Speaker 1: From the heart where innovation, money and power Collie in
Speaker 1: Silicon Vallet NBN. This is Bloomberg Technology with Caroline hide
Speaker 1: and Ed Ludlow.
Speaker 2: Imed Ludlow in San Francisco. Caroline hides off today this
Speaker 2: is Bluemberg Technology. Our top stories. Full earnings coverage ahead
Speaker 2: as Apple loses its three trillion market cap crown amid
Speaker 2: tepid demand for iPhone plus Amazon seeing strong revenue growth
Speaker 2: even as the e commerce giant reigns in that spending
Speaker 2: under CEO Andy Jasse and Nikola replacing its CEO after
Speaker 2: less than a year of running. The electric truck maker
Speaker 2: will bring you the details on why and a new
Speaker 2: familiar face taking the wheel. It is our top story.
Speaker 2: Apple and Amazon reporting quarterly earnings. Look at the investor response.
Speaker 2: Apple down three percent. That means its market cap is
Speaker 2: now below three trillion US dollars. It has lost that
Speaker 2: three trillion market cap crown. The story here is about
Speaker 2: executives talking iPhone acceleration into the fiscal fourth quarter ending
Speaker 2: in September. Services continuing to be strong, but double digit
Speaker 2: declines in wearables and iPad. The story is it technology
Speaker 2: and a lack of upgrades or new generation platforms in
Speaker 2: the quarter gone, are we waiting for iPhone fifteen. Let's
Speaker 2: get right to Apple and bring in juliask principle analysts
Speaker 2: at Forster, Tim Cook's talking about weakness in the smartphone
Speaker 2: market in the US but strengthen India and China. What
Speaker 2: were the main stories for you? How are this quarter's earnings.
Speaker 3: So specific to his smartphone? The main stories are is
Speaker 3: that Apple did well in China. They did well in
Speaker 3: new markets that are traditionally dominated by Android, and they
Speaker 3: had more and they had a record for the number
Speaker 3: of people who switched from Android to iOS. The challenge
Speaker 3: with the smartphone market is just as you said, it
Speaker 3: is a mature market. When you look at US online adults,
Speaker 3: ninety five percent of them own a smartphone. The devices
Speaker 3: are very expensive, the devices are amazing, The upgrade cycles
Speaker 3: are slower. It's not like ten years ago where we
Speaker 3: all bought a new phone every two years.
Speaker 4: It is.
Speaker 3: These phones are serving consumers now like PCs, for three,
Speaker 3: four and even five years at a time. So it's
Speaker 3: going to be tough. I don't think it's a surprise,
Speaker 3: but it's going to be like this because the market's mature.
Speaker 3: Unless you go out and find new customers and break
Speaker 3: into some new markets.
Speaker 2: Julie, I'd like to do some mental arithmetic with you,
Speaker 2: which you open to doing that with me? Okay, let's try.
Speaker 2: Apple said it has an installed base of two billion
Speaker 2: devices globally. They also said they had one billion paid
Speaker 2: subscribers now, but clearly there is a big pocket of
Speaker 2: Apple device uses around the world that are not paying
Speaker 2: for an Apple service. They're using what's available for free.
Speaker 2: Are you able to work out there for the path forward,
Speaker 2: how Apple and how many of those uses Apple can
Speaker 2: convert to paying for a service.
Speaker 3: Well, I think ed one of the tricks in the
Speaker 3: numbers is is right, there's a couple of things that
Speaker 3: we know about Apple users. One, they're relatively affluent compared
Speaker 3: to Android owners. And the second thing is is we
Speaker 3: know that they own multiple devices. It would not be
Speaker 3: uncommon in markets like the United States for someone to
Speaker 3: own a laptop, a tablet, a smartphone, and even a
Speaker 3: smart watch. And so we have two billion active devices.
Speaker 3: That doesn't mean we have two billion owners, right, We
Speaker 3: have fewer owners because each person owns multiple devices. But
Speaker 3: the strength in that story, I think comes back to
Speaker 3: the you know the arguments that you were making earlier
Speaker 3: about the services. The more devices I own and the
Speaker 3: more valuable the services become to me because they work
Speaker 3: across all of my devices. And yeah, I can continue
Speaker 3: down that path or we can shift here. Their services
Speaker 3: story is a very strong one, and they're laying they've
Speaker 3: been laying the groundwork for years and years for that
Speaker 3: disservices revenue to continue to build and build and build
Speaker 3: with video with audio. Right, they've got almost twenty percent
Speaker 3: of the United States paying for music paying for video.
Speaker 2: Go ahead, Julie, let's be constructive then and say what
Speaker 2: was exciting for you based on what was discussed on
Speaker 2: the call or what they put in the earning statement.
Speaker 3: So what was exciting for me? I would say one
Speaker 3: was the was the services number was up right, and
Speaker 3: that speaks to the power of the ecosystem. The second
Speaker 3: thing that's always exciting for me is looking at the
Speaker 3: wearables market. Right. You know you talked about in your
Speaker 3: opening that the smartphone is the device. It is the
Speaker 3: device that Apple counts on, and we've all been talking
Speaker 3: about will there be something that comes after the smartphone
Speaker 3: and places it and we haven't seen that yet. But
Speaker 3: what we are looking at right forty billion dollars and
Speaker 3: the wearables in the whole market. Thirty five percent of
Speaker 3: US online adults own a smart watch. Now it is
Speaker 3: outpaced fitness wearables. So you're in a vision pro that
Speaker 3: could come up in time. So I think that part
Speaker 3: of it is interesting, right, and Apple continues to lay
Speaker 3: the groundwork here. We have always said that a smart
Speaker 3: watch will have more utility and become more valuable when
Speaker 3: it's my payment mechanism, when it's my health mechanism, when
Speaker 3: it's my identity mechanism, and when we look at all
Speaker 3: of the states trying to move my driver's license, my
Speaker 3: insurance onto the Apple wallet, that translates to the watch,
Speaker 3: and those things are going to be more valuable. So
Speaker 3: that's the second thing that I would at.
Speaker 2: Well, I just want to jump in me. Let me
Speaker 2: take a moment, Juli, really quick, because I'm looking at
Speaker 2: these beautiful images of Vision Pro and it takes me
Speaker 2: back to being right exactly and being back at WW
Speaker 2: or you say it's amazing, Okay, but did we learn
Speaker 2: and try them on?
Speaker 3: You've had them all. You're like, wow, that's that's something.
Speaker 2: And then what you're one of a small group then,
Speaker 2: But did you hear anything last night that gives you
Speaker 2: a better sense of how wide the rollout of this
Speaker 2: vision pro is going to be globally.
Speaker 3: No, you know this is going to be top initially
Speaker 3: on right. You know from what I've heard, they're still
Speaker 3: you know, working through you know, getting the product ready
Speaker 3: for market. I mean they're still caring nearly like a
Speaker 3: thirty five hundred dollars price point, right, I mean that
Speaker 3: may be mid price for a computer, but it's not
Speaker 3: mid price for a consumer device. So that's I think
Speaker 3: we're going to be in a weight and see situation
Speaker 3: there in twenty twenty four. The technology impresses, the ecosystem impresses,
Speaker 3: you know what their rollout is going to be. Right,
Speaker 3: that's a different question. Well that's a bit of a
Speaker 3: wait and.
Speaker 2: See Julia Aska forres So the key analysis on Apple,
Speaker 2: those shares down three percent, the three trillion market cap
Speaker 2: crown gone, thank you very much. The other big earning
Speaker 2: story is Amazon joining us as Melissa Verdict Packview president
Speaker 2: and co founder. Amazon completely the opposite beating across the board.
Speaker 2: Investors cheering those results. What I found so interesting is
Speaker 2: the core business Amazon dot com is seeing growth, but
Speaker 2: they're also getting better at making money in the more
Speaker 2: profitable areas of the e commerce business, namingly advertising and
Speaker 2: selling services today's independent merchants. What was your sort of
Speaker 2: analysis of that part of the business.
Speaker 5: Yeah, I mean, they had their biggest earning speed since
Speaker 5: Q four twenty twenty and basically every single area they
Speaker 5: did a good job. The two drivers AWS and ADS
Speaker 5: were really up. Advertising This business was on fire this
Speaker 5: quarter over ten point six billion dollars. And we have
Speaker 5: a benchmark report at at TAKU where we look at
Speaker 5: quarter reporter return on advertising s then and that was
Speaker 5: also really strong enough this quarter, So they fow great
Speaker 5: results for advertisers with ADS. They also have implemented some
Speaker 5: new new generative AI capability and then also they have
Speaker 5: Amazon Marketing Cloud and Amazon Stream which offers a lot
Speaker 5: of great data analytics, real time optimization, and that has
Speaker 5: really helped fuel advertising spending this part.
Speaker 2: Listen, let's zero in on AWS because at the end
Speaker 2: of the day, it's the majority of operating income. What
Speaker 2: did you learn about the rest of the year, how
Speaker 2: AWS is going to continue to grow? Because if we
Speaker 2: go back to Microsoft just a week ago, we were
Speaker 2: a bit concerned about this broad market.
Speaker 5: Yeah, I mean all the eyes were on AWS this quarter.
Speaker 5: They actually were at twelve percent, which last where they're
Speaker 5: sixteen percent. So it's just been a declining kind of
Speaker 5: increase core recorder, but they still be I think the
Speaker 5: biggest challenge has been our companies. Companies have been cough
Speaker 5: cutting and that AWS has has been cut. Even our
Speaker 5: own company has been looking stringently at how do we
Speaker 5: operate most efficiently and AWS is kind of a target.
Speaker 5: But Anty Jasse spent a long time on the investor
Speaker 5: call yesterday talking about how a TOWS has stabilized, how
Speaker 5: consumer you know, companies are in we're increasing their workloads,
Speaker 5: and then he also spent a lot of time about
Speaker 5: all the generative AI capabilities that they're launching, code Whisper,
Speaker 5: Bedrock and the use cases around them.
Speaker 6: So those are and then look, yeah, go ahead, Sorry.
Speaker 2: No, I just want to jump in on that point
Speaker 2: because how Andy Jesse described that though, was Amazon taking
Speaker 2: the first few steps in a marathon. And I think
Speaker 2: we still have the question how does Amazon make money
Speaker 2: on the basically enterprise and cloud focused AI offering? Do
Speaker 2: you have an answer to that?
Speaker 5: You know that it's a tough one. Like Generative AI
Speaker 5: isn't actually a big investment from Amazon, so they're going
Speaker 5: to have to invest a lot of money and resources
Speaker 5: to build that out. But the idea is is that
Speaker 5: they can grab market share and have much more of
Speaker 5: an attractive offering because their product is so amazing, it's
Speaker 5: much more efficient, helps it helps customers use it. So,
Speaker 5: you know, think all eyes are on this. Microsoft and
Speaker 5: Google I think they were twenty six and twenty eight
Speaker 5: percent last quarter, while Amazon was twelve percent in cloud.
Speaker 5: But those are on smaller basis. But I think that's
Speaker 5: that's definitely something to look at because others are you know,
Speaker 5: is their markets You're going to grow.
Speaker 2: You know, what's the reaction, Melissa, very very quickly, what
Speaker 2: do you give Andy Jesse on his quarterly report? Car A,
Speaker 2: B or C for the job he's done.
Speaker 6: He's done an A.
Speaker 5: You know, he's all his cost cutting measures over the
Speaker 5: last two years. He's really improved efficiency. Uh, the warehouse opportunity.
Speaker 5: They've moved from a national to regionalize operation. That was huge,
Speaker 5: and they're getting shipments to customers factor that that has
Speaker 5: been a huge improvement. So I think he's done a
Speaker 5: great job and this quarter is a result of the
Speaker 5: last two years.
Speaker 2: Less aboutic PAC view president and co founder, and all
Speaker 2: things Amazon, Thank you so much. Now coming up here
Speaker 2: on blue technology, sports and streaming. What one Internet TV
Speaker 2: providers strong earnings means for the future of streaming sports
Speaker 2: on platforms. We're going to talk to the CEO of
Speaker 2: Fubo TV. Next. Another big, big story. We're watching shares
Speaker 2: of Nikola down twelve percent now. Steve Gersky who led
Speaker 2: the spack that took them public in June twenty twenty.
Speaker 2: He's been chairman since September of twenty twenty. He now
Speaker 2: is in the CEO job. Michael Loscheller is out for
Speaker 2: personal reasons. We will bring you the details later in
Speaker 2: the show. This is Bloomberg, all right, going viral. Everyone
Speaker 2: on social is talking about the FIFA Women's World Cup.
Speaker 2: Searches for the tournament trending on Google as it heats
Speaker 2: up into the knockout stages. Fierce rival Sweden and the
Speaker 2: United States will meet once again in the round of sixteen,
Speaker 2: but this time the stakes were even higher. The US
Speaker 2: is vying for a third consecutive World Cup, but were
Speaker 2: nearly eliminated by Portugal. Sweden won all of their group
Speaker 2: matches this World Cup have outscored opponents nine goals to one.
Speaker 2: All right, speaking of games and where you can find them,
Speaker 2: Fubo TV exceeded North American guidance in the second quarter,
Speaker 2: achieving three hundred and five million dollars in revenue. That's
Speaker 2: up forty one percent year on year. The internet TV
Speaker 2: providers sports first live streaming model, making progress towards profitability
Speaker 2: in twenty twenty five. Here tell us all about it,
Speaker 2: Fubo TV's CEO, David Gandler. You know, I find Fubo
Speaker 2: TVs so interesting. You know, people call you a streaming platform,
Speaker 2: but you're essentially a software platform to get gone and
Speaker 2: get other people's streams and content. What was the big
Speaker 2: driver for you in recent financial performance?
Speaker 6: Yeah, well, I think the above. The company had a
Speaker 6: very clean print.
Speaker 7: We as you said, we grew revenues up over forty percent,
Speaker 7: we grew subscribers over twenty percent. We increased our average
Speaker 7: revenue per user by thirteen percent. Ad revenue increased by
Speaker 7: about five percent year over year. So across the board,
Speaker 7: I think we've operated very well, and also we've been
Speaker 7: very measured and disciplined as it.
Speaker 6: Relates to our cost structure, and as you.
Speaker 7: Can see from our bottom line, we've improved by about
Speaker 7: forty million dollars. So everything that the team has been
Speaker 7: focused on over the last six months is certainly starting
Speaker 7: to come to fruition.
Speaker 2: Let's host about the fief of Women's World Cup. How
Speaker 2: is that driving things to you right now?
Speaker 7: Yeah, Well, as you know, our DNA is soccer, we
Speaker 7: launched Fubo as a football or soccer platform. Women's World
Speaker 7: Cup is performing quite well. To see increasing traction, double
Speaker 7: digit traction as the tournament progresses, and as you know,
Speaker 7: we're still sort of i would say, relatively early in
Speaker 7: the tournament. So we're looking forward to continuing to drive
Speaker 7: viewership for the Women's World Cup and of course the
Speaker 7: women's national team.
Speaker 2: You know we've discussed here on Bloembag technology. Frankly, like
Speaker 2: turmoil in sports TV, the industry faces a lot of
Speaker 2: long term questions on profitability but also cultural technological questions.
Speaker 2: Outline for me, David, how you see people consuming sports
Speaker 2: in the future, the platforms, the devices.
Speaker 7: Yeah, I think you hit the nail on the head.
Speaker 7: It's a very very complicated industry. With media companies and
Speaker 7: physical platforms sticks.
Speaker 6: Like Roku and Amazon, and then you have.
Speaker 7: Companies like Fubo, which are software based, platform agnostic that
Speaker 7: allow people to move from device to device in any
Speaker 7: room in the house seamlessly, giving them access to their
Speaker 7: favorite teams and other content through one single app. So
Speaker 7: I think we're positioned for growth in a space where
Speaker 7: you're going to see i would say significant competition from
Speaker 7: the likes of connected TV players that you're very familiar with,
Speaker 7: like Amazon and Roko. But at the same time, you
Speaker 7: see the increase in competition from you know, manufacturers like
Speaker 7: Samsung and Visios. So we think that we're going to
Speaker 7: continue to increase the leverage that we have as we
Speaker 7: are driving significant eyeballs across all of these platforms, and
Speaker 7: you know, again we're aggregating content for consumers and making
Speaker 7: sure that they're able to remove a lot of the
Speaker 7: friction and fragmentation that they have to deal with on
Speaker 7: a daily basis.
Speaker 2: David, to what extent does cable regional sports networks die.
Speaker 7: Well, as you know, we have differentiated versus other platforms
Speaker 7: in the United States.
Speaker 6: Due to our sort of i would say our local footprint.
Speaker 7: We believe that there is a primacy in sports, and
Speaker 7: more so even in local sports, which has been a
Speaker 7: really strong driver of viewership for us. But you know,
Speaker 7: we have relationship, a great relationship with Diamond Sports, which
Speaker 7: controls the majority.
Speaker 6: Of the original sports that I've spent.
Speaker 7: At the same time, we continue to build solid relationships
Speaker 7: with the league, particularly with Major League Baseball given that
Speaker 7: we're in season, and we've also made a number of
Speaker 7: marketing announcements with teams across basketball and baseball to continue
Speaker 7: to drive more awareness for their video.
Speaker 6: Product on our platform.
Speaker 7: So you know, at the moment, we're confident in both
Speaker 7: those directions.
Speaker 2: David quickly, the Virtual Cable Bundle isn't working for anyone else,
Speaker 2: it is for you. What's your secret?
Speaker 6: You know, I always like to say comes down to product.
Speaker 7: I think we do a really good job surfacing a
Speaker 7: lot of the content that people like.
Speaker 6: We do it in a very premium user experience.
Speaker 7: And you know, historically we've been known for really spending
Speaker 7: a lot of time developing innovative features, and you know,
Speaker 7: we've been first to market on things like four K
Speaker 7: and multiview, which is now something that other services including
Speaker 7: Apple has now launched.
Speaker 6: Actually, I think it was weeks ago that they've begun
Speaker 6: to roll that out.
Speaker 7: But now we're focused on video a I features and
Speaker 7: being able to really tap into the most exciting moments
Speaker 7: in a very personalized way, in a discrete fashion for
Speaker 7: each of our users. So that's sort of the area
Speaker 7: where I think we'll continue to focus.
Speaker 2: Right Fubo tvco Dave Agandler good to catch up Airbnb,
Speaker 2: reporting a slower pace of growth in a number of
Speaker 2: nights books. His prices for lodging remain despite that, shares
Speaker 2: now moving higher. Kind of chopped around in Friday morning session,
Speaker 2: joining us now Tom White DA David's an analyst who
Speaker 2: has a by rating on Airbnb a one hundred and
Speaker 2: sixty two dollars price target. You're billing this is a
Speaker 2: solid quarter, constructive guidance, and I think in a little
Speaker 2: bit we can talk about some of the new tech
Speaker 2: that they product that they've hinted as well. But what
Speaker 2: is the big picture story Tom for Airbnb, because we've
Speaker 2: seen how there's like Expedia, for example, give worrying signs
Speaker 2: about people's travel habits.
Speaker 8: Yeah, look, so you know Airbnb is it's not a
Speaker 8: cheap stock, it's got a high valuation, and with high
Speaker 8: valuations come pretty high expectations for earnings. But you know,
Speaker 8: I think they did just enough this earnings print to
Speaker 8: kind of get people excited still about the story, maybe
Speaker 8: toned down some of the chatter about, you know, the
Speaker 8: inevitable sort of normalization of the travel landscape and people
Speaker 8: kind of going back to traditional hotels and sort of
Speaker 8: more traditional travel patterns and maybe a little bit less
Speaker 8: of the vacation rental type stuff.
Speaker 6: So on top of that, they also.
Speaker 8: Talked about some interesting new kind of product opportunities and
Speaker 8: kind of growth unlocks, if you will, for twenty twenty four,
Speaker 8: which I think the market's responding well to.
Speaker 2: Wait, shift those heads quote your eye to mist.
Speaker 6: Well, it's funny.
Speaker 8: I mean, we've been doing a lot of work following
Speaker 8: the experiences space, sort of the tours and attractions space,
Speaker 8: so it's easy to kind of point to that as
Speaker 8: an exciting category. I think what's interesting about what Airbnb
Speaker 8: calls experiences is that it's kind of this enablement of
Speaker 8: a new product, and in a lot of ways it's
Speaker 8: similar to what Airbnb did with the inventory in its
Speaker 8: lodging accommodation right and enable this entire new class of
Speaker 8: travel product, this entire new class of accommodation product, and
Speaker 8: with experiences, they have an opportunity potentially do the same thing.
Speaker 8: But there's also other other things to do. Advertising for hosts,
Speaker 8: a way for hosts to remote themselves more in short order,
Speaker 8: that could be a nice little revenue tail win for Airbnb,
Speaker 8: and also news services for guests. So think about, you know,
Speaker 8: trying to more better professionalize, if you will, kind of
Speaker 8: the guest experience, make it a little bit more hotel
Speaker 8: like in some ways. I think those are the types
Speaker 8: of things that Airbnb is kind of thinking about testing,
Speaker 8: and hopefully we'll hear more about that come into course.
Speaker 2: Tom quickly does does Airbnb still have a technology advantage
Speaker 2: over the kind of every other offering that's out there
Speaker 2: in the short term rental space.
Speaker 1: Yeah.
Speaker 2: Look, you know, it's.
Speaker 8: Hard to point to any one single technology feature, but
Speaker 8: I think kind of the pace and the flurry of
Speaker 8: innovations and product upgrades that these guys make quarter after quarter,
Speaker 8: we think that they are still solidly ahead, particularly when
Speaker 8: it comes to kind of the host experience. They've made
Speaker 8: a lot of efforts to streamline the onboarding of hosts
Speaker 8: and for a first time host, making it a lot
Speaker 8: easier just to get your house or your room up
Speaker 8: on the platform and available to book. They've recently rolled
Speaker 8: that new futures to help host understand pricing and do
Speaker 8: analytics around what's the best level to price their inventory.
Speaker 8: So short answers, we think they're still solved the competition,
Speaker 8: but they've got.
Speaker 2: To keep walking on it all right, Tom White, Da Davidson,
Speaker 2: A long earnings week for you and I both, thank
Speaker 2: you very much. Welcome back to Bluembow Technology, Ed love
Speaker 2: loow here in San Francisco. There's a number of stories
Speaker 2: within the earnings print that we have not discussed that
Speaker 2: stick with Apple. Bring in Bloomberg's Mark German. The one
Speaker 2: idea that you and I talked about last night, Mark
Speaker 2: was Apple talking about comps with the year earlier an
Speaker 2: iPad and then also currency headwinds. You're not buying it, why.
Speaker 9: Well, First of all, in terms of the iPad decline, right,
Speaker 9: that's a twenty percent decline. It's one of the biggest
Speaker 9: declines in the history of the iPad. And what they're
Speaker 9: doing is they're trying to partially blame it on a
Speaker 9: comparison to the launch of the m one iPad Air.
Speaker 6: That iPad Air came out last March.
Speaker 9: I'm not entirely sure how many sales of the iPad
Speaker 9: that actually drove, right, so I think it's not a
Speaker 9: totally fair comparison. I think the bigger picture is the
Speaker 9: iPad compared to the latest Max is simply not as
Speaker 9: compelling as it used to be. I think more consumers
Speaker 9: are going to the Mac. The pricing is very strong,
Speaker 9: the fifteen inch MacBook Air is fantastic, the chips in
Speaker 9: the latest MacBooks are terrific, and then combined with that,
Speaker 9: consumers are noticing that changes to the iPad Pro, in particular,
Speaker 9: that's the highest revenue driving iPad, have been very light.
Speaker 9: That device has not received a redesign in over five years,
Speaker 9: or close to five years since it was revamped in
Speaker 9: twenty eighteen. I'm told there'll be much bigger changes to
Speaker 9: the iPad pro in the Spring and OLED display a
Speaker 9: revamped design, some new charging capabilities, so that's going to
Speaker 9: be pretty significant, and consumers may be holding out for
Speaker 9: that big revamp.
Speaker 2: The story is that weakness in iPhone in the quarter
Speaker 2: gone did not do enough to offset a record quarter
Speaker 2: for services revenue. What else are we expecting based on
Speaker 2: what Luke of Maistreet, the CFO had to say going
Speaker 2: into the fiscal fourth quarter, which is the period ending September.
Speaker 9: Yeah, what the CFO said is he gave guidance on
Speaker 9: three items. The first was that the performance in terms
Speaker 9: of the growth or lack thereof, will be consistent between
Speaker 9: Q three and Q four, So that means you can
Speaker 9: expect a Q four decline of about one and a
Speaker 9: half percent, right, okay, so that's not awful, but that
Speaker 9: is going to be the fourth quarter in a row
Speaker 9: where Apple declines. That's the first time this has happened
Speaker 9: since two thousand and one. The second thing he said
Speaker 9: is that iPhone revenue growth as well as services would accelerate.
Speaker 9: So that's going to mean that you're going to see
Speaker 9: more growth for services and the iPhone in the fourth quarter.
Speaker 9: So that means the iPhone had Q three decline of
Speaker 9: about two and a half percent, it'll be less than
Speaker 9: that or maybe we'll see some growth thanks to the
Speaker 9: iPhone fifteen. The third thing he said is that the
Speaker 9: iPad and Mac would continue their declines and they would
Speaker 9: both fall double digit percentage points. Now that makes sense
Speaker 9: given that new max are not coming out until later
Speaker 9: in the quarter, right, They're not coming out or later
Speaker 9: in the year. They're not coming out until the first quarter.
Speaker 9: And I'm not expecting any major iPad news until calendar
Speaker 9: twenty twenty four, which is also in the fiscal quarter
Speaker 9: after Q four.
Speaker 2: Bloomberg's Mark Guban not just getting the innings breakdown, but
Speaker 2: weaving in his lacest reporting as well and all things Apple,
Speaker 2: thank you very much. The other top story is Amazon
Speaker 2: joining us now Bloomberg Spenser Sofa out of Seattle. Wow,
Speaker 2: the Andy Jesse effects. He has really pulled it out
Speaker 2: the bag. What for you is the biggest takeaway, Spencer, Well.
Speaker 10: It's hard to narrow to any one one particular thing.
Speaker 10: It was more that everything was was, you know, kind
Speaker 10: of firing on all pistons. So if we look back
Speaker 10: to the first quarter, analysts were worried because they divulged
Speaker 10: at that time that cloud sales continued to decelerate, that
Speaker 10: they were seeing the softness. So a big takeaway from
Speaker 10: this print is that investors kind of expect that cloud
Speaker 10: computing sales for Amazon or at kind of the bottom
Speaker 10: of the trough and they're going.
Speaker 6: To kind of keep you know, could come back.
Speaker 10: The other thing is on the poor e commerce business,
Speaker 10: is that we're really seeing the benefits of all of
Speaker 10: the cost cutting that Andy Jasse has been doing. You know,
Speaker 10: they laid off about twenty seven thousand corporate employees. They've
Speaker 10: been slashing a lot of these kind of experimental projects
Speaker 10: that are seen as not not yielding returns anytime soon.
Speaker 10: And so I think that the print, which had a
Speaker 10: beat on profits for the second quarter and also an
Speaker 10: expectation to be you know, the street was looking for
Speaker 10: and quarter, just shows that those things are paying often.
Speaker 10: That Jazz is bringing a sense of a sense of discipline,
Speaker 10: whereas his predecessor, Jeff Bezos, you know, kind of ran
Speaker 10: Amazon is like almost like a VC fund, you know,
Speaker 10: just lots of lots of scattered projects going on at
Speaker 10: any time to see what would rise, and Jess is
Speaker 10: kind of clamping down on that.
Speaker 2: You know, we went into earnings knowing AWS Amazon Web Services,
Speaker 2: the cloud unit is going to be important. It always is.
Speaker 2: But there is a big portion of the Bloomberg technology
Speaker 2: audience out there that aren't familiar with a WS spencer.
Speaker 2: You know they know Amazon is the company that magically
Speaker 2: delivers packages to their DOORSET just explain why AWS was
Speaker 2: important and how it performed in the quarter.
Speaker 10: Well, for years now, Amazon's cloud computing business and this
Speaker 10: is basically people renting space on Amazon's in Amazon data
Speaker 10: centers that the access via the Internet. For a year now,
Speaker 10: it's basically been the primary profit engine of Amazon. Whereas
Speaker 10: the e commerce business, you know, it's up and down.
Speaker 10: It's profitable and then it's not profitable. And a w
Speaker 10: US is kind of thing that's that's been sustaining it
Speaker 10: and also growing at a healthy clip for years, but
Speaker 10: started started slowing down because if there was as there
Speaker 10: was some uneasiness in the economy, Uh, folks that were
Speaker 10: buying a w U S services were pulling back.
Speaker 6: We're pulling back on that investment now.
Speaker 10: And especially with all of the interest in artificial intelligence,
Speaker 10: Amazon's trying to position itself as a key place to
Speaker 10: access tools for artificial intelligence, and they see that as
Speaker 10: a as a boost to their cloud computing business. Even
Speaker 10: though some folks think maybe they're getting beat a little
Speaker 10: bit by by Microsoft, but it's still an opportunity for
Speaker 10: them and the cloud computing division is just going to
Speaker 10: be something investors will be will be watching for some
Speaker 10: type of company.
Speaker 2: Alright, Bloomberg Spencer Soper with the most fantastic shirt on
Speaker 2: television this Friday, Thank you to break down all things Amazon.
Speaker 2: All right, coming up here on Bloomberg Technology, so many
Speaker 2: more earnings to recap. We'll hear from Matt Culkins, the
Speaker 2: founder and CEO cloud computing company Appyan, about its second
Speaker 2: quarter results. An updated outlook. This is Bloomberg actually before
Speaker 2: we had to break. Federal Reserve Bank of Atlanta president
Speaker 2: Raphael bost It caught up with Bloomberg's David Weston in Aspen, Colorado,
Speaker 2: weighing in on his thoughts generative AI. Have a listener what.
Speaker 4: I would say on the generative AI. It is happening
Speaker 4: so fast, and change is happening so fast. So this
Speaker 4: is really a frontier We're going to have to We're
Speaker 4: going to frankly do new things and different things to
Speaker 4: try to keep up with it, because it is the
Speaker 4: question that will I think, drive a lot of what
Speaker 4: happens in our economy for the next several years.
Speaker 2: So many companies are chasing the big large cap stocks
Speaker 2: and the artificial intelligence race cloud computing company Appian, though
Speaker 2: says it's in a different race to establish a distinct
Speaker 2: AI future. The company also posting second quarter sales the
Speaker 2: top testimates and narrowed it's adjusted loss per share forecast
Speaker 2: for the full year. Joining us now Appian CEO Matt Hawkins,
Speaker 2: along with our very own Alex Brinker out of Los Angeles,
Speaker 2: find this really interesting. Matt, there's a real focus on
Speaker 2: the cloud environment right now. Your cloud subscription business grew
Speaker 2: thirty percent year on year in the court of gone.
Speaker 2: What was the main driver of that.
Speaker 11: Well, there's steady interest in our ability to manage the
Speaker 11: way a process works across an organization. We coordinate mission
Speaker 11: critical processes for major customers around the world, and there's
Speaker 11: sustained demand for that, particularly in.
Speaker 2: The age of AI.
Speaker 12: And Matt, looking across the industry, cloud businesses have kind
Speaker 12: of had a tough quarter. You guys seem to be
Speaker 12: a bright spot in general cloud spending. Do you think
Speaker 12: we've kind of reached the bottom of this challenging time
Speaker 12: in the current economic environment.
Speaker 11: I think spend follows productivity gains, and particularly with AI,
Speaker 11: automation as a sector is going to deliver powerful new
Speaker 11: productivity gains, and that's going to pave the way for
Speaker 11: new spending levels.
Speaker 12: Matt, when you talked about your approach to AI with
Speaker 12: investors and analysts yesterday on your earnings call, I was
Speaker 12: really struck by something you said that you think that companies,
Speaker 12: organizations like yours and your clients should be bringing algorithms
Speaker 12: and training them in house. Now that's a different approach
Speaker 12: than we've seen from the likes of Meta, who have
Speaker 12: been kind of evangelizing open sourcing artificial intelligence.
Speaker 6: Can you kind of.
Speaker 12: Explain a little bit of your take on this idea
Speaker 12: of bringing everything in house. When it comes to organizations
Speaker 12: bringing AI into.
Speaker 11: Their businesses, we typically work with large organizations, mission critical
Speaker 11: organizations with the regulated industry sensitive data. For those customers,
Speaker 11: a public AI model doesn't make sense. It doesn't make
Speaker 11: sense to send your data across the Internet. It doesn't
Speaker 11: make sense to cultivate an algorithm that you don't own
Speaker 11: and that you could lose if you lost your contract
Speaker 11: with a big tech vendor. These CIOs and these organizations
Speaker 11: are going to need the benefit of AI, but they're
Speaker 11: going to need it on their own terms. They're going
Speaker 11: to need to preserve their own information, which is their
Speaker 11: most valuable asset. They're going to need to own that
Speaker 11: AI algorithm that they've helped to create.
Speaker 6: We are going to enable that.
Speaker 11: We see that as a parallel market to the AI
Speaker 11: that everybody's talking about. We think private AI is its
Speaker 11: own objective and it's going to appeal to a healthy
Speaker 11: section sector of our customers.
Speaker 12: And Matt if this last starting season is any guide
Speaker 12: for all of the large cloud companies, say Meta Alphabet,
Speaker 12: Keeping AI or housing AI and cloud is expensive. It
Speaker 12: requires lots of servers, lots of compute power, and it
Speaker 12: also requires highly technical individuals to make this happen.
Speaker 2: So are you kind of saying.
Speaker 12: That as you look out across your client base, these
Speaker 12: folks with sensitive data that they're going to have to
Speaker 12: kind of build this tech infrastructure and house hire these
Speaker 12: talented folks in house. How does this evolution look internally
Speaker 12: at businesses if they take this private AI approach?
Speaker 11: There is publicly available AI that's easy to source. What
Speaker 11: you need then is to train or fine tune it
Speaker 11: on internal data. That's the tricky part, and that's where
Speaker 11: we plan to spend most of our energy helping by
Speaker 11: collecting data sets that span the enterprise, arranging them and
Speaker 11: then training them automatically, using them to train data to
Speaker 11: AI algorithms automatically. We're going to facilitate that step from
Speaker 11: merely having a general capble AI platforms sourced from outside
Speaker 11: and then cultivating a unique AI intelligence based on that
Speaker 11: by training it on your own data. That's the hurdle
Speaker 11: that we're going to focus on getting our customers across.
Speaker 2: Matt At the heart of this story is the question,
Speaker 2: what is Appian's technological competence or point of difference from
Speaker 2: anyone else out there offering the ability to train a
Speaker 2: large language model in house or through a third party.
Speaker 6: Appian does two things, if I may say so.
Speaker 11: The best one of those is we do process. We
Speaker 11: route work from one worker to another when some of
Speaker 11: those workers are digital. AI is a new digital worker,
Speaker 11: and we're going to have to route a lot of work.
Speaker 11: In every business that uses AI, you're going to be
Speaker 11: routing work to and from AI. So that's one of
Speaker 11: our big edges. And then the other one is our
Speaker 11: mastery of data. We have a data fabric that connects
Speaker 11: all the data in an enterprise and allows you to
Speaker 11: gather custom data sets for training and AI. We're going
Speaker 11: to rely heavily on those two features to give us
Speaker 11: an advantage in the opening world of private AI.
Speaker 2: All right, happy and CEO Matt Holkins and Bloomberg's Alex Brinka,
Speaker 2: thanks to you both, and a happy Friday. All right
Speaker 2: here on Bloomberg Technology, it is time for talking tech.
Speaker 2: First up, Apple, Samsung, and HP are freezing new imports
Speaker 2: of laptops and tablets into India. The South Asian country
Speaker 2: abruptly banned in boundshipments without a license, which surprised some
Speaker 2: of the world's biggest PC makers that according to unnamed sources,
Speaker 2: tech firms are now engaging with New Delhi on how
Speaker 2: they're going to obtain licenses quickly. Plus, Qualcom and NXP
Speaker 2: Semi are teaming up in order to rival the likes
Speaker 2: of SoftBank's arm. The chip designers are working with other
Speaker 2: firms to fund a new company specializing in risk V
Speaker 2: technologies for chip designs. The unnamed business will initially focus
Speaker 2: on applications for cars. And a workers' union is accusing
Speaker 2: Alphabet of illegally ending contracts for a host of Google
Speaker 2: help workers that we're trying to unionize organize as Father
Speaker 2: complaint with the National Labor Relations Board, accusing the Internet
Speaker 2: Giant of retaliation against a number of writers, graphic designers,
Speaker 2: and launch coordinators responsible for AI related tasks at the
Speaker 2: company payments company, shift For raised its outlook for the
Speaker 2: year after reporting record results in the second quarter. Joining
Speaker 2: us for more his Shift Force founder CEO Jared Isaacman,
Speaker 2: who we also know on this program of course as
Speaker 2: an astronaut and jet pilot. Jared, good morning to you.
Speaker 2: What gave you the confidence to raise guidance?
Speaker 6: Hey, Ed, thanks for having me on the show.
Speaker 13: It's a great question, right because you think about the
Speaker 13: macro picture right now and there's a lot of moving pieces.
Speaker 13: But you know, shift for his growth largely comes from
Speaker 13: winning share of a very large addressable market. I mean,
Speaker 13: we grew payment volume sixty percent year over year. That's
Speaker 13: obviously not very driven by same store sales. I mean,
Speaker 13: that's that's a factor of just taking a lot more
Speaker 13: customers now than we had in the year prior. And
Speaker 13: that's and that's really what's driving the the raise to
Speaker 13: our outlook is we're winning a lot of share across
Speaker 13: all our key verticals, and we're also expanding internationally, so
Speaker 13: we're able to take all the products and services that
Speaker 13: work for us here in the US and bring them
Speaker 13: into new markets, so that that's a large part of
Speaker 13: the confidence going into the guidance lift.
Speaker 2: There was two items on the call that caught my eye,
Speaker 2: and it's an issue of technology, but fees. And you
Speaker 2: kind of cooled out some of your competitors over the
Speaker 2: issues of fees in the context of hotels restaurants.
Speaker 13: Why yeah, I think, first of all, we have some
Speaker 13: awesome competitors and they're doing great, and they're going to
Speaker 13: continue to you know, win a lot of share, especially
Speaker 13: within the restaurant vertical. But you know, there was you know,
Speaker 13: a very public misstep in which, you know, an intent
Speaker 13: by one of our competitors to start charging a lot
Speaker 13: of junk fees directly to consumers for placing online orders.
Speaker 13: And this just isn't the time. I mean, you know,
Speaker 13: economy is on somewhat shaky ground. I mean, hopefully we're
Speaker 13: petting for that soft landing, but I don't think it's
Speaker 13: the time to start penalizing consumers who want to go
Speaker 13: out and need or do a takeout order and whatnot.
Speaker 13: So you know, we did the exact opposite. We said, look,
Speaker 13: any of these restaurant customers that aren't happy with where
Speaker 13: they're at, we'll pay you five thousand to move over
Speaker 13: to shift for and instead of penalizing you for online ordering,
Speaker 13: we'll give you a dollar for every online order during
Speaker 13: the promotion period.
Speaker 6: And we can do that because we're profitable.
Speaker 13: I mean, you know, we grew even to sixty eight
Speaker 13: percent year over year. You know, we have high fifty
Speaker 13: percent free cash flow conversion. We don't need to price
Speaker 13: and fee our way to profitability like others out there.
Speaker 13: In fact, we can turn around to put some of
Speaker 13: that capital to work when it's needed.
Speaker 2: Jared, most of the interactions between you and I have
Speaker 2: been in the context of you being an astronaut. I
Speaker 2: have a few key questions before we lose you. Does
Speaker 2: Polaris Dawn happen before the end of this year?
Speaker 13: It's probably a very well researched question. Look, we hope, so,
Speaker 13: I mean that's you know, we're still aiming, you know,
Speaker 13: officially towards the end of the year. But as you know,
Speaker 13: you know, the Player's program is a research development type initiative.
Speaker 13: We're building things that haven't been done in fifty years
Speaker 13: since we last walked on the Moon, and some things
Speaker 13: are just completely brand new and that puts some risks
Speaker 13: in the timelines. But when it does fly, you know,
Speaker 13: it'll be a very exciting mission. And yeah, we're still hopeful.
Speaker 6: Towards the end of the year.
Speaker 2: You've already done the highest altitude SpaceX all bit. We
Speaker 2: told that story in the show. Just very quickly explain
Speaker 2: the work you're doing on space suits, the technology development
Speaker 2: you're involved in.
Speaker 13: Yeah, so this next mission coming up, polarist on is
Speaker 13: really exciting. It'll be you know, the highest Earth altitude
Speaker 13: ever flown, fourteen hundred kilometers, so it'll be the farthest
Speaker 13: that humans will have gone from the Earth since the
Speaker 13: last time we walked on the Moon fifty years ago.
Speaker 13: Two of our crew members, Sarah and Anna, will be
Speaker 13: the women who have journeyed and explored farthest from Earth,
Speaker 13: which is very cool. Then we're going to come down
Speaker 13: in altitude. We're going to vent down the cabin and
Speaker 13: do a space walk with a brand new spacesuit, a
Speaker 13: generation of which of the suits will be testing, which
Speaker 13: are the first new suits in forty years, might be
Speaker 13: what people are wearing on the Moon in Mars someday,
Speaker 13: which is pretty awesome. And then we're going to test
Speaker 13: a new constellation of satellites out laser to laser communication
Speaker 13: with Starling satellites and do about five days of science
Speaker 13: and research.
Speaker 2: All right, chift Fall has found a CEO, Jerreedisingman. We
Speaker 2: are also watching on Polaris stare and thank you so much,
Speaker 2: thanks for having me. All right. Next, so lots of
Speaker 2: digest out of Nikola, shares falling after reporting earnings and revenue,
Speaker 2: and a deliveries outlook that's been cut in recent times.
Speaker 2: But more interesting, a new CEO who's also a familiar
Speaker 2: face joining us now out of Bloomberg's Detroit bureau. David Welch. David,
Speaker 2: you and I have covered this story closely. Steve Gersky
Speaker 2: is now CEO of Nikola. What's happened?
Speaker 14: So look at Mike close Schelder, who was Steve's hand
Speaker 14: picked CEO coming out of GM's former German opal unit.
Speaker 14: They'd worked together there years ago. He was the car
Speaker 14: guy who was the engineer who was going to come
Speaker 14: in and make all of this happen. And he's had
Speaker 14: some issue with family that he's going back to Germany.
Speaker 14: I believe to take care of. And so Gersky is
Speaker 14: stepping out of the non executive chairman's job back into
Speaker 14: the CEO's role, and he's going to be an operating guy.
Speaker 14: He's even, I guess, going to have a place down
Speaker 14: in Arizona where the company is Steve Woods in New York,
Speaker 14: and it's going to spend a lot of time down there.
Speaker 14: So he's going to do He's not an interim CEO.
Speaker 14: He's going to do this as long as it takes
Speaker 14: to get the company really moving and really going quite
Speaker 14: a bit.
Speaker 2: She's a surprise, right, This was a surprise for both
Speaker 2: of us this morning. The context is that he was
Speaker 2: at the helm of the spac Vecto IQ that took
Speaker 2: Nikola public. He was involved in all of Trevor Milton's
Speaker 2: rollercoaster saga that you and I have covered so closely.
Speaker 2: Bloomberg's David Welch out of Detroit, thank you so much.
Speaker 2: That does it. I'm afraid for this edition of Bloomberg Technology.
Speaker 2: It's just been an immense week, so earning's heavy Apple Amazon.
Speaker 2: We also had other numbers earlier in the week. A
Speaker 2: lot to recap therefore, so don't forget about our podcast.
Speaker 2: Wherever you get your podcasts, we publish on Apple, Spotify,
Speaker 2: and iHeart, but also on all the existing Bloomberg platforms.
Speaker 2: The thing is, the earning story continues into next week,
Speaker 2: so much more to refocus on as well, particularly in
Speaker 2: the field of AI. From San Francisco. This is Bloomberg Technology.