WEBVTT - Broadcom-VMware Deal and Adobe's Outlook 0:00:02.279 --> 0:00:05.560 From the heart of where innovation, money and power COLLI 0:00:06.400 --> 0:00:10.960 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:11.000 --> 0:00:27.600 Emily Jay. I'm Emily Check in San Francisco, and this 0:00:27.640 --> 0:00:30.280 is Bloomberg Technology. Coming up in the next hour, broad 0:00:30.320 --> 0:00:32.879 Common talks to buy the m Ware, setting up a 0:00:32.920 --> 0:00:36.360 blockbuster tech deal that would vault the chip maker into 0:00:36.400 --> 0:00:40.480 a highly specialized area of software. We'll tell you everything 0:00:40.520 --> 0:00:44.000 we know so far about this Bloomberg School. Plus I'm 0:00:44.080 --> 0:00:47.800 joined exclusively by Shantan now Ryan, CEO and share of Adobe. 0:00:47.840 --> 0:00:50.280 We've got a lot to talk about, including how Adobe 0:00:50.400 --> 0:00:53.440 is handling this market sell off, plus his outlook for 0:00:53.440 --> 0:00:58.320 the company's future and plans for the metaverse. And coin 0:00:58.360 --> 0:01:02.680 bases fall from rates, how a bear market, regulatory pressure 0:01:02.680 --> 0:01:05.520 and falling crypto prices are piling up on the largest 0:01:05.600 --> 0:01:09.080 US crypto exchange, coin Base has now lost fifty one 0:01:09.440 --> 0:01:13.040 billion dollars in market values since its IPO. More in 0:01:13.040 --> 0:01:15.720 our crypto report later this hour. Let's talk a whole 0:01:15.720 --> 0:01:18.200 lot more about that Broadcom deal for vm Ware. I 0:01:18.240 --> 0:01:20.759 want to bring in bloom brig Leanna Baker, who covers 0:01:20.840 --> 0:01:22.319 M and A for US, and I'm also joined by 0:01:22.400 --> 0:01:25.520 James Fish and analyst at Piper Sandler who focuses specifically 0:01:25.920 --> 0:01:30.440 on infrastructure and communication software. Leana, first of all, tell 0:01:30.520 --> 0:01:32.960 us what we know what we don't know at this point. Sure, 0:01:33.120 --> 0:01:35.720 so we know that Broadcom is in talks by vm 0:01:35.760 --> 0:01:37.840 where it's a blockbuster or deal. We don't know the 0:01:37.880 --> 0:01:41.000 exact price. But before our story, you know, shares are 0:01:41.000 --> 0:01:44.280 already trading valuing vm Ware it over forty billions. So 0:01:44.360 --> 0:01:47.400 this is really going to be a large one and 0:01:47.520 --> 0:01:50.520 the deal is probably imminent. We reported it's coming later 0:01:50.600 --> 0:01:52.560 this week and it's going to be one of the 0:01:52.560 --> 0:01:55.880 biggest tech deals in years. So, Jane, if we're looking 0:01:55.880 --> 0:01:59.280 at a potential sixty billion dollar valuation for vm Ware 0:01:59.280 --> 0:02:01.080 as part of this, l who do you think, Wayne, 0:02:01.080 --> 0:02:04.240 who loses in this tie up? Um? Look at a 0:02:04.480 --> 0:02:08.640 story for Broadcommon talking with my colleague Harshkmar where you 0:02:08.680 --> 0:02:10.920 know they've done a tremendous job on rolling up some 0:02:10.919 --> 0:02:13.960 of these software assets, whether it's c A and Semantic together. 0:02:14.160 --> 0:02:16.160 Actually an apt Meta was a small one that they 0:02:16.200 --> 0:02:19.680 did last year. Um. But at the end of the day, 0:02:19.960 --> 0:02:23.640 you know, the playbook that the CEO of Broadcom runs, 0:02:23.880 --> 0:02:27.640 you know, fits well with vm work. For the most part, 0:02:28.080 --> 0:02:32.040 we see vm Ware is fairly complimentary to the existing 0:02:32.160 --> 0:02:37.240 software segments that they have. There is some overlap, especially 0:02:37.280 --> 0:02:39.720 as you start to think about the Carbon Black deal 0:02:39.760 --> 0:02:43.240 that vm Ware did with for example, the Semantic endpoint 0:02:43.240 --> 0:02:47.359 protection business UM. But overall, you know, vm Ware has 0:02:47.400 --> 0:02:51.120 been a drag versus some of the others in infrastructure 0:02:51.919 --> 0:02:55.079 because of the Delta vestiture overhang, because of the move 0:02:55.120 --> 0:02:58.639 towards public cloud, and because of its ongoing transition. So 0:02:58.800 --> 0:03:00.400 you know, it can be a win win for both 0:03:00.400 --> 0:03:03.160 sides in this case, Leona, how close is this to 0:03:03.240 --> 0:03:05.280 being a done deal? I know we're reporting it could 0:03:05.280 --> 0:03:09.000 potentially happen this week. It's funny with Broadcom, you never know. 0:03:09.160 --> 0:03:11.200 Last summer they were close to a deal with something 0:03:11.240 --> 0:03:15.160 called sas Institute, a deal valued close to twenty billion, 0:03:15.200 --> 0:03:18.200 and it fell apart. And then three years ago Broadcom 0:03:18.200 --> 0:03:20.239 was close to buying all of Semantic and that also 0:03:20.320 --> 0:03:23.639 fell apart. So you never know with Broadcom CEO Hawk ten. 0:03:23.800 --> 0:03:26.760 But this one, from what we know, it's still in talks. Uh, 0:03:26.880 --> 0:03:29.560 not in danger right now of of falling apart, but 0:03:29.720 --> 0:03:32.560 a deal isn't done until it gets the finish line, 0:03:32.560 --> 0:03:34.240 and as you know with Elon Musk and Twitter, even 0:03:34.280 --> 0:03:35.760 if you do get to the finish line, it may 0:03:35.760 --> 0:03:41.240 not be a done deal exactly. Um Qualcom. Broadcom did 0:03:41.240 --> 0:03:43.960 try to buy qual Calm back in which also would 0:03:43.960 --> 0:03:46.960 have been a massive deal that didn't happen because of 0:03:47.000 --> 0:03:51.800 Trump administration concerns about Broadcom's headquarters in Singapore. But we 0:03:51.840 --> 0:03:54.920 did catch up with Qualcom CEO Cristiano I'm on in 0:03:55.120 --> 0:03:58.880 Davos earlier asked his thoughts on this potential tie up 0:03:58.920 --> 0:04:01.560 between Broadcom and vm ware. Take a listen to what 0:04:01.600 --> 0:04:05.280 he had to say. It's really for Broadcom to comment. 0:04:05.360 --> 0:04:07.080 By the way, I look, Broadcom has become a more 0:04:07.080 --> 0:04:09.520 of a software company and uh, you know with some 0:04:09.560 --> 0:04:11.760 of the acquisitions they made in the past, and I 0:04:11.760 --> 0:04:14.480 think vm or is a software company. We're going to 0:04:14.600 --> 0:04:17.400 the different direction. I think we will continue to be 0:04:17.760 --> 0:04:21.760 a semiconductor company, focus in the growth that we have 0:04:22.279 --> 0:04:26.159 in this industry, especially at the edge, and uh, we'll 0:04:26.160 --> 0:04:31.279 continue to see not consolidation but conversions of all those opportunities. 0:04:31.680 --> 0:04:37.080 James Broadcom CEO Hackten as ambitious and seemingly acquisitive as 0:04:37.120 --> 0:04:40.000 effort is Broadcom even a chip company anymore, or is 0:04:40.040 --> 0:04:43.000 it more of a software company? Well, to be fair, 0:04:43.000 --> 0:04:44.919 I don't I don't cover Broadcom, but you know that 0:04:45.040 --> 0:04:48.920 the chip part does still overwhelmed the software piece. But 0:04:48.960 --> 0:04:51.640 when you think about it, you have a roughly seven 0:04:51.720 --> 0:04:55.160 eight billion dollars running right on the software side, and 0:04:55.320 --> 0:04:57.320 when you look at what vm Ware could do, that 0:04:57.360 --> 0:05:00.080 could essentially triple the side of the software business and 0:05:00.080 --> 0:05:02.159 and kind of start to bring it more in line 0:05:02.200 --> 0:05:05.560 with the UH semiconductor side of the business. James, what 0:05:05.600 --> 0:05:07.040 do you make of the fact that this is happening 0:05:07.040 --> 0:05:09.800 when we are in the midst of a tech sell off, 0:05:09.839 --> 0:05:13.040 and do you expect more big deals of this nature. Well, 0:05:13.520 --> 0:05:14.960 it's a good question. I actually just wanted to come 0:05:15.080 --> 0:05:19.359 on only honest point there. It probably does trigger the 0:05:19.480 --> 0:05:23.120 Chinese regulatories just because vm Ware does have a decently 0:05:23.120 --> 0:05:26.159 sized business there. Um that would kind of be over 0:05:26.240 --> 0:05:29.000 that threshold rate that that's typically assigned there. So it 0:05:29.040 --> 0:05:31.920 would expect China to be someone involved here on the 0:05:31.960 --> 0:05:35.080 approval process needing to get done. And you know, it's 0:05:35.200 --> 0:05:38.640 very few companies that could actually swallow something the size 0:05:38.839 --> 0:05:42.840 of vm Ware in this case. Um, And let's face it. 0:05:42.920 --> 0:05:45.760 Some of the hyper scalers would have some challenge and 0:05:45.800 --> 0:05:47.440 getting this kind of deal done, so it kind of 0:05:47.440 --> 0:05:50.360 removes them to a degree from the equation I would 0:05:50.440 --> 0:05:54.039 say it's impossible, but it does present some problems on 0:05:54.240 --> 0:06:00.640 that and um, but it is the case where um, 0:06:00.680 --> 0:06:02.280 you know, at the end of the day, broadcom makes 0:06:02.360 --> 0:06:08.040 makes a lot of sense and you know, for um, 0:06:08.200 --> 0:06:11.280 for really what needs to get done here, Um, we 0:06:11.640 --> 0:06:15.159 see pretty smooth process. It just might take some time. 0:06:15.240 --> 0:06:20.200 And um yeah, all right, James Fish, Piper Sandler, thanks 0:06:20.240 --> 0:06:22.520 for your perspective. Leanna. We're going to continue to watch 0:06:22.560 --> 0:06:34.520 your teams reporting on this deal. Thank you both. Airbnb 0:06:34.760 --> 0:06:38.120 is closing its business in China. According to Bloomberg sources, 0:06:38.200 --> 0:06:42.960 Chinese starts traveling abroad have been a bigger opportunity for Airbnb, 0:06:43.200 --> 0:06:46.279 with its domestic business inside China accounting for just a 0:06:46.320 --> 0:06:50.560 percent of Airbnb's revenue. AIRBNBC O Brian Chesky addressed all 0:06:50.600 --> 0:06:53.560 of this in my last interview with him on Bloomberg Television. 0:06:53.600 --> 0:06:58.120 Take a listen. You know, our China business has primarily 0:06:58.160 --> 0:07:03.000 been people in China leaving China obviously crossing a border, 0:07:03.040 --> 0:07:06.080 so it's cross border travel going to other countries. Japan 0:07:06.200 --> 0:07:09.159 was a really popular corridor. South Korea they're going to 0:07:09.320 --> 0:07:12.600 like Europe, They're going to other places. Because of the 0:07:12.600 --> 0:07:15.920 situation of China. In COVID, there's not a huge amount 0:07:15.960 --> 0:07:18.240 of outbound business right now, and so our business in 0:07:18.320 --> 0:07:20.560 China is not super robust and it's going to be 0:07:20.600 --> 0:07:23.440 probably a while. It's really gonna track with the health crisis, 0:07:25.080 --> 0:07:29.760 all mainland Chinese listings will be taken down by this summer, 0:07:29.800 --> 0:07:34.320 according to sources. Alright, speaking of AIRBNBC Obrian Chesky also 0:07:34.480 --> 0:07:37.200 tweeting a number of times about the difficulties fighting tech 0:07:37.320 --> 0:07:40.880 and startups, in particular given the volatility we are seeing 0:07:40.960 --> 0:07:42.640 in the markets. For more on all this and just 0:07:42.800 --> 0:07:45.800 how low things could go, I'm joined by Dan Suzuki. 0:07:45.800 --> 0:07:49.360 He's the chief investment officer at Richard Bernstein Advisory, which 0:07:49.360 --> 0:07:53.080 has about fifteen billion dollars in assets under management. Dan, 0:07:53.120 --> 0:07:55.080 thank you so much for joining us. So looked, did 0:07:55.080 --> 0:07:56.760 we just hit the bottom and are we on our 0:07:56.800 --> 0:07:59.600 way back up? Or is there a lot lower we 0:07:59.640 --> 0:08:04.000 could go? Well, Emily, I think the reality is that 0:08:04.000 --> 0:08:07.200 that nobody really knows for sure. Um, but I would 0:08:07.200 --> 0:08:09.679 say that the you don't want to sort of jump 0:08:09.720 --> 0:08:12.680 in here simply because you know, regardless you're going to 0:08:12.760 --> 0:08:15.080 get these big moves and markets on both sides. But 0:08:15.480 --> 0:08:17.560 you know, it all comes back to us. You know, 0:08:17.760 --> 0:08:19.640 why do you Why would you buy? And I think 0:08:19.640 --> 0:08:22.000 it's when the data tells you should buy? And right 0:08:22.200 --> 0:08:25.040 the issue that the markets content have is despite the 0:08:25.080 --> 0:08:27.200 fact that you have this, you've had this sell off, 0:08:27.440 --> 0:08:31.320 profits are still slowing, liquidity is still tightening, and you know, 0:08:31.520 --> 0:08:33.800 evaluations why it come down a little bit, there's still 0:08:33.840 --> 0:08:36.520 quite elevated certain parts of the market. So that's not 0:08:36.559 --> 0:08:39.560 a combination of factors that tells you you want to 0:08:39.640 --> 0:08:41.959 jump in feed first to markets, even if you think 0:08:42.000 --> 0:08:45.199 that they've gotten a little bit cheaper. So let's talk 0:08:45.240 --> 0:08:48.400 about tech in particular. Just what kind of a roller 0:08:48.400 --> 0:08:51.520 coaster are you expecting tech itself to be on over 0:08:51.520 --> 0:08:55.360 the next weeks and months? Yeah, you know, to be honest, 0:08:55.440 --> 0:08:57.360 I think that we are at you know, we in 0:08:57.360 --> 0:09:00.600 the early stages of a new paradigm him and a 0:09:00.640 --> 0:09:03.920 new secular leadership in stocks, and that secular leadership is 0:09:03.960 --> 0:09:06.840 not going to be the same as the leadership over 0:09:06.880 --> 0:09:09.640 the last ten or fifteen years. I mean, investors always 0:09:09.679 --> 0:09:13.280 invest in the rear view mirror, you know, but this 0:09:13.360 --> 0:09:16.400 is probably a time given the huge shifts, you know, 0:09:16.480 --> 0:09:19.599 the tectonic shifts we're seeing in the macro backdrop, that 0:09:19.640 --> 0:09:23.120 are screaming that, you know, the backdrop is changing. So 0:09:23.320 --> 0:09:26.000 it's it should be no, it should be obvious that 0:09:26.040 --> 0:09:28.960 the probably the leadership of markets is going to change 0:09:29.200 --> 0:09:32.320 with all this happening. Um. I I think this is 0:09:32.320 --> 0:09:33.800 not going to be a short term thing. And this 0:09:33.880 --> 0:09:36.200 is something we've been saying that you know, tech and 0:09:36.400 --> 0:09:40.240 innovation and disruption. While we believe in the story, you know, 0:09:40.320 --> 0:09:43.479 people have got ahead of themselves in terms of their evaluations, 0:09:43.480 --> 0:09:45.920 in terms of the expectations, and it's created a bubble. 0:09:46.360 --> 0:09:48.880 Uh And and that bubble is in the process of deflating. 0:09:48.920 --> 0:09:50.920 And if you look at the history of bubbles, they 0:09:50.920 --> 0:09:53.920 don't softly and quickly correct over a six month period. 0:09:54.120 --> 0:09:57.160 That typically takes longer, and they usually go down more 0:09:57.200 --> 0:09:59.720 than what we've seen so far, despite the fact that 0:09:59.760 --> 0:10:03.079 you have sometimes monster rallies on the way down. Um 0:10:03.200 --> 0:10:04.800 So there's nothing to say you can't get that. But 0:10:04.880 --> 0:10:07.959 I would not be jumping in here like some others 0:10:08.000 --> 0:10:09.959 are saying this is a buying opportunity of a lifetime. 0:10:10.240 --> 0:10:13.000 I just don't think so. Now we're just getting some 0:10:13.080 --> 0:10:16.360 headlines from a new filing that just came out from 0:10:16.800 --> 0:10:21.560 snap Snaps saying that they are expecting their EBITDA and 0:10:21.920 --> 0:10:24.040 revenue in the second quarter to come in at the 0:10:24.080 --> 0:10:27.559 low end of their guidance, saying that the macro economic 0:10:27.640 --> 0:10:31.760 environment has deteriorate, deteriorated much more quickly than they thought. 0:10:31.840 --> 0:10:35.040 What do you make of this? Well, I think you 0:10:35.040 --> 0:10:38.720 know there there there's two important takeaways here. You know, one, 0:10:39.280 --> 0:10:43.640 this is just another example of you know, companies results 0:10:43.720 --> 0:10:46.600 over the last earning season or two that have had 0:10:46.640 --> 0:10:52.120 to sort of bring down these un unattainable, unrealistic investor 0:10:52.120 --> 0:10:55.640 expectations down to earth. I think the two unrealistic expectations 0:10:55.640 --> 0:10:58.040 have been that you're going to continue to see growth 0:10:58.080 --> 0:11:00.640 at the same trajectory you have over the last feyears 0:11:00.720 --> 0:11:03.600 and all Secondarily, that you're going to see all these 0:11:03.600 --> 0:11:07.040 companies be winners. I think you're seeing company after company 0:11:07.160 --> 0:11:08.760 tell you that that's not going to be the case. 0:11:09.240 --> 0:11:13.040 Underlying growth is slowing as these companies mature and it 0:11:13.040 --> 0:11:16.760 gets more competitive, and that's one thing. The second thing 0:11:17.040 --> 0:11:20.040 that I think is critical is that the market continues 0:11:20.080 --> 0:11:24.720 to underestimate the economic sensitivity of these tech stocks. I 0:11:24.760 --> 0:11:27.160 think that when you when you think about it, you 0:11:27.200 --> 0:11:30.600 know what if the economy starts to slow, You're gonna 0:11:30.640 --> 0:11:33.200 cut their number of streaming services, you're gonna use, companies 0:11:33.240 --> 0:11:36.000 are gonna cut their advertising spending. They're gonna have less 0:11:36.040 --> 0:11:40.200 software investments, You're gonna buy less discretionary you know, high 0:11:40.240 --> 0:11:44.760 expensive technology goods, and so technology is very cyclical. It 0:11:44.880 --> 0:11:47.800 just wasn't during the pandemic, and so as growth continues 0:11:47.800 --> 0:11:50.480 as slow, that's gonna be a headwind. And the big 0:11:50.480 --> 0:11:53.000 issue is not just that things are gonna slow, but 0:11:53.160 --> 0:11:55.480 expectations just aren't there yet. So I think that's why 0:11:55.480 --> 0:11:58.840 you get these big ratings as you re rate those expectations. 0:11:59.360 --> 0:12:03.880 So Snap shares now down in twenty two percent after hours, 0:12:03.880 --> 0:12:05.560 We're going to continue to follow that. Dan, I'd love 0:12:05.600 --> 0:12:08.760 to get your thoughts on this pending potentially pending deal 0:12:09.000 --> 0:12:12.839 between Broadcom and vm Ware would be a massive consolidation 0:12:12.840 --> 0:12:14.240 in the tech space. Do you think we're going to 0:12:14.360 --> 0:12:18.479 see more M and A like this given the environment 0:12:19.280 --> 0:12:21.000 or not, given that what we're seeing is actually a 0:12:21.080 --> 0:12:25.880 huge premium on where VM is, where is trading today. Yeah, 0:12:25.920 --> 0:12:27.760 I think you know, if you if you think about 0:12:27.840 --> 0:12:32.240 just overall trends, it's not it's it's not you know, 0:12:32.280 --> 0:12:34.720 out of the norm to see this type of action. 0:12:34.760 --> 0:12:37.600 I mean it, you know very much. Typically what you 0:12:37.640 --> 0:12:41.280 see with company the way companies act is very similar 0:12:41.280 --> 0:12:43.360 to the way investors act. And so that's why you 0:12:43.400 --> 0:12:46.920 see share buybacks tend to peak at market highs. M 0:12:46.960 --> 0:12:49.360 and A activity tends to peak, you know, at peaks 0:12:49.360 --> 0:12:52.960 of markets, and then even after things start to roll over, 0:12:53.280 --> 0:12:56.160 you tend to see a lot of momentum with investor 0:12:56.200 --> 0:12:59.480 activity as well as company activity because they think, you know, 0:12:59.480 --> 0:13:03.280 they're getting big sale price on the on these assets. Uh. 0:13:03.280 --> 0:13:05.880 And I think that that's kind of what you're seeing today. 0:13:06.200 --> 0:13:07.960 That will probably dry up, and that will be the 0:13:08.000 --> 0:13:10.440 sign that you know, you're really starting to see things 0:13:10.520 --> 0:13:14.120 roll over and that you're reaching that auto. All right, 0:13:14.120 --> 0:13:16.280 We're gonna continue to watch all of this. Dan Tazuki, 0:13:16.440 --> 0:13:20.000 Richard Bernstein Advisers, thank you for sharing your perspective with us. 0:13:20.400 --> 0:13:22.679 And coming up, we're gonna hear from Intel CEO in 0:13:22.760 --> 0:13:25.160 Davos on all things Chip and a progress update on 0:13:25.160 --> 0:13:28.480 supply chain pain, plus his thoughts on that vm Ware 0:13:28.480 --> 0:13:31.200 a deal given that he was of course previously c 0:13:31.200 --> 0:13:41.720 CEO of vm Ware. This is Bloomberg continuing our coverage 0:13:41.720 --> 0:13:44.480 of a potential acquisition of vm Ware by Broadcom. We 0:13:44.520 --> 0:13:47.920 spoke with Intel CEO Pat gal Singer from Davos. He was, 0:13:47.960 --> 0:13:51.240 of course the former CEO of vm Where here he 0:13:51.360 --> 0:13:53.520 is with my colleague, has Linda a mean talking about 0:13:53.559 --> 0:13:59.280 all things? Also chip supply Yeah, no, we we definitely 0:13:59.280 --> 0:14:04.000 think that the applied demand balances and uh, you know, 0:14:04.040 --> 0:14:06.679 a year ago, I said twenty three. Since then, we've 0:14:06.720 --> 0:14:10.120 seen a number of equipment supply chains move out, so 0:14:10.240 --> 0:14:12.640 our equipment coming into the fabs that we're building that 0:14:12.720 --> 0:14:16.160 has moved out. So overall four until we start to 0:14:16.160 --> 0:14:19.880 see a reasonable balancing of semiconductor supply chain. So what 0:14:19.960 --> 0:14:21.880 I get worse from here before it gets better, because 0:14:21.880 --> 0:14:23.280 when you take a look at the ports and China, 0:14:23.320 --> 0:14:26.480 for instance, we're talking about fifties sixty ships just waiting 0:14:26.480 --> 0:14:29.880 to unload, and of course, uh, that's causing a lot 0:14:29.880 --> 0:14:32.600 of headaches. Oh yeah, the supply chain issues that we've 0:14:32.640 --> 0:14:35.120 seen in China. But it comes on the back of 0:14:35.200 --> 0:14:37.760 many other supply chain issues. So we're already sort of 0:14:37.760 --> 0:14:39.680 beaten down and so we have to work through it. 0:14:40.000 --> 0:14:42.520 And maybe the you know, softening of the economy, a 0:14:42.560 --> 0:14:45.280 little bit of consumer softness, gives us just a little 0:14:45.280 --> 0:14:48.440 bit of breath, but you know, we're still out and 0:14:48.480 --> 0:14:52.480 obviously the Shanghai ports have created a bit more turbulous 0:14:52.520 --> 0:14:55.600 that we're managing through. Near term. We talk about a slowdown, 0:14:55.680 --> 0:14:58.320 in fact, a global slowdown, although we've seen a pushback 0:14:58.320 --> 0:15:01.400 from Crystalline and Jeva saying we're not looking at a 0:15:01.400 --> 0:15:05.120 global recession, but definitely a slowdown. What do that mean, 0:15:05.200 --> 0:15:08.680 demand destruction? What assumptions are you making? Well, we definitely 0:15:08.720 --> 0:15:11.840 see a bit of softening on the consumer side. How 0:15:11.880 --> 0:15:13.800 much softening, I mean, can you give a number to that? 0:15:14.080 --> 0:15:15.880 Um you know, as you saw on our earnings, you know, 0:15:16.000 --> 0:15:17.760 we saw, you know, there was a meaningful you know, 0:15:18.280 --> 0:15:20.360 you know, a number of percentage of points software there. 0:15:20.400 --> 0:15:23.280 We originally were expecting the PC industry to be up 0:15:23.320 --> 0:15:26.080 a couple of points this year. Now it's sort of flatish, 0:15:26.160 --> 0:15:29.120 maybe down one point, so you know, a meaningful swing. 0:15:29.440 --> 0:15:32.560 But on the business side, the enterprise and commercial side, 0:15:32.800 --> 0:15:36.440 no change, right continuing to have real strength, and those 0:15:37.280 --> 0:15:39.480 areas of the market. You know, I think with you know, 0:15:39.560 --> 0:15:45.320 inflation concerns, tightening a monetary policy, these continuing supply chain challenges, Yeah, 0:15:45.320 --> 0:15:46.960 things are probably gonna be a little bit choppy for 0:15:47.000 --> 0:15:50.840 a couple of quarters. You're also were looking reviewing where 0:15:50.920 --> 0:15:54.120 you produced your chips and facts. You're making Europe as 0:15:54.120 --> 0:15:57.600 well as the US a priority, and perhaps that message 0:15:57.640 --> 0:16:01.240 is resonating even more given what we're seeing in China. Um, 0:16:02.080 --> 0:16:04.960 how is that coming along? Well, we are all in 0:16:05.360 --> 0:16:09.800 on the rebuilding on what we've called the geographically balanced, 0:16:09.920 --> 0:16:14.280 resilient supply chain where you know, this industry was in 0:16:14.400 --> 0:16:19.280 US and Europe thirty years ago. Now it's manufactured in Asia. 0:16:19.960 --> 0:16:22.400 What happened? You know? And it was never as I 0:16:22.480 --> 0:16:24.680 you know, I was in Washington last week, and you know, 0:16:24.760 --> 0:16:28.120 I joked to some of the congressional leaders. We never 0:16:28.240 --> 0:16:32.160 voted to get rid of this industry, but those countries 0:16:32.360 --> 0:16:35.280 voted to get this industry, you know, and they put 0:16:35.320 --> 0:16:38.640 strong packages in place to attract this industry there. And 0:16:38.680 --> 0:16:41.040 now we see that, oh, you know, we are way 0:16:41.080 --> 0:16:44.200 too dependent on too few places in the world, you know, 0:16:44.240 --> 0:16:47.520 And has Linda what aspect of your life is not 0:16:47.640 --> 0:16:51.520 becoming more digital? Everything is becoming digital, right. You know, 0:16:51.600 --> 0:16:55.080 my consumer my healthcare, my trade, transportation, you know how 0:16:55.120 --> 0:16:59.000 I work, how I live, and everything digital runs on semiconductors. 0:16:59.280 --> 0:17:01.840 As I say, you know where the oil reserves are 0:17:02.240 --> 0:17:06.479 defined geopolitics for the last five decades. Where the fabs 0:17:06.520 --> 0:17:09.600 are is more important for the next several decades. Let's 0:17:09.600 --> 0:17:11.919 build them where we want them and do it in 0:17:11.960 --> 0:17:14.480 a way that we have more resilience to the supply chain. 0:17:14.720 --> 0:17:17.080 It is all great that you want to make the 0:17:17.200 --> 0:17:20.080 US and Europe a priority, but it's also about scaling 0:17:20.119 --> 0:17:23.680 and scaling quickly. How soon can you get there? Well, 0:17:23.720 --> 0:17:26.719 you know we've announced the Ohio side expansions in Arizona. 0:17:26.840 --> 0:17:30.560 In Europe, we announced our expansion and Germany, new research 0:17:30.880 --> 0:17:36.000 in France, expansions continuing in Ireland. And what we're really 0:17:36.040 --> 0:17:40.119 now anxious to see is that the US and the 0:17:40.240 --> 0:17:43.480 EU Chips Act get completed that allows us to make 0:17:43.520 --> 0:17:47.680 those good economic investments, because part of the challenges is that, 0:17:47.880 --> 0:17:50.440 you know, we're competing now with countries that have very 0:17:50.520 --> 0:17:54.439 actively incented those investments in Asia, and these investments they 0:17:54.440 --> 0:17:57.760 have to be competitive worldwide or I can't compete for 0:17:57.800 --> 0:18:00.320 the worldwide market. So, and that's what we're looking for 0:18:00.800 --> 0:18:04.000 the EU leaders as well as the US congressional leaders, 0:18:04.040 --> 0:18:06.720 get these things done so we can go faster. Just 0:18:06.880 --> 0:18:10.919 for our radio listeners, we're speaking to about pad galcinga 0:18:11.040 --> 0:18:15.160 Intel CEO here in Davos. I mean, we talked about 0:18:15.200 --> 0:18:17.879 how we want to ramp up that production in the 0:18:17.960 --> 0:18:21.320 US and Europe. But what kind of government support are 0:18:21.359 --> 0:18:24.600 you seeing are you getting and is it enough? Well, 0:18:24.640 --> 0:18:27.520 you know, the US Chips Act fifty two billion dollars, 0:18:27.600 --> 0:18:31.720 the European Chips Act forty five billion euros. And as 0:18:31.760 --> 0:18:34.400 we've looked at those programs and we've helped to shape them, 0:18:34.640 --> 0:18:36.920 they make us competitive in the world. We feel very 0:18:36.960 --> 0:18:40.440 good that these are very good steps forward and it's 0:18:40.480 --> 0:18:43.199 against what I call the moon shot. And by the 0:18:43.280 --> 0:18:45.439 end of the decade, our objective is that we go 0:18:45.520 --> 0:18:51.639 from eight percent Asia, US and Europe to fifty fifty right, 0:18:51.720 --> 0:18:56.199 thirty US tent in Europe fifty percent in Asia. That 0:18:56.440 --> 0:18:58.720 is the goal that we are driving these four and 0:18:58.760 --> 0:19:01.800 we think these these are rate steps forward and if 0:19:01.840 --> 0:19:15.520 they are being successful, we can drive towards that welcome 0:19:15.520 --> 0:19:17.760 back to Bloomberg Technology and Emily changing in San Francisco, 0:19:17.760 --> 0:19:21.360 want to get back to that breaking news out of Snap. 0:19:21.400 --> 0:19:25.199 The company shares plummeting in late trading here in the 0:19:25.280 --> 0:19:27.359 US after cutting its guidance for the current quarter. Are 0:19:27.400 --> 0:19:29.640 at ludlow here. Snap shares last I look down more 0:19:29.680 --> 0:19:34.399 than two percent, saying the macro economic environment has deteriorated 0:19:34.480 --> 0:19:36.920 much more quickly than even the anticy. And you you'll 0:19:36.920 --> 0:19:39.800 remember in April when they reported first quarter arnings and 0:19:39.800 --> 0:19:41.920 gave guidance for the current set of quarter, they said 0:19:41.960 --> 0:19:44.760 that they started the year better than expected. Advertisers had 0:19:44.760 --> 0:19:47.200 held up a lot of young people stuck with Snap 0:19:47.200 --> 0:19:49.960 at a time where they weren't sticking with Facebook, that's 0:19:50.000 --> 0:19:53.280 for sure. But things changed, particularly in the context of 0:19:53.280 --> 0:19:55.800 the war in Ukraine, and what we're hearing from Snap 0:19:55.880 --> 0:19:58.440 right now is that that's got even worse. And so 0:19:58.480 --> 0:20:01.320 they're saying, our revenue in the second quarter are adjusted 0:20:01.320 --> 0:20:05.199 earnings before interest tax, et cetera, will be at the 0:20:05.240 --> 0:20:07.000 lower end of the scale which they gave in revenue, 0:20:07.000 --> 0:20:10.040 they said, will the street have been looking for something more? 0:20:11.320 --> 0:20:13.520 And this has also taken down other social media's rights. 0:20:13.600 --> 0:20:16.919 Twitter Twitter doesn't need any more bad news, right, It 0:20:16.960 --> 0:20:19.200 does not need any more complication, that's for sure. I 0:20:19.240 --> 0:20:21.959 think you remember back in April when we were digesting 0:20:22.000 --> 0:20:24.879 Metas earnings, we're thinking, oh, Snap was a bright spot. 0:20:25.520 --> 0:20:27.560 We did see movement in other stocks depending on the 0:20:27.560 --> 0:20:30.480 fate of others. Why because they all have tied fates 0:20:30.520 --> 0:20:33.119 when it comes to advertising, and so this is worrying, 0:20:33.200 --> 0:20:37.880 especially for Facebook, where Snapp has had growth, Facebook has 0:20:37.920 --> 0:20:40.800 stagnated in its growth, and so if we're hearing this 0:20:40.840 --> 0:20:43.080 message from Snap, I think there would be a concern 0:20:43.280 --> 0:20:45.399 to some of the other social media platforms. Now, it 0:20:45.440 --> 0:20:48.800 was interesting at the time when Snap tied the lower 0:20:48.960 --> 0:20:53.080 numbers to the war in Ukraine, when it seems like 0:20:53.080 --> 0:20:55.240 it would be more directly tied to coming out of 0:20:55.240 --> 0:20:58.200 a pandemic and people just having less disposable time to 0:20:58.320 --> 0:21:01.520 sit around and look at social media. So the thing 0:21:01.600 --> 0:21:04.919 when you cover social media stocks and companies is we 0:21:05.000 --> 0:21:07.800 forget how they make money, which is advertising revenue. You know, 0:21:07.840 --> 0:21:10.560 we're super fixated on how many users they do or 0:21:10.600 --> 0:21:13.520 don't have on a daily or monthly active user basis, 0:21:13.600 --> 0:21:16.680 or how their growth is. But ultimately advertisers have other 0:21:16.720 --> 0:21:19.200 reasons to pull money right. If they don't have confidence 0:21:19.240 --> 0:21:21.919 in the global economy, they might hold off on spending 0:21:22.119 --> 0:21:24.720 y because they're targeting people with those ads. They need 0:21:24.720 --> 0:21:27.320 the consumer to be strong to actually buy products, and 0:21:27.520 --> 0:21:29.240 that's certainly what we've seen in the war in Ukraine. 0:21:29.240 --> 0:21:31.760 You see Alphabet, the parent company of Google and YouTube 0:21:31.920 --> 0:21:34.600 hit by similar impact. It's the worry that those ads 0:21:34.640 --> 0:21:37.440 aren't getting any eyeballs willing to spend all right at Lovell, 0:21:37.520 --> 0:21:40.920 thank you for that update. We're watching so many tech 0:21:40.960 --> 0:21:43.080 companies trying to navigate this sell off, and my next 0:21:43.080 --> 0:21:46.120 guest is one of software's biggest success stories, but even 0:21:46.160 --> 0:21:49.000 they haven't been immune to the recent volatility. I'm joined 0:21:49.040 --> 0:21:51.199 now by Shantonoon and Ryan. He is the CEO and 0:21:51.320 --> 0:21:55.320 chair of Adobe. Shantonoo, great to have you back with us. 0:21:55.359 --> 0:21:57.879