WEBVTT - The M&A Rush and Japan Weighs In on Chip Curbs 0:00:13.320 --> 0:00:15.720 Caroline Hide of Bloomberg's World tad quarters in New York 0:00:16.160 --> 0:00:18.720 and the Mad Ludlow in San Francisco. This is Bloomberg 0:00:18.800 --> 0:00:22.720 Technology coming up in this our merger. Monday returns after 0:00:22.760 --> 0:00:24.560 a quiet year for M and A in the US 0:00:24.760 --> 0:00:27.960 dealmakers they raised to get tech transactions across the line. 0:00:28.160 --> 0:00:31.240 We break them down and it could be a huge 0:00:31.280 --> 0:00:35.040 win for the Biden Administration's pushed to loosen Beijing's access 0:00:35.240 --> 0:00:39.519 to the semiconductor industry, as Japan weighs joining curbs on 0:00:39.720 --> 0:00:44.400 China and the well unorthodox management styles of Elon Musk 0:00:44.479 --> 0:00:47.040 and Sam bagmun Freed Tech and Media founder and board 0:00:47.080 --> 0:00:52.440 member Arianna Huffington's joins to explain why it's bad for business. First, 0:00:52.760 --> 0:00:55.400 so many news headlines breaking when it comes to M 0:00:55.400 --> 0:00:57.160 and A this Monday. I kind of keep track of them, 0:00:57.160 --> 0:00:59.720 but luckily we know somebody they can Yeah, exactly not 0:00:59.840 --> 0:01:02.000 a nine of course, Microsoft buying that steak in the 0:01:02.040 --> 0:01:05.040 London Stock ex Change. It's been a whirlwind of well 0:01:05.080 --> 0:01:07.840 getting into the week of M and A space. In fact, 0:01:07.920 --> 0:01:10.480 I think it's been to seventy billion dollars of M 0:01:10.480 --> 0:01:12.960 and A rush is coming before this holiday and that's 0:01:13.000 --> 0:01:15.280 just from Sunday into Monday. Let's push it on with 0:01:15.360 --> 0:01:18.600 Bloombergs Katie Ruth, who has been across several of these stories. 0:01:18.800 --> 0:01:21.479 And Katie just talk us through some of the reasoning 0:01:21.560 --> 0:01:25.520 behind the sudden florry of deals. Sure, great to be 0:01:25.600 --> 0:01:28.440 with you. So we see a lot of deals happening 0:01:28.440 --> 0:01:30.960 before the end of the year. Sometimes, um, there's an 0:01:30.959 --> 0:01:34.560 eagerness to wrap things up before the holidays, especially because 0:01:34.560 --> 0:01:38.760 people don't want deals to die before the holidays. So um, 0:01:38.800 --> 0:01:42.160 you know, we had been reporting on the Kopa situation 0:01:42.400 --> 0:01:45.280 for a while. Our understanding is that there had been 0:01:45.319 --> 0:01:48.440 talks for months. But yes, it finally got done. Although 0:01:48.520 --> 0:01:51.360 with Kopa this was part of a wave of take 0:01:51.400 --> 0:01:55.680 privates this year, in particular by Toma looking at enterprise software. 0:01:56.120 --> 0:01:59.840 UM with with the emngine Horizon situation, there had been 0:01:59.880 --> 0:02:03.960 a bidding war between them and Santa Fee, which backed 0:02:04.000 --> 0:02:06.840 out yesterday and then late last night we broke the 0:02:06.880 --> 0:02:10.920 story that Amin came through and made an offer. But yes, 0:02:11.040 --> 0:02:13.919 this is quite the murger Monday. Uh you may imagtion 0:02:14.040 --> 0:02:17.120 The Microsoft also took a stake in the London Stock Exchange. 0:02:18.280 --> 0:02:20.560 It's interesting time a year for all of this to happen. 0:02:20.600 --> 0:02:23.040 It was interesting as well the premium that Tomer Bravo 0:02:23.120 --> 0:02:25.440 is willing to put on Cooper I think seventy seven 0:02:25.760 --> 0:02:30.280 premium over the closing price from the day that you 0:02:30.480 --> 0:02:33.639 guys first reported that that Cooper was up for sales. 0:02:33.680 --> 0:02:37.000 So it's kind of an interesting development. A lot happening 0:02:37.080 --> 0:02:39.760 in four D eight hours. It's a sprint finish to 0:02:39.880 --> 0:02:43.200 end the year. How does that set us up for Katie, 0:02:43.200 --> 0:02:45.040 because I know there are other deals that we're tracking 0:02:45.040 --> 0:02:49.160 as we go forward. Absolutely, so we are expecting, at 0:02:49.240 --> 0:02:52.720 least from what we hear from dealmakers, that will be 0:02:52.800 --> 0:02:55.720 pretty active on the M and A front, particularly with 0:02:55.760 --> 0:02:58.360 tech M and A. I mean, one thing that you know, 0:02:58.800 --> 0:03:00.840 observers of the stock mark it have noticed is that 0:03:01.000 --> 0:03:04.200 TEX stocks are down substantially and it took a while 0:03:04.400 --> 0:03:10.760 for sellers and buyers to agree on price, especially with volatility, 0:03:10.960 --> 0:03:14.920 and so people are expecting that at this point tech 0:03:14.919 --> 0:03:16.600 companies are going to be less likely to be in 0:03:16.680 --> 0:03:19.799 deni all about where they're worth in um. It makes 0:03:19.840 --> 0:03:22.200 it a good time for for buyers to look and 0:03:22.240 --> 0:03:25.919 buy things on the cheek. Bloomberg's Katie Ruth their care 0:03:26.040 --> 0:03:28.239 I can tell you Katie is a jet setter. She's 0:03:28.240 --> 0:03:30.800 on a plane, she's in cities all around the world 0:03:30.919 --> 0:03:33.960 chasing these deals. She's never in one place. It's no 0:03:34.040 --> 0:03:37.000 wonder she's able to keep it all in her mind. 0:03:37.120 --> 0:03:38.960 We have a lot more discussed, Katie, Ruth, thank you 0:03:39.040 --> 0:03:42.080 very much. Let's take into it more with Robert Profuset, 0:03:42.160 --> 0:03:44.920 who chairs the Global m and a practice over at 0:03:45.000 --> 0:03:50.160 law firm. Jones Day, December twelve, Merger Monday, Why why now? 0:03:52.280 --> 0:03:56.320 Well U two has been down compared to one, but 0:03:56.720 --> 0:04:02.440 it's still was five trillion dollars. It was just fabulous. 0:04:02.480 --> 0:04:05.000 And one of the things that always happens in a 0:04:05.160 --> 0:04:08.720 market correction is it takes Katie mentioned it, it takes 0:04:08.760 --> 0:04:12.680 time for buyers and sellers to figure out, well, what's 0:04:12.720 --> 0:04:15.880 the real number? UM? What am I really worth? UM? 0:04:16.400 --> 0:04:20.040 Famous quote by build Parcelves was you are what your 0:04:20.040 --> 0:04:24.159 record says you are. In in Wall Street parlance, that 0:04:24.200 --> 0:04:27.200 means the market dictates what you're worth at that particular 0:04:27.240 --> 0:04:29.920 important time. But it's very hard to adjust. I mean, 0:04:30.000 --> 0:04:34.279 the m Gen deal was interesting, almost done at a 0:04:34.279 --> 0:04:38.599 all time high. For the Target Horizon Tomo Bravo deal, 0:04:38.720 --> 0:04:40.839 it's not surprising. It was difficult to get to a 0:04:40.880 --> 0:04:43.960 deal it even though it's a huge premium to their market. 0:04:44.000 --> 0:04:47.280 Before the story broke um, they were trading at four 0:04:47.360 --> 0:04:50.800 or five times that value just eighteen months ago. So 0:04:50.839 --> 0:04:52.919 it's very hard that one of the big There are 0:04:52.960 --> 0:04:56.000 two issues that happen in these circumstances, and one of 0:04:56.000 --> 0:04:59.080 them is this dislocation on value. What what is it 0:04:59.160 --> 0:05:03.760 really worth? So things are starting to settle out, maybe 0:05:04.000 --> 0:05:07.600 in terms of what the equity markets say, bo, what 0:05:07.600 --> 0:05:09.880 what do we really need with all your years of experience, 0:05:09.880 --> 0:05:11.520 I mean one of the top M and a corporate 0:05:11.520 --> 0:05:14.120 governance lawyers out there, And when you're talking to these businesses, 0:05:14.520 --> 0:05:16.600 what from a macro perspective do they want to see? 0:05:16.760 --> 0:05:19.359 Is it the federal reserve stopping on the hiking front. 0:05:19.680 --> 0:05:22.719 Is it some sort of calmness when it comes to 0:05:22.920 --> 0:05:25.960 overall volatility, Because what's interesting is, yes, we've had a 0:05:26.040 --> 0:05:28.520 sell off overall in the market, but for example, the 0:05:28.560 --> 0:05:32.000 fear gauge, the volatility index hasn't been a real at 0:05:32.000 --> 0:05:35.000 a real elevated level from real perspective, in these discussions 0:05:35.040 --> 0:05:37.719 you're having with people who want to use the huge 0:05:38.440 --> 0:05:40.359 amounts of cash they got to put to work. What 0:05:40.360 --> 0:05:44.640 do they want to see? Well, it's it is stability. Um. 0:05:44.880 --> 0:05:46.919 One of the things about twenty this, this not just 0:05:47.760 --> 0:05:51.520 this most recent period, is I can can more stuff 0:05:51.560 --> 0:05:53.520 happen in a in a short period of time. And 0:05:53.600 --> 0:05:56.760 we've been through I mean, you know we as awesome messed. 0:05:56.760 --> 0:05:59.520 I think ed mentioned it earlier. We went through twelve 0:05:59.600 --> 0:06:03.880 years of virtually of just quiet interest rates, nothing going 0:06:03.920 --> 0:06:05.840 on in that environment, and all of a sudden, it's 0:06:05.839 --> 0:06:08.240 a debate. Is a tenure going to five fifty or 0:06:08.240 --> 0:06:10.400 six hundred? You know? I mean, how does that happen? 0:06:11.120 --> 0:06:13.040 And then we've got we've got war, We've got all 0:06:13.080 --> 0:06:16.359 this stuff. So part of it is just some stability um, 0:06:16.440 --> 0:06:18.520 and businesses need to do that. But when you when 0:06:18.560 --> 0:06:21.320 you think about it from m Gen's point of view, Um, 0:06:21.360 --> 0:06:24.320 you know, horizon as I'm not an expert on this 0:06:24.520 --> 0:06:26.920 on this sort of stuff, but I understand they've got 0:06:26.960 --> 0:06:30.159 some great drugs. Am Gen, like every other big farment, 0:06:30.200 --> 0:06:32.840 has got stuff coming off patent. It's always got to 0:06:32.880 --> 0:06:36.360 replenish itself, and it's got a powerful balance sheet. I 0:06:36.360 --> 0:06:39.240 think it's a billion hundred fifty billion dollar market gap 0:06:39.279 --> 0:06:42.359 come through something and they got They got a bridge 0:06:42.360 --> 0:06:46.400 loan for the deal for twenty eight billion dollars. This 0:06:46.480 --> 0:06:48.360 is in the same market where people say they can't 0:06:48.360 --> 0:06:52.359 borrow money. Well, it's something everybody can have. Some people 0:06:52.360 --> 0:06:54.720 can borrow money. It's just that everybody can't bought for 0:06:54.800 --> 0:06:59.160 all money like they could. So it's a it's it's 0:06:59.160 --> 0:07:01.440 gonna be it's gonna to be a more fundamental market 0:07:01.600 --> 0:07:04.760 rather than a financial market. And and the tomb of 0:07:04.800 --> 0:07:07.120 Bravo deal is important too. For one other thing, there 0:07:07.200 --> 0:07:10.120 is a tremendous amount of private equity that was that 0:07:10.280 --> 0:07:13.880 was raised in the last several years, trillions, literally trillions 0:07:13.880 --> 0:07:16.520 of dollars that's got to be put to use because 0:07:16.520 --> 0:07:19.480 of the way they're economics work. Not that they would 0:07:19.680 --> 0:07:21.680 not that they do deals they think are good deals, 0:07:21.960 --> 0:07:25.160 but there there's some pressure to get that money applied. Well, 0:07:25.360 --> 0:07:28.240 there's some companies out there in the technology space, on 0:07:28.280 --> 0:07:31.160 the biotech space that also have an awful lot of money. 0:07:31.440 --> 0:07:34.960 They're also keen to do deals. But the regulators we 0:07:34.960 --> 0:07:39.000 were just talking last week the prolificence of the prominence 0:07:39.000 --> 0:07:41.800 of the FTC just everywhere, whether it's looking at what 0:07:41.960 --> 0:07:43.800 meth has been doing in terms of money where it's 0:07:43.800 --> 0:07:46.120 looking what Microsoft is buying in the gaming space, how 0:07:46.200 --> 0:07:48.200 much is regulation and way for the people you talk to. 0:07:50.040 --> 0:07:54.360 It's a factor. Um. And certainly like the Microsoft Activision 0:07:54.640 --> 0:07:58.240 deal and and even as Simon and Schuster, much smaller 0:07:58.280 --> 0:08:01.000 deal but kind of important in some way in terms 0:08:01.040 --> 0:08:04.680 of what it says that that deal was blown off 0:08:05.280 --> 0:08:08.400 by any trust reasons. On the other hand, the government 0:08:08.440 --> 0:08:11.280 has been their track record has not been too good 0:08:11.520 --> 0:08:17.000 this last and most recent period, um, United uh, United Health, Alumina, 0:08:17.840 --> 0:08:20.960 that Sugar deal, a lot of things. So just because 0:08:21.000 --> 0:08:23.200 they moved to block a deal doesn't mean it will 0:08:23.240 --> 0:08:26.920 be blocked. Um. But it's certainly a factor. And this 0:08:27.000 --> 0:08:32.880 administration is taking an aggressive view of this, but in 0:08:33.000 --> 0:08:35.760 all candor, I'm not sure it's all that more aggressive 0:08:35.800 --> 0:08:39.280 than than the Trump administration on these things. It's just 0:08:39.360 --> 0:08:41.760 a factor. And one of the realities is, you know, 0:08:41.800 --> 0:08:45.080 the Microsoft deal. I know some people were acting like 0:08:45.120 --> 0:08:47.720 that was surprising. I would have been surprised if they 0:08:47.720 --> 0:08:51.560 would have just said, Okay, it's Microsoft after all. I mean, 0:08:52.720 --> 0:08:54.800 you have to take a look at it. Now, do 0:08:54.800 --> 0:08:56.600 you have to sue I? I I don't know, so 0:08:56.760 --> 0:09:01.480 I don't think that's really changed. But they're like a 0:09:01.480 --> 0:09:03.800 lot of things in this world we're in there, there's 0:09:03.800 --> 0:09:07.240 a little bit more rhetoric. Hey, Bob, let's look at 0:09:07.240 --> 0:09:09.640 this from a slightly different angle. Caroline is talking about 0:09:09.679 --> 0:09:11.320 some of the big names out there that are going 0:09:11.360 --> 0:09:14.200 shopping right because they had a strong balance sheet, because 0:09:14.200 --> 0:09:17.000 they see opportunity. The other side of the table, there 0:09:17.000 --> 0:09:20.400 are those under duress, the four sellers. When we think 0:09:20.440 --> 0:09:24.800 about the market right now, the market, what role does 0:09:24.880 --> 0:09:28.800 the four seller play in global M and A activity? 0:09:29.840 --> 0:09:34.480 Usually it's when it bought things bottom it's the four 0:09:34.559 --> 0:09:39.000 sellers that at start the level of activity. Usually it's 0:09:39.280 --> 0:09:41.240 because of over leverage. That's not going to be the 0:09:41.280 --> 0:09:44.800 case this time. It's it's just a it's just a 0:09:44.840 --> 0:09:46.679 function of the world we've just lived in. In the 0:09:46.760 --> 0:09:50.080 last several years. I mean, there was equity available at 0:09:50.400 --> 0:09:55.199 very aggressive prices for all sorts of ideas, whether they 0:09:55.200 --> 0:09:58.240 were in the e V space or biotech or unime, 0:09:58.760 --> 0:10:02.280 equity was there that those markets are closed. Um, the 0:10:03.760 --> 0:10:06.480 public markets are absolutely close for that sort of stuff, 0:10:06.720 --> 0:10:09.880 and the private markets are very difficult, not like they were, 0:10:10.679 --> 0:10:14.480 and a lot of businesses were were financed based on 0:10:14.520 --> 0:10:17.240 the assumption that equity could be there. Well, it's not 0:10:17.280 --> 0:10:19.320 going to be there, and they can't borrow money when 0:10:19.360 --> 0:10:23.000 they're in the startup mode. Um, So there's gonna be 0:10:23.040 --> 0:10:25.880 a lot of merging um. And I think firms like 0:10:26.440 --> 0:10:28.439 you know, I talking about tom of Brabo, they're in 0:10:28.440 --> 0:10:32.240 the news, they're perfectly well situated for this sort of thing. 0:10:32.880 --> 0:10:34.760 There's just going to have to be a lot of 0:10:34.800 --> 0:10:37.959 activity because some companies are frankly going to get close 0:10:38.000 --> 0:10:41.000 to running out of money. They don't have revenue or 0:10:41.080 --> 0:10:44.080 very much and they got to pay the bills. We 0:10:44.160 --> 0:10:47.040 will see if and when that happens. Bob Profuse at 0:10:47.080 --> 0:10:50.320 Global m H at Giants Day, Thank you very much. 0:10:50.880 --> 0:10:53.480 Now coming up a potential win for the US and 0:10:53.520 --> 0:10:57.319 it's quest to loosen China's access to chip making technology 0:10:57.360 --> 0:11:00.760 is Japan considers similar clubs to the by An administration. 0:11:00.960 --> 0:11:13.559 This is Bloomberg Bloomberg's learned that Japan and the Netherlands 0:11:13.559 --> 0:11:16.439 have agreed in principle to join the US in tightening 0:11:16.559 --> 0:11:20.320 chip making machinery exports to China. That according to sources, 0:11:20.400 --> 0:11:23.880 that is a potential blow to Beijing's technology ambitions. The 0:11:23.920 --> 0:11:26.480 two countries are likely to announce soon that there will 0:11:26.480 --> 0:11:29.520 adopt at least some of the measures the US rolled 0:11:29.520 --> 0:11:33.920 out in October. Stacy razgone Bernstein, Managing director and Senior 0:11:33.960 --> 0:11:38.760 analyst of US Semiconductors SO Stacy Bloomberg. Sources say that 0:11:38.840 --> 0:11:43.600 these two governments are considering curbs on chip making equipment 0:11:43.679 --> 0:11:48.120 for fourteen nanometer or more advanced chips. And I want 0:11:48.160 --> 0:11:50.360 to get straight to you on whether that actually has 0:11:50.480 --> 0:11:54.440 any result or helps the US reach the result that 0:11:54.520 --> 0:11:57.760 it's aiming for, which is too It's stated aim to 0:11:58.040 --> 0:12:01.680 stop the Chinese government having access to technology that could 0:12:01.679 --> 0:12:04.200 be used for military uses. My understanding, and I know 0:12:04.280 --> 0:12:06.520 that you know this face inside and out, is that 0:12:06.600 --> 0:12:10.480 even with twenty eight nanometer, you can use some of 0:12:10.520 --> 0:12:13.559 those chips in military function. So does this actually get 0:12:13.600 --> 0:12:16.440 the result that the US is pushing for this coalition on. 0:12:17.120 --> 0:12:19.439 I mean, it depends on what you're doing. Of course, 0:12:19.480 --> 0:12:23.520 there are military applications that use older generation chips, and 0:12:23.559 --> 0:12:25.800 in fact, many of these applications use all kinds of 0:12:25.880 --> 0:12:30.199 chips from from many types of generations. Um By limiting 0:12:30.320 --> 0:12:33.000 the access to portune nanimators and below, though, you're going 0:12:33.040 --> 0:12:37.440 to limit access to anything that that's really higher performance, 0:12:37.520 --> 0:12:40.360 especially around the compute side of things. That's where you're 0:12:40.360 --> 0:12:42.520 going to see more of that advanced logic. And so 0:12:42.640 --> 0:12:47.199 this will prevent those sorts of chips from from this 0:12:47.440 --> 0:12:51.760 principle from getting into into military hands in China. Stacy meanwhile, 0:12:51.880 --> 0:12:54.640 China as well to dispute over the USX for controls 0:12:54.640 --> 0:12:58.200 with the w t O. Ultimately, how damaging is this 0:12:58.480 --> 0:13:02.920 to China, to Beijing and production chips, it's damaging. I 0:13:02.960 --> 0:13:06.760 mean it stops them. If it holds, it stops them 0:13:06.800 --> 0:13:12.080 from developing their own local ecosystem to design, manufacture and 0:13:12.120 --> 0:13:16.960 build leading edge semiconductors. And they are not prevented from 0:13:17.000 --> 0:13:20.120 developing the CAPE further developing the capability to build older 0:13:20.120 --> 0:13:23.440 generation parts. They can do that, but anything that is 0:13:23.920 --> 0:13:27.280 to be used for advanced computing UM, either from a 0:13:27.320 --> 0:13:30.200 design side or from a manufacturing side, we want to 0:13:30.200 --> 0:13:33.160 stop them, and that is something that's gonna be very difficult, 0:13:33.160 --> 0:13:36.120 if not impossible, for them to build up from a 0:13:36.240 --> 0:13:40.280 from a local standpoint. And now with these new blockades 0:13:40.440 --> 0:13:44.240 from the Netherlands and from Japan UM, this may finally 0:13:44.240 --> 0:13:46.959 close the window on it UM. If if if all 0:13:46.960 --> 0:13:49.240 of this kind of comes together with the US, there's 0:13:49.240 --> 0:13:51.640 not a whole lot that China can do from a 0:13:51.679 --> 0:13:54.320 local standpoint to build that stuff up on their own. 0:13:55.360 --> 0:13:59.080 The reason we're tracking these three companies stacy, three countries, 0:13:59.080 --> 0:14:01.840 sorryes because of the companies. You know that this small 0:14:01.880 --> 0:14:05.760 group of key players land Research, k l A A 0:14:06.200 --> 0:14:09.439 s mL. What is your assessment of what these cubs 0:14:09.480 --> 0:14:13.120 and the plan cubs are doing to impact those companies 0:14:13.120 --> 0:14:16.560 top and bottom lines? So it's important to remember like 0:14:16.559 --> 0:14:18.200 why are they doing this? Why do we care about 0:14:18.200 --> 0:14:21.040 the Netherlands? In Japan? So China already cannot make the 0:14:21.320 --> 0:14:24.800 most bleeding edge semiconductors That requires a tool set that 0:14:24.840 --> 0:14:27.760 has already been banned. UM. However, if you're going to 0:14:27.880 --> 0:14:30.280 sort of like a couple of generations back but still 0:14:30.320 --> 0:14:33.720 pretty advanced, like fourteen nanometers, they're all are There are 0:14:33.760 --> 0:14:36.480 alternatives to the U S companies. UM. You can get 0:14:36.520 --> 0:14:40.400 alternative to to what sm L cells from companies like 0:14:40.480 --> 0:14:43.880 Nikon in Japan. You can get alternatives to what companies 0:14:43.920 --> 0:14:46.880 like a MAP and land cell from companies like Tokyo Electron. 0:14:47.160 --> 0:14:49.040 So there are alternatives, and that's why it's important. I 0:14:49.040 --> 0:14:51.400 think you get everybody on the same page here. Um. 0:14:51.440 --> 0:14:53.840 In terms of the impact on the company's balancies, at 0:14:53.880 --> 0:14:55.560 least to the US ends, they've kind of sized this 0:14:56.360 --> 0:14:58.240 um and there's actually only a few of them that 0:14:58.280 --> 0:15:01.400 are impacted in video. On the ex side, although they've 0:15:01.400 --> 0:15:04.080 been able to develop alternative products that they're selling instead, 0:15:04.080 --> 0:15:06.160 and for now that's closing the gap. And on the 0:15:06.200 --> 0:15:08.520 semi cap side, there was some impact, Lamb said, I 0:15:08.560 --> 0:15:10.320 think it was somewhere between two and a half two 0:15:10.320 --> 0:15:12.680 and two and a half billion dollars a year. Aim 0:15:12.680 --> 0:15:15.080 At was similar, although they think that they can bring 0:15:15.120 --> 0:15:17.040 that down to more like the billion to a billion 0:15:17.080 --> 0:15:20.560 and a half. I think kind of kind of range. Um. 0:15:20.600 --> 0:15:23.640 It's also important to remember though from a from an 0:15:23.640 --> 0:15:26.480 equipment side, it may get less over time because you 0:15:26.520 --> 0:15:30.840 figure if the capacity is needed and it is not 0:15:31.000 --> 0:15:34.600 being built in China, eventually it may be built somewhere else. 0:15:35.200 --> 0:15:37.360 So from the equipment players, this may turn out to 0:15:37.400 --> 0:15:40.360 be somewhat temporary. We may find that all of this 0:15:40.480 --> 0:15:43.800 capacity is not permanently lost, but it will take some 0:15:43.880 --> 0:15:47.160 time and some rejiggering of the supply chains to to 0:15:47.240 --> 0:15:49.480 get it delta elsewhere. Or if it's not built in China. 0:15:50.440 --> 0:15:53.440 You're right about Land Research is an example. I think 0:15:53.440 --> 0:15:55.200 they did say it would impact to the tune of 0:15:55.240 --> 0:15:57.960 two half billion dollars. Caroline and I had Doug Passenger 0:15:58.000 --> 0:16:00.200 on the show actually a couple of weeks ago. He 0:16:00.240 --> 0:16:05.440 did points out that their workarounds essentially UM in terms 0:16:05.440 --> 0:16:10.120 of licensing or alternative products. Is China going to have 0:16:10.160 --> 0:16:14.200 success they're pushing those alternatives. You know that the sanctions 0:16:14.200 --> 0:16:17.240 themselves are fairly targeted about what is and what is 0:16:17.280 --> 0:16:20.120 not banned UM and and the issue is like some 0:16:20.200 --> 0:16:24.080 of the equipment I mean, I mean land Max catchers say, 0:16:24.120 --> 0:16:25.720 and I may be using an atcher or to make 0:16:25.760 --> 0:16:27.880 fortune animator chips and maybe using the same atuer to 0:16:27.920 --> 0:16:30.360 do twenty eight man in your chips. So there's a 0:16:30.400 --> 0:16:32.240 bit of a judgment call, I think in terms of 0:16:32.520 --> 0:16:35.640 how this stuff actually will get to get UM applied. 0:16:35.720 --> 0:16:38.160 But the general characteristics of what is banned and what 0:16:38.240 --> 0:16:41.240 is not are fairly got and dried. I mean, LAMB 0:16:41.320 --> 0:16:44.640 presumably can contrive to develop alternative products. Whether or not 0:16:45.000 --> 0:16:47.720 that's going to be a viable path that I don't know. UM. 0:16:47.800 --> 0:16:49.840 Some of the product companies, at least like an nvidio 0:16:49.920 --> 0:16:52.800 for example. It's not equipment, it's actual chips that have 0:16:52.880 --> 0:16:56.440 been done. They've actually been able to develop alternative products 0:16:56.440 --> 0:16:59.280 that come in sort of just below the threshold, and 0:16:59.320 --> 0:17:01.720 so right now they can sell those. The issue with 0:17:01.760 --> 0:17:04.080 that those of specials you're never going to rise. So 0:17:04.160 --> 0:17:07.439 the gap between what is legal and available to Southern 0:17:07.520 --> 0:17:09.679 China and what is available in the rest of the 0:17:09.680 --> 0:17:11.679 world over time is going to get bigger and bigger 0:17:11.720 --> 0:17:14.439 and bigger, and so eventually, you know, these sort of 0:17:14.440 --> 0:17:17.800 substances may may no longer be suitable for what they're replacing. 0:17:18.240 --> 0:17:20.959 Geer political macro to the micro of how effects all 0:17:20.960 --> 0:17:23.639 these companies you watch. We thank you always on these stories. 0:17:23.680 --> 0:17:35.760 Beency Managing director and senior analyst Stacy Baskin. Ticket Master 0:17:35.920 --> 0:17:40.680 apologizes again, this time involves bad funny. The Wall Street 0:17:40.720 --> 0:17:43.480 Journal reports hundreds of fans who bought tickets were turned 0:17:43.520 --> 0:17:46.800 away from the Artists concert in Mexico City on Friday 0:17:47.000 --> 0:17:51.200 because security officers fought their tickets were Carrol fake. This 0:17:51.359 --> 0:17:54.240 after ticket Master said it's system had been overwhelmed with 0:17:54.280 --> 0:17:58.000 an unprecedented number of people with fake tickets. Mexico's Office 0:17:58.040 --> 0:18:00.800 of the Federal Prosecutor for the Consumer said over the 0:18:00.880 --> 0:18:04.240 weekend that fans with legitimate tickets would be refunded, and 0:18:04.240 --> 0:18:07.760 then it asked ticket Master for a report explaining what 0:18:07.880 --> 0:18:09.320 had happened in a little bit of d h r 0:18:09.400 --> 0:18:12.240 V there, Yeah, a little bit. And I mean talking 0:18:12.280 --> 0:18:15.800 of apologies, I mean some people call some ma'men freed, right, 0:18:15.920 --> 0:18:18.000 he's still on his apology tour as many and dobing 0:18:18.000 --> 0:18:21.119 it at the moment. And it's across well media outlets 0:18:21.160 --> 0:18:24.399 such as ours, it's across social media, particularly such as Twitter, 0:18:24.520 --> 0:18:28.600 and it's actually a pretty heated spaces debate. And you 0:18:28.680 --> 0:18:30.800 and I ed we're testing out spaces as a way 0:18:30.800 --> 0:18:33.480 in which we want to conduct our conversations bringing our audience. 0:18:33.720 --> 0:18:35.480 But I think what stood out for me, and we're 0:18:35.480 --> 0:18:38.119 gonna discuss much more about whether or not sp is 0:18:38.160 --> 0:18:39.920 going to be at the Senate hearing or indeed the 0:18:40.000 --> 0:18:42.600 House hearing, but the fact that we are getting our 0:18:42.680 --> 0:18:47.000 news from Twitter spaces, that this idea of citizen journalism 0:18:47.040 --> 0:18:48.920 it's really coming to a fault, and in large part 0:18:48.960 --> 0:18:52.160 it's sort of spirited by crypto. Yeah, then you asked 0:18:52.160 --> 0:18:54.639 the question about SPF or why is he going to 0:18:54.680 --> 0:18:57.800 go or not go as a case byb before Congress 0:18:57.840 --> 0:18:59.600 and Clappers or Hill, when you can get all the 0:18:59.640 --> 0:19:01.960 information you need from him live on any given social 0:19:01.960 --> 0:19:04.720 media platform. I think that's the frustration of these lawmakers 0:19:04.720 --> 0:19:07.560 have as well. Yeah, and in some part though, I mean, 0:19:07.600 --> 0:19:10.160 I know people have been very critical of lawmakers when 0:19:10.160 --> 0:19:14.399 it comes to their real understanding acute technological understanding of 0:19:14.480 --> 0:19:17.280 social media, for example, And we've had Mark Zuckerberg and 0:19:17.280 --> 0:19:19.240 the likes dragged up in front of them. What about 0:19:19.240 --> 0:19:22.040 the will understanding in crypto two? And what about the 0:19:22.040 --> 0:19:24.440 people that are actually asking questions on these Twitter spaces. 0:19:32.880 --> 0:19:35.399 Welcome back to Bloomberg Technology. I'm Karine Hide in New 0:19:35.440 --> 0:19:38.040 York with Eddudlow in San Francisco, and there's a day 0:19:38.040 --> 0:19:41.320 where tech stalks we're actually pushing higher like that. That's ed. 0:19:41.400 --> 0:19:43.640 But let's talk about one name that's kind of languishing 0:19:43.640 --> 0:19:46.440 at the moment. Yeah, and it's Tesla. And it's really 0:19:46.440 --> 0:19:49.760 hard to understand why there's no specific news drive and 0:19:49.800 --> 0:19:51.800 not at least this Monday, the stock down more than 0:19:51.880 --> 0:19:54.959 six percent, trading at a three week low. Yes, there 0:19:54.960 --> 0:19:56.960 are a lot of headlines over the aggregate of a 0:19:57.000 --> 0:20:00.760 week right, we talked all about the pullbacking production in Shanghai. 0:20:01.040 --> 0:20:04.240 We talked about the Bloomberg News report that Elon Musk 0:20:04.359 --> 0:20:07.520 is considering switching some of the unsecured debt for margin 0:20:07.600 --> 0:20:10.560 loans in his financing of the Twitter deal, which would 0:20:10.560 --> 0:20:13.000 be backed by Tesla stock. That could be bringing some 0:20:13.080 --> 0:20:16.280 downward pressure. Then there's also Elon Musk himself, what he's 0:20:16.280 --> 0:20:19.320 saying on Twitter, his actions over the weekend, which I 0:20:19.359 --> 0:20:20.399 know we're going to go into. I just want to 0:20:20.440 --> 0:20:22.919 bring up this chart really quickly and get into some technicals. 0:20:23.080 --> 0:20:26.120 We don't often do this, but it's interesting. From its 0:20:26.800 --> 0:20:30.800 one high, there's this sort of clear downward channel trend 0:20:30.840 --> 0:20:34.600 for Tesla stock, where on multiple occasions it's tested key 0:20:34.680 --> 0:20:38.000 levels of support, key levels of resistance, but it's still 0:20:38.040 --> 0:20:42.280 continues this downward slide. And it's really hard to pick 0:20:42.320 --> 0:20:45.520 out why a lot of analysts don't necessarily agree on 0:20:45.560 --> 0:20:49.240 what is supporting or not supporting the stock as the case. 0:20:49.320 --> 0:20:52.480 Maybe you know, when we've reported about questions on demand 0:20:52.480 --> 0:20:55.159 from China, a lot of the Tesla retail investors and 0:20:55.160 --> 0:20:57.119 fans pushed back and say that can't be the case. 0:20:57.400 --> 0:21:00.320 But we've also reported that Tesla's cut prices. So question 0:21:00.400 --> 0:21:01.520 I have, and I know we're going to get into 0:21:01.560 --> 0:21:03.320 this with our guests in the moment, is how much 0:21:03.440 --> 0:21:05.480 is it just Elon Musk? Right? Is there a key 0:21:05.480 --> 0:21:09.199 man risk element? Is there a distraction element? Retail investors 0:21:09.240 --> 0:21:11.440 have been worried about that head and yeah, we want 0:21:11.440 --> 0:21:13.560 to dig into it. Want to dig into Elon Musk's management. 0:21:13.600 --> 0:21:16.560 Start a little bit more with someone who has built businesses, 0:21:16.640 --> 0:21:19.000 helped steer them on boards, and now is focused on 0:21:19.080 --> 0:21:22.640 behavioral change and sign them to about Arianna Hufington's She says, 0:21:22.680 --> 0:21:24.600 in fact that Elon Musk's management style there is an 0:21:24.640 --> 0:21:27.600 example of poor business strategy after he told employees to 0:21:27.640 --> 0:21:30.720 embrace hardcore work experience at Twitter. In an op ed 0:21:30.800 --> 0:21:33.720 for The Information, Havington writes that worker mental health is 0:21:33.720 --> 0:21:36.640 more important than ever as an essential part of business strategy, 0:21:36.920 --> 0:21:40.960 proving not only employee productivity, but also recruitment and retention. 0:21:41.080 --> 0:21:45.280 She labels Musk burnout denier. Of course, it's Huvington has 0:21:45.320 --> 0:21:48.760