WEBVTT - SpaceX To Target $75B in IPO at $135 Per Share 0:00:02.520 --> 0:00:12.920 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:12.960 --> 0:00:16.759 from coast to coast with Caroline Hyde in New York 0:00:17.040 --> 0:00:19.040 and Ed Lovelow in San Francisco. 0:00:22.239 --> 0:00:23.720 This is Bloomberg Tech coming up. 0:00:23.760 --> 0:00:27.240 Belon Musk rejects another Wall Street convention, sets a fixed 0:00:27.280 --> 0:00:30.280 price for his space xipo ahead of the marketing phase 0:00:30.320 --> 0:00:33.040 of the deal. The plan offer shares at one hundred 0:00:33.040 --> 0:00:34.520 and thirty five dollars a piece. 0:00:34.479 --> 0:00:37.639 Plus Palo Alto Networks falls after the company reported its 0:00:37.680 --> 0:00:40.920 results failing to meet really elevated by side expectations. This 0:00:41.000 --> 0:00:44.120 following a more than six percent run to date. 0:00:44.240 --> 0:00:47.840 And candidates backed by tech billionaires and founders fell short 0:00:47.960 --> 0:00:51.400 in California's primary elections. Yesterday. We break down the results 0:00:51.400 --> 0:00:53.120 and what it means for Silicon Valley. 0:00:53.600 --> 0:00:56.280 But let's check in on what current geopolitics means for 0:00:56.320 --> 0:00:56.880 this market. 0:00:56.920 --> 0:00:57.800 We take a breather. 0:00:57.920 --> 0:01:00.480 We have been at record high after record high, have 0:01:00.560 --> 0:01:02.520 been on a nine day tair. The NASDAG have been 0:01:02.600 --> 0:01:05.080 up for four straight training days. Today we pause rob 0:01:05.120 --> 0:01:07.160 By just a tenth percent. Of course, Front and Center 0:01:07.280 --> 0:01:10.120 is maybe conflict rumpting once more, A little bit that 0:01:10.200 --> 0:01:12.880 sees far under pressure between the US and Iran. All 0:01:12.959 --> 0:01:15.759 those higher bonialds they go higher. Stocks just pull back 0:01:15.760 --> 0:01:16.319 a little bit ed. 0:01:16.319 --> 0:01:16.720 But what are you. 0:01:16.760 --> 0:01:21.080 Watching, skit today's big number eighty four point seventy five billion. 0:01:21.200 --> 0:01:25.000 Alphabet is upsizing It's equity raised to that level, up 0:01:25.000 --> 0:01:27.920 from the previously announced rays of eighty billion dollars. All 0:01:27.920 --> 0:01:32.840 this to fund its AI infrastructure expansion. Interesting like this 0:01:32.880 --> 0:01:35.280 is a multi day story. The stock's basically flat, but 0:01:35.440 --> 0:01:38.720 is an element of dilution, the main point being parts 0:01:38.760 --> 0:01:42.440 of the equity offering really oversubscribe to Alphabet's saying okay, 0:01:42.760 --> 0:01:46.400 we'll do a little bit more. Google's lay is fundraising. 0:01:46.600 --> 0:01:49.720 There's a race happening here, guys. Highlights this scramble for 0:01:49.800 --> 0:01:53.520 capital in the Aire, and now SpaceX is taking things 0:01:53.520 --> 0:01:56.600 a step further. Elon Musk company is planning a seventy 0:01:56.600 --> 0:01:59.360 five billion dollar IPO and has already set a fixed 0:01:59.360 --> 0:02:03.360 share price ahead of the traditional roadso process. Another sign 0:02:03.720 --> 0:02:06.960 Musk is willing to rewrite Wall Street's playbook. That's all 0:02:07.160 --> 0:02:11.280 according to sources. Bloomberg's caffriin dollarities here with more. 0:02:11.600 --> 0:02:12.160 It's been. 0:02:13.919 --> 0:02:15.800 Well, a bit of a well in few days, So 0:02:15.840 --> 0:02:18.280 we report it's one hundred and thirty five dollars a share, 0:02:18.960 --> 0:02:21.560 five hundred and fifty six point five million shares. Do 0:02:21.639 --> 0:02:24.120 the math, they'll raise seventy five billion dollars. That's not 0:02:24.200 --> 0:02:27.480 how this typically works in an IPO process. 0:02:28.040 --> 0:02:31.680 Why No, Typically a company that's looking to list in 0:02:31.720 --> 0:02:34.800 the US markets is going to look at a range. 0:02:34.840 --> 0:02:37.360 They're not going with a firm number like this one 0:02:37.440 --> 0:02:41.000 hundred and thirty five that you're referencing. And that's because 0:02:41.080 --> 0:02:43.200 in the next week or so there's a lot of 0:02:43.280 --> 0:02:44.959 things that could change. This is supposed to be a 0:02:45.000 --> 0:02:48.840 marketing process, but locking in a price of one hundred 0:02:48.840 --> 0:02:51.679 and thirty five dollars a share is giving some sort 0:02:51.680 --> 0:02:54.359 of certainty. It's giving a signal to the market of 0:02:54.480 --> 0:02:58.040 what to expect. We're expecting that next week, by around 0:02:58.040 --> 0:03:02.120 the eleventh is when we could see these SpaceX shares 0:03:02.160 --> 0:03:05.200 come to market, But even leading up to it, it's 0:03:05.280 --> 0:03:09.919 just another indication of the difference in the approach that 0:03:10.320 --> 0:03:12.920 SpaceX and Musk's team are taking at this time. 0:03:13.560 --> 0:03:16.360 I mean, there is some precedent for doing it this way, Catherine, 0:03:16.480 --> 0:03:16.799 just not of. 0:03:16.760 --> 0:03:21.359 This size, right, absolutely so, smaller companies can take this 0:03:21.520 --> 0:03:25.000 route that SpaceX is looking like it will, but it 0:03:25.040 --> 0:03:28.840 is not typical for a company, especially given that this 0:03:29.200 --> 0:03:33.600 is supposed to be the largest listing on record. So 0:03:33.639 --> 0:03:36.960 it's taking just some unconventional roots. But you're absolutely right, 0:03:37.240 --> 0:03:40.600 it's not the first time or likely the last, especially 0:03:40.680 --> 0:03:42.200 for companies of smaller sizes. 0:03:43.200 --> 0:03:45.600 I mean, and you've been at the forefront of reporting 0:03:45.760 --> 0:03:48.520 each tick by tick when it comes to what's happening 0:03:48.520 --> 0:03:50.960 with en On Musk and SpaceX more broadly. But isn't 0:03:50.960 --> 0:03:52.440 there there are a lot of cooks in the kitchen 0:03:52.520 --> 0:03:54.960 right now. How we understanding is to what this price 0:03:55.000 --> 0:03:58.440 point means and what it means for all of those friends, family, 0:03:58.520 --> 0:04:01.200 those are about to potentially becomes well. 0:04:01.120 --> 0:04:02.920 The price point is interesting. So one hundred and thirty 0:04:02.920 --> 0:04:05.920 five dollars to share is a twenty eight percent premium 0:04:05.960 --> 0:04:08.720 from when they did a stock split on May the fifteen, 0:04:08.840 --> 0:04:11.840 So basically SpaceX's shares were above five hundred dollars in 0:04:11.880 --> 0:04:13.600 the private market, so it did a five for one 0:04:13.880 --> 0:04:16.520 took it down to one hundred and five at the 0:04:16.560 --> 0:04:18.680 valuation of one point twenty five trillion. So this is 0:04:18.720 --> 0:04:20.839 like math, it's kind of you know, a little bit dry. 0:04:20.920 --> 0:04:22.960 But the point is is that the share price at 0:04:23.000 --> 0:04:26.680 one thirty five is not keeping up with the jump 0:04:26.680 --> 0:04:30.479 in valuation. There's dilution there, but the friends and family 0:04:30.520 --> 0:04:33.720 that'll get an allocation, all of the mechanics are still 0:04:33.720 --> 0:04:36.360 in place, like traditional IPO stuff. The roadshow will happen, 0:04:36.520 --> 0:04:39.080 it will price in the normal way. You're just saying, like, 0:04:39.279 --> 0:04:42.320 here's the number. It's a very very unusual situation, by 0:04:42.360 --> 0:04:45.120 the way, Bloomerskaarn dotty, thank you very much. Top recording. 0:04:45.160 --> 0:04:48.200 As always, some news crossing the terminal as well. Elon 0:04:48.320 --> 0:04:53.680 Musk's ai company Xai has paused hiring for professionals to 0:04:53.720 --> 0:04:56.440 train its groc chatbot on a range of specialized skills. 0:04:56.440 --> 0:04:59.160 That's according to sources, who say the decision is at 0:04:59.240 --> 0:05:03.279 least partly to concerns that the company's HR department is 0:05:03.360 --> 0:05:09.760 overwhelmed and often unable to process new candidates. Read that 0:05:09.800 --> 0:05:11.120 one on the Bloomberg. 0:05:10.720 --> 0:05:12.800 Carat we always will. 0:05:12.920 --> 0:05:16.000 Meanwhile, read on the Bloomberg just how these markets are performing? Look, 0:05:16.040 --> 0:05:18.120 you know the S and P five hundred had been 0:05:18.120 --> 0:05:21.000 writing a really powerful winning streak. 0:05:21.160 --> 0:05:22.520 It was up for nine straight days. 0:05:22.520 --> 0:05:25.400 Maybe it's nine straight weeks stocks a record hires as 0:05:25.440 --> 0:05:28.839 of yesterday. Next guest saying, look, we are just actually 0:05:28.880 --> 0:05:32.719 at the infancy of this AI industrial revolution. Joining us 0:05:32.800 --> 0:05:36.080 now with her outlook Rebecca Wels CEO, Chief Investment Officer, 0:05:36.279 --> 0:05:38.960 whilst the wealth management and look we take a breather today, 0:05:38.960 --> 0:05:41.760 it's more about geopolitics, Rebecca. But how when we have 0:05:41.920 --> 0:05:44.720 five trillion dollar companies and we have Alphabet tapping the 0:05:44.760 --> 0:05:48.040 market for eighty five billion dollars let's call it. How 0:05:48.320 --> 0:05:50.720 is that not some sort of sign that we're kind 0:05:50.760 --> 0:05:52.520 of nearer the end than the beginning here. 0:05:54.320 --> 0:05:55.560 No, I don't think so, Caroly. 0:05:55.640 --> 0:05:59.400 I think this is the very very beginning stages of monetization. 0:05:59.600 --> 0:06:02.520 Now we I've seen some financing changes. I think Alphabet 0:06:02.560 --> 0:06:04.680 Google is just trying to get ahead of the three 0:06:05.080 --> 0:06:08.920 huge IPOs. Obviously just talked about SpaceX, the largest IPO 0:06:08.920 --> 0:06:13.320 in history, will be the largest company valuation and the 0:06:13.480 --> 0:06:14.320 entire world. 0:06:14.520 --> 0:06:16.360 So that in and of itself is just crazy. 0:06:16.360 --> 0:06:19.520 Then you follow that with opening AI and anthropic googlegle 0:06:19.600 --> 0:06:22.320 once to get more money. If you look at the hyperscalers, 0:06:22.520 --> 0:06:25.520 they're usually writing about a little under thirty billion of 0:06:25.560 --> 0:06:27.880 bonds a year and last year in twenty twenty five, 0:06:28.000 --> 0:06:30.080 they wrote one hundred and twenty one billion. So we're 0:06:30.080 --> 0:06:33.880 starting to see we can't get enough capital to do 0:06:34.080 --> 0:06:36.680 all of the investments the capex that we want, and 0:06:36.720 --> 0:06:38.479 so I think if we get the capex, we're going 0:06:38.560 --> 0:06:39.920 to keep seeing this market go up. 0:06:40.080 --> 0:06:41.280 It's the beginning stages. 0:06:42.040 --> 0:06:44.520 So, Rebecca, you are the capital or you're a part 0:06:44.560 --> 0:06:47.919 of the capital. Right, you have the alphabet equity raise SpaceX, 0:06:48.000 --> 0:06:52.240 IPO and tropics filed confidentially, a lot of debt financing, 0:06:52.560 --> 0:06:55.359 and then there's the Nvidia bit. Is this the fomo 0:06:55.480 --> 0:06:58.120 trade where you just have to have exposure to everything 0:06:58.920 --> 0:07:02.200 or do you pick a hole in the race and say, actually, 0:07:02.240 --> 0:07:04.840 in the end, why there are five lanes, but I 0:07:04.880 --> 0:07:06.880 only think three of them will will succeed. 0:07:08.279 --> 0:07:09.360 Yeah, that's a great question. 0:07:09.440 --> 0:07:12.200 It's so hard to pick the winners at the beginning 0:07:12.240 --> 0:07:15.920 stages of monetization because we don't know who what technologies 0:07:15.960 --> 0:07:18.680 are actually gonna win out or what methodologies. So I 0:07:18.720 --> 0:07:22.520 do think you have to sprinkle some capital kind of everywhere. 0:07:22.240 --> 0:07:24.120 But that's and you have to hold. 0:07:24.160 --> 0:07:25.560 You have to be willing, Like if you look at 0:07:25.560 --> 0:07:28.560 the monetization of Nasdak in the nineties we had you know, 0:07:29.160 --> 0:07:32.680 thirty thirty three percent overall, but we had fifteen pullbacks. 0:07:32.680 --> 0:07:37.080 So people need to understand that monetization is volatile and 0:07:37.400 --> 0:07:40.920 get the steal the band of steel to stay the 0:07:41.040 --> 0:07:44.240 course and to be in for at least the long haul. 0:07:44.320 --> 0:07:48.040 Most of our IPOs usually are you know, coming down 0:07:48.160 --> 0:07:49.960 in the first twelve months, so I think there's gonna 0:07:49.960 --> 0:07:52.440 be a lot of emotion. Possibly wait till the at 0:07:52.520 --> 0:07:56.320 least the insider lockups expire in six months, and then 0:07:56.440 --> 0:07:58.080 go in. But I do think if you're going to 0:07:58.160 --> 0:08:00.120 participate in the emotion of it, you're going to I 0:08:00.160 --> 0:08:02.800 want to feel the pressure pulling back. So I would wait, 0:08:03.040 --> 0:08:05.240 and I would buy in strategically, and I would keep 0:08:05.280 --> 0:08:08.240 my investment broad I. 0:08:08.160 --> 0:08:11.160 Mean, in many ways people come what may well have 0:08:11.200 --> 0:08:13.680 exposure to these names just by the very weight within 0:08:13.720 --> 0:08:14.600 certain benchmarks. 0:08:14.600 --> 0:08:15.880 But Rebecca, how much exposure do. 0:08:15.920 --> 0:08:19.200 You want outside of the US that the IPO frenzy 0:08:19.240 --> 0:08:21.920 is stealing the thunder when it comes to big US giants. 0:08:22.360 --> 0:08:25.760 But still we've seen significant outperformance over an Asian training 0:08:25.800 --> 0:08:26.440 for example. 0:08:27.520 --> 0:08:30.720 Yes, I definitely think that you've got things in Korea Obviously, 0:08:30.800 --> 0:08:33.199 you've got markets outside of the US that are going 0:08:33.280 --> 0:08:35.280 to be a part of AI, and I look really 0:08:35.360 --> 0:08:38.600 to the legislative policies. I'm really concerned about the Secure Act. 0:08:38.880 --> 0:08:42.400 If the banking lobby is successful and really pulling weight 0:08:42.440 --> 0:08:44.360 and teeth out of the stable corn in the United States, 0:08:44.360 --> 0:08:46.280 it will route elsewhere and that is going to be 0:08:46.360 --> 0:08:48.720 part of this whole AI monetization. We're changing our payment 0:08:48.760 --> 0:08:50.600 system to digital that's coming. 0:08:50.800 --> 0:08:51.720 So the United States. 0:08:51.559 --> 0:08:54.360 Seem to be a part of that and facilitating that 0:08:54.400 --> 0:08:56.680 and not trying to stop it and keep legacy systems 0:08:56.679 --> 0:08:58.720 in place because they are on their out. It's going 0:08:58.760 --> 0:09:01.200 to take time, but they are legacy, and we need 0:09:01.240 --> 0:09:04.959 to keep making sure the United States is the focal 0:09:05.000 --> 0:09:06.880 point of everything. But certainly I would pick up some 0:09:06.960 --> 0:09:08.080 international as well. 0:09:09.679 --> 0:09:11.160 Just what you said a minute ago, By the way, 0:09:12.360 --> 0:09:15.120 love that participate in the emotion of it. I'm not 0:09:15.160 --> 0:09:19.880 participating in the markets right for obvious reasons. Certainly participating 0:09:19.920 --> 0:09:22.199 in the motion and the emotion of what's going on. 0:09:22.280 --> 0:09:25.840 So now you've given me something to think about. There's 0:09:25.960 --> 0:09:28.960 statement as well, right. Jensen Mung's on stage again last 0:09:29.040 --> 0:09:32.240 night for the seventh time in five days saying that 0:09:32.280 --> 0:09:35.520 you would be insane if you didn't see the return 0:09:35.559 --> 0:09:38.520 on investment that is now real out in the world 0:09:38.559 --> 0:09:41.600 from AI, and that you would be foolish, you know, 0:09:41.679 --> 0:09:45.560 not to keep investing in the space. Do you see 0:09:45.600 --> 0:09:47.199 it as clearly as he does. 0:09:48.520 --> 0:09:49.240 Well, I was just. 0:09:49.200 --> 0:09:51.040 Excited that he was on stage saying here's the first 0:09:51.120 --> 0:09:54.439 laptop for an agentic AI agent Like I was like, yay, 0:09:54.559 --> 0:09:57.800 Now we're buying laptops for agents AI agents, not people. 0:09:57.840 --> 0:09:59.040 This is really interesting. 0:09:59.320 --> 0:10:03.480 Listen, this is the largest technological change and the history 0:10:03.520 --> 0:10:06.560 of human time. You can't be more hyperbolic and parabolic. 0:10:06.720 --> 0:10:09.360 With these equity prices going up, there is going to 0:10:09.400 --> 0:10:10.079 be volatility. 0:10:10.080 --> 0:10:11.120 It is going to pull back. 0:10:11.320 --> 0:10:15.199 But this is the largest opportunity for wealth creation and 0:10:15.240 --> 0:10:17.760 for people, average people to get in on it. 0:10:17.960 --> 0:10:18.760 Take only to. 0:10:18.720 --> 0:10:21.760 The risk that you can tolerate, but definitely participate in 0:10:21.800 --> 0:10:24.439 this and just know that you're going to have a volatility. 0:10:24.559 --> 0:10:27.160 Stay the course, that's the theme. Stay the course and 0:10:27.200 --> 0:10:30.000 you will be a winner in the long run. Financially. Anyways, 0:10:30.000 --> 0:10:31.760 we don't know about all the other bad side of AI, 0:10:31.840 --> 0:10:33.480 but the financial side positive. 0:10:35.720 --> 0:10:35.960 Wow. 0:10:36.120 --> 0:10:39.560 On debut, Rebecca Walsa, CEO and Chief investment officer of 0:10:40.000 --> 0:10:43.240 so Wealth Management on Bloomberg Tech. Hit every single story 0:10:43.240 --> 0:10:44.839 that we had to offer today, Thank you very much. 0:10:44.920 --> 0:10:49.040 Now coming up Palato Networks fools after the company failed 0:10:49.040 --> 0:10:51.719 to meet very elevated by side expectations. We got the 0:10:51.800 --> 0:10:55.000 earning story and a little chat about a pay package 0:10:55.040 --> 0:10:55.880 that's coming up next. 0:10:56.240 --> 0:10:57.280 This is Bloomberg Tech. 0:11:05.160 --> 0:11:07.920 Let's check in on Palo Alto Network shares down. They're 0:11:07.960 --> 0:11:10.199 actually having their worst day and let's call it a 0:11:10.240 --> 0:11:12.000 couple of months. April the tenth, we're off five to 0:11:12.040 --> 0:11:14.559 five percent, but that's such a cybersecurity firm. 0:11:14.559 --> 0:11:16.440 Actually reported really strong revenue growth. 0:11:16.520 --> 0:11:19.320 They've again been fueled by AI spending in the fiscal 0:11:19.360 --> 0:11:22.680 third quarter. It was up though against the Hima paralle 0:11:22.679 --> 0:11:26.320 Alto network shares. Look, they're up fifty three percent so 0:11:26.400 --> 0:11:28.320 far year today they were up sixty percent going into 0:11:28.320 --> 0:11:32.520 this release. Let's talk more with Bloomberg's editor covering cybersecurity, Linduan, 0:11:32.600 --> 0:11:34.360 and we've got plenty to talk about in the exec 0:11:34.480 --> 0:11:37.320 chair as well. But first talk about these numbers, because 0:11:37.400 --> 0:11:39.719 there was a lot of anticipation they raised, but it 0:11:39.760 --> 0:11:40.320 wasn't good. 0:11:40.240 --> 0:11:41.320 Enough, Karlin. 0:11:41.480 --> 0:11:45.720 It feels baffling at first, right, But as you noted 0:11:45.800 --> 0:11:48.360 just now, there was a huge run up in this 0:11:48.520 --> 0:11:52.520 dark ahead of the earnings. They have done amazingly since 0:11:52.640 --> 0:11:54.600 the beginning of the year. I think there was a 0:11:54.640 --> 0:11:57.280 lot of anticipation. I'm just going to call this like 0:11:57.320 --> 0:12:00.400 the Nvidia effect. From here on out right, you can 0:12:00.440 --> 0:12:04.319 beat on every single key metric, and that's what Palo 0:12:04.360 --> 0:12:09.160 Alto did. Every beat on revenue, earnings, outlook was solid. 0:12:09.480 --> 0:12:11.680 And yet your stock can still come down because of 0:12:11.679 --> 0:12:14.400 that run up, because analysts aren't really honest about what 0:12:14.440 --> 0:12:17.040 they want to see in those earnings, and because of 0:12:17.080 --> 0:12:19.400 the macro review, right. I mean, I'm sure that it 0:12:19.440 --> 0:12:22.520 doesn't help that the entire stock market is down on 0:12:22.760 --> 0:12:26.079 usc run news on top of all that bad timing 0:12:26.080 --> 0:12:26.800 for Palo Alto. 0:12:26.840 --> 0:12:30.880 Of course, one of the issues that shareholders have with 0:12:31.000 --> 0:12:34.480 the company, or as we put it, the recurring beef, 0:12:35.360 --> 0:12:38.720 is with the pay package of the CEO and other 0:12:38.760 --> 0:12:41.839 senior leaders. We ran this big feature twenty four hours 0:12:41.880 --> 0:12:43.040 ago explaining it. 0:12:43.520 --> 0:12:44.440 Explain it to us. 0:12:44.880 --> 0:12:47.920 You know, that's a really interesting issue, as I said, 0:12:47.920 --> 0:12:49.760 that's going on in the background. 0:12:49.760 --> 0:12:50.120 Isn't it. 0:12:50.200 --> 0:12:53.520 Now, This is an analysis that we did based on 0:12:54.360 --> 0:12:58.160 proxy data that is available on the Bloomberg terminal, and 0:12:58.320 --> 0:13:03.160 we went back several years to twenty fifteen, and what 0:13:03.200 --> 0:13:06.120 that revealed to us in a surprising way. We didn't 0:13:06.120 --> 0:13:10.120 expect to see this that Palo Alto Networks has seen 0:13:10.240 --> 0:13:14.280 more rejections on its say on pay votes, which cover 0:13:15.240 --> 0:13:21.000 executive compensation for that past year, than any other company 0:13:21.120 --> 0:13:24.760 in the SMP five hundred. They have seen seven total 0:13:25.200 --> 0:13:29.200 rejections by investors on those SAM pay votes since twenty fifteen. 0:13:29.640 --> 0:13:31.440 No other company in the EDIX comes close to that. 0:13:32.840 --> 0:13:35.320 The last vote I think was in December, and at 0:13:35.360 --> 0:13:37.880 that point I think more than half of shareholder has 0:13:37.880 --> 0:13:40.680 pushed back on the one hundred million dollars potentially coming 0:13:41.200 --> 0:13:43.960 Nick kesh Aora's way. But to be fair to the guy, 0:13:44.480 --> 0:13:47.160 the stock has added a market cap of one hundred billion. 0:13:47.240 --> 0:13:49.319 Is that sort of how they tend to say, Like, yes, 0:13:49.559 --> 0:13:51.840 he's paid more, actually more than some of the biggest 0:13:51.840 --> 0:13:54.000 CEOs in the world, like a Tim Cook, but a 0:13:54.040 --> 0:13:56.720 lot more is actually linked to the performance of the stock. 0:13:56.880 --> 0:13:57.400 You're raising. 0:13:57.480 --> 0:14:00.360 Such a good point, Caroline, and we actually hit that 0:14:00.520 --> 0:14:03.079 in the story because the story itself isn't even just 0:14:03.120 --> 0:14:06.280 about Palo Alto. It's about the effectiveness of these say 0:14:06.280 --> 0:14:09.000 on pay votes. And in fact, there have been reports 0:14:09.080 --> 0:14:13.280 done that suggest that investors like it and they like 0:14:13.360 --> 0:14:18.640 to compensate CEOs when the returns on their investments are strong. 0:14:19.120 --> 0:14:22.040 So in that way, Palo Alto and its CEO are 0:14:22.080 --> 0:14:25.840 a bit of an anomaly because Palo Alto has soared, 0:14:25.920 --> 0:14:28.080 as we just talked about, in the past year. In fact, 0:14:28.120 --> 0:14:31.440 they've soared in the past like six years. They've been 0:14:31.600 --> 0:14:34.640 on the rise since Aurora took over. I think they've 0:14:34.640 --> 0:14:37.600 added well over one hundred billion dollars in market cap, right, 0:14:37.680 --> 0:14:41.600 So you would think that their shareholders would vote supporting 0:14:41.680 --> 0:14:45.200 that compensation, but they are an exception to that rule. 0:14:45.640 --> 0:14:47.200 They have voted against it. 0:14:48.280 --> 0:14:51.200 Nikesha ROR's package is valued at like nearly one hundred 0:14:51.200 --> 0:14:52.520 million dollars, and one of the things you do in 0:14:52.560 --> 0:14:56.240 the story is compare it with some of the titans 0:14:56.520 --> 0:15:01.080 of corporate America. Right, So it's not just tech. You know, 0:15:01.120 --> 0:15:03.520 you've outlined the performance of the stock. Why is it 0:15:03.560 --> 0:15:06.880 that the shareholders think that number is too big relative 0:15:06.960 --> 0:15:09.480 to Nikesh's peers? 0:15:10.400 --> 0:15:11.080 Well ed? 0:15:11.240 --> 0:15:15.600 If you are comparing Nikesh and his pay packages to 0:15:15.760 --> 0:15:19.920 his peers, ISS would say, and Glass Lewis for that matter, 0:15:20.360 --> 0:15:23.880 both proxy advisory firms would say that it is not aligned. 0:15:24.360 --> 0:15:28.480 He is consistently paid well above his peers in the 0:15:28.520 --> 0:15:32.680 cybersecurity industry. What Nikesh would say, and what he did 0:15:32.720 --> 0:15:35.800 say in our story is that that's because he's been 0:15:35.840 --> 0:15:39.520 capable of delivering outsize returns. And in fact, if you 0:15:39.640 --> 0:15:43.440 look at Palo Alto Networks performance this year, it has 0:15:43.760 --> 0:15:47.600 performed well, far and above the rallies that you've seen 0:15:47.640 --> 0:15:51.600 from other major cybersecurity stocks in the US. 0:15:51.600 --> 0:15:54.400 Being mostly into bringing that story to life, thank you 0:15:54.520 --> 0:15:57.240 very much. Indeed, CEOs and a ings are also top 0:15:57.240 --> 0:16:00.320 of mind for Adobe investors. The creative software giant is 0:16:00.400 --> 0:16:03.360 under pressure from AI native rivals and is in the 0:16:03.400 --> 0:16:06.680 process of finding a new CEO to replace shantan In Iran, 0:16:06.920 --> 0:16:09.360 who's led the company for nearly two decades. Being the 0:16:09.440 --> 0:16:12.600 software reporter, Brody Ford joins us with reporting that there 0:16:12.640 --> 0:16:15.840 are two internal candidates in the running, but the company, 0:16:15.960 --> 0:16:17.520 Brody is also looking elsewhere. 0:16:18.000 --> 0:16:21.320 What do we know, Yeah, well, we know that Adobe 0:16:21.360 --> 0:16:25.680 needs a new CEO. They decide they stop nice. They 0:16:26.000 --> 0:16:28.400 you know, they are kind of one of the air 0:16:28.560 --> 0:16:33.680 examples of the saaspocalypse. Or investors have decided that AI 0:16:33.840 --> 0:16:37.040 might disrupt some of these leading software companies that enjoyed 0:16:37.040 --> 0:16:39.920 some of the best growth rates and margins for decades. 0:16:40.480 --> 0:16:42.680 And so Adobe announced back in March that they're going 0:16:42.720 --> 0:16:44.600 to do a whole search for a CEO. And what 0:16:44.640 --> 0:16:47.200 we have today is that they've zeroed in on two 0:16:47.360 --> 0:16:50.440 internal leaders, and they've also brought in one of tech's 0:16:50.440 --> 0:16:53.200 best known search firms to look for folks who might 0:16:53.240 --> 0:16:56.400 have a little more experience with cutting EDGI development. 0:16:56.760 --> 0:16:58.840 I mean talk to us about the internal leaders and 0:16:58.880 --> 0:17:02.440 where they were they stood to lead before in the 0:17:02.480 --> 0:17:05.200 business units. Because this is a company that probably, rather 0:17:05.280 --> 0:17:08.359 like Salesforce, a lot of the general revenue. 0:17:08.040 --> 0:17:09.240 Drivers are just flowing down. 0:17:09.280 --> 0:17:10.960 There's like a little bit of macro overhang. 0:17:11.040 --> 0:17:12.080 Companies aren't spending so. 0:17:12.080 --> 0:17:14.879 Much on software as much unless it is sort of 0:17:14.920 --> 0:17:16.160 directly AI related. 0:17:16.680 --> 0:17:19.920 The most obvious choice is somebody named David Wadwani. I mean, 0:17:20.640 --> 0:17:23.280 he's been the main deputy for quite a while for 0:17:23.359 --> 0:17:25.760 the largest chunk of the business. I think a lot 0:17:25.760 --> 0:17:28.679 of folks within Adobe assumed that he would just be 0:17:28.760 --> 0:17:31.680 the next CEO, and so the fact that they announced 0:17:31.680 --> 0:17:35.440 this big public search made some folks say, hmm, oh, well, 0:17:35.440 --> 0:17:38.040 maybe David isn't going to get it right. Our understanding 0:17:38.119 --> 0:17:39.879 is David certainly still could get it. 0:17:40.200 --> 0:17:43.520 You need to have an evident race, you know, you 0:17:43.560 --> 0:17:46.000 need to prove yourself that you are the right person 0:17:46.040 --> 0:17:46.480 for their job. 0:17:46.560 --> 0:17:48.480 Having at Disney as well, right like you know that 0:17:48.520 --> 0:17:50.640 you go in internal candidate, but you put a little 0:17:50.640 --> 0:17:53.080 pressure by saying, well, we're also looking at You said 0:17:53.080 --> 0:17:55.639 search for them, but you mean executive search, right, headhunters 0:17:55.720 --> 0:17:56.439 or that case. 0:17:57.119 --> 0:17:59.720 Do we know if there's anyone out there headhunters? Yeah, 0:17:59.720 --> 0:18:02.520 they're looking quite widely. One name that we have in 0:18:02.560 --> 0:18:05.560 the story is Microsoft's Charles Lamana. I mean, he's an 0:18:05.560 --> 0:18:09.679 ascendent executive at Microsoft. He helped some talks with Adobe, 0:18:10.119 --> 0:18:13.400 ultimately backed out of those, but it's an illustrative example 0:18:13.440 --> 0:18:15.920 of the kind of folks that Adobe's probably looking at, 0:18:15.960 --> 0:18:18.240 those who are seen as being able to kind of 0:18:18.600 --> 0:18:21.720 develop and monetize AI at the scale that you need 0:18:21.760 --> 0:18:23.320 to at a company like Adobe. 0:18:23.600 --> 0:18:26.239 What about Shantanou right now and how he guides it 0:18:26.280 --> 0:18:28.200 in this interim period where everyone's. 0:18:27.960 --> 0:18:31.359 Kind of just what kind of just holding all breath 0:18:31.400 --> 0:18:32.400 and to find out more. 0:18:32.920 --> 0:18:34.320 He's the chair of the board, so it's got to 0:18:34.359 --> 0:18:36.119 be a little awkward for him, right. I mean you 0:18:36.200 --> 0:18:39.600 have these two deputies. The other one Neil Chakravarti, he 0:18:39.720 --> 0:18:42.640 runs the other big part of the business. He's done 0:18:42.720 --> 0:18:44.919 very well that part of the business. While it's not 0:18:44.960 --> 0:18:48.680 what we think of as Adobe. It's marketing software, marketing 0:18:48.680 --> 0:18:51.360 and analytics software, which is you know, it's not Photoshop, 0:18:51.400 --> 0:18:53.200 but it's still a big money maker and it's grown 0:18:53.280 --> 0:18:55.560 quite a bit. You know, he has a Neil, and 0:18:55.600 --> 0:18:58.640 he has David Likely saying hey, pick me. 0:18:58.680 --> 0:18:59.840 I should be your next CEO. 0:19:00.160 --> 0:19:04.040 Soare going back spaces right? You know people will know 0:19:04.080 --> 0:19:08.119 Adobe because of Photoshop or PDF or some video editing 0:19:08.240 --> 0:19:12.320 equip software platforms. But the basic story is that a 0:19:12.359 --> 0:19:18.320 lot of that tool can be found free from some 0:19:18.400 --> 0:19:20.720 kind of generated AI platform. 0:19:21.160 --> 0:19:21.320 Right. 0:19:21.400 --> 0:19:24.040 So Adobe, you know, you and I've worked on this together. 0:19:24.119 --> 0:19:25.920 Right when we've we've sat down with Chantono in the 0:19:26.000 --> 0:19:29.040 last twelve months, is to say what are you good 0:19:29.040 --> 0:19:32.440 at here? Like are you using AI? Have they sort 0:19:32.480 --> 0:19:35.040 of dispelled those fears with investors? Where are people still 0:19:35.080 --> 0:19:37.879