WEBVTT - Apple’s Succession Plans, Warner Brothers Discovery Earnings 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:17.520 Eastern on Apple car Play and Android Auto with the 0:00:17.520 --> 0:00:21.440 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.520 or watch us live on YouTube. 0:00:25.079 --> 0:00:27.560 Let's move on to another tech story. It is on 0:00:27.600 --> 0:00:30.120 the Bloomberg Big Take Today and the title is the 0:00:30.160 --> 0:00:34.200 Apple Insiders in the running to succeed Tim Cook. Only 0:00:34.240 --> 0:00:36.159 one person you can talk to about anything to do 0:00:36.200 --> 0:00:38.839 with technology and Apple, and that's Mark German, Bloomberg, Chief 0:00:38.880 --> 0:00:43.040 correspondent on Bloomberg Technology joining us. It was so interesting 0:00:43.200 --> 0:00:45.400 when I read this because I don't think I have 0:00:45.520 --> 0:00:48.560 heard of anyone talking about succession with Tim Cook. But 0:00:48.600 --> 0:00:50.360 he's been around for a very. 0:00:50.159 --> 0:00:51.040 Long time. 0:00:53.159 --> 0:00:53.600 For having me. 0:00:53.640 --> 0:00:54.000 That's right. 0:00:54.080 --> 0:00:57.240 Cook has been around for over two decades at Apple now. 0:00:57.760 --> 0:01:01.200 He was named CEO in twenty eleven and obviously taking 0:01:01.240 --> 0:01:04.560 over for Steve Jobs. He's turning sixty five next year. 0:01:04.600 --> 0:01:06.679 He's one of the older CEOs in the S and 0:01:06.680 --> 0:01:10.120 P five hundred. They have a management team that's essentially 0:01:10.160 --> 0:01:13.680 been the same cast of characters for a decade plus 0:01:14.120 --> 0:01:18.000 and they're in a precarious position right now, battling smartphone slowdowns, 0:01:18.400 --> 0:01:21.600 battling a shift of manufacturing out of China while trying 0:01:21.640 --> 0:01:25.240 to keep China still happy, regulatory concerns in both the 0:01:25.360 --> 0:01:28.240 US and the European Union. So there's a lot going on. 0:01:28.680 --> 0:01:31.000 But Tim Cook's getting up there, and it's time to 0:01:31.040 --> 0:01:33.679 start thinking about who comes after Cook. And so my 0:01:33.760 --> 0:01:36.160 story this week takes a look at some of the options, 0:01:36.480 --> 0:01:38.479 and I'll just give you the quick summary here. If 0:01:38.480 --> 0:01:41.360 he were to step down in the near term, he'd 0:01:41.360 --> 0:01:44.520 likely be replaced by Jeff Williams. He's the chief operating officer. 0:01:45.200 --> 0:01:48.200 If he stays around about five years, as many expect, 0:01:48.280 --> 0:01:51.200 including me, he'd likely to be replaced by John Turnis. 0:01:51.280 --> 0:01:54.720 He's the company's senior VP of hardware Engineering, and he's 0:01:54.720 --> 0:01:57.560 been playing an increasingly important role in product development and 0:01:57.600 --> 0:01:58.800 other aspects of the company. 0:01:59.120 --> 0:02:00.800 So, Mark, this was a great point that you made 0:02:00.840 --> 0:02:02.960 in the story that you said, So Tim Cook, he's 0:02:03.000 --> 0:02:05.520 sixty three older than a lot of his peers in 0:02:05.560 --> 0:02:09.840 the average Fortune five hundred C suite company. But it's 0:02:09.880 --> 0:02:12.639 interesting because there was a quote from somebody you know saying, 0:02:12.680 --> 0:02:15.640 you know, if Biden Trump could be president at eighty 0:02:15.720 --> 0:02:17.880 years old. Like, who's to say that Tim Cook can't 0:02:17.880 --> 0:02:21.120 stay on as CEO or that you know, someone else 0:02:21.120 --> 0:02:23.680 of one of his peers who's maybe also in that 0:02:23.720 --> 0:02:26.760 same kind of age range also couldn't be suitable for it. 0:02:28.560 --> 0:02:31.639 Yeah, he certainly, you know, could stick around, right. I mean, 0:02:31.639 --> 0:02:33.120 if you can run the country at that age, you 0:02:33.120 --> 0:02:36.119 can run Apple at that age. But I don't think 0:02:36.200 --> 0:02:39.360 that's what Apple's board of directors or Tim Cook would want, 0:02:39.960 --> 0:02:41.080 to be honest. 0:02:41.560 --> 0:02:41.880 Why not? 0:02:44.520 --> 0:02:46.760 Well, I think there is a culture of passing the 0:02:46.800 --> 0:02:50.960 baton right in these corporations, and Tim Cook is going 0:02:51.000 --> 0:02:52.840 to want to give someone else a chance. 0:02:52.919 --> 0:02:53.079 Right. 0:02:53.120 --> 0:02:56.680 It's a technology company, and you know, many people want 0:02:56.880 --> 0:03:00.480 someone who you know, grew up in Silicon Valley, someone 0:03:00.560 --> 0:03:03.440 who is newer and more innovative, to take over these 0:03:03.480 --> 0:03:05.920 tech companies. So I just don't think Tim Cook at 0:03:05.919 --> 0:03:09.080 eighty years old would want to run Apple or should 0:03:09.160 --> 0:03:09.639 run Apple. 0:03:09.919 --> 0:03:12.520 It doesn't sound like Tim Cook has talked a whole 0:03:12.520 --> 0:03:14.800 lot about this. You mentioned this was I thought this 0:03:14.880 --> 0:03:17.040 was kind of weird that of all places where Tim 0:03:17.080 --> 0:03:20.120 Cook has shared the most about, you know, his life 0:03:20.200 --> 0:03:23.200 after Apple, has been on a podcast with Dua Lipa 0:03:23.360 --> 0:03:24.240 didn't see that coming. 0:03:24.280 --> 0:03:24.919 I don't know is she. 0:03:25.160 --> 0:03:27.360 Presently did not see that coming, Like, is this like 0:03:27.400 --> 0:03:29.440 the place to go if you're going to drop some 0:03:29.480 --> 0:03:30.840 secession news. 0:03:31.880 --> 0:03:35.200 Well, Tim Cook doesn't do many interviews, right, He does 0:03:35.240 --> 0:03:38.560 a few a year, and you know, to be fair, 0:03:38.960 --> 0:03:42.840 du Alipa probably asked the best questions of any interview 0:03:42.880 --> 0:03:45.400 that I've seen Tim Cook participate in a while, and 0:03:45.920 --> 0:03:48.360 she brought up the succession question. Obviously, that was a 0:03:48.400 --> 0:03:51.480 little surprising that she brought that up because it doesn't 0:03:51.520 --> 0:03:54.080 seem central to, you know, her line of questions that 0:03:54.120 --> 0:03:56.520 the rest of the podcast had. But she asked, and 0:03:56.800 --> 0:03:58.960 Tim Cook gave his most in depth comments on the 0:03:59.000 --> 0:03:59.680 subject to date. 0:04:00.360 --> 0:04:04.360 You mentioned a hardware engineering person that may be taking 0:04:04.360 --> 0:04:07.320 over if it's longer than five years, Why not like 0:04:07.360 --> 0:04:08.880 an ai Ish person. 0:04:11.360 --> 0:04:14.680 Well, it's not necessarily because John Turnus is a harderre 0:04:14.680 --> 0:04:18.279 engineering person that he's going to be taking over the company. 0:04:18.520 --> 0:04:22.239 It's mostly because he's in the right age range. He's 0:04:22.440 --> 0:04:26.440 so important to the company. He has excellent managerial skills, 0:04:26.520 --> 0:04:30.520 He's extremely well respected inside the company and within the industry. 0:04:30.839 --> 0:04:32.360 So he has a lot of things going for him 0:04:32.520 --> 0:04:35.839 other than obviously very important being the hardware engineering person. 0:04:36.400 --> 0:04:38.960 In terms of not an AI person, well, Apple's AI 0:04:39.120 --> 0:04:42.640 person John Jane Andrea. Quite frankly, I don't expect him 0:04:42.640 --> 0:04:45.800 to remain at Apple for many more years, and I 0:04:45.839 --> 0:04:48.800 certainly don't think that he's prime to run the whole company. 0:04:49.200 --> 0:04:52.960 He joined Apple in twenty nineteen. For all intentsive purposes, 0:04:53.040 --> 0:04:56.040 he's an outsider. When you're at Apple, you really want 0:04:56.040 --> 0:04:58.080 to gain steam there, especially if you're going to be 0:04:58.080 --> 0:05:00.680 the next CEO. You really got to be there for 0:05:00.720 --> 0:05:04.039 two decades. It's a cult, right, You're not going to 0:05:04.040 --> 0:05:07.039 see someone be able to be CEO who comes in 0:05:07.080 --> 0:05:09.360 from the outside and their head of AI for all 0:05:09.440 --> 0:05:11.760 intensive purposes, Like I said, is an outsider. 0:05:12.279 --> 0:05:14.720 So when Steve Jobs was, you know, toward the end 0:05:14.760 --> 0:05:18.200 of his tenure, obviously he was battling cancer at the time. 0:05:18.440 --> 0:05:21.280 What kind of circumstances, you know, barring you know, a 0:05:21.279 --> 0:05:23.560 health crisis, which of course we hope that wouldn't happen, 0:05:23.600 --> 0:05:26.440 But what kind of circumstances do you think would be 0:05:27.000 --> 0:05:28.960 fitting for Cook to step down? 0:05:29.040 --> 0:05:29.280 Under? 0:05:31.560 --> 0:05:33.600 Well, Cook is going to run Apple as long as 0:05:33.600 --> 0:05:34.680 he wants to run Apple. 0:05:34.880 --> 0:05:35.080 Right. 0:05:35.240 --> 0:05:36.760 Like I said, I don't think that's going to be 0:05:36.880 --> 0:05:39.520 until eighty, but I wouldn't be surprised if he remains 0:05:39.520 --> 0:05:43.520 at Apple until seventy, right, And the circumstances would be 0:05:43.560 --> 0:05:45.680 when he feels it's time to pass the baton. No 0:05:45.720 --> 0:05:48.680 one is going to force him out. There's no retirement age, 0:05:48.880 --> 0:05:51.720 there's no requirement, So it's going to be as long 0:05:51.720 --> 0:05:53.920 as he wants to run the company, and so there's 0:05:53.920 --> 0:05:56.240 no circumstance that I think would push him out the door. 0:05:56.720 --> 0:06:00.760 It also feels like managing Apple is also about and 0:06:00.800 --> 0:06:05.520 managing geopolitical relationships with China, Like how do you think 0:06:05.600 --> 0:06:07.920 that kind of overlays? Or are I making too much of 0:06:07.960 --> 0:06:10.760 a big deal about it and it's actually a cyclical 0:06:10.800 --> 0:06:12.279 thing and I should chill out. 0:06:13.680 --> 0:06:16.840 Well, No, I think that's extremely central to the CEO role, right, 0:06:16.920 --> 0:06:19.280 And the thing that's going to test turnus the most 0:06:19.640 --> 0:06:22.919 is how do you operate on the world stage. Now, 0:06:23.040 --> 0:06:27.200 there's something else to really understand here. The CEO of 0:06:27.240 --> 0:06:32.160 Google Sundor Prichai, the CEO of Microsoft Satanadella. They are 0:06:32.200 --> 0:06:35.240 both engineers who took on the CEO role, just like 0:06:35.279 --> 0:06:39.039 I expect turnis to eventually right. But both of those 0:06:39.040 --> 0:06:42.960 people have an executive there that manage the relations for 0:06:43.000 --> 0:06:46.160 them right. Microsoft famously has a president whose name is 0:06:46.200 --> 0:06:51.880 Brad Smith. He handles all the international relations, right soundor Prachai. 0:06:52.080 --> 0:06:57.279 They made their CFO Ruth porat Right. She now manages 0:06:57.320 --> 0:07:01.120 these international relations and these issues, So the CEO doesn't 0:07:01.160 --> 0:07:05.440 necessarily have to be the person who manages these relationships. 0:07:05.480 --> 0:07:07.760 The reason Tim Cook does it at Apple is not 0:07:07.839 --> 0:07:10.960 because he's the CEO. That's because he's the best at it, right, 0:07:11.000 --> 0:07:13.320 And different CEOs are going to have different skill sets, 0:07:13.840 --> 0:07:16.679 And being the CEO doesn't mean you have to do everything. 0:07:16.920 --> 0:07:19.440 It means you have to do a mix of things, 0:07:19.800 --> 0:07:23.320 but have the ability to appoint the right person and 0:07:23.360 --> 0:07:26.000 put the right people in position to do the things 0:07:26.000 --> 0:07:26.880 that you're not good at. 0:07:27.200 --> 0:07:30.160 Last one for you here mark thirty seconds. Tim Cook's 0:07:30.160 --> 0:07:33.920 talking about maybe life after Apple being something more philanthropic. 0:07:34.120 --> 0:07:35.800 Any ideas on what that might be like. 0:07:37.320 --> 0:07:39.560 Well, obviously he generated a lot of money while being 0:07:39.640 --> 0:07:42.840 CEO of Apple. My belief he's going to open up 0:07:42.840 --> 0:07:48.400 some sort of charitable foundation and make donations to you know, 0:07:48.600 --> 0:07:52.160 various places. I would say the best comp to This 0:07:52.240 --> 0:07:54.880 would be something like what Mackenzie Scott has been doing 0:07:55.400 --> 0:07:59.440 or Lorraine Powell jobs. Both have opened foundations over the past, 0:07:59.480 --> 0:08:04.240 you know, several years and make fill philanthropic donations on 0:08:04.280 --> 0:08:08.760 a pretty targeted basis to specific entities constantly, and so 0:08:08.760 --> 0:08:10.360 I would expect the cook to do the same. 0:08:10.960 --> 0:08:13.080 Really appreciate it, Mark, I know what's early where you are. 0:08:13.120 --> 0:08:15.200 We appreciate you getting up for us. Mark German Bloomberg 0:08:15.240 --> 0:08:18.120 a chief correspondent on global technology, and you can read 0:08:18.120 --> 0:08:21.400 this great story on Bloomberg and also at Bloomberg dot 0:08:21.440 --> 0:08:23.880 com Slash Big Take. Don't miss it. 0:08:25.640 --> 0:08:29.559 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:29.600 --> 0:08:33.439 weekdays at ten am Eastern on Applecarplay and Android Auto 0:08:33.559 --> 0:08:36.319 with a Bloomberg Business Act. You can also listen live 0:08:36.440 --> 0:08:39.600 on Amazon Alexa from our flagship New York station, Just 0:08:39.679 --> 0:08:43.040 say Alexa play Bloomberg eleven thirty. 0:08:44.120 --> 0:08:48.120 We also have a really interesting move here with HubSpot 0:08:48.160 --> 0:08:50.440 and Alphabet. Do I know those things? 0:08:50.559 --> 0:08:52.120 I don't really know. Those things don't have a man 0:08:52.200 --> 0:08:53.760 deep saying, thankfully. 0:08:53.360 --> 0:08:56.520 Jos and so does Narash Patel. So manyep Singh is 0:08:56.559 --> 0:09:01.160 Senior Technology Software Senior Technology analyst for Bloomberg Intelligence Naragepitel 0:09:01.200 --> 0:09:04.600 at Bloomberg Intelligence senior software analysts. Luckily they can have 0:09:04.679 --> 0:09:07.600 us covered on all of this, Garage. What is HubSpot 0:09:07.679 --> 0:09:10.400 and what does a Google slash alphabet want with it? 0:09:12.120 --> 0:09:15.960 Yeah? Hi, Alex and HubSpot they are playing directly into 0:09:16.000 --> 0:09:20.480 sales and marketing software. Small player, well below the scale 0:09:20.520 --> 0:09:24.199 of Salesforce and Adobe. They have about two and a 0:09:24.240 --> 0:09:28.679 half billion in revenue relative to a forty billion salesforce scale, 0:09:28.960 --> 0:09:32.640 so much smaller. They target SMBs. Their average customers about 0:09:32.640 --> 0:09:36.640 fifty one hundred employees. So they offer this type of platform, 0:09:36.679 --> 0:09:39.320 which is about two hundred and ten thousand total customers 0:09:39.720 --> 0:09:45.720 to Google to maybe enhance some advertisement and leverage CRM 0:09:45.840 --> 0:09:49.400 as a gateway for AI into software. For Google, this is. 0:09:49.360 --> 0:09:51.520 A pretty big potentially acquisition. 0:09:52.040 --> 0:09:53.679 So I want to bring in man Deep saying here, 0:09:53.679 --> 0:09:55.120 who's with us in the studio today? 0:09:55.160 --> 0:09:55.800 Hey, Man Deep. 0:09:56.800 --> 0:09:59.720 So this would be a company right now that's valued HubSpot, 0:09:59.720 --> 0:10:02.040 that is around thirty billion dollars. 0:10:02.280 --> 0:10:04.720 So much talk of antitrust. 0:10:04.040 --> 0:10:06.960 Going on in the tech space, Is this something like 0:10:07.000 --> 0:10:08.280 Google could really pull off? 0:10:09.200 --> 0:10:13.120 I mean they could in theory simply because Microsoft recently 0:10:13.160 --> 0:10:16.600 bought Activision and that was close to seventy billion dollars, 0:10:16.640 --> 0:10:20.800 So you know, any acquisition here would not be north 0:10:20.840 --> 0:10:23.720 of thirty five to forty billion. So from that perspective, 0:10:23.880 --> 0:10:27.360 you know, given Google is not a player in application software, 0:10:28.320 --> 0:10:31.439 I think the antitrust argument is pretty weak in terms of, 0:10:31.559 --> 0:10:34.959 you know, preventing them from acquire HubSpot and in terms 0:10:35.000 --> 0:10:38.440 of why they are looking to buy an asset like this. Look, 0:10:38.480 --> 0:10:43.120 Google's primary business remains ads. They're big on the you know, 0:10:43.200 --> 0:10:46.520 the foundational model side with generative AI. They have the 0:10:46.559 --> 0:10:52.880 cloud infrastructure, so getting a data CRM play for training 0:10:52.920 --> 0:10:57.440 your models is something that is quite forward looking. I 0:10:57.440 --> 0:11:00.040 don't think the market fully grasps what they're trying to 0:11:00.040 --> 0:11:04.000 to do here, but it does make sense because in 0:11:04.040 --> 0:11:06.480 the end, if you have to deploy generative AI at 0:11:06.480 --> 0:11:10.320 the enterprise level, you need data and who better than 0:11:10.480 --> 0:11:13.920 a CRM company that has got data related to an 0:11:14.080 --> 0:11:17.320 enterprise system sales system. So it does make sense that 0:11:17.400 --> 0:11:20.480 they are trying to apply that kind of AI in 0:11:20.520 --> 0:11:21.880 the context of an enterprise. 0:11:22.040 --> 0:11:24.240 Well to your point of you know, maybe investors not 0:11:24.320 --> 0:11:27.559 quite grasping it yet. Google shares more or less unchanged 0:11:27.559 --> 0:11:30.160 on the day actually slightly down, but you think this 0:11:30.200 --> 0:11:32.920 could be maybe a more positive longer term story for 0:11:32.960 --> 0:11:33.319 the stock. 0:11:33.600 --> 0:11:37.920 I mean, these companies don't make acquisitions for inorganic growth. 0:11:38.280 --> 0:11:41.600 It isn't about the revenue contribution from hubsqat. It is 0:11:41.640 --> 0:11:45.200 more about how can they position themselves better at the 0:11:45.320 --> 0:11:48.760 enterprise level. And in the case of Alphabet, look, they've 0:11:49.040 --> 0:11:53.040 never had an enterprise business before Google Cloud. So the 0:11:53.120 --> 0:11:56.120 fact that they have a thirty five billion dollars Google 0:11:56.160 --> 0:12:01.520 Cloud infrastructure business, they can add this DRM asset and 0:12:01.559 --> 0:12:04.760 then the generative AI aspect is huge because that's where 0:12:04.800 --> 0:12:06.640 everyone is expecting all the growth. 0:12:06.360 --> 0:12:07.960 To be nearage. 0:12:07.960 --> 0:12:10.560 Do you like the numbers that we're looking at here, 0:12:10.640 --> 0:12:12.600 I mean, what do you think it would be worth 0:12:12.760 --> 0:12:15.160 if Alphabet had to take it over, had to want 0:12:15.200 --> 0:12:15.880 it to take it over. 0:12:17.240 --> 0:12:21.520 Yeah, this is HubSpot's landing at the high end of 0:12:21.559 --> 0:12:24.959 app software evaluation today it's about twelve times on a 0:12:25.000 --> 0:12:28.080 forward sales. Some of the comparable piers in SMB space 0:12:28.520 --> 0:12:32.320 are half of that multiple. So you know, giving Google's 0:12:32.360 --> 0:12:35.040 balance sheet, they have the appetite to keep pushing the 0:12:35.080 --> 0:12:40.200 valuation to a higher level. The offset here not from 0:12:40.200 --> 0:12:43.680 the numbers but from a perspective of HubSpot management, this 0:12:43.880 --> 0:12:46.160 is really their baby. They're going to have a very 0:12:46.200 --> 0:12:49.840 hard time letting go. You have two active co founders 0:12:50.440 --> 0:12:53.959 and one is still very active in all product development. 0:12:54.040 --> 0:12:56.920 He's the current CTO, So there will be a little 0:12:56.960 --> 0:12:58.960 resistance from the management perspective. 0:12:59.400 --> 0:13:02.040 So real quick on that could somebody else come in 0:13:02.080 --> 0:13:04.000 and make another bid that would make them feel better? 0:13:08.320 --> 0:13:12.520 They probably prefer a Google that's not in CRM software 0:13:12.600 --> 0:13:16.120 versus a salesporce Adobe s a P type of company 0:13:16.160 --> 0:13:21.520 where they would just be rolled up into an enterprise portfolio. 0:13:22.160 --> 0:13:23.719 So if we were to think man deep of how 0:13:23.760 --> 0:13:27.920 something like this could hypothetically be financed, obviously cash not 0:13:28.000 --> 0:13:30.679 a problem for Google. You think this is something they 0:13:30.679 --> 0:13:33.480 would buy and uh, you know, just with cash on 0:13:33.520 --> 0:13:36.559 the balance sheet, would go to a debt or equity market. 0:13:36.840 --> 0:13:41.400 I mean, look if being bore shareholder friendly recently with 0:13:41.440 --> 0:13:45.559 the announcement of a dividend, so clearly they are making 0:13:45.679 --> 0:13:48.920 changes to their capital structure. I wouldn't be surprised if 0:13:48.960 --> 0:13:51.480 they go to the bond market to finance such a 0:13:51.480 --> 0:13:55.319 big acquisition with these rates. Yeah, but I mean Google 0:13:55.440 --> 0:13:56.200 is like triple A. 0:13:56.600 --> 0:14:01.360 Yeah, probably basically cheaper than the government can. 0:14:01.679 --> 0:14:04.559 Yeah, so I don't think financing is an issue, but 0:14:04.880 --> 0:14:08.360 the regulatory scrutiny is going to come no matter, you know, 0:14:08.720 --> 0:14:11.640 I whether they compete in that same space or not, 0:14:11.720 --> 0:14:15.560 given the size of a potential deal. But I think 0:14:15.600 --> 0:14:19.280 they can convince the regulators that this deal makes sense 0:14:19.320 --> 0:14:19.640 for them. 0:14:19.960 --> 0:14:21.880 Can we go to Roadblocks for a second, because maybe 0:14:21.880 --> 0:14:24.320 you also cover this. So my knowledge of Roadblocks is this. 0:14:24.800 --> 0:14:26.880 My daughter comes in in the morning on Saturday and Sunday, 0:14:26.920 --> 0:14:30.080 takes my phone and plays Roadblocks on my phone Warrior cats. 0:14:30.360 --> 0:14:30.960 That's all I know. 0:14:31.040 --> 0:14:32.680 I don't really know what that means. 0:14:32.680 --> 0:14:35.160 She knows to talk to anyone online and she basically 0:14:35.160 --> 0:14:37.160 makes cats fight each other and. 0:14:37.240 --> 0:14:40.240 Get animals and you know, more than based up. 0:14:40.600 --> 0:14:42.120 That's all I know what's going on. 0:14:42.240 --> 0:14:43.160 But she plays a lot. 0:14:43.360 --> 0:14:45.600 And I bet you she's using your credit card to 0:14:45.640 --> 0:14:49.080 make those Roadblocks purchases. 0:14:49.160 --> 0:14:51.720 Alex Face, what are you saying? 0:14:52.080 --> 0:14:53.920 I think Roadblocks wants her to do that. 0:14:54.000 --> 0:14:55.000 But why is the stockdown like. 0:14:55.000 --> 0:14:55.600 Twenty three percent? 0:14:55.840 --> 0:14:58.920 Well so in this case, I mean engagement is what 0:14:59.000 --> 0:15:01.640 drives all these plats and the fact that we are 0:15:02.080 --> 0:15:05.560 going into summer months, it's kind of a natural to 0:15:05.600 --> 0:15:08.880 see some seasonality in terms of engagement coming down. So 0:15:09.000 --> 0:15:13.960 ours spent were three percent below consensus expectations, even though 0:15:14.000 --> 0:15:16.840 the user growth was in line with consensus twenty percent 0:15:16.960 --> 0:15:19.640 user growth. And to my mind, the long term story 0:15:19.720 --> 0:15:23.640 is still intact. They have the content to drive you know, 0:15:23.960 --> 0:15:26.800 kids of that age, and they have the engagement. There 0:15:26.840 --> 0:15:29.600 will always be seasonality, and you know, once in a 0:15:29.640 --> 0:15:33.040 while the stock will react like this because the expectations 0:15:33.040 --> 0:15:35.720 were higher, but there was nothing on the call that 0:15:35.840 --> 0:15:39.760 suggested they're losing their engagement to social media. Yeah, and 0:15:39.800 --> 0:15:42.880 so I think this is the case of market being 0:15:42.920 --> 0:15:45.320 in that mood where if it's not a beat and 0:15:45.360 --> 0:15:47.840 a big raise, your stock is going to get hit. 0:15:47.920 --> 0:15:50.360 And you're seeing that with the robots tough crowd. 0:15:50.760 --> 0:15:53.840 Yeah, you know, this is something that I wanted to 0:15:54.480 --> 0:15:57.640 come back to. We I covered the economy in my 0:15:57.760 --> 0:16:00.880 regular job here at Bloomberg, and we actually we're talking 0:16:00.880 --> 0:16:03.400 to the lead economists of Visa not too long ago, 0:16:03.520 --> 0:16:06.720 and they had some great research out about how the 0:16:06.800 --> 0:16:10.880 gaming economy has really added like so much in terms 0:16:10.880 --> 0:16:14.360 of consumption just by virtue of so many people being 0:16:14.400 --> 0:16:17.320 on computers being exposed to so many more ads and 0:16:17.400 --> 0:16:20.040 buying more things, not just within the game, but you 0:16:20.040 --> 0:16:23.080 know in the broader internet at large, and I don't know, 0:16:23.120 --> 0:16:25.520 it's do you like see the connection with that as 0:16:25.560 --> 0:16:27.800 well in this gaming world and how that's also just 0:16:28.080 --> 0:16:29.680 boosting aggregate consumption. 0:16:30.080 --> 0:16:33.800 I mean, Roadblocks did call out virtual shopping being a 0:16:33.840 --> 0:16:37.080 potential driver for twenty twenty five. So even though no 0:16:37.080 --> 0:16:40.320 one talks about metaverse now, the fact that you know, 0:16:40.480 --> 0:16:43.960 companies are still talking about virtual storefronts and the fact 0:16:43.960 --> 0:16:48.560 that you can do shopping on these kind of platforms 0:16:48.960 --> 0:16:52.280 down the line goes to show that gaming is something 0:16:52.360 --> 0:16:56.400 that everyone fields contributes to this AI wave as well 0:16:56.480 --> 0:16:59.640 as you know, largely e commerce connection in terms of 0:16:59.680 --> 0:17:02.600 you know, the storefronts and how the behavior could change 0:17:02.640 --> 0:17:03.320 down the line. 0:17:03.360 --> 0:17:05.240 What are they sell in there? What can you buy 0:17:05.240 --> 0:17:05.800 on that shop? 0:17:06.000 --> 0:17:08.960 I mean, like that was the whole promise of metawverse, 0:17:08.960 --> 0:17:12.399 that you can replicate malls in the metaverse. And so 0:17:12.600 --> 0:17:15.760 if I'm a Walmart that is setting up a grocery 0:17:16.000 --> 0:17:18.359 or you know, their shop in that kind of a 0:17:18.440 --> 0:17:22.640 virtual storefront, I can drive that kind of experience where 0:17:22.680 --> 0:17:25.080 people feel they are inside them all when they're sitting 0:17:25.080 --> 0:17:26.960 in front of a computer and they can do a 0:17:27.000 --> 0:17:30.000 lot of the shopping, which again was the promise of Meatowors. 0:17:30.040 --> 0:17:32.000 There were probably three four years too early and it 0:17:32.040 --> 0:17:33.119 will take time to build that. 0:17:33.480 --> 0:17:35.280 All right, Naraj, I know you're still here. Sorry, we 0:17:35.320 --> 0:17:37.399 need to get more info on roadblocks, basically, so I 0:17:37.480 --> 0:17:39.919 understand what it actually is. My daughter's playing it. What 0:17:40.000 --> 0:17:42.560 else are you working on right now in your sphere? 0:17:44.280 --> 0:17:47.560 I think there's a big dichotomy with the valuations that 0:17:47.640 --> 0:17:51.919 are occurring in software. You're seeing the SMB companies like 0:17:51.960 --> 0:17:55.480 a HubSpot, which is a little bit moving against the wave. 0:17:55.880 --> 0:17:58.560 The rest of the companies are getting hit because small 0:17:58.560 --> 0:18:02.359 medium business spending is quite constrained, and you're seeing a 0:18:02.400 --> 0:18:07.159 significant downward push on valuation multiples for other companies like 0:18:07.200 --> 0:18:09.960 a Claviow, like a pay Call Pay loss a, a 0:18:10.000 --> 0:18:12.040 whole host of companies and app software. 0:18:12.600 --> 0:18:14.600 All right, guys, I really appreciate it, Thank you so much. 0:18:15.320 --> 0:18:17.639 Can't get any more and can't get better than this. 0:18:17.680 --> 0:18:21.240 You're at Narajhpatel Bloomberg Intelligence senior software analysts joining us 0:18:21.280 --> 0:18:24.040 at man Deep Singh. He is Bloomberg Intelligence a senior 0:18:24.600 --> 0:18:26.360 technology analyst. 0:18:28.359 --> 0:18:32.240 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:18:32.320 --> 0:18:35.400 weekdays at ten am Eastern on Apple card playing Android 0:18:35.400 --> 0:18:38.520 Auto with the Bloomberg Business App. Listen on demand wherever 0:18:38.560 --> 0:18:42.400 you get your podcasts, or watch us live on YouTube. 0:18:43.600 --> 0:18:45.080 Just get back to Warner Brothers Discovery. 0:18:45.080 --> 0:18:46.680 That stock us out by about four tens of one 0:18:46.720 --> 0:18:49.320 percent as Nor was talking about the company reporting sales 0:18:49.320 --> 0:18:53.440 and profit that fell short analyst expectations. Shocker lower TV 0:18:53.520 --> 0:18:57.040 ad sales plus poor performance of video games. So no 0:18:57.080 --> 0:18:59.240 one better to talk to than KEITHR. Mangana than Bloomberg 0:18:59.280 --> 0:19:02.520 Intelligence and Animal on US media. Why is the stock 0:19:02.640 --> 0:19:03.680 up on the earnings? 0:19:05.040 --> 0:19:07.439 Yeah, it was a little bit of a mixed bag 0:19:07.840 --> 0:19:12.439 Alex so definitely ebitdah under pressure as always TV advertising, 0:19:12.440 --> 0:19:14.639 as you just pointed out, But they did have some 0:19:14.720 --> 0:19:17.040 bright spots and I think that's why we're seeing a 0:19:17.040 --> 0:19:19.080 little bit of enthusiasm here. So one thing that they 0:19:19.080 --> 0:19:22.000 did mention was that, you know, Warner Brothers in Discovery. 0:19:22.000 --> 0:19:24.760 It's obviously a merger. They've extracted so far about four 0:19:24.760 --> 0:19:28.280 billion dollars in cost savings. They are now projecting an 0:19:28.320 --> 0:19:31.680 extra one billion dollars in synergies so that I think 0:19:31.760 --> 0:19:34.240 is something that you know, the street is definitely hopeful about. 0:19:34.520 --> 0:19:35.840 And then you have the streaming business. 0:19:35.920 --> 0:19:39.000 Remember this is the HBO business that has now been 0:19:39.040 --> 0:19:43.400 rebranded as Max and we're seeing some some green shoots here, 0:19:43.480 --> 0:19:46.159 so you know, subscriber growth had kind of hit a wall, 0:19:46.720 --> 0:19:49.439 but again we're seeing some reinviegration here. So they had 0:19:49.480 --> 0:19:51.720 about two million subscriber ads and they have a lot 0:19:51.760 --> 0:19:53.960 more momentum going forward because we're going to see a 0:19:54.000 --> 0:19:56.440 lot of overseas market launches. 0:19:56.840 --> 0:19:58.480 But that's not real. The real story. 0:19:58.520 --> 0:20:01.200 The real stories that the segment is actually profitable, and 0:20:01.240 --> 0:20:03.480 that is what has become the new gauge across the 0:20:03.520 --> 0:20:06.360 whole streaming landscape whether the streaming business can be profitable, 0:20:06.400 --> 0:20:09.240 and obviously Warner Brothers showing us how it's done. 0:20:09.600 --> 0:20:12.080 I honestly, you know, I will admit I'm not part 0:20:12.119 --> 0:20:14.480 of the gaming worlds, but I was under the impression 0:20:14.520 --> 0:20:19.240 that this is a pretty strong segment of consumer spending, 0:20:19.280 --> 0:20:21.800 has a lot of people who are very active in 0:20:21.840 --> 0:20:24.040 the gaming world, and it seems like for Warner Brothers 0:20:24.040 --> 0:20:26.960 at least, this came down to one game in particular. 0:20:27.640 --> 0:20:30.159