WEBVTT - Microsoft’s Activision Deal Blocked by UK 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.960 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.920 --> 0:00:22.720 All right, well, investors definitely want shares of Microsoft in 0:00:22.760 --> 0:00:26.279 a big way. It's unbelievable, maybe not unbelievable considering the 0:00:26.360 --> 0:00:28.760 quarter that they just came out with Microsoft, as you know, 0:00:28.840 --> 0:00:31.880 we broke their earnings last night. They are top in 0:00:31.920 --> 0:00:34.000 the S and P five hundred and Nasdaq one hundred, 0:00:34.000 --> 0:00:35.760 stock at its highest level in more than a year. 0:00:35.880 --> 0:00:38.640 Air adding and my numbers may be a little bit 0:00:39.200 --> 0:00:41.519 off a little bit, but as a latest measure, a 0:00:41.560 --> 0:00:43.920 record one hundred and fifty one billion in value. And 0:00:43.960 --> 0:00:47.280 that's despite the UK blocking a sixty nine billion dollar 0:00:47.400 --> 0:00:51.400 Activision deal acquisition of Activision. So let's continue our coverage 0:00:51.440 --> 0:00:54.560 of the tech giant. Bloomberg Intelligence Senior Technology analyst anarrag 0:00:54.600 --> 0:00:58.640 Rana is back in our Bloomberg Interactive Brokers studio. Narag 0:00:58.720 --> 0:01:01.279 a lot. It was twenty four hours since we got 0:01:01.320 --> 0:01:05.360 their results. Anything changing in your thinking about the results 0:01:05.360 --> 0:01:06.640 we got. 0:01:06.319 --> 0:01:08.800 No, I mean it was surprisingly last night. It's still 0:01:08.840 --> 0:01:11.800 surprising how they pulled it off, especially when they guided 0:01:11.959 --> 0:01:14.600 just two months ago to grow six percent in constant 0:01:14.640 --> 0:01:17.880 currency and they beat it by four hundred or four percent. 0:01:17.959 --> 0:01:20.839 Then you know, came at ten percent, So it is surprising. 0:01:20.920 --> 0:01:23.920 It is good. They're executing well and you know, let's 0:01:23.920 --> 0:01:24.880 help this continues. 0:01:25.240 --> 0:01:28.039 And I wonder to what extent and the Microsoft story, 0:01:28.319 --> 0:01:30.840 you see this as a win for them when it 0:01:30.840 --> 0:01:33.840 comes to the AI race. Did the earnings yesterday? 0:01:34.000 --> 0:01:36.720 No? No, no, no, that's too early in the game. 0:01:36.800 --> 0:01:39.320 It's not going to add to anything meaningful for years 0:01:39.319 --> 0:01:42.920 to come. This is your regular bread and butter business, 0:01:43.000 --> 0:01:48.840 you know, PC sales, office cloud being not as bad 0:01:48.920 --> 0:01:51.560 as we thought it would be. So it is, as 0:01:51.800 --> 0:01:54.400 I would say, very little to no contribution from new 0:01:54.440 --> 0:01:55.240 workloads from AI. 0:01:55.440 --> 0:01:58.360 Yeah, it's interesting, right, We've all been to ecstatic over Microsoft, 0:01:58.360 --> 0:02:00.360 in particular because of what it's been saying about AI. 0:02:00.400 --> 0:02:02.240 But when it really comes to it, it was cloud 0:02:02.320 --> 0:02:04.720 and just kind of the core business at Microsoft that 0:02:05.040 --> 0:02:06.800 just did so well. What do you make though of 0:02:06.800 --> 0:02:08.359 a company when you say it was just a few 0:02:08.400 --> 0:02:10.679 months ago they came out with one estimate right or 0:02:10.760 --> 0:02:13.400 forecast and then all of a sudden they just blow 0:02:13.440 --> 0:02:16.360 it out, like what is that? Just how it sometimes 0:02:16.360 --> 0:02:16.920 plays out? 0:02:17.360 --> 0:02:20.640 It does, and it's the narrative because remember Microsoft is 0:02:20.680 --> 0:02:24.440 such a big part of the software world that anything 0:02:24.520 --> 0:02:26.919 it says has a big you know meaning for read 0:02:26.960 --> 0:02:28.799 through for other companies. I mean, look at some of 0:02:28.840 --> 0:02:32.880 the other companies today. Look at Snowflake, Data Dog, you know, Mango, 0:02:32.960 --> 0:02:36.440 deb They're all rushing because these are the guys who 0:02:36.480 --> 0:02:39.560 say that, okay, enterprises are still spending on some of 0:02:39.600 --> 0:02:42.160 their products and things are not getting worse. I think 0:02:42.200 --> 0:02:44.400 things are not getting worse. Is to me is the 0:02:44.440 --> 0:02:48.520 big movement because you know, the banks being blowing up. 0:02:48.560 --> 0:02:51.520 Banks spent quite a bit of money on technology. This 0:02:51.800 --> 0:02:55.960 shows me that the need to be digital is superseding, 0:02:56.280 --> 0:02:58.200 you know, some short complex in funding. 0:02:58.320 --> 0:03:00.360 I wonder if, like when they gave out that for cast, 0:03:00.440 --> 0:03:01.760 was that I'm trying to think of where we were 0:03:01.800 --> 0:03:03.480 in terms of like what the FED was going to do. 0:03:03.560 --> 0:03:04.919 Was it because they thought the FED was going to 0:03:04.919 --> 0:03:07.000 be a lot more aggressive and slow down the economy. 0:03:07.120 --> 0:03:10.440 I don't think it's they go by that method. I mean, 0:03:10.440 --> 0:03:12.760 they look at the backlock. They think they look at 0:03:12.760 --> 0:03:14.600 what the orders are coming in, and they look at 0:03:14.639 --> 0:03:16.720 what you know, people are turning things off, and they 0:03:16.720 --> 0:03:19.280 give their best estimate at that point. But to go 0:03:19.320 --> 0:03:21.560 from six to ten was pretty commendable to me. 0:03:21.760 --> 0:03:22.239 Yeah. 0:03:22.280 --> 0:03:24.880 On the PC side that you were mentioning earlier, we've 0:03:24.919 --> 0:03:27.120 been talking a lot about like the smaller names, like 0:03:27.160 --> 0:03:30.080 the Seagates of the world sort of being an indicator 0:03:30.120 --> 0:03:31.600 of a slowdown in demand. 0:03:32.080 --> 0:03:34.680 Are you concerned about that? When it comes to the 0:03:34.680 --> 0:03:35.560 Microsoft story. 0:03:35.720 --> 0:03:38.600 In the Microsoft study, there are two things, consumer and commercial. 0:03:38.760 --> 0:03:41.040 The consumer was still weak. That has been the case, 0:03:41.080 --> 0:03:43.920 and then that probably flows through for other vendors. In 0:03:43.960 --> 0:03:46.680 the case of commercial PCs, which is companies upgrading their 0:03:46.720 --> 0:03:49.600 PC that goes by a cycle that typically does not 0:03:49.960 --> 0:03:52.400 you know, a factor in the in your normal day 0:03:52.400 --> 0:03:55.160 to day that consumer spending is week. So companies won't upgrade, 0:03:55.200 --> 0:03:58.280 it doesn't happen. They go by their own methodology. If 0:03:58.320 --> 0:04:00.720 the computers are old, they go out and you know, 0:04:01.440 --> 0:04:04.000 I would say upgraded. Sometimes they push it out by 0:04:04.040 --> 0:04:07.320 I would say six months to nine months. But I 0:04:07.360 --> 0:04:09.280 mean those numbers were actually pretty good. 0:04:09.160 --> 0:04:12.279 So that's not like an economic indicator at all, okay. 0:04:12.120 --> 0:04:14.360 Well, we talk about the bell weathers right within a sector, 0:04:14.400 --> 0:04:16.440 and I do wonder how you extrapolate out what we 0:04:16.520 --> 0:04:18.560 got from Microsoft and what it tells us about the 0:04:18.560 --> 0:04:19.919 broader business spend on it. 0:04:20.640 --> 0:04:23.520 No, you see, we'll have another company report tonight service. 0:04:23.560 --> 0:04:26.040 Now we'll have Amazon tomorrow night. So I think there 0:04:26.040 --> 0:04:29.839 are other companies that will show. Now it's possible Microsoft 0:04:29.880 --> 0:04:32.440 executed better than others, but I doubt that it's such. 0:04:32.480 --> 0:04:35.040 As I said, it's such a big portion of overall 0:04:35.120 --> 0:04:37.880 software spend. I think this just shows to me that, 0:04:38.240 --> 0:04:40.600 you know, we are probably hitting the low watermark at 0:04:40.600 --> 0:04:42.640 this time, and maybe it's time for a u turn 0:04:42.680 --> 0:04:44.120 in terms of technology spending. 0:04:44.480 --> 0:04:46.520 Interesting. You know, it's funny yesterday we were kind of 0:04:47.160 --> 0:04:51.880 musing about Microsoft under Bomber versus Microsoft under Nadella. I mean, 0:04:51.880 --> 0:04:53.640 it's a different company. 0:04:53.360 --> 0:04:55.960 A very different company. It's it's day and night. You know. 0:04:56.080 --> 0:04:59.480 It was open source was an evil word in the 0:04:59.560 --> 0:05:03.120 days of you know, Steve Bomber, and Nadella has embraced 0:05:03.120 --> 0:05:05.640 it quite a bit, you know, working with rivals, trying 0:05:05.680 --> 0:05:07.960 to recognize that if you're not good in certain things, 0:05:08.000 --> 0:05:10.440 walk out of it. He walked out of the Nokia deal, 0:05:10.520 --> 0:05:12.359 Bomber went ahead and you know bought no. Okay, so 0:05:12.360 --> 0:05:15.719 it's a it's a completely different view when it comes 0:05:15.760 --> 0:05:19.000 to to to the new Microsoft. 0:05:18.480 --> 0:05:20.480 And speaking of deals, I would love to get your 0:05:20.480 --> 0:05:24.560 take on the Activision situation, the acquisition getting shut down 0:05:24.600 --> 0:05:25.960 in the UK, and you know. 0:05:25.960 --> 0:05:28.680 Our expert generly has talked a lot about it and 0:05:28.720 --> 0:05:31.640 this is not you know, in the four years ago 0:05:31.680 --> 0:05:33.719 this would have been not an issue. But the economic 0:05:33.760 --> 0:05:37.880 and political climate is so different today that you know 0:05:37.960 --> 0:05:40.080 they are they will block anything by big tech at 0:05:40.120 --> 0:05:40.840 this point. 0:05:41.120 --> 0:05:43.720 So okay, we know Microsoft's already appealed it. 0:05:44.040 --> 0:05:47.000 I mean, Didjetjen say is going to take a long time? 0:05:47.080 --> 0:05:48.880 It's going to take a long time. Is it a 0:05:48.920 --> 0:05:51.200 case where I think there's a three billion dollar breakup 0:05:51.200 --> 0:05:53.520 fee that if Microsoft walks away from it? Is it 0:05:53.600 --> 0:05:55.560 likely Microsoft will or it will just write it out. 0:05:56.040 --> 0:05:57.880 I think they will just keep on appealing till they 0:05:57.880 --> 0:05:58.400 figure it out. 0:05:58.480 --> 0:05:59.200 Do they need it? 0:05:59.240 --> 0:05:59.480 Though? 0:05:59.680 --> 0:06:02.919 Like tell me in terms of strategy what does it 0:06:03.000 --> 0:06:04.200 mean for future growth? 0:06:04.360 --> 0:06:06.520 Gaming is a big part of it, and like other 0:06:07.040 --> 0:06:09.480 areas such as let's say streaming, you know, content is 0:06:09.520 --> 0:06:11.559 a very big important piece of it in this case, 0:06:11.880 --> 0:06:13.640 in the case of gaming, you do want to make 0:06:13.640 --> 0:06:15.800 sure you have the best games possible, and they have 0:06:15.880 --> 0:06:18.080 said that they will allow it on other platforms as well, 0:06:18.120 --> 0:06:21.680 but I think that's still met with skepticism. And if 0:06:22.160 --> 0:06:24.960 someday in the future Microsoft wants to get into cloud gaming, 0:06:25.279 --> 0:06:26.960 you know it would I'm sure would want to have 0:06:27.040 --> 0:06:29.760 a lot of those digital assets with it that it 0:06:29.800 --> 0:06:31.039 can offer those games. 0:06:31.120 --> 0:06:32.440 Is that why it's not really an overhang on the 0:06:32.440 --> 0:06:34.359 stack today because it's like, okay, this is going to 0:06:34.360 --> 0:06:36.960 be drawn out or it's I mean, was it an 0:06:37.000 --> 0:06:38.120 over I don't think I really so. 0:06:38.160 --> 0:06:41.040 Initially it went up by nine percent, eight percent. Now 0:06:41.040 --> 0:06:43.760 it's up to seven percent, maybe one percent up and down. 0:06:44.200 --> 0:06:47.039 But again, you know, Microsoft is a company that has 0:06:47.240 --> 0:06:49.640 six or seven things working for them. It's not dependent 0:06:49.720 --> 0:06:53.320 on any one particular product or segment for growth. This AI, 0:06:53.440 --> 0:06:55.640 for example, that just came out in the last six months, 0:06:55.760 --> 0:06:58.080 one could argue three years from now, it's going to 0:06:58.160 --> 0:07:00.960 drive growth a lot more than you know, perhaps even 0:07:01.000 --> 0:07:03.159 gaming now, you know, it's difficult to measure that, but 0:07:04.000 --> 0:07:06.600 this is one company that's investing in the right kind 0:07:06.600 --> 0:07:08.640 of R and D and it's getting really good results. 0:07:08.680 --> 0:07:11.040 What I'm wondering is Amazon, is we know cloud also 0:07:11.040 --> 0:07:13.440 important obviously to that company. Is there something that we 0:07:13.480 --> 0:07:15.320 can glean from what we got from Microsoft and what 0:07:15.360 --> 0:07:16.240 it means for Amazon? 0:07:16.360 --> 0:07:17.280 It should be fine. 0:07:17.520 --> 0:07:18.320 It should be fine. 0:07:18.360 --> 0:07:21.800 But once again, Amazon's far more exposed to startups and 0:07:21.880 --> 0:07:25.480 new companies than Microsoft, which has a big portfolio of 0:07:25.880 --> 0:07:28.920 legacy or older companies like you know, City Bank, Pepsi, 0:07:29.000 --> 0:07:32.480 Coca Cola, et cetera. While Amazon has more of you know, 0:07:32.520 --> 0:07:35.840 the ubers and the and the startups. So Amazon may 0:07:35.840 --> 0:07:38.400 be exposed a little bit more, but I think it, 0:07:38.600 --> 0:07:39.640 you know, maybe it's fine. 0:07:39.800 --> 0:07:42.840 Some of our guests have been calling AI the iPhone 0:07:42.880 --> 0:07:46.720 moment of this era, and it would seem that Microsoft 0:07:46.840 --> 0:07:50.160 is the Apple then, right, do you agree with that? 0:07:50.200 --> 0:07:51.760 I feel like you don't see it. 0:07:53.120 --> 0:07:55.400 It's like somebody asking me about metaverse a year and 0:07:55.440 --> 0:07:57.840 a half ago. I need to see the results before 0:07:57.880 --> 0:08:00.280 I get excited. I am a financial anandlist need to 0:08:00.320 --> 0:08:03.200 see the numbers. It's a Philosophically, from a concept point 0:08:03.200 --> 0:08:06.160 of view, it's very good. I have no doubt that 0:08:06.200 --> 0:08:08.520 this is really a very game changing moment for the 0:08:08.640 --> 0:08:11.440 entire world in some form or shape. But now, how 0:08:11.440 --> 0:08:13.960 long does it take to become mainstream? Is going to 0:08:14.000 --> 0:08:16.080 be a you know, it could take years. 0:08:16.120 --> 0:08:19.120 Frankly, you know aneric that's so interesting. Do you put 0:08:19.120 --> 0:08:21.440 it on the same plane as a metaverse or is 0:08:21.440 --> 0:08:24.480 it something a little bit more constructive and more developed. 0:08:24.680 --> 0:08:27.040 I will tell you five to seven years ago I 0:08:27.080 --> 0:08:29.120 wrote a piece on this thing, how AI can change 0:08:29.160 --> 0:08:32.319 the world. It's just that's happening at a much faster paced. 0:08:32.240 --> 0:08:35.160 Generative AI specific or just aiah. 0:08:35.160 --> 0:08:37.080 And again, IBM was a big deal at that time. 0:08:37.160 --> 0:08:39.280 IBM was doing a lot of those similar things, and 0:08:39.520 --> 0:08:41.960 you know, it just could not expand and got acceptance. 0:08:41.960 --> 0:08:44.640 At that point, it bought Weather Company, it bought a 0:08:44.640 --> 0:08:47.640 couple of other companies that looked at images. Watson Health 0:08:47.720 --> 0:08:50.120 was a big deal. I've played around with it. Such 0:08:50.120 --> 0:08:52.440 a phenomenal product, but it never took off. 0:08:53.040 --> 0:08:55.680 Right, You can't really argue with the uptake and use 0:08:55.720 --> 0:08:59.240 of something like chat GBT versus the use of the metaverse. 0:08:59.320 --> 0:09:02.400 It's night day, true, But at the same time, the 0:09:02.480 --> 0:09:05.079 real money is going to be made from enterprise use 0:09:05.800 --> 0:09:08.640 companies when they expand into a product like that. But 0:09:08.720 --> 0:09:11.000 they have to then dive into their own data. They 0:09:11.040 --> 0:09:13.160 have to clean up that data that could take us. 0:09:13.600 --> 0:09:16.280 This is not as simple to monetize as you know 0:09:16.320 --> 0:09:17.240 people are making out to be. 0:09:17.400 --> 0:09:19.480 Does it ultimately anerog play out, just like we have 0:09:19.520 --> 0:09:21.160 a couple of really big we have a lot of 0:09:21.160 --> 0:09:22.720 people in the cloud, but we have a couple of 0:09:22.760 --> 0:09:26.199 really big players. Is that how this, you know, next 0:09:26.280 --> 0:09:28.960 level AI plays out? Or you're going to have a 0:09:28.960 --> 0:09:29.800 lot of hands in it. 0:09:29.920 --> 0:09:31.760 So the software is going to be used, could be 0:09:31.840 --> 0:09:33.600 used by anybody. It's up to you. If you want 0:09:33.640 --> 0:09:36.080 to make an application, you can create one and it 0:09:36.120 --> 0:09:38.280 could do wonders. You know, it could be a grocery store, 0:09:38.280 --> 0:09:41.760 if be deployed anywhere, healthcare industry. But at the end 0:09:41.800 --> 0:09:44.480 of the day, we think the biggest beneficiaries are going 0:09:44.520 --> 0:09:47.120 to be the three or the four biggest cloud providers 0:09:47.360 --> 0:09:52.440 because this infrastructure has to be built on cloud. So Amazon, Google, Microsoft. 0:09:52.000 --> 0:09:52.800 Don't care who's doing it. 0:09:52.800 --> 0:09:55.080 Well as long as say, if you're a company and 0:09:55.120 --> 0:09:57.199 you want to spend some money and create an application, 0:09:57.600 --> 0:09:58.800 yeah you can go out and make it. 0:09:58.920 --> 0:10:01.560 Last question twenty fe seconds. Was there anything on the 0:10:01.600 --> 0:10:04.000 call that wasn't answered to your. 0:10:03.760 --> 0:10:06.880 Now, Yeah, it's just surprising you're on the positive side. 0:10:06.960 --> 0:10:09.920 It is amazing, so great to check in with you again. 0:10:10.160 --> 0:10:11.560 I'm not even sure if you got any sleep. Did 0:10:11.559 --> 0:10:12.199 you get any sleep? 0:10:12.400 --> 0:10:12.480 No? 0:10:14.120 --> 0:10:17.320 We so appreciate honor our Grana, our senior technology analyst 0:10:17.360 --> 0:10:19.600 here at our Bloomberg Intelligence team, our in house group 0:10:19.600 --> 0:10:20.440 of analysts. 0:10:20.960 --> 0:10:24.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:24.559 --> 0:10:27.920 live weekday afternoons from three to six Eastern Listen on 0:10:27.960 --> 0:10:32.000 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:10:32.280 --> 0:10:34.559 or watch us live on YouTube. 0:10:35.600 --> 0:10:38.280 Hey, we're keeping an eye on shares of Tesla as well, 0:10:38.600 --> 0:10:40.920 stock down about three and a half percent just off 0:10:40.960 --> 0:10:44.640 their lows, and they have backtracked nearly twenty five percent 0:10:44.679 --> 0:10:48.120 since March thirty. First, we continue to see Elon continuing 0:10:48.120 --> 0:10:50.400 to shape strategy that includes betting the house on low 0:10:50.400 --> 0:10:53.560 prices and razor thin margin. So this story is today's 0:10:53.559 --> 0:10:56.000 Bloomberg Big Take. It's also the upcoming new issue of 0:10:56.000 --> 0:10:59.440 Bloomberg Business Week on newsstands later on this week tomorrow. 0:10:59.520 --> 0:11:01.880 In fact, already online at Blomberg dot com slash Business 0:11:01.880 --> 0:11:04.360 Weekend on the Bloomberg terminals. So let's get to it. 0:11:04.600 --> 0:11:08.079 Let's get to Bloomberg News. Globals are cars are Craig Trudell, 0:11:08.120 --> 0:11:10.880 he's on the phone in London, Craig. Good to have 0:11:10.960 --> 0:11:12.959 you here with us. So, yeah, it does feel like 0:11:13.000 --> 0:11:14.680 every day we come in and there's either another price 0:11:14.720 --> 0:11:17.880 cut or some kind of price move from Elon. Tell 0:11:17.920 --> 0:11:20.199 us a little bit about your story in this strategy 0:11:20.240 --> 0:11:21.120 of mister Musk's. 0:11:22.080 --> 0:11:24.079 Yeah, well, we'll see if I wake up to another 0:11:24.160 --> 0:11:26.319 one overnight, it's going to be right in the middle 0:11:26.320 --> 0:11:30.240 of as I'm sleeping. So, I mean, this has been 0:11:30.280 --> 0:11:32.920 a story of just yeah, relentless cutting all year long, 0:11:33.000 --> 0:11:35.280 and we really started to see hints of it even 0:11:35.400 --> 0:11:38.640 late last year, you know, whether there were there were 0:11:38.640 --> 0:11:43.480 some cuts in China or some incentive offers in the US. 0:11:44.000 --> 0:11:48.319 But in the end, we're now to a point where 0:11:48.360 --> 0:11:51.360 where it cast us almost a third less to buy 0:11:51.400 --> 0:11:53.320 a model why now than it did just a little 0:11:53.360 --> 0:11:56.280 over three months ago. And this is just something that 0:11:56.320 --> 0:11:58.760 we haven't seen before, right, It's it's not a model 0:11:58.800 --> 0:12:02.200 that you know, is is really uh you know, low 0:12:02.440 --> 0:12:04.680 low volume or or has been in this you know, 0:12:04.760 --> 0:12:08.320 market decline. If anything. It's been their strongest model, and 0:12:08.360 --> 0:12:10.559 it's potentially I mean, it could end up being the 0:12:10.880 --> 0:12:12.840 best selling vehicle in the world this year. 0:12:13.360 --> 0:12:13.560 Uh. 0:12:13.600 --> 0:12:16.760 And yet it's a case of adding a heck of 0:12:16.760 --> 0:12:20.160 a lot of capacity very quickly. Uh and and the 0:12:20.800 --> 0:12:24.160 model itself, uh you know, going into that process being 0:12:24.360 --> 0:12:27.800 quite high price, being high volume. Uh and yet with 0:12:27.840 --> 0:12:30.960 all that capacity coming online and real changes in the 0:12:31.000 --> 0:12:34.280 sort of supply demand dynamics for the broader industry, you know, 0:12:34.600 --> 0:12:38.240 all all of those things have sort of combined to also, 0:12:38.280 --> 0:12:41.880 I guess adding a CEO who is sort of prone 0:12:41.920 --> 0:12:44.880 to making very sort of sudden changes, and boom, you 0:12:44.920 --> 0:12:48.000 get yourself. You know, these these massive uh you know, 0:12:48.040 --> 0:12:49.600 price cuts in the last few months. 0:12:49.760 --> 0:12:51.640 Craig, does it work for the company? 0:12:53.320 --> 0:12:56.800 I think that's that's a question that's really difficult to 0:12:57.280 --> 0:13:00.280 answer because you have, you know, really smart piece people 0:13:00.600 --> 0:13:04.320 who come to just radically different conclusions where you know, 0:13:04.559 --> 0:13:07.480 some some will tell you it's desperation and some will 0:13:07.480 --> 0:13:10.080 tell you it's just disruption, and you may even actually 0:13:10.080 --> 0:13:12.360 hear it, you know, hints of that in the in 0:13:12.400 --> 0:13:15.400 the same answer from the same person. And I allude 0:13:15.400 --> 0:13:18.720 there to Jim Harley the CEO of Ford. He's talked about, 0:13:19.000 --> 0:13:21.520 you know, just last week, you know, he told reporters 0:13:21.600 --> 0:13:24.760 look up nineteen thirteen and he was referring, of course 0:13:24.800 --> 0:13:28.320 to Henry Ford and the Model T and how quickly 0:13:28.360 --> 0:13:31.880 Henry Ford dropped the price of that car when he 0:13:32.160 --> 0:13:33.720 sort of had an edge on the rest of the 0:13:33.760 --> 0:13:37.439 industry and had, you know, innovated with the moving assembly line. 0:13:37.880 --> 0:13:40.360 I think, you know, Musk thinks that he's pressing an 0:13:40.400 --> 0:13:43.120 advantage here, but I also don't think that you cut 0:13:43.160 --> 0:13:46.400 your prices that much that quickly from a position of 0:13:46.480 --> 0:13:49.679 absolute strength. It's clear that he's, you know, to some degree, 0:13:49.760 --> 0:13:51.199 been pushing on a string here. 0:13:51.960 --> 0:13:55.080 What I do wonder, you know, is this about forgive 0:13:55.080 --> 0:13:58.520 me going after the masses more easily? Because these cars 0:13:58.559 --> 0:14:01.280 have been even the low and pretty expensive. 0:14:02.559 --> 0:14:05.040 Yeah, I mean just last year, I mean you had 0:14:05.040 --> 0:14:08.640 to pay sixty five thousand dollars plus for a Model Ye, 0:14:08.920 --> 0:14:12.200 this was not a cheap vehicle. It's now to the 0:14:12.240 --> 0:14:14.640 point where you can you can get it in the 0:14:14.679 --> 0:14:17.480 mid forties. And that's you know, something that we haven't 0:14:17.480 --> 0:14:20.360 seen before, where you know that that vehicle was not 0:14:20.960 --> 0:14:24.520 anywhere close to what the average transaction price was in 0:14:24.520 --> 0:14:27.120 the US and now it's slightly below it. And so 0:14:27.160 --> 0:14:31.400 we've seen that change. It's been about twenty thousand dollars, 0:14:31.960 --> 0:14:35.640 you know, change in the differential. Our colleague Tom Randall 0:14:35.680 --> 0:14:38.200 had a great story on this yesterday. Just he's been 0:14:38.320 --> 0:14:41.600 very closely following those numbers. So you know, it absolutely 0:14:41.720 --> 0:14:44.960 is the case that he's unlocking, you know, a greater market. 0:14:45.040 --> 0:14:48.520 But you know, to what extent is he able to 0:14:48.560 --> 0:14:51.560 sustain the Model three, which is is you know, older, 0:14:52.200 --> 0:14:54.160 and then you have a sort of very different story 0:14:54.160 --> 0:14:56.160 with the Model S and the Model X, which are 0:14:56.240 --> 0:14:58.840 are very old and really having a hard time. 0:14:59.000 --> 0:15:00.680 You know, it's interesting what I I thought your story 0:15:00.680 --> 0:15:03.600 and you took us back to the Rick Wagner days 0:15:03.680 --> 0:15:06.440 at General Motors when he was CEO. Do you think 0:15:06.440 --> 0:15:09.480 it's fair like to share with our audience, you know, 0:15:09.560 --> 0:15:11.960 that comparison. But I do wonder is it fair to 0:15:12.080 --> 0:15:15.000 make that comparison, because I would say that it's kind 0:15:15.040 --> 0:15:16.560 of it feels a little different. 0:15:17.680 --> 0:15:20.680 Oh, it's it's definitely different. I do think that the 0:15:21.080 --> 0:15:24.920 sort of similarity there is, you know, a story of 0:15:25.880 --> 0:15:27.880 a company that has a heck of a lot of 0:15:27.880 --> 0:15:32.760 capacity and has to make some difficult decisions when you 0:15:32.840 --> 0:15:36.800 know it's having trouble getting demand for the capacity that 0:15:36.920 --> 0:15:40.840 it has. I think the comparisons maybe due, you know, 0:15:40.920 --> 0:15:43.200 to your point and there, and I think there's a 0:15:43.200 --> 0:15:46.720 great chart in our story today capturing what's happened to 0:15:46.800 --> 0:15:50.560 the cash and the debt on Tesla's balance sheet. We saw, 0:15:50.960 --> 0:15:54.560 you know, in twenty nineteen and twenty twenty, Tesla raise 0:15:55.040 --> 0:15:57.360 a ton of money from Wall Street and in the 0:15:57.440 --> 0:15:59.960 last few years has itself you know, added to its 0:16:00.040 --> 0:16:03.000 cash balance, you know, from its own operations. And in 0:16:03.040 --> 0:16:05.840 the process it's it's also paid off about you know, 0:16:05.920 --> 0:16:08.840 ten billion, ten billion dollars worth of debt in the 0:16:08.880 --> 0:16:11.080 course of three years. And that's why, you know, just 0:16:11.160 --> 0:16:14.600 recently we saw Moody's raise Tesla to investment grate. 0:16:14.760 --> 0:16:16.920 So it's a great chart. It's how you want it 0:16:16.960 --> 0:16:17.120 to be. 0:16:18.280 --> 0:16:21.280 Yeah, it's Tesla in a structural state anywhere close to 0:16:21.320 --> 0:16:24.720 where GM was. Absolutely not. But I do think you know, 0:16:24.840 --> 0:16:28.480 the sort of you know, it's funny, we we sort 0:16:28.480 --> 0:16:31.800 of thought that Tesla was something different and not like 0:16:31.960 --> 0:16:34.720 other sort of old line carmakers. But you know, this 0:16:34.840 --> 0:16:38.320 idea of of sort of as we saw in two 0:16:38.400 --> 0:16:41.680 thousand and one, you know, just sort of resorting to 0:16:42.720 --> 0:16:46.480 discounting to sort of move the metal. It definitely brings 0:16:46.560 --> 0:16:48.280 you know, it sounds familiar there. 0:16:48.320 --> 0:16:53.600 So why aren't they pouring that money into generating freshness? 0:16:53.640 --> 0:16:56.760 Which I'm stealing from one of your sources. But Carol 0:16:56.800 --> 0:16:58.440 and I get a lot of our best ideas, or 0:16:58.480 --> 0:17:00.200 I do, at least from the makeup room. And what 0:17:00.240 --> 0:17:02.720 they always talk about is the lack of availability of 0:17:02.760 --> 0:17:06.399 different colors of Tesla's. I know that sounds silly, but 0:17:06.520 --> 0:17:08.720 is something like that on Elon Musk's mind. 0:17:10.280 --> 0:17:12.480 It's a good question. I mean, I don't think that 0:17:12.520 --> 0:17:15.879 they've really sort of, you know, talked a whole lot about, 0:17:15.920 --> 0:17:19.200 you know, significant changes to the product. And of course 0:17:19.240 --> 0:17:21.600 you always sort of run the risk when you sort of, 0:17:21.680 --> 0:17:24.959 you know, dangle this sort of next thing that you 0:17:25.000 --> 0:17:28.920 sort of have the consumer wait for the changes to come. 0:17:29.000 --> 0:17:30.800 And we may be seeing that a little bit. I 0:17:30.880 --> 0:17:34.399 think there's been reports recently that the Model why and 0:17:34.440 --> 0:17:38.560 the Model three are going to undergo some upgrades fairly soon, 0:17:38.640 --> 0:17:41.000 and so are we seeing some consumers hold back and 0:17:41.359 --> 0:17:44.520 wait for the pressure models? I think another fair question 0:17:44.600 --> 0:17:47.119 to raise here is. You know, if you're a consumer, 0:17:47.160 --> 0:17:48.840 why the heck would you want to buy a Tesla 0:17:48.920 --> 0:17:51.719 right now when when the prices are coming down so quickly? 0:17:52.760 --> 0:17:55.000 You know, why not wait a little bit more and 0:17:55.080 --> 0:17:57.680 see if these prices sort of settle down a little 0:17:57.720 --> 0:18:00.639 bit before you, you know, go out of and purchase 0:18:00.720 --> 0:18:03.399 something that you know, a few weeks later, might you 0:18:03.440 --> 0:18:07.080 know the price may depreciate another two thousand dollars, we'll 0:18:07.160 --> 0:18:07.480 go up. 0:18:07.520 --> 0:18:11.160 I'm just going to say there's a flip side, no Eli, Hey, 0:18:11.240 --> 0:18:13.639 I just I am curious, Craig, is Tesla going to 0:18:13.640 --> 0:18:15.760 be like any other carmaker though that like every year 0:18:15.800 --> 0:18:17.879 there's a new model. It doesn't feel like, you know, 0:18:18.000 --> 0:18:21.480 Elin just does it so differently. Should we expect as 0:18:21.920 --> 0:18:24.119 consumers that that's how he's going to do it? Or 0:18:24.160 --> 0:18:26.399 is it going to be I don't know akin to 0:18:26.520 --> 0:18:28.520