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Speaker 2: Big story in the tech space today Oracle with some
Speaker 2: news out there talking about maybe pushing back some of
Speaker 2: their rollout. It's been a little bit of a headwind
Speaker 2: for just the last several trading sessions for some of
Speaker 2: these AI names. Oracle stock off five point eight percent today.
Speaker 2: Joining us is Anna rog Ran, a senior techanist for
Speaker 2: Bloomberg Intelligence. Anrag what's the latest from our friends at Oracle.
Speaker 3: Yeah, from what I just heard is that they're having
Speaker 3: some delay in getting the data centers online, and as
Speaker 3: we know, if the data centers don't come online, the
Speaker 3: servers are not let up, you really cannot transform that
Speaker 3: big back walk into sales, and I think that has
Speaker 3: been a big concern for everybody. This just shows that
Speaker 3: it's not going to be a linear line to go
Speaker 3: from funding to get the data centers lined up and
Speaker 3: then recognition. So I think that's a hiccup for them.
Speaker 3: It you know, in our calculations, it does impact that
Speaker 3: FI twenty eight sales, but not the ones that you
Speaker 3: know in the next let's say twelve.
Speaker 4: Months now, Anaag. You know, Paul and I were noting
Speaker 4: earlier that the delay seems to be incited to labor
Speaker 4: and material shortages, right, and so could you just break
Speaker 4: it down a little bit for a listener. So what
Speaker 4: actually is involved in this data center build out? Which
Speaker 4: and why is it so subject to you the potential
Speaker 4: for delay such as this.
Speaker 3: See, it's no different than building any manufacturing, a factory
Speaker 3: or anything else. I mean, you'd have labor the biggest
Speaker 3: bartneck right now for everybody's power. So let's assume that
Speaker 3: these big vendors have figured out they've found like somewhere
Speaker 3: in Wisconsin or someone in Atlanta, they found a place
Speaker 3: where they haven't have power. Then you got to go
Speaker 3: out and build a data center. Cooling, equipment, labored, all
Speaker 3: of that stuff that has nothing to do with technology
Speaker 3: is the one that need is needed for the next
Speaker 3: let's say two years to get the data centers up
Speaker 3: and running. Then you got to put the chips in there,
Speaker 3: and then finally realize that revenue.
Speaker 2: Is there a backlog that they quote, give us a censor?
Speaker 2: Is that a good numbered thing? Representative?
Speaker 3: Oh, it is absolutely spectacular. That number is five hundred
Speaker 3: billion dollars and out of that five billion, three hundred billion,
Speaker 3: over three hundred billion is from open Ai. So if
Speaker 3: you go back a few years, this backlog was to
Speaker 3: be honest in material or not much. But what has
Speaker 3: happened is open Ai has this absolute need to go
Speaker 3: out and build capacity so that they can do both
Speaker 3: inferencing for a lot of the workloads that are coming in,
Speaker 3: but more importantly, they can train their models so that
Speaker 3: their next generation models are better than let's say, what
Speaker 3: Google has produced. So it's an important, you could say,
Speaker 3: strategy for them in order to get that data center
Speaker 3: up and running. And for now they have been partnering
Speaker 3: more with Article than anybody else at this point.
Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 5: YouTube the tech story. There's a couple of tech stories here.
Speaker 2: Oracle pushing out some of their plans, Broadcom putting out
Speaker 2: some numbers at the street a little bit disappointed, and
Speaker 2: so it's kind of contributed to himself in some of
Speaker 2: these broader tech names. Let's break it down with Ku
Speaker 2: Johan Subani. He is Bloomberg Intelligence Senior Semiconductor and I
Speaker 2: let's start with Broadcom. Can you break down what's going
Speaker 2: on over there?
Speaker 6: Souper John Cunten, Yeah, I mean, look, fundamentally, it was
Speaker 6: one of the great and very strong AI semis report
Speaker 6: this quarter. I could not find a lot wrong in
Speaker 6: the numbers. I mean they upsided their AI revenue numbers
Speaker 6: by twenty percent above the street for next quarter. They
Speaker 6: even guided their backlog or provided their backlog, which as
Speaker 6: of today would imply an upside from street numbers for
Speaker 6: the next year, even the next eighteen months. So I
Speaker 6: don't know what more better they could have done.
Speaker 2: This.
Speaker 6: By the way, backlog is like the baseline that they
Speaker 6: could continue and building to that backlog and hence moving
Speaker 6: the numbers up as of this morning on the street,
Speaker 6: if we look at it, all the numbers up for
Speaker 6: the next year and the next two years have gone up,
Speaker 6: especially for the key area, which is their AI revenue.
Speaker 6: So nothing wrong fundamentally here. It just seems it's just
Speaker 6: that state in the market when it comes to AI
Speaker 6: valuations and AI sentiment that so sort of no good
Speaker 6: news is good enough right now?
Speaker 4: Yeah, Well, Kunden, a lot of attention being paid to
Speaker 4: that seventy three billion dollar backlog that you're mentioning. It
Speaker 4: seems like the market isn't really rewarding Broadcome for that.
Speaker 4: But what does that actually tell us about the demand
Speaker 4: for these products across the semiconductor supply chain.
Speaker 2: Yeah, a couple of things.
Speaker 6: Look, one thing we are all aware of which every
Speaker 6: AI accelerator company, whether it's in media, IMD, Broadcom or Morble,
Speaker 6: is enjoying, is the rising capex from all the hyperscalers
Speaker 6: in the cloud guys, which is a very well covered story.
Speaker 6: But for specifically for someone like a Broadcom who does
Speaker 6: the A six custom accelerators for the likes of Google Meta.
Speaker 6: Amazon also has their own chip, but that's not what
Speaker 6: they work with Marvel on that the demand for these
Speaker 6: chips is rising much faster. So even if there were
Speaker 6: some concerns that how long can the hyperscalers keep rising
Speaker 6: their capex spending that does not directly impact A six,
Speaker 6: which Broadcom supplies, because the hyperscalers are continuing to move
Speaker 6: their workload on A six. And this is a very
Speaker 6: small scale when you look at the entire like five
Speaker 6: hundred six billion dollars they are going to spend here,
Speaker 6: I mean seventy billion over next eighteen months. Where they're
Speaker 6: going too close to spend trillion bucks is nothing, it's change.
Speaker 5: John. You talk to institutional investors all over the world.
Speaker 2: Has the conversation changed at all in the last two
Speaker 2: to three weeks, Perhaps a little less bullish or people
Speaker 2: concerned about some of these short term sell offs here
Speaker 2: we've seen recently.
Speaker 6: I think the aura that there has been sort of
Speaker 6: a saturation, or you know, there's like how much can
Speaker 6: these numbers and guidances keep going up? I don't think
Speaker 6: the sentiment has changed towards bearish. I think there's much
Speaker 6: more cautious optimism now coming in, so like people are
Speaker 6: trying to be very careful. Also, remember it's that time
Speaker 6: of the year where you've sort of captured the numbers
Speaker 6: for the year mostly right, so you're not going to
Speaker 6: get a significant upside in the remaining time, so people
Speaker 6: are just getting ready for the next year and sort
Speaker 6: of going back looking at where they can trim exposures
Speaker 6: and where they can sort of book profits.
Speaker 5: Yeah.
Speaker 4: Well, a lot of other news out there today related
Speaker 4: to Ai Kunjan. Let's talk about this Oracle news delays
Speaker 4: to some data center projects for open air to twenty
Speaker 4: twenty eight, and we're seeing the market roll over on this.
Speaker 4: What can you kind of tell us about, you know,
Speaker 4: the state of this industry On the one hand, a
Speaker 4: lot of promise there in the data center space, but
Speaker 4: also seems like a lot of kind of volatile sentiment
Speaker 4: related to it as well.
Speaker 6: Yeah, I mean, look, there has been a lot of
Speaker 6: impact with the open air deals also for in media,
Speaker 6: also for Broadcom a similar thing maybe investors didn't like
Speaker 6: if you were trying to really find flaws Last night
Speaker 6: from Broadcoms Learning was they mentioned the open air revenues
Speaker 6: for them will now start in twenty seven, and some
Speaker 6: folks were expecting those revenues to start coming in late
Speaker 6: twenty six. So a lot was driven by initial hype,
Speaker 6: which these programs take many years, so it's very difficult
Speaker 6: to pinpoint two years ahead in time, like this is
Speaker 6: the quarter when all the buildouts will start, and everyone
Speaker 6: is starting to get my DATO revenues. As we are
Speaker 6: getting closer to that time, we are getting more clarity
Speaker 6: on whether will it be at twenty seven with that
Speaker 6: will be twenty eight. We don't see fundamental flags in
Speaker 6: this new time milestone movements is just we are getting
Speaker 6: more clarity, and initially it was just a lot of
Speaker 6: goodness being priced in, which is now being adjusted.
Speaker 2: This is in my mind, a classic overpromise and now
Speaker 2: under deliver.
Speaker 5: You're supposed to do the exact opposite.
Speaker 2: Yeah, maybe we'll have these things around twenty thirty. Then
Speaker 2: you look like a hero if you come in at
Speaker 2: twenty twenty eight, because Oracle's saying that the delays are
Speaker 2: due largely to labor and material shortages, not like some
Speaker 2: technological you know, headwind that they can't get around.
Speaker 5: So, Kujan, is this just.
Speaker 2: Maybe a little bit of the market in general, your
Speaker 2: technology market investor base just kind of taking a little
Speaker 2: maybe money off the table, just stepping back a little
Speaker 2: bit and maybe waiting for the next catalyst.
Speaker 6: There's definitely that, And like I said, is that time
Speaker 6: of the year where making some money over the table
Speaker 6: makes sense, right. I mean, look, if you're a portfolio
Speaker 6: manager right now, there's not again, You've already covered significant
Speaker 6: amount of good rewards and performance through the year. You
Speaker 6: don't want to lose that, right, even if you're underlying
Speaker 6: key fundamental convictions have not changed.
Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 2: Let's talk about the retail space. Here we heard from
Speaker 2: Lulu Lemon, the stock surgeons. We had the CEO changing
Speaker 2: and maybe suggesting some new strategy there Punham Goil. She
Speaker 2: is a senior US e commerce and retail analysts for
Speaker 2: Bloomberg Intelligence. She's based down there in Princeton. Pum What
Speaker 2: do you make of Lulu Lemon? What did you learn
Speaker 2: in the earnings and what do you expect to see
Speaker 2: from this change in the C suite.
Speaker 7: Yeah, so there's a few things. So earnings for the
Speaker 7: quorder showed strength but the guidance was weaker and the
Speaker 7: strength really came from outside of the US. So we're
Speaker 7: not surprised that China is strong. China has been a
Speaker 7: strong point for them for quite some time. The issue
Speaker 7: is still the US domestic The domestic business is weak
Speaker 7: and continues to be weak, and we think it's a
Speaker 7: function of just lack of differentiation product innovation over the
Speaker 7: last few years. And the biggest news yesterday, quite frankly,
Speaker 7: was the announcement of Callan MacDonald stepping down as CEO
Speaker 7: and the search for a new CEO for next year.
Speaker 7: So I think investors are excited to see new strategy,
Speaker 7: new vision, to see who can run this ship back
Speaker 7: to sale because lu Lemon has lost ground in recent.
Speaker 5: Years, you know, put up.
Speaker 4: Yeah, it's interesting that you mentioned a lot of games
Speaker 4: being ascribed to that leadership change at Lulu raight, But
Speaker 4: given all the other challenges of the company that you've
Speaker 4: just described, is this really going to be a material
Speaker 4: How much does this leadership change? How much will it
Speaker 4: do to write the ship?
Speaker 7: As you say, It's going to matter, but it's going
Speaker 7: to depend on who takes the top role here.
Speaker 8: Right.
Speaker 7: We would like it to be a product led executive
Speaker 7: because we think product is key in retail. And the
Speaker 7: reason Lululemon has lacked behind and has lacked competition, especially
Speaker 7: the emerging upstart brands take some of its share, is
Speaker 7: because it hasn't stayed ahead as it once was in
Speaker 7: its product offerings. There's less differentiation and the price points
Speaker 7: are comparable.
Speaker 2: That's where I wanted to go plun them because when
Speaker 2: I talk to people like in this studio about Lulu Lemon,
Speaker 2: I hear the same thing, good product, but boy it's expensive.
Speaker 2: Is that an issue for them in terms of product placement?
Speaker 7: I don't think it's an issue for them based on
Speaker 7: where they sit because if you think about the Little
Speaker 7: Lemon product portfolio and you compare it to a vory
Speaker 7: or an aloe, they're quite similar. Now if you compare
Speaker 7: it to an Airy, which is a brand by American Eagle,
Speaker 7: yes the price points are higher, but I don't think
Speaker 7: the price point is the issue here. I think the
Speaker 7: consumer wants to see more. Right, The aligning Lenkings have
Speaker 7: been around for so long and I love them, I
Speaker 7: truly do, but I also like alo and it's just like,
Speaker 7: what are you giving me to make me like little
Speaker 7: Lemon so much more. And are you giving me innovation
Speaker 7: constantly to make me try the next new thing? I
Speaker 7: think that's the big gap here. They need to put
Speaker 7: innovation back on track and they're trying, but it's just
Speaker 7: we won't really see much of that until next year.
Speaker 7: And then when we do get a new CEO, it'll
Speaker 7: be interesting to see the vision that they set forward.
Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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Speaker 2: Let's switch gears and go to the media space. We
Speaker 2: can do that with Keitha Ranganath, and she is the
Speaker 2: senior media analyst for Bloomberg Intelligence.
Speaker 5: We've been talking a lot to.
Speaker 2: Githa about this Warner Brothers Discovery deal. It can be
Speaker 2: close to a ninety billion dollar trade when it happens.
Speaker 2: Netflix is involved, Paramount is involved, and we'll get some
Speaker 2: talk there. But I'm going to start getha with Disney.
Speaker 2: Yesterday they made a big and it seems like a
Speaker 2: pretty big announcement, you know, making one billion dollar investment
Speaker 2: in open AI. What's the strategy here for the Walt
Speaker 2: Disney Company.
Speaker 8: Seems to be, Paul, if you can't beat them, you
Speaker 8: join them, Right. Disney really is realizing that AI is
Speaker 8: here to stay. User generated content is obviously getting a
Speaker 8: lot of traction, and so they want to be able to,
Speaker 8: i think, create this blueprint so where you have you know,
Speaker 8: they can license their characters in a safe way. It's
Speaker 8: a brand safe way, It respects copyrights, and they also
Speaker 8: get to monetize their characters. So rather than being you know,
Speaker 8: constantly reactive and defensive and fighting in court they are
Speaker 8: this is much more proactive a way for them to
Speaker 8: participate in eventual you know, monetization of all those licensing
Speaker 8: of all those characters. Yeah.
Speaker 4: Well, geetha very interesting that you mentioned. I mean, that
Speaker 4: seems to be the key point here, right, that Disney
Speaker 4: is allowing sore access to its IP two hundred plus
Speaker 4: iconic characters. That's a big step. I mean there's a
Speaker 4: lot of kind of potential for the brand to be
Speaker 4: maybe a little diluted because of that. But what's your
Speaker 4: take on that? Is is it able to protect the
Speaker 4: integrity of its franchises here.
Speaker 8: I think it's going to try its best to do that.
Speaker 8: I mean, what was interesting about you yesterday's deal was
Speaker 8: obviously they ink the deal with Sora and at the
Speaker 8: very same time sent a seasoned doses letter to Google.
Speaker 8: So they're really kind of trying to draw the line
Speaker 8: around you know, brand safety, around copyrights. You know, no
Speaker 8: violation of copyrights, so that's pretty clear. But you're absolutely right.
Speaker 8: I mean, this is kind of a little bit of
Speaker 8: you know, letting the fox into the henhouse, if you will,
Speaker 8: because once you kind of allow open Ai and Sora
Speaker 8: to get access to all of your characters, who knows
Speaker 8: how it's going to be used. Disney of course is
Speaker 8: going to have you know a little bit of say,
Speaker 8: they are going to get a lot of those Sora
Speaker 8: content or those videos to come back to their Disney
Speaker 8: Plus platform. And I think what it really helps Disney
Speaker 8: do is of course, get in on the moment, really
Speaker 8: kind of deepen their engagement with their younger fans, kind
Speaker 8: of build a big pipeline of new franchises hopefully and
Speaker 8: more importantly, really collect data in what kind of you know,
Speaker 8: what are fans actually looking for? Do they enjoy spending
Speaker 8: time with, you know, all of thesecharacters creating videos? So
Speaker 8: it's really, you know, so many different things that I
Speaker 8: think Disney is hoping to kind of learn from this
Speaker 8: whole exercise.
Speaker 5: All right, Keith, enough with that, Let's get back to
Speaker 5: the issue at hand.
Speaker 2: Here, any news coming out of either, you know, the
Speaker 2: Warner camp, the Netflix clamp, the Paramount camp.
Speaker 8: So it seems now, Paul, that the ball is really
Speaker 8: in Paramount score slash in Warner Brothers Discoveries code. So Paramount,
Speaker 8: as you know, has already sent that all cash bid.
Speaker 8: They are waiting to hear back from the Warner Brothers
Speaker 8: Discovery board. The deadline for that is December twenty second.
Speaker 8: But there was some reporting yesterday that suggested that Paramount
Speaker 8: is looking into potentially raising its bid by about ten percent.
Speaker 8: So we know right now it's thirty dollars per share
Speaker 8: for all of Warner Brothers Discovery, potentially looking to raise
Speaker 8: that to as much as thirty three dollars per share.
Speaker 8: And remember they do have to pay Warner Brothers. They
Speaker 8: do have to compensate Warner Brothers Discovery for the three
Speaker 8: billion dollar termination fee that they that Warner Brothers would
Speaker 8: have to pay Netflix in case it walks away from
Speaker 8: a deal.
Speaker 4: Geth, what do you think is going on in the
Speaker 4: Netflix c suite right now? Do you think they're sitting
Speaker 4: a little bit nervously or do you think they're still
Speaker 4: comfortable with their twenty seven dollars this year offer at
Speaker 4: this point, I.
Speaker 8: Think they are also looking to potentially raise it, but
Speaker 8: they're not going to do anything before you know, we see.
Speaker 8: The first move has to be from Paramount, and I
Speaker 8: think Netflix is definitely comfortable in raising its offer. The
Speaker 8: thing that they really need to contend with is that
Speaker 8: the market is not happy with this deal. We definitely
Speaker 8: don't want to see Netflix get into this bidding war
Speaker 8: at all. There are just too many concerns from a
Speaker 8: regulatory perspective, from an integration perspective, and it really kind
Speaker 8: of I think Muddy's what was a very very nice
Speaker 8: pure play streaming story with exposure now to legacy media,
Speaker 8: so obviously the market doesn't like it. Netflix, of course,
Speaker 8: things that they're playing the long game. They're kind of
Speaker 8: you know, positioning themselves here for the future, but getting
Speaker 8: involved in a very expensive bidding war. I don't think
Speaker 8: anybody really wants that.
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