Speaker 1: From the heart of where innovation, money and power COLLI
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Check in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour, broad
Speaker 1: Common talks to buy the m Ware, setting up a
Speaker 1: blockbuster tech deal that would vault the chip maker into
Speaker 1: a highly specialized area of software. We'll tell you everything
Speaker 1: we know so far about this Bloomberg School. Plus I'm
Speaker 1: joined exclusively by Shantan now Ryan, CEO and share of Adobe.
Speaker 1: We've got a lot to talk about, including how Adobe
Speaker 1: is handling this market sell off, plus his outlook for
Speaker 1: the company's future and plans for the metaverse. And coin
Speaker 1: bases fall from rates, how a bear market, regulatory pressure
Speaker 1: and falling crypto prices are piling up on the largest
Speaker 1: US crypto exchange, coin Base has now lost fifty one
Speaker 1: billion dollars in market values since its IPO. More in
Speaker 1: our crypto report later this hour. Let's talk a whole
Speaker 1: lot more about that Broadcom deal for vm Ware. I
Speaker 1: want to bring in bloom brig Leanna Baker, who covers
Speaker 1: M and A for US, and I'm also joined by
Speaker 1: James Fish and analyst at Piper Sandler who focuses specifically
Speaker 1: on infrastructure and communication software. Leana, first of all, tell
Speaker 1: us what we know what we don't know at this point. Sure,
Speaker 1: so we know that Broadcom is in talks by vm
Speaker 1: where it's a blockbuster or deal. We don't know the
Speaker 1: exact price. But before our story, you know, shares are
Speaker 1: already trading valuing vm Ware it over forty billions. So
Speaker 1: this is really going to be a large one and
Speaker 1: the deal is probably imminent. We reported it's coming later
Speaker 1: this week and it's going to be one of the
Speaker 1: biggest tech deals in years. So, Jane, if we're looking
Speaker 1: at a potential sixty billion dollar valuation for vm Ware
Speaker 1: as part of this, l who do you think, Wayne,
Speaker 1: who loses in this tie up? Um? Look at a
Speaker 1: story for Broadcommon talking with my colleague Harshkmar where you
Speaker 1: know they've done a tremendous job on rolling up some
Speaker 1: of these software assets, whether it's c A and Semantic together.
Speaker 1: Actually an apt Meta was a small one that they
Speaker 1: did last year. Um. But at the end of the day,
Speaker 1: you know, the playbook that the CEO of Broadcom runs,
Speaker 1: you know, fits well with vm work. For the most part,
Speaker 1: we see vm Ware is fairly complimentary to the existing
Speaker 1: software segments that they have. There is some overlap, especially
Speaker 1: as you start to think about the Carbon Black deal
Speaker 1: that vm Ware did with for example, the Semantic endpoint
Speaker 1: protection business UM. But overall, you know, vm Ware has
Speaker 1: been a drag versus some of the others in infrastructure
Speaker 1: because of the Delta vestiture overhang, because of the move
Speaker 1: towards public cloud, and because of its ongoing transition. So
Speaker 1: you know, it can be a win win for both
Speaker 1: sides in this case, Leona, how close is this to
Speaker 1: being a done deal? I know we're reporting it could
Speaker 1: potentially happen this week. It's funny with Broadcom, you never know.
Speaker 1: Last summer they were close to a deal with something
Speaker 1: called sas Institute, a deal valued close to twenty billion,
Speaker 1: and it fell apart. And then three years ago Broadcom
Speaker 1: was close to buying all of Semantic and that also
Speaker 1: fell apart. So you never know with Broadcom CEO Hawk ten.
Speaker 1: But this one, from what we know, it's still in talks. Uh,
Speaker 1: not in danger right now of of falling apart, but
Speaker 1: a deal isn't done until it gets the finish line,
Speaker 1: and as you know with Elon Musk and Twitter, even
Speaker 1: if you do get to the finish line, it may
Speaker 1: not be a done deal exactly. Um Qualcom. Broadcom did
Speaker 1: try to buy qual Calm back in which also would
Speaker 1: have been a massive deal that didn't happen because of
Speaker 1: Trump administration concerns about Broadcom's headquarters in Singapore. But we
Speaker 1: did catch up with Qualcom CEO Cristiano I'm on in
Speaker 1: Davos earlier asked his thoughts on this potential tie up
Speaker 1: between Broadcom and vm ware. Take a listen to what
Speaker 1: he had to say. It's really for Broadcom to comment.
Speaker 1: By the way, I look, Broadcom has become a more
Speaker 1: of a software company and uh, you know with some
Speaker 1: of the acquisitions they made in the past, and I
Speaker 1: think vm or is a software company. We're going to
Speaker 1: the different direction. I think we will continue to be
Speaker 1: a semiconductor company, focus in the growth that we have
Speaker 1: in this industry, especially at the edge, and uh, we'll
Speaker 1: continue to see not consolidation but conversions of all those opportunities.
Speaker 1: James Broadcom CEO Hackten as ambitious and seemingly acquisitive as
Speaker 1: effort is Broadcom even a chip company anymore, or is
Speaker 1: it more of a software company? Well, to be fair,
Speaker 1: I don't I don't cover Broadcom, but you know that
Speaker 1: the chip part does still overwhelmed the software piece. But
Speaker 1: when you think about it, you have a roughly seven
Speaker 1: eight billion dollars running right on the software side, and
Speaker 1: when you look at what vm Ware could do, that
Speaker 1: could essentially triple the side of the software business and
Speaker 1: and kind of start to bring it more in line
Speaker 1: with the UH semiconductor side of the business. James, what
Speaker 1: do you make of the fact that this is happening
Speaker 1: when we are in the midst of a tech sell off,
Speaker 1: and do you expect more big deals of this nature. Well,
Speaker 1: it's a good question. I actually just wanted to come
Speaker 1: on only honest point there. It probably does trigger the
Speaker 1: Chinese regulatories just because vm Ware does have a decently
Speaker 1: sized business there. Um that would kind of be over
Speaker 1: that threshold rate that that's typically assigned there. So it
Speaker 1: would expect China to be someone involved here on the
Speaker 1: approval process needing to get done. And you know, it's
Speaker 1: very few companies that could actually swallow something the size
Speaker 1: of vm Ware in this case. Um, And let's face it.
Speaker 1: Some of the hyper scalers would have some challenge and
Speaker 1: getting this kind of deal done, so it kind of
Speaker 1: removes them to a degree from the equation I would
Speaker 1: say it's impossible, but it does present some problems on
Speaker 1: that and um, but it is the case where um,
Speaker 1: you know, at the end of the day, broadcom makes
Speaker 1: makes a lot of sense and you know, for um,
Speaker 1: for really what needs to get done here, Um, we
Speaker 1: see pretty smooth process. It just might take some time.
Speaker 1: And um yeah, all right, James Fish, Piper Sandler, thanks
Speaker 1: for your perspective. Leanna. We're going to continue to watch
Speaker 1: your teams reporting on this deal. Thank you both. Airbnb
Speaker 1: is closing its business in China. According to Bloomberg sources,
Speaker 1: Chinese starts traveling abroad have been a bigger opportunity for Airbnb,
Speaker 1: with its domestic business inside China accounting for just a
Speaker 1: percent of Airbnb's revenue. AIRBNBC O Brian Chesky addressed all
Speaker 1: of this in my last interview with him on Bloomberg Television.
Speaker 1: Take a listen. You know, our China business has primarily
Speaker 1: been people in China leaving China obviously crossing a border,
Speaker 1: so it's cross border travel going to other countries. Japan
Speaker 1: was a really popular corridor. South Korea they're going to
Speaker 1: like Europe, They're going to other places. Because of the
Speaker 1: situation of China. In COVID, there's not a huge amount
Speaker 1: of outbound business right now, and so our business in
Speaker 1: China is not super robust and it's going to be
Speaker 1: probably a while. It's really gonna track with the health crisis,
Speaker 1: all mainland Chinese listings will be taken down by this summer,
Speaker 1: according to sources. Alright, speaking of AIRBNBC Obrian Chesky also
Speaker 1: tweeting a number of times about the difficulties fighting tech
Speaker 1: and startups, in particular given the volatility we are seeing
Speaker 1: in the markets. For more on all this and just
Speaker 1: how low things could go, I'm joined by Dan Suzuki.
Speaker 1: He's the chief investment officer at Richard Bernstein Advisory, which
Speaker 1: has about fifteen billion dollars in assets under management. Dan,
Speaker 1: thank you so much for joining us. So looked, did
Speaker 1: we just hit the bottom and are we on our
Speaker 1: way back up? Or is there a lot lower we
Speaker 1: could go? Well, Emily, I think the reality is that
Speaker 1: that nobody really knows for sure. Um, but I would
Speaker 1: say that the you don't want to sort of jump
Speaker 1: in here simply because you know, regardless you're going to
Speaker 1: get these big moves and markets on both sides. But
Speaker 1: you know, it all comes back to us. You know,
Speaker 1: why do you Why would you buy? And I think
Speaker 1: it's when the data tells you should buy? And right
Speaker 1: the issue that the markets content have is despite the
Speaker 1: fact that you have this, you've had this sell off,
Speaker 1: profits are still slowing, liquidity is still tightening, and you know,
Speaker 1: evaluations why it come down a little bit, there's still
Speaker 1: quite elevated certain parts of the market. So that's not
Speaker 1: a combination of factors that tells you you want to
Speaker 1: jump in feed first to markets, even if you think
Speaker 1: that they've gotten a little bit cheaper. So let's talk
Speaker 1: about tech in particular. Just what kind of a roller
Speaker 1: coaster are you expecting tech itself to be on over
Speaker 1: the next weeks and months? Yeah, you know, to be honest,
Speaker 1: I think that we are at you know, we in
Speaker 1: the early stages of a new paradigm him and a
Speaker 1: new secular leadership in stocks, and that secular leadership is
Speaker 1: not going to be the same as the leadership over
Speaker 1: the last ten or fifteen years. I mean, investors always
Speaker 1: invest in the rear view mirror, you know, but this
Speaker 1: is probably a time given the huge shifts, you know,
Speaker 1: the tectonic shifts we're seeing in the macro backdrop, that
Speaker 1: are screaming that, you know, the backdrop is changing. So
Speaker 1: it's it should be no, it should be obvious that
Speaker 1: the probably the leadership of markets is going to change
Speaker 1: with all this happening. Um. I I think this is
Speaker 1: not going to be a short term thing. And this
Speaker 1: is something we've been saying that you know, tech and
Speaker 1: innovation and disruption. While we believe in the story, you know,
Speaker 1: people have got ahead of themselves in terms of their evaluations,
Speaker 1: in terms of the expectations, and it's created a bubble.
Speaker 1: Uh And and that bubble is in the process of deflating.
Speaker 1: And if you look at the history of bubbles, they
Speaker 1: don't softly and quickly correct over a six month period.
Speaker 1: That typically takes longer, and they usually go down more
Speaker 1: than what we've seen so far, despite the fact that
Speaker 1: you have sometimes monster rallies on the way down. Um
Speaker 1: So there's nothing to say you can't get that. But
Speaker 1: I would not be jumping in here like some others
Speaker 1: are saying this is a buying opportunity of a lifetime.
Speaker 1: I just don't think so. Now we're just getting some
Speaker 1: headlines from a new filing that just came out from
Speaker 1: snap Snaps saying that they are expecting their EBITDA and
Speaker 1: revenue in the second quarter to come in at the
Speaker 1: low end of their guidance, saying that the macro economic
Speaker 1: environment has deteriorate, deteriorated much more quickly than they thought.
Speaker 1: What do you make of this? Well, I think you
Speaker 1: know there there there's two important takeaways here. You know, one,
Speaker 1: this is just another example of you know, companies results
Speaker 1: over the last earning season or two that have had
Speaker 1: to sort of bring down these un unattainable, unrealistic investor
Speaker 1: expectations down to earth. I think the two unrealistic expectations
Speaker 1: have been that you're going to continue to see growth
Speaker 1: at the same trajectory you have over the last feyears
Speaker 1: and all Secondarily, that you're going to see all these
Speaker 1: companies be winners. I think you're seeing company after company
Speaker 1: tell you that that's not going to be the case.
Speaker 1: Underlying growth is slowing as these companies mature and it
Speaker 1: gets more competitive, and that's one thing. The second thing
Speaker 1: that I think is critical is that the market continues
Speaker 1: to underestimate the economic sensitivity of these tech stocks. I
Speaker 1: think that when you when you think about it, you
Speaker 1: know what if the economy starts to slow, You're gonna
Speaker 1: cut their number of streaming services, you're gonna use, companies
Speaker 1: are gonna cut their advertising spending. They're gonna have less
Speaker 1: software investments, You're gonna buy less discretionary you know, high
Speaker 1: expensive technology goods, and so technology is very cyclical. It
Speaker 1: just wasn't during the pandemic, and so as growth continues
Speaker 1: as slow, that's gonna be a headwind. And the big
Speaker 1: issue is not just that things are gonna slow, but
Speaker 1: expectations just aren't there yet. So I think that's why
Speaker 1: you get these big ratings as you re rate those expectations.
Speaker 1: So Snap shares now down in twenty two percent after hours,
Speaker 1: We're going to continue to follow that. Dan, I'd love
Speaker 1: to get your thoughts on this pending potentially pending deal
Speaker 1: between Broadcom and vm Ware would be a massive consolidation
Speaker 1: in the tech space. Do you think we're going to
Speaker 1: see more M and A like this given the environment
Speaker 1: or not, given that what we're seeing is actually a
Speaker 1: huge premium on where VM is, where is trading today. Yeah,
Speaker 1: I think you know, if you if you think about
Speaker 1: just overall trends, it's not it's it's not you know,
Speaker 1: out of the norm to see this type of action.
Speaker 1: I mean it, you know very much. Typically what you
Speaker 1: see with company the way companies act is very similar
Speaker 1: to the way investors act. And so that's why you
Speaker 1: see share buybacks tend to peak at market highs. M
Speaker 1: and A activity tends to peak, you know, at peaks
Speaker 1: of markets, and then even after things start to roll over,
Speaker 1: you tend to see a lot of momentum with investor
Speaker 1: activity as well as company activity because they think, you know,
Speaker 1: they're getting big sale price on the on these assets. Uh.
Speaker 1: And I think that that's kind of what you're seeing today.
Speaker 1: That will probably dry up, and that will be the
Speaker 1: sign that you know, you're really starting to see things
Speaker 1: roll over and that you're reaching that auto. All right,
Speaker 1: We're gonna continue to watch all of this. Dan Tazuki,
Speaker 1: Richard Bernstein Advisers, thank you for sharing your perspective with us.
Speaker 1: And coming up, we're gonna hear from Intel CEO in
Speaker 1: Davos on all things Chip and a progress update on
Speaker 1: supply chain pain, plus his thoughts on that vm Ware
Speaker 1: a deal given that he was of course previously c
Speaker 1: CEO of vm Ware. This is Bloomberg continuing our coverage
Speaker 1: of a potential acquisition of vm Ware by Broadcom. We
Speaker 1: spoke with Intel CEO Pat gal Singer from Davos. He was,
Speaker 1: of course the former CEO of vm Where here he
Speaker 1: is with my colleague, has Linda a mean talking about
Speaker 1: all things? Also chip supply Yeah, no, we we definitely
Speaker 1: think that the applied demand balances and uh, you know,
Speaker 1: a year ago, I said twenty three. Since then, we've
Speaker 1: seen a number of equipment supply chains move out, so
Speaker 1: our equipment coming into the fabs that we're building that
Speaker 1: has moved out. So overall four until we start to
Speaker 1: see a reasonable balancing of semiconductor supply chain. So what
Speaker 1: I get worse from here before it gets better, because
Speaker 1: when you take a look at the ports and China,
Speaker 1: for instance, we're talking about fifties sixty ships just waiting
Speaker 1: to unload, and of course, uh, that's causing a lot
Speaker 1: of headaches. Oh yeah, the supply chain issues that we've
Speaker 1: seen in China. But it comes on the back of
Speaker 1: many other supply chain issues. So we're already sort of
Speaker 1: beaten down and so we have to work through it.
Speaker 1: And maybe the you know, softening of the economy, a
Speaker 1: little bit of consumer softness, gives us just a little
Speaker 1: bit of breath, but you know, we're still out and
Speaker 1: obviously the Shanghai ports have created a bit more turbulous
Speaker 1: that we're managing through. Near term. We talk about a slowdown,
Speaker 1: in fact, a global slowdown, although we've seen a pushback
Speaker 1: from Crystalline and Jeva saying we're not looking at a
Speaker 1: global recession, but definitely a slowdown. What do that mean,
Speaker 1: demand destruction? What assumptions are you making? Well, we definitely
Speaker 1: see a bit of softening on the consumer side. How
Speaker 1: much softening, I mean, can you give a number to that?
Speaker 1: Um you know, as you saw on our earnings, you know,
Speaker 1: we saw, you know, there was a meaningful you know,
Speaker 1: you know, a number of percentage of points software there.
Speaker 1: We originally were expecting the PC industry to be up
Speaker 1: a couple of points this year. Now it's sort of flatish,
Speaker 1: maybe down one point, so you know, a meaningful swing.
Speaker 1: But on the business side, the enterprise and commercial side,
Speaker 1: no change, right continuing to have real strength, and those
Speaker 1: areas of the market. You know, I think with you know,
Speaker 1: inflation concerns, tightening a monetary policy, these continuing supply chain challenges, Yeah,
Speaker 1: things are probably gonna be a little bit choppy for
Speaker 1: a couple of quarters. You're also were looking reviewing where
Speaker 1: you produced your chips and facts. You're making Europe as
Speaker 1: well as the US a priority, and perhaps that message
Speaker 1: is resonating even more given what we're seeing in China. Um,
Speaker 1: how is that coming along? Well, we are all in
Speaker 1: on the rebuilding on what we've called the geographically balanced,
Speaker 1: resilient supply chain where you know, this industry was in
Speaker 1: US and Europe thirty years ago. Now it's manufactured in Asia.
Speaker 1: What happened? You know? And it was never as I
Speaker 1: you know, I was in Washington last week, and you know,
Speaker 1: I joked to some of the congressional leaders. We never
Speaker 1: voted to get rid of this industry, but those countries
Speaker 1: voted to get this industry, you know, and they put
Speaker 1: strong packages in place to attract this industry there. And
Speaker 1: now we see that, oh, you know, we are way
Speaker 1: too dependent on too few places in the world, you know,
Speaker 1: And has Linda what aspect of your life is not
Speaker 1: becoming more digital? Everything is becoming digital, right. You know,
Speaker 1: my consumer my healthcare, my trade, transportation, you know how
Speaker 1: I work, how I live, and everything digital runs on semiconductors.
Speaker 1: As I say, you know where the oil reserves are
Speaker 1: defined geopolitics for the last five decades. Where the fabs
Speaker 1: are is more important for the next several decades. Let's
Speaker 1: build them where we want them and do it in
Speaker 1: a way that we have more resilience to the supply chain.
Speaker 1: It is all great that you want to make the
Speaker 1: US and Europe a priority, but it's also about scaling
Speaker 1: and scaling quickly. How soon can you get there? Well,
Speaker 1: you know we've announced the Ohio side expansions in Arizona.
Speaker 1: In Europe, we announced our expansion and Germany, new research
Speaker 1: in France, expansions continuing in Ireland. And what we're really
Speaker 1: now anxious to see is that the US and the
Speaker 1: EU Chips Act get completed that allows us to make
Speaker 1: those good economic investments, because part of the challenges is that,
Speaker 1: you know, we're competing now with countries that have very
Speaker 1: actively incented those investments in Asia, and these investments they
Speaker 1: have to be competitive worldwide or I can't compete for
Speaker 1: the worldwide market. So, and that's what we're looking for
Speaker 1: the EU leaders as well as the US congressional leaders,
Speaker 1: get these things done so we can go faster. Just
Speaker 1: for our radio listeners, we're speaking to about pad galcinga
Speaker 1: Intel CEO here in Davos. I mean, we talked about
Speaker 1: how we want to ramp up that production in the
Speaker 1: US and Europe. But what kind of government support are
Speaker 1: you seeing are you getting and is it enough? Well,
Speaker 1: you know, the US Chips Act fifty two billion dollars,
Speaker 1: the European Chips Act forty five billion euros. And as
Speaker 1: we've looked at those programs and we've helped to shape them,
Speaker 1: they make us competitive in the world. We feel very
Speaker 1: good that these are very good steps forward and it's
Speaker 1: against what I call the moon shot. And by the
Speaker 1: end of the decade, our objective is that we go
Speaker 1: from eight percent Asia, US and Europe to fifty fifty right,
Speaker 1: thirty US tent in Europe fifty percent in Asia. That
Speaker 1: is the goal that we are driving these four and
Speaker 1: we think these these are rate steps forward and if
Speaker 1: they are being successful, we can drive towards that welcome
Speaker 1: back to Bloomberg Technology and Emily changing in San Francisco,
Speaker 1: want to get back to that breaking news out of Snap.
Speaker 1: The company shares plummeting in late trading here in the
Speaker 1: US after cutting its guidance for the current quarter. Are
Speaker 1: at ludlow here. Snap shares last I look down more
Speaker 1: than two percent, saying the macro economic environment has deteriorated
Speaker 1: much more quickly than even the anticy. And you you'll
Speaker 1: remember in April when they reported first quarter arnings and
Speaker 1: gave guidance for the current set of quarter, they said
Speaker 1: that they started the year better than expected. Advertisers had
Speaker 1: held up a lot of young people stuck with Snap
Speaker 1: at a time where they weren't sticking with Facebook, that's
Speaker 1: for sure. But things changed, particularly in the context of
Speaker 1: the war in Ukraine, and what we're hearing from Snap
Speaker 1: right now is that that's got even worse. And so
Speaker 1: they're saying, our revenue in the second quarter are adjusted
Speaker 1: earnings before interest tax, et cetera, will be at the
Speaker 1: lower end of the scale which they gave in revenue,
Speaker 1: they said, will the street have been looking for something more?
Speaker 1: And this has also taken down other social media's rights.
Speaker 1: Twitter Twitter doesn't need any more bad news, right, It
Speaker 1: does not need any more complication, that's for sure. I
Speaker 1: think you remember back in April when we were digesting
Speaker 1: Metas earnings, we're thinking, oh, Snap was a bright spot.
Speaker 1: We did see movement in other stocks depending on the
Speaker 1: fate of others. Why because they all have tied fates
Speaker 1: when it comes to advertising, and so this is worrying,
Speaker 1: especially for Facebook, where Snapp has had growth, Facebook has
Speaker 1: stagnated in its growth, and so if we're hearing this
Speaker 1: message from Snap, I think there would be a concern
Speaker 1: to some of the other social media platforms. Now, it
Speaker 1: was interesting at the time when Snap tied the lower
Speaker 1: numbers to the war in Ukraine, when it seems like
Speaker 1: it would be more directly tied to coming out of
Speaker 1: a pandemic and people just having less disposable time to
Speaker 1: sit around and look at social media. So the thing
Speaker 1: when you cover social media stocks and companies is we
Speaker 1: forget how they make money, which is advertising revenue. You know,
Speaker 1: we're super fixated on how many users they do or
Speaker 1: don't have on a daily or monthly active user basis,
Speaker 1: or how their growth is. But ultimately advertisers have other
Speaker 1: reasons to pull money right. If they don't have confidence
Speaker 1: in the global economy, they might hold off on spending
Speaker 1: y because they're targeting people with those ads. They need
Speaker 1: the consumer to be strong to actually buy products, and
Speaker 1: that's certainly what we've seen in the war in Ukraine.
Speaker 1: You see Alphabet, the parent company of Google and YouTube
Speaker 1: hit by similar impact. It's the worry that those ads
Speaker 1: aren't getting any eyeballs willing to spend all right at Lovell,
Speaker 1: thank you for that update. We're watching so many tech
Speaker 1: companies trying to navigate this sell off, and my next
Speaker 1: guest is one of software's biggest success stories, but even
Speaker 1: they haven't been immune to the recent volatility. I'm joined
Speaker 1: now by Shantonoon and Ryan. He is the CEO and
Speaker 1: chair of Adobe. Shantonoo, great to have you back with us.
Speaker 1: It's been a while and the world has changed a lot.
Speaker 1: I have to get due reaction to the later sell off.
Speaker 1: Obviously we're talking about what's happening in Snap at this
Speaker 1: very moment, but in big TEG more broadly as well.
Speaker 1: What's your outlook on all of this, given that you've
Speaker 1: been in this industry for a couple of decades. Well,
Speaker 1: Lemily First, it's great to be back on your show.
Speaker 1: As you said, it's been a couple of years, and
Speaker 1: big picture for us, certainly the move towards digital, it's
Speaker 1: no longer would be nice. It's an absolutely critical imperative
Speaker 1: and so it's sort of a cliche, but the truth
Speaker 1: is that digital is changing everything from entertainment to work
Speaker 1: to play, and uh, I think we're at the center
Speaker 1: of all those secular trends. So some of the companies
Speaker 1: reporting I don't understand fully what their business cycles are,
Speaker 1: but from our perspective, we continue to innovate and our
Speaker 1: addressable market opportunity just continues to grow larger and larger. Now,
Speaker 1: some folks are comparing what we're seeing right now to
Speaker 1: the dot com bust, and I'd love to hear how
Speaker 1: you are trying to put this into context. What is
Speaker 1: your assessment of the macro economic environment and the circumstances
Speaker 1: that are beyond your control, whether it is inflation or
Speaker 1: rising rates or an ongoing war. Well, a couple of
Speaker 1: thoughts come to mind, Emily. The first is that we
Speaker 1: have been through this incredible, uh macro economic bull period
Speaker 1: for the last few years, and so to some degree
Speaker 1: a business cycle is absolutely critical, and that's happening also
Speaker 1: as a result of the backdrop of what happened both
Speaker 1: with the pandemic and more recently with the war in Ukraine. Uh.
Speaker 1: I believe that what this will cause is a number
Speaker 1: of companies that are single product companies that may not
Speaker 1: have the depth and the breadth of the kinds of
Speaker 1: offerings that the larger tech companies like Adobe have will
Speaker 1: be shaken out. And so I think part of what
Speaker 1: you're seeing is a normal period where when you go
Speaker 1: through such a boom, everybody believes that you know it's
Speaker 1: because of them, and then you realize, in a period
Speaker 1: like this, who are going to be the true secular winners.
Speaker 1: And I think Adobe is going to be part of it.
Speaker 1: So I think the way we think about an opportunity
Speaker 1: like this is, first, are we continuing to innovate on
Speaker 1: behalf of our customers. Second, we have a tremendous balance sheet,
Speaker 1: We have tremendous opportunity, So don't do anything that is
Speaker 1: short term focused and continue to focus on making sure
Speaker 1: that we drive the company long term. But I think
Speaker 1: for the single product companies or the much smaller companies,
Speaker 1: it's going to be a trying period because whether it's
Speaker 1: the war in Ukraine or the potential dark clouds on
Speaker 1: the macroeconomic environment, a lot of those companies haven't learned
Speaker 1: how to deal with that. Now, speaking of innovation at Adobe,
Speaker 1: you just launched Creative Cloud Express. Most folks know Adobe
Speaker 1: for its signature Photoshop product, which is facing some increasing
Speaker 1: competition from Canava light Ricks. How do you plan to
Speaker 1: hold off some of that? You know, potential market share
Speaker 1: gains to some of these competitors for this iconic product
Speaker 1: in your portfolio. Emily, we created three categories, and when
Speaker 1: you create three large categories the way we did, whether
Speaker 1: it's creativity and uh, you know, our vision of enabling
Speaker 1: anybody who has a story to tell to tell their story.
Speaker 1: At the other end of the spectrum, whether it's enabling
Speaker 1: every single business that's increasingly going to be digital to
Speaker 1: engage with their customers digitally, and in the middle what
Speaker 1: we do with document cloud and automating document productivity. Uh,
Speaker 1: these are massive markets and we're going to win because
Speaker 1: we created these markets. We have a vision for the market.
Speaker 1: But the reality is that when you create these addressable
Speaker 1: opportunities that are hundreds of billions of dollars you're going
Speaker 1: to see other companies. So the way we focus on it,
Speaker 1: specifically on the creative side, we are the largest company
Speaker 1: in that space. We have an incredible portfolio, whether it's
Speaker 1: Creative Cloud as you mentioned, and photoshop up, what we're
Speaker 1: doing to enable the emerging metaverse, what we are doing
Speaker 1: for people who are either communicators or consumers. So I
Speaker 1: think it's the breadth of our offerings and it's the
Speaker 1: depth of our technology and understanding of these trends that
Speaker 1: will continue to make sure that Adobe is at the
Speaker 1: forefront of all of these massive opportunities. You've got five
Speaker 1: billion dollars in cash sitting on your balance sheet, are
Speaker 1: you buying any acquisitions? We were just talking about a
Speaker 1: big potential deal between Broadcam and VM where Adobe always
Speaker 1: looks for really deep technology and great culture. I think,
Speaker 1: to your point, what's happened in the market, there will
Speaker 1: be a number of companies, so you know, we're always
Speaker 1: judicious and we're always thoughtful in terms of the acquisitions
Speaker 1: that we made. We just made a couple of acquisitions
Speaker 1: that have actually turned out to be a phenomenal one
Speaker 1: in the collaboration space Emily, where we bought this company
Speaker 1: called frame Io, which enables anybody who's doing video collaboration
Speaker 1: to collaborate in a way. We've also bought a company
Speaker 1: called Workfront that allows anybody who's creating these marketing campaigns
Speaker 1: to be far more efficient. So we're always looking. We're
Speaker 1: very pleased with the portfolio of products that we have
Speaker 1: in the depth, but we will continue to take a
Speaker 1: look and our criteria continues to be making sure that
Speaker 1: there's great technology, that there's a culture match, and financially
Speaker 1: it is a good deal for our shareholders. All right,
Speaker 1: Chanton Ryan, CEO of Adobe. Great to have you back
Speaker 1: with us. Hopefully we can do it again before another
Speaker 1: two years past. Thank you. Coming up once the crypto
Speaker 1: Darling coin based now crashing hard. What is behind the
Speaker 1: rise and fall of the largest US cryptocurrency in exchange
Speaker 1: and what does it mean that's next? This is Bloomberg.
Speaker 1: It's time now for our crypto report, and I want
Speaker 1: to take a quick look at coin base, which has
Speaker 1: gone from one of the stock market's biggest debuts to
Speaker 1: one of its most spectacular crashes, all in a little
Speaker 1: over a year. Coin Base seeing a bit of a
Speaker 1: hike in Monday trading but share still down about sixty
Speaker 1: six dollars apiece, way down from that three high back
Speaker 1: in November. I want to get into this all and
Speaker 1: more with Rebecca Kaida, director of marketing xpt o, which
Speaker 1: offers global access to crypto finance through institutional trading, mining
Speaker 1: and investing. Rebecca, what do you make of coin based
Speaker 1: in particular as a microcosm of what's happening in crypto
Speaker 1: more broadly? Well, absolutely, I mean I think that you know,
Speaker 1: we have to remember that crypto is such, it's in
Speaker 1: its pre teen phase um as a kind of financial
Speaker 1: system uh and digital asset class. So it's important to
Speaker 1: note that volatility is just a huge part of emerging technologies.
Speaker 1: So what's interesting to note with coin based in particular
Speaker 1: is their price to earnings are quite high. Uh and
Speaker 1: as we know, as we've seen often with the stock market,
Speaker 1: you can have great earnings, are great financials, and your
Speaker 1: stock still plummets. And so what I really see here
Speaker 1: is is negative impacts of the very notorious stable coin
Speaker 1: you know, failure if you will, with Tera Luna recently
Speaker 1: in the last couple of weeks. That's causing a lot
Speaker 1: of panic, if you will, from retail investors, and then
Speaker 1: looking at coin base as a as a kind of
Speaker 1: definition of crypto in the market, it's is seeing some
Speaker 1: of those um downturns. So how long would you say
Speaker 1: this crypto winter is going to last. We talked to
Speaker 1: a guest last week who thinks that don't expect bitcoin
Speaker 1: to start trading back up for twelve to eighteen months.
Speaker 1: I think it's possible, Emily. I mean, if I had
Speaker 1: an oracle and I could tell you definitively, I would
Speaker 1: let you know. But what happened equally in crypto is
Speaker 1: that you know, the lows are are are getting higher
Speaker 1: and they're getting shorter. So it's kind of the same
Speaker 1: with the early stock market. Right. We go in these
Speaker 1: different financial cycles, and you know, they last a lot
Speaker 1: longer in the early stage and then they start to
Speaker 1: get a lot shorter. But I'll bet my career that
Speaker 1: Bitcoin and etherorum are not going to zero. And what
Speaker 1: we're seeing right now is just the the impact of
Speaker 1: some news that's been happening, and even the global markets. Right.
Speaker 1: I think that as we've discussed, many guests on your
Speaker 1: show discussed kind of different you know, macro trends at work.
Speaker 1: The external events that are affecting everything. Crypto is not
Speaker 1: the only one that's being impacted. You've seen a lot
Speaker 1: of tech stocks fall, you know, sevent as well. I think,
Speaker 1: in depending upon how you judge it, that some of
Speaker 1: the tech stocks could be more volatile than crypto right now.
Speaker 1: So how is this all impacting institutional appetite to expose
Speaker 1: you know, themselves to more crypto assets. I mean, you know,
Speaker 1: we were seeing that build up to this point, but
Speaker 1: our institutional investors starting to get cold feet. Well you've
Speaker 1: seen Goldman just invested in in Elwood Technologies, which does
Speaker 1: actually help them, uh, you know, service their clients and
Speaker 1: institutions that are looking to diversify into crypto. But what
Speaker 1: typically happens, emily is that you have retail investors who
Speaker 1: are maybe newer investors, and so they see downturns like
Speaker 1: this and they panic sel and get frustrated, and then
Speaker 1: this becomes a huge opportunity for institutions to get at
Speaker 1: a more palatable price point. So, um, you know, something
Speaker 1: that we've seen is some of the largest crypto wallets
Speaker 1: have been actually amassing a lot more of top tier crypto.
Speaker 1: So I would say that this is actually one of
Speaker 1: the times that you know, UM, different funds of folks
Speaker 1: that have been allocating you know, slowly kind of investing
Speaker 1: over time. UM, this is a good point for them
Speaker 1: to kind of get back in at a price that
Speaker 1: that is a little bit more reasonable. Meantime, you have
Speaker 1: venture capitalists looking at funding the next big crypto thing,
Speaker 1: and I wonder when you look at a company like
Speaker 1: coin base, is that a matter of you know, just
Speaker 1: the market or is there also some measure of poor
Speaker 1: execution there. With coin Bree specifically, I think that, you know, uh,
Speaker 1: they've definitely done a lot of hires UM. So when
Speaker 1: it comes to kind of business execution, I think that,
Speaker 1: you know, it's it's easy for companies to get into
Speaker 1: this this place of over hiring UM for lots of
Speaker 1: positions that they can't necessarily derive a lot of value
Speaker 1: from at the time. And we've seen that with crypto companies,
Speaker 1: we've seen that with tech companies, and oftentimes that that
Speaker 1: can be UM definitely a uh it takes the wind
Speaker 1: out of their sales, if you will. So sometimes it
Speaker 1: can be a little bit about poor business execution UM,
Speaker 1: but that happens all the time. Unfortunately, Okay, Rebecca Kata
Speaker 1: x bt O, thank you for joining us. Thank you
Speaker 1: shaking up office WiFi. It's harder to set up than
Speaker 1: you might think, and the founders of Meter, two brothers,
Speaker 1: think it's the next big opportunity in big tech. Meter
Speaker 1: is a startup that makes all of its own hardware
Speaker 1: and software. To that end, it is backed by Silicon
Speaker 1: Valley heavyweights from Sequoia and silver Lake to vm Ware
Speaker 1: and Stripe. Here to talk about it all. Co founder
Speaker 1: and CEO of Meter A Neil Varnasci and Neil, great
Speaker 1: to have you back with us. So what are the
Speaker 1: problems with office WiFi that we don't quite understand? Yeah,
Speaker 1: every business runs on connectivity, right, most companies no longer
Speaker 1: build their own data centers, but internet infrastructure continues to
Speaker 1: be something that's complex, time consuming and really difficult. So well,
Speaker 1: we think it should be like is similar to a
Speaker 1: utility that when you go into a space, just like
Speaker 1: you turn on electricity or water, it just works. And
Speaker 1: what we're seeing is that every business increasingly is reliant
Speaker 1: on software and technology, and frankly, we just don't think
Speaker 1: that's going to slow down at all. So for all
Speaker 1: of this to work, we really need great internet infrastructure,
Speaker 1: a qualit us all of the different market segments. Now
Speaker 1: you say you want internet service and infrastructure to be
Speaker 1: a utility, what do you mean by that? And isn't
Speaker 1: it already kind of a utility? So outside of spaces,
Speaker 1: it truly is. But if you go inside of a space,
Speaker 1: let's say you know you're setting up a workhouse, a
Speaker 1: life sciences lab, retail, healthcare office space, what happens inside
Speaker 1: it takes months. You have to deal with so many
Speaker 1: different vendors, and you have to take on the complexity
Speaker 1: of maintaining these really old systems. And so what we
Speaker 1: do is make all of that kind of go away
Speaker 1: so that customers can just go on with building their
Speaker 1: own business. More broadly, is there a redistribution happening of
Speaker 1: how we use WiFi? Given the shift to remote work?
Speaker 1: More people working at home? I mean, aren't less people
Speaker 1: working in the office today? Yeah? We we certainly service
Speaker 1: customers and offices, but we service customers in warehouses, life
Speaker 1: sciences lab else or so think about the past two
Speaker 1: years where we've all ordered stuff on e commerce that
Speaker 1: comes from a warehouse where it has robots and sensors
Speaker 1: and computers and so everything runs on the Internet, So
Speaker 1: there probably isn't a company, a product, or something that
Speaker 1: we are customers of where they don't run on Internet.
Speaker 1: Now working in WiFi. Now, you founded this company with
Speaker 1: your brother, and I've heard some interesting comparisons to you
Speaker 1: all and the Callison brothers, who of course co founded
Speaker 1: Stripe and whose career I've enjoyed following over the last decade.
Speaker 1: Talk to us a little bit about your story and
Speaker 1: why you chose to take internet infrastructure on when it
Speaker 1: could have been just about anything. Yeah, I think fundamentally
Speaker 1: what we saw was this is a problem we wanted
Speaker 1: to solve ourselves. But as we started working with a
Speaker 1: lot of different companies and talked to companies that are
Speaker 1: stalwart technology companies, we increasingly saw them ending a lot
Speaker 1: of time in capital. But even if we take a
Speaker 1: step back for a second, what's importantness to think about again,
Speaker 1: We've heard about software reading the world and um technology
Speaker 1: being everywhere. Internet infrastructure is kind of that underlying bed
Speaker 1: that makes all the possible. So I'm sure your kids
Speaker 1: watch YouTube or Twitch, or you know, we order something
Speaker 1: or order a car to go somewhere. All of that
Speaker 1: needs internet infrastructure. To function. So we think it's tremendously
Speaker 1: important to get that right as technology grows over the
Speaker 1: next decade. So let's talk about dollars. We know you
Speaker 1: just raised a big new round of funding, but you know,
Speaker 1: how big is the market size here? How many billions
Speaker 1: of dollars do you think are up for grabs? Yeah,
Speaker 1: so this is probably one of the largest markets there
Speaker 1: is in technology. You know, there's been some noteworthy companies
Speaker 1: for decades now, so you know, rather than kind of
Speaker 1: thinking about just particular market segment, what's important to look
Speaker 1: at is the billions of square fee that are all
Speaker 1: of these segments that require internet infrastructure. So every single
Speaker 1: type of space you see as you're driving by or
Speaker 1: walking down main street, or when you think about a
Speaker 1: company you work with or a customer of those are
Speaker 1: all customers that are potential markets. Trusts. Is there a
Speaker 1: number you'd put on it? Not not really. I think
Speaker 1: it's in the tens of hundreds of billions, but I
Speaker 1: think it just it's increasing. So what's again, you know
Speaker 1: point earlier I was saying this is where currently it's
Speaker 1: already one of the largest markets, but it is just
Speaker 1: increasing every year as all of these other technology companies
Speaker 1: become successful, and every company becomes a technology company. All right,
Speaker 1: A Neil Varnasi, co founder and CEO of Meter, We'll
Speaker 1: keep her eye on you and that big potential opportunity ahead.
Speaker 1: Thank you. Before we go, I want to mention two
Speaker 1: of those big tech stories that broke late in US
Speaker 1: trading today, Snap shares falling after it cut its revenue
Speaker 1: and profit forecasts below the low end of its guidance,
Speaker 1: and part of that lean the company saying the macroeconomic
Speaker 1: environment has deteriorated further and faster than they anticipated. We
Speaker 1: also watched Zoom report its results, projecting sales and profit
Speaker 1: for the current quarter of that topped estimates. And coming
Speaker 1: up tomorrow right here on Bloomberg Technology, we'll be talking
Speaker 1: about all these trends and earnings with Zoom CFO Kelly Steckelberg.
Speaker 1: I'll also be speaking with Max Peterson, AWS vice president
Speaker 1: for the Worldwide Public Sector about the future of the cloud.
Speaker 1: That does it. For Bloomberg Technology, I'm Emily Chang in
Speaker 1: San Francisco. This is Bloomberg