where they can trim exposures 132 00:06:56,200 --> 00:06:58,160 Speaker 6: and where they can sort of book profits. 133 00:06:59,000 --> 00:06:59,240 Speaker 5: Yeah. 134 00:06:59,279 --> 00:07:02,239 Speaker 4: Well, a lot of other news out there today related 135 00:07:02,279 --> 00:07:05,760 Speaker 4: to Ai Kunjan. Let's talk about this Oracle news delays 136 00:07:05,800 --> 00:07:09,080 Speaker 4: to some data center projects for open air to twenty 137 00:07:09,120 --> 00:07:12,200 Speaker 4: twenty eight, and we're seeing the market roll over on this. 138 00:07:12,560 --> 00:07:15,080 Speaker 4: What can you kind of tell us about, you know, 139 00:07:15,160 --> 00:07:17,920 Speaker 4: the state of this industry On the one hand, a 140 00:07:17,960 --> 00:07:20,040 Speaker 4: lot of promise there in the data center space, but 141 00:07:20,120 --> 00:07:22,880 Speaker 4: also seems like a lot of kind of volatile sentiment 142 00:07:23,080 --> 00:07:25,400 Speaker 4: related to it as well. 143 00:07:25,680 --> 00:07:28,200 Speaker 6: Yeah, I mean, look, there has been a lot of 144 00:07:28,240 --> 00:07:30,800 Speaker 6: impact with the open air deals also for in media, 145 00:07:30,840 --> 00:07:34,680 Speaker 6: also for Broadcom a similar thing maybe investors didn't like 146 00:07:34,720 --> 00:07:36,840 Speaker 6: if you were trying to really find flaws Last night 147 00:07:36,880 --> 00:07:40,000 Speaker 6: from Broadcoms Learning was they mentioned the open air revenues 148 00:07:40,040 --> 00:07:42,960 Speaker 6: for them will now start in twenty seven, and some 149 00:07:43,040 --> 00:07:46,560 Speaker 6: folks were expecting those revenues to start coming in late 150 00:07:46,600 --> 00:07:50,040 Speaker 6: twenty six. So a lot was driven by initial hype, 151 00:07:50,240 --> 00:07:53,280 Speaker 6: which these programs take many years, so it's very difficult 152 00:07:53,280 --> 00:07:56,800 Speaker 6: to pinpoint two years ahead in time, like this is 153 00:07:56,840 --> 00:07:59,320 Speaker 6: the quarter when all the buildouts will start, and everyone 154 00:07:59,360 --> 00:08:01,640 Speaker 6: is starting to get my DATO revenues. As we are 155 00:08:01,680 --> 00:08:05,280 Speaker 6: getting closer to that time, we are getting more clarity 156 00:08:05,320 --> 00:08:07,360 Speaker 6: on whether will it be at twenty seven with that 157 00:08:07,440 --> 00:08:10,640 Speaker 6: will be twenty eight. We don't see fundamental flags in 158 00:08:10,680 --> 00:08:14,440 Speaker 6: this new time milestone movements is just we are getting 159 00:08:14,440 --> 00:08:17,440 Speaker 6: more clarity, and initially it was just a lot of 160 00:08:17,480 --> 00:08:20,240 Speaker 6: goodness being priced in, which is now being adjusted. 161 00:08:20,960 --> 00:08:24,200 Speaker 2: This is in my mind, a classic overpromise and now 162 00:08:24,280 --> 00:08:24,840 Speaker 2: under deliver. 163 00:08:24,960 --> 00:08:26,400 Speaker 5: You're supposed to do the exact opposite. 164 00:08:26,480 --> 00:08:28,800 Speaker 2: Yeah, maybe we'll have these things around twenty thirty. Then 165 00:08:28,800 --> 00:08:30,000 Speaker 2: you look like a hero if you come in at 166 00:08:30,000 --> 00:08:33,320 Speaker 2: twenty twenty eight, because Oracle's saying that the delays are 167 00:08:33,400 --> 00:08:38,760 Speaker 2: due largely to labor and material shortages, not like some 168 00:08:38,880 --> 00:08:42,400 Speaker 2: technological you know, headwind that they can't get around. 169 00:08:42,520 --> 00:08:43,839 Speaker 5: So, Kujan, is this just. 170 00:08:43,880 --> 00:08:46,360 Speaker 2: Maybe a little bit of the market in general, your 171 00:08:46,440 --> 00:08:50,160 Speaker 2: technology market investor base just kind of taking a little 172 00:08:50,160 --> 00:08:52,240 Speaker 2: maybe money off the table, just stepping back a little 173 00:08:52,280 --> 00:08:55,559 Speaker 2: bit and maybe waiting for the next catalyst. 174 00:08:56,480 --> 00:08:58,839 Speaker 6: There's definitely that, And like I said, is that time 175 00:08:58,880 --> 00:09:00,960 Speaker 6: of the year where making some money over the table 176 00:09:01,080 --> 00:09:03,200 Speaker 6: makes sense, right. I mean, look, if you're a portfolio 177 00:09:03,240 --> 00:09:06,440 Speaker 6: manager right now, there's not again, You've already covered significant 178 00:09:06,440 --> 00:09:09,720 Speaker 6: amount of good rewards and performance through the year. You 179 00:09:09,720 --> 00:09:12,599 Speaker 6: don't want to lose that, right, even if you're underlying 180 00:09:12,679 --> 00:09:14,920 Speaker 6: key fundamental convictions have not changed. 181 00:09:15,679 --> 00:09:18,800 Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this. 182 00:09:22,720 --> 00:09:26,400 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 183 00:09:26,480 --> 00:09:29,559 Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android 184 00:09:29,600 --> 00:09:32,880 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 185 00:09:32,960 --> 00:09:36,080 Speaker 1: you get your podcasts, or watch us live on YouTube. 186 00:09:36,840 --> 00:09:38,760 Speaker 2: Let's talk about the retail space. Here we heard from 187 00:09:38,800 --> 00:09:42,439 Speaker 2: Lulu Lemon, the stock surgeons. We had the CEO changing 188 00:09:42,440 --> 00:09:46,560 Speaker 2: and maybe suggesting some new strategy there Punham Goil. She 189 00:09:46,679 --> 00:09:48,680 Speaker 2: is a senior US e commerce and retail analysts for 190 00:09:48,679 --> 00:09:51,319 Speaker 2: Bloomberg Intelligence. She's based down there in Princeton. Pum What 191 00:09:51,360 --> 00:09:53,560 Speaker 2: do you make of Lulu Lemon? What did you learn 192 00:09:53,640 --> 00:09:55,560 Speaker 2: in the earnings and what do you expect to see 193 00:09:55,600 --> 00:09:57,000 Speaker 2: from this change in the C suite. 194 00:09:58,040 --> 00:10:00,040 Speaker 7: Yeah, so there's a few things. So earnings for the 195 00:10:00,080 --> 00:10:03,600 Speaker 7: quorder showed strength but the guidance was weaker and the 196 00:10:03,640 --> 00:10:07,640 Speaker 7: strength really came from outside of the US. So we're 197 00:10:07,640 --> 00:10:10,080 Speaker 7: not surprised that China is strong. China has been a 198 00:10:10,080 --> 00:10:13,080 Speaker 7: strong point for them for quite some time. The issue 199 00:10:13,160 --> 00:10:16,680 Speaker 7: is still the US domestic The domestic business is weak 200 00:10:16,679 --> 00:10:19,640 Speaker 7: and continues to be weak, and we think it's a 201 00:10:19,640 --> 00:10:24,000 Speaker 7: function of just lack of differentiation product innovation over the 202 00:10:24,040 --> 00:10:28,120 Speaker 7: last few years. And the biggest news yesterday, quite frankly, 203 00:10:28,360 --> 00:10:32,400 Speaker 7: was the announcement of Callan MacDonald stepping down as CEO 204 00:10:32,520 --> 00:10:34,760 Speaker 7: and the search for a new CEO for next year. 205 00:10:35,200 --> 00:10:40,319 Speaker 7: So I think investors are excited to see new strategy, 206 00:10:40,440 --> 00:10:44,560 Speaker 7: new vision, to see who can run this ship back 207 00:10:44,600 --> 00:10:48,559 Speaker 7: to sale because lu Lemon has lost ground in recent. 208 00:10:48,320 --> 00:10:50,320 Speaker 5: Years, you know, put up. 209 00:10:50,360 --> 00:10:52,480 Speaker 4: Yeah, it's interesting that you mentioned a lot of games 210 00:10:52,480 --> 00:10:55,880 Speaker 4: being ascribed to that leadership change at Lulu raight, But 211 00:10:56,240 --> 00:10:59,320 Speaker 4: given all the other challenges of the company that you've 212 00:10:59,400 --> 00:11:02,120 Speaker 4: just described, is this really going to be a material 213 00:11:02,200 --> 00:11:05,440 Speaker 4: How much does this leadership change? How much will it 214 00:11:05,480 --> 00:11:06,679 Speaker 4: do to write the ship? 215 00:11:06,679 --> 00:11:10,360 Speaker 7: As you say, It's going to matter, but it's going 216 00:11:10,400 --> 00:11:13,280 Speaker 7: to depend on who takes the top role here. 217 00:11:13,400 --> 00:11:13,640 Speaker 8: Right. 218 00:11:14,520 --> 00:11:17,679 Speaker 7: We would like it to be a product led executive 219 00:11:17,840 --> 00:11:21,360 Speaker 7: because we think product is key in retail. And the 220 00:11:21,480 --> 00:11:25,960 Speaker 7: reason Lululemon has lacked behind and has lacked competition, especially 221 00:11:26,000 --> 00:11:30,280 Speaker 7: the emerging upstart brands take some of its share, is 222 00:11:30,320 --> 00:11:33,960 Speaker 7: because it hasn't stayed ahead as it once was in 223 00:11:34,000 --> 00:11:38,040 Speaker 7: its product offerings. There's less differentiation and the price points 224 00:11:38,080 --> 00:11:38,760 Speaker 7: are comparable. 225 00:11:40,520 --> 00:11:43,400 Speaker 2: That's where I wanted to go plun them because when 226 00:11:43,440 --> 00:11:47,480 Speaker 2: I talk to people like in this studio about Lulu Lemon, 227 00:11:47,520 --> 00:11:51,040 Speaker 2: I hear the same thing, good product, but boy it's expensive. 228 00:11:51,520 --> 00:11:54,240 Speaker 2: Is that an issue for them in terms of product placement? 229 00:11:55,480 --> 00:11:58,280 Speaker 7: I don't think it's an issue for them based on 230 00:11:59,120 --> 00:12:02,000 Speaker 7: where they sit because if you think about the Little 231 00:12:02,120 --> 00:12:05,400 Speaker 7: Lemon product portfolio and you compare it to a vory 232 00:12:05,679 --> 00:12:09,440 Speaker 7: or an aloe, they're quite similar. Now if you compare 233 00:12:09,480 --> 00:12:14,120 Speaker 7: it to an Airy, which is a brand by American Eagle, 234 00:12:14,520 --> 00:12:17,680 Speaker 7: yes the price points are higher, but I don't think 235 00:12:17,679 --> 00:12:20,600 Speaker 7: the price point is the issue here. I think the 236 00:12:20,640 --> 00:12:24,760 Speaker 7: consumer wants to see more. Right, The aligning Lenkings have 237 00:12:24,840 --> 00:12:27,320 Speaker 7: been around for so long and I love them, I 238 00:12:27,440 --> 00:12:32,560 Speaker 7: truly do, but I also like alo and it's just like, 239 00:12:32,840 --> 00:12:35,520 Speaker 7: what are you giving me to make me like little 240 00:12:35,600 --> 00:12:38,600 Speaker 7: Lemon so much more. And are you giving me innovation 241 00:12:39,400 --> 00:12:42,600 Speaker 7: constantly to make me try the next new thing? I 242 00:12:42,640 --> 00:12:45,560 Speaker 7: think that's the big gap here. They need to put 243 00:12:45,600 --> 00:12:49,000 Speaker 7: innovation back on track and they're trying, but it's just 244 00:12:49,240 --> 00:12:51,480 Speaker 7: we won't really see much of that until next year. 245 00:12:51,520 --> 00:12:53,800 Speaker 7: And then when we do get a new CEO, it'll 246 00:12:53,840 --> 00:12:56,280 Speaker 7: be interesting to see the vision that they set forward. 247 00:12:57,440 --> 00:13:00,520 Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this. 248 00:13:04,480 --> 00:13:08,160 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 249 00:13:08,240 --> 00:13:11,360 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 250 00:13:11,360 --> 00:13:14,679 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 251 00:13:14,720 --> 00:13:18,280 Speaker 1: you get your podcasts, or watch us live on YouTube. 252 00:13:19,000 --> 00:13:21,280 Speaker 2: Let's switch gears and go to the media space. We 253 00:13:21,280 --> 00:13:23,040 Speaker 2: can do that with Keitha Ranganath, and she is the 254 00:13:23,600 --> 00:13:26,120 Speaker 2: senior media analyst for Bloomberg Intelligence. 255 00:13:26,120 --> 00:13:27,480 Speaker 5: We've been talking a lot to. 256 00:13:27,480 --> 00:13:30,880 Speaker 2: Githa about this Warner Brothers Discovery deal. It can be 257 00:13:31,000 --> 00:13:33,480 Speaker 2: close to a ninety billion dollar trade when it happens. 258 00:13:33,559 --> 00:13:36,280 Speaker 2: Netflix is involved, Paramount is involved, and we'll get some 259 00:13:36,360 --> 00:13:39,320 Speaker 2: talk there. But I'm going to start getha with Disney. 260 00:13:39,400 --> 00:13:42,400 Speaker 2: Yesterday they made a big and it seems like a 261 00:13:42,400 --> 00:13:45,360 Speaker 2: pretty big announcement, you know, making one billion dollar investment 262 00:13:45,400 --> 00:13:48,679 Speaker 2: in open AI. What's the strategy here for the Walt 263 00:13:48,720 --> 00:13:49,720 Speaker 2: Disney Company. 264 00:13:51,720 --> 00:13:53,559 Speaker 8: Seems to be, Paul, if you can't beat them, you 265 00:13:53,760 --> 00:13:58,200 Speaker 8: join them, Right. Disney really is realizing that AI is 266 00:13:58,240 --> 00:14:02,360 Speaker 8: here to stay. User generated content is obviously getting a 267 00:14:02,360 --> 00:14:04,800 Speaker 8: lot of traction, and so they want to be able to, 268 00:14:04,840 --> 00:14:09,080 Speaker 8: i think, create this blueprint so where you have you know, 269 00:14:09,120 --> 00:14:11,440 Speaker 8: they can license their characters in a safe way. It's 270 00:14:11,480 --> 00:14:15,120 Speaker 8: a brand safe way, It respects copyrights, and they also 271 00:14:15,160 --> 00:14:18,240 Speaker 8: get to monetize their characters. So rather than being you know, 272 00:14:18,360 --> 00:14:22,600 Speaker 8: constantly reactive and defensive and fighting in court they are 273 00:14:23,120 --> 00:14:26,320 Speaker 8: this is much more proactive a way for them to 274 00:14:26,360 --> 00:14:31,480 Speaker 8: participate in eventual you know, monetization of all those licensing 275 00:14:31,480 --> 00:14:33,200 Speaker 8: of all those characters. Yeah. 276 00:14:33,240 --> 00:14:35,840 Speaker 4: Well, geetha very interesting that you mentioned. I mean, that 277 00:14:35,920 --> 00:14:38,760 Speaker 4: seems to be the key point here, right, that Disney 278 00:14:38,880 --> 00:14:42,040 Speaker 4: is allowing sore access to its IP two hundred plus 279 00:14:42,160 --> 00:14:45,120 Speaker 4: iconic characters. That's a big step. I mean there's a 280 00:14:45,120 --> 00:14:47,680 Speaker 4: lot of kind of potential for the brand to be 281 00:14:47,840 --> 00:14:51,520 Speaker 4: maybe a little diluted because of that. But what's your 282 00:14:51,520 --> 00:14:53,840 Speaker 4: take on that? Is is it able to protect the 283 00:14:53,840 --> 00:14:55,440 Speaker 4: integrity of its franchises here. 284 00:14:56,280 --> 00:14:58,320 Speaker 8: I think it's going to try its best to do that. 285 00:14:58,360 --> 00:15:00,760 Speaker 8: I mean, what was interesting about you yesterday's deal was 286 00:15:00,800 --> 00:15:02,720 Speaker 8: obviously they ink the deal with Sora and at the 287 00:15:02,800 --> 00:15:05,800 Speaker 8: very same time sent a seasoned doses letter to Google. 288 00:15:06,000 --> 00:15:08,000 Speaker 8: So they're really kind of trying to draw the line 289 00:15:08,160 --> 00:15:12,640 Speaker 8: around you know, brand safety, around copyrights. You know, no 290 00:15:12,760 --> 00:15:16,920 Speaker 8: violation of copyrights, so that's pretty clear. But you're absolutely right. 291 00:15:16,960 --> 00:15:19,200 Speaker 8: I mean, this is kind of a little bit of 292 00:15:19,280 --> 00:15:21,440 Speaker 8: you know, letting the fox into the henhouse, if you will, 293 00:15:21,440 --> 00:15:24,840 Speaker 8: because once you kind of allow open Ai and Sora 294 00:15:24,960 --> 00:15:27,120 Speaker 8: to get access to all of your characters, who knows 295 00:15:27,160 --> 00:15:29,680 Speaker 8: how it's going to be used. Disney of course is 296 00:15:29,720 --> 00:15:31,400 Speaker 8: going to have you know a little bit of say, 297 00:15:31,680 --> 00:15:34,200 Speaker 8: they are going to get a lot of those Sora 298 00:15:34,720 --> 00:15:37,360 Speaker 8: content or those videos to come back to their Disney 299 00:15:37,360 --> 00:15:39,720 Speaker 8: Plus platform. And I think what it really helps Disney 300 00:15:39,760 --> 00:15:42,200 Speaker 8: do is of course, get in on the moment, really 301 00:15:42,240 --> 00:15:45,640 Speaker 8: kind of deepen their engagement with their younger fans, kind 302 00:15:45,640 --> 00:15:49,920 Speaker 8: of build a big pipeline of new franchises hopefully and 303 00:15:50,000 --> 00:15:54,120 Speaker 8: more importantly, really collect data in what kind of you know, 304 00:15:54,760 --> 00:15:58,520 Speaker 8: what are fans actually looking for? Do they enjoy spending 305 00:15:58,560 --> 00:16:02,280 Speaker 8: time with, you know, all of thesecharacters creating videos? So 306 00:16:02,320 --> 00:16:04,680 Speaker 8: it's really, you know, so many different things that I 307 00:16:04,720 --> 00:16:07,880 Speaker 8: think Disney is hoping to kind of learn from this 308 00:16:07,920 --> 00:16:08,720 Speaker 8: whole exercise. 309 00:16:09,240 --> 00:16:11,320 Speaker 5: All right, Keith, enough with that, Let's get back to 310 00:16:11,360 --> 00:16:13,000 Speaker 5: the issue at hand. 311 00:16:13,080 --> 00:16:16,720 Speaker 2: Here, any news coming out of either, you know, the 312 00:16:16,760 --> 00:16:19,520 Speaker 2: Warner camp, the Netflix clamp, the Paramount camp. 313 00:16:20,800 --> 00:16:23,760 Speaker 8: So it seems now, Paul, that the ball is really 314 00:16:23,960 --> 00:16:28,040 Speaker 8: in Paramount score slash in Warner Brothers Discoveries code. So Paramount, 315 00:16:28,560 --> 00:16:30,960 Speaker 8: as you know, has already sent that all cash bid. 316 00:16:31,560 --> 00:16:35,160 Speaker 8: They are waiting to hear back from the Warner Brothers 317 00:16:35,160 --> 00:16:38,760 Speaker 8: Discovery board. The deadline for that is December twenty second. 318 00:16:39,080 --> 00:16:42,640 Speaker 8: But there was some reporting yesterday that suggested that Paramount 319 00:16:42,920 --> 00:16:47,360 Speaker 8: is looking into potentially raising its bid by about ten percent. 320 00:16:47,440 --> 00:16:49,560 Speaker 8: So we know right now it's thirty dollars per share 321 00:16:49,600 --> 00:16:52,960 Speaker 8: for all of Warner Brothers Discovery, potentially looking to raise 322 00:16:53,000 --> 00:16:55,480 Speaker 8: that to as much as thirty three dollars per share. 323 00:16:55,520 --> 00:17:00,400 Speaker 8: And remember they do have to pay Warner Brothers. They 324 00:17:00,440 --> 00:17:03,560 Speaker 8: do have to compensate Warner Brothers Discovery for the three 325 00:17:03,640 --> 00:17:06,480 Speaker 8: billion dollar termination fee that they that Warner Brothers would 326 00:17:06,480 --> 00:17:08,240 Speaker 8: have to pay Netflix in case it walks away from 327 00:17:08,240 --> 00:17:08,520 Speaker 8: a deal. 328 00:17:08,960 --> 00:17:10,800 Speaker 4: Geth, what do you think is going on in the 329 00:17:10,840 --> 00:17:14,240 Speaker 4: Netflix c suite right now? Do you think they're sitting 330 00:17:14,280 --> 00:17:16,120 Speaker 4: a little bit nervously or do you think they're still 331 00:17:16,160 --> 00:17:18,800 Speaker 4: comfortable with their twenty seven dollars this year offer at 332 00:17:18,800 --> 00:17:20,359 Speaker 4: this point, I. 333 00:17:20,400 --> 00:17:22,679 Speaker 8: Think they are also looking to potentially raise it, but 334 00:17:22,760 --> 00:17:26,080 Speaker 8: they're not going to do anything before you know, we see. 335 00:17:26,280 --> 00:17:29,200 Speaker 8: The first move has to be from Paramount, and I 336 00:17:30,000 --> 00:17:33,280 Speaker 8: think Netflix is definitely comfortable in raising its offer. The 337 00:17:33,359 --> 00:17:35,520 Speaker 8: thing that they really need to contend with is that 338 00:17:35,560 --> 00:17:38,240 Speaker 8: the market is not happy with this deal. We definitely 339 00:17:38,240 --> 00:17:40,800 Speaker 8: don't want to see Netflix get into this bidding war 340 00:17:40,920 --> 00:17:43,639 Speaker 8: at all. There are just too many concerns from a 341 00:17:43,680 --> 00:17:47,160 Speaker 8: regulatory perspective, from an integration perspective, and it really kind 342 00:17:47,200 --> 00:17:50,600 Speaker 8: of I think Muddy's what was a very very nice 343 00:17:50,720 --> 00:17:54,400 Speaker 8: pure play streaming story with exposure now to legacy media, 344 00:17:54,520 --> 00:17:56,800 Speaker 8: so obviously the market doesn't like it. Netflix, of course, 345 00:17:56,800 --> 00:17:58,679 Speaker 8: things that they're playing the long game. They're kind of 346 00:17:58,840 --> 00:18:02,480 Speaker 8: you know, positioning themselves here for the future, but getting 347 00:18:02,520 --> 00:18:05,360 Speaker 8: involved in a very expensive bidding war. I don't think 348 00:18:05,359 --> 00:18:06,240 Speaker 8: anybody really wants that. 349 00:18:06,840 --> 00:18:11,520 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 350 00:18:11,720 --> 00:18:15,680 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 351 00:18:15,880 --> 00:18:19,159 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 352 00:18:19,280 --> 00:18:23,119 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 353 00:18:23,160 --> 00:18:26,439 Speaker 1: can also watch us live every weekday on YouTube and 354 00:18:26,680 --> 00:18:28,600 Speaker 1: always on the Bloomberg terminal