Speaker 1: Bloomberg Audio Studios, podcasts, radio news, The.
Speaker 2: Stock Movers Report, your roundup of companies making moves in
Speaker 2: the stock market, harnessing the power of Bloomberg Data.
Speaker 1: Let's look at some of the stocks on the move
Speaker 1: today in Europe. I'm Lizzie Burden with Stephen Carroll and
Speaker 1: rejoined by Bloomberg reporter Chloe Melly. Chloe, I'm looking at
Speaker 1: SAP shares down ten point eight percent. It's a dramatic
Speaker 1: round turn. This is the most valuable software company in Europe.
Speaker 1: How did it get here?
Speaker 3: Yeah, it's a very very bad day forair SAP.
Speaker 4: So the reason why it's done so much today is
Speaker 4: because the growth the growth are in its cloud backlog
Speaker 4: disappointed investors quite a lot and was below the company's
Speaker 4: at target. And so that's a big problem given that
Speaker 4: the cloud business is absolutely essential to SAP's a strategy,
Speaker 4: and the CEOs started this pivot a few years ago,
Speaker 4: back in twenty twenty, from selling software licenses at that
Speaker 4: clients would operate on local servers to offering software subscriptions
Speaker 4: that were in the cloud directly. So that was a
Speaker 4: move that investors were really keen on at first, and
Speaker 4: the share price actually hit a record last year on
Speaker 4: the back of that, but now there are some concerns
Speaker 4: around the potentially negative impact of artificial intelligence on that strategy.
Speaker 4: There's worries that AI powered tools can potentially displace what
Speaker 4: enterprise software companies like SAP can actually offer, and SAP
Speaker 4: is trying to kind of get ahead of this and
Speaker 4: offer customers AI applications in the cloud, but then you know,
Speaker 4: the disruption from new entrants into the market is.
Speaker 3: Still a threat.
Speaker 4: And this disappointing cloud growth backlog is it was taken
Speaker 4: as very very disappointing from investors, and despite the fact
Speaker 4: that it also announced a ten billion or a buyback,
Speaker 4: the shares are still way down. So that really tells
Speaker 4: you the extent of how disappointed investors were, because usually
Speaker 4: buybacks get them quite excited.
Speaker 2: Yeah.
Speaker 5: Indeed, and in case anyone's a bit believed by the
Speaker 5: term cloud backlog, this is services essentially that they have
Speaker 5: contracted and sold but not yet recognized as revenue. So
Speaker 5: it's the indicator, as you say, Chloe, of the revenue
Speaker 5: that will come down the line from cloud for the company.
Speaker 5: So that's why it's getting so much focused today. But
Speaker 5: we want to turn next to st Micro's results beating estimates,
Speaker 5: how are investors receiving them?
Speaker 3: Yeah, it seems that software with SIP he's not doing
Speaker 3: too well.
Speaker 4: But then the hardware part of that tech market is
Speaker 4: so st Micro is a supplier of chips for a
Speaker 4: Tesla and Apple and then also to industrial companies and
Speaker 4: car makers, and its outlook for sales in the first
Speaker 4: quarter was ahead of expectations, and that was seen as
Speaker 4: a sign that there's a recovery potential recovery in those
Speaker 4: end markets. And this also echoes the results that we've
Speaker 4: got from Texas Instruments, which is a company over in
Speaker 4: the US, which also reported this week and also provides
Speaker 4: those chips mostly to customers that are not AI customers,
Speaker 4: to industrial, automotive, personal electronics clients, and so the outlook
Speaker 4: for the first quarter from that company was also surprising good.
Speaker 4: And so this indicates that those customers in industrial and markets,
Speaker 4: automotive and markets have started to work through the massive
Speaker 4: inventory that accumulated post pandemic and are starting to buy
Speaker 4: again and invest again.
Speaker 3: So it seems that chip demand is picking.
Speaker 4: Up beyond AI, although it's still worth noting that the
Speaker 4: auto sector is still a little bit weaker, but this
Speaker 4: is quite encouraging for the sector as a whole. Now.
Speaker 1: Clariy Deutsche shares are down two point eight percent. Deutsche
Speaker 1: Bank out with earnings this morning, but it seems they've
Speaker 1: been overshadowed by that.
Speaker 3: Raid on them.
Speaker 4: Yeah, so at first onance, it looks really positive for
Speaker 4: Doutsche Bank.
Speaker 3: As you said, there's strong earnings, really.
Speaker 4: Solid fixed income trading, a one billion euro buy bag.
Speaker 4: But the problem is that, as you said, the results
Speaker 4: were overshadowed by this raid on the on the Dotchebak offices,
Speaker 4: which happened just yesterday.
Speaker 3: And this is a probe that is around money laundering.
Speaker 4: It's centered around it's said to be centered around the
Speaker 4: past dealings of staff members with firms that were linked
Speaker 4: to Roman Abramovich, who is now sanctioned. And this is
Speaker 4: really a fresh headache for the CEO. And it's not
Speaker 4: the only kind of legal challenge that he is facing
Speaker 4: at the moment. There's also another lawsuit which was filed
Speaker 4: by a group of former managers that alleged that they
Speaker 4: were wrongfully blamed in an accounting scandal at Montepesci. So
Speaker 4: there's a few different challenges that the Dotche Bank is facing,
Speaker 4: and those are taking center stage now. And unfortunately for
Speaker 4: the bank, the great results that they posted were just
Speaker 4: maybe not enough to make investors forget about those illegal
Speaker 4: headaches coming down the line.
Speaker 2: The Stock Movers report from Bloomberg Radio. Check back with
Speaker 2: us throughout the day for the latest roundup of companies
Speaker 2: making news on Wall Street and for the latest market
Speaker 2: moving headlines. Listen to Bloomberg Radio Live, catch us on YouTube,
Speaker 2: Bloomberg dot com, and on Applecarplay and Android Auto with
Speaker 2: the Bloomberg Business app.