Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: live from Coast to Coast with Caroline Hide in New
Speaker 1: York and Edla Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Open ai is working on financial models that could one
Speaker 3: day replace the grunt works of junior bankers. Plus, President
Speaker 3: Trump announces a rare Earth's deal with Australia to counter
Speaker 3: China's dominance, and Warner Brothers Discovery says it has expanded
Speaker 3: a strategic review of the business to maximize shareholder value.
Speaker 2: And that's where we started.
Speaker 3: It was the breaking news of the morning that move
Speaker 3: markets Warner Brothers Discovery off session highs up nine percent.
Speaker 3: They are looking at a range of strategic options, including
Speaker 3: moving forward with the existing plan to split the business
Speaker 3: into cable TV and then studios and streaming option spin offs,
Speaker 3: selling some all of it. We will get a lot
Speaker 3: more on this story later in the program. It is
Speaker 3: the big move of the day. Another top story that
Speaker 3: we are watching. Open ai is building out financial models
Speaker 3: that could one day replace the grunt work of junior
Speaker 3: bankers across the banking sector, with the help of a
Speaker 3: secretive project inside the startup. Let's get to Bloomberg's chief
Speaker 3: Wall Street correspondent Strida Nadaranjan. This is based on a
Speaker 3: document the Bloomberg's scene on Project Mercury and conversation with sources.
Speaker 3: What is project Mercury? What is it the open AI
Speaker 3: is working on here?
Speaker 2: Good question ed.
Speaker 4: According to our reporters in Dubai spoke to sources, a
Speaker 4: open AI got their hands on some document and the
Speaker 4: so called Project Mercury is effectively open AI hiring ex
Speaker 4: investment bankers as contractors, people who can help with the
Speaker 4: modeling to us who can help the AI with training
Speaker 4: it on how to write prompts, how to execute models,
Speaker 4: and how to make sure that they could get into
Speaker 4: a position where they can do some of the tasks
Speaker 4: that are currently performed by associates and analysts on live
Speaker 4: deals such as financial modeling. Their work on PowerPoint presentations
Speaker 4: and Excel is something that takes up most of the
Speaker 4: work hours for a lot of these junior bankers. It's
Speaker 4: a lot of repetitive tasks. It's a lot of simple
Speaker 4: task and there is very little strategic work there and
Speaker 4: perhaps not even a whole lot of analytical work there.
Speaker 4: So if you could use technology to replace some of that.
Speaker 4: The hope is that you could free up some of
Speaker 4: these junior bankers to do some of the bigger picture stuff.
Speaker 4: So it will need an evolution of their skill set,
Speaker 4: but also could put them into better use that would
Speaker 4: not leave them jaded early in their career.
Speaker 2: Srere.
Speaker 3: I know the team over at Liquidity are probably watching
Speaker 3: the show right now, worried about their audience as well.
Speaker 3: This is the origin of the please fix meme, right
Speaker 3: This is investment bankers, junior analysts who spend eighty or
Speaker 3: one hundred hours a week working in x sell on
Speaker 3: these types of tasks. You cover Wall Street inside and out.
Speaker 3: You know these people just explain earlier at the top
Speaker 3: of the show, I say grunt work. Go deep into
Speaker 3: the grunt work that open AI wants to displace with
Speaker 3: custom financial models.
Speaker 4: I mean, you have to think about when you're working
Speaker 4: in a live deal, what really are the requirements if
Speaker 4: you are dealing with the client, you want to come
Speaker 4: up with material with presentations, whether it is suggesting potential transactions,
Speaker 4: coming up with valuation models. Industry comps looking at the
Speaker 4: overall landscape out there that is effectively a lot of
Speaker 4: open source research that needs to be done. That is
Speaker 4: using a lot of your Excel skills and making sure
Speaker 4: that you can do the modeling. That is inputting numbers
Speaker 4: again and again, replacing numbers, putting in new estimates, and
Speaker 4: coming up with figures that could outline various scenarios for
Speaker 4: your clients. That is stuff that you could argue that
Speaker 4: technology can do, can replace you in doing that, and
Speaker 4: can do it better. And that's where the real promise
Speaker 4: here comes. But also remember, and this is something where
Speaker 4: you spoke about liquidity, but anyone who's followed this space
Speaker 4: for long knows that when you talk about junior banker
Speaker 4: workers about those eighty two hundred dollars work weeks, often
Speaker 4: that figure is magnified because bankers, once they finished their work,
Speaker 4: are waiting for hours on end, waiting for feedback from
Speaker 4: their managers, who then come back with immediate responses and
Speaker 4: fixes that you need to do, and there is a revision,
Speaker 4: and you follow that cycle repeatedly till your manager is satisfied.
Speaker 4: So perhaps what you also need is an AI solution
Speaker 4: that can take care of that manager who will stop
Speaker 4: focusing on those very little, small font level changes and allow.
Speaker 2: You to focus on big picture stuff.
Speaker 3: An Open AI spokesperson said the company employs a range
Speaker 3: of experts to work generally or models that didn't really
Speaker 3: address our reporting specifically. Bloomberg Street, Madarajan, thank you very much.
Speaker 3: In other news, President Trump announced a rare earth steal
Speaker 3: with yesterday I aimed at countering China's dominance in the
Speaker 3: supply chain for critical metals. The move comes ahead of
Speaker 3: expected trade talks between the US and China, with the
Speaker 3: President expressing optimism about reaching a fair deal.
Speaker 5: I expect we'll probably work out a very fair deal
Speaker 5: with President Jiev China, so most of you will be
Speaker 5: with us. It's going to be very exciting, and I
Speaker 5: think we're going to work out something that's good for
Speaker 5: both countries.
Speaker 3: Bloomberg Senior Tech editor Mike Sheppard joins us from DC
Speaker 3: A fair deal go into what a fair deal is
Speaker 3: to the best of our knowledge and our reporting, and
Speaker 3: what happens next.
Speaker 6: Well, the fair deal will be in the eye of
Speaker 6: the beholder, and the number one beholder here, of course,
Speaker 6: is President Donald Trump. And it's important to note that
Speaker 6: during that same conversation yesterday with reporters, he reiterated his
Speaker 6: threat of triple digit tariffs against Chinese goods if Beijing
Speaker 6: did not come with a satisfactory offer in his eyes.
Speaker 6: And we have seen the President and his advisors in
Speaker 6: recent days lay out some of their key points and
Speaker 6: key sticking points in the negotiations. Of course, first and
Speaker 6: foremost is rare earth. It is something that has dominated
Speaker 6: the conversation for the past two weeks since China imposed
Speaker 6: export controls on these minerals that are so crucial to
Speaker 6: various points in the supply chains for autos, for consumer technology,
Speaker 6: and even defense materiel. Now ed what we're watching also, though,
Speaker 6: is pressure in other areas. Yesterday we saw Jamison Greer,
Speaker 6: the US Trade representative, take aim at another area where
Speaker 6: China has tried to exert its influence over the supply chain,
Speaker 6: an area where it has an advantage, and that is shipping.
Speaker 6: And he warned that sanctions against US units of a
Speaker 6: South Korean company were are counter to these kinds of conversations.
Speaker 3: The deal with Australia is being interpreted in DC at
Speaker 3: least as kind of a counter move to what China
Speaker 3: has been doing.
Speaker 2: What's our reporting on.
Speaker 6: That, well, it very much is a countermove. The the
Speaker 6: Trump administration is trying. This is the latest in a
Speaker 6: series of steps to try to break China's grip on
Speaker 6: the rare earth's market and reduce US dependence on China
Speaker 6: as a source of critical minerals. Now, this is a
Speaker 6: long term play, and the US has tried to put investments.
Speaker 6: It has already had three government moves to invest in
Speaker 6: companies that specialize in rare earths. We saw one just
Speaker 6: a few weeks ago when Canadian Prime Minister Mark Carney
Speaker 6: visited Washington and met with President Donald Trump the US,
Speaker 6: and that's a ten percent stake in a Canadian miner
Speaker 6: called Trilogy, and also the opening of a road. But
Speaker 6: this is a longer term play.
Speaker 2: It will take a while.
Speaker 6: Australia, though, is promising what it says is a faster
Speaker 6: pipeline to these rare earth elements. It says that it
Speaker 6: can provide thirty to forty out of the fifty critical
Speaker 6: minerals that the US has identified as being needed most.
Speaker 6: And it likes to refer to itself as the world's
Speaker 6: periodic table and has all that expertise in mining. How
Speaker 6: quickly can be brought to beer and whether this functions,
Speaker 6: there's some sort of pressure in the trade negotiations between
Speaker 6: US Treasury Secretary Scott Besson and his Chinese counterpart later
Speaker 6: this week. Remains to be seen, but it is certainly
Speaker 6: something that the President will try to bring to his
Speaker 6: conversation with Shijimping, expected to take place next week.
Speaker 3: Bloemberg's Mike Shepard, thank you very much. Let's bring in
Speaker 3: Rob Funnels, senior portfolio manager at Tortoise Capital, who argues
Speaker 3: the US needs to develop its rare f supply chain
Speaker 3: in the same way that it refall.
Speaker 2: Energy supply chains.
Speaker 3: Tortoise Capital has approximately nine billion dollars in assets under management,
Speaker 3: the focus energy and power infrastructure. So to start, Rob,
Speaker 3: your reaction to the deal that the President did with
Speaker 3: Australia on rare earths and what it signals to you
Speaker 3: more broadly about what they'll do in supply chain.
Speaker 7: Yeah, Well, as you highlighted, so the supply chain is
Speaker 7: really important. You need more rare earth minerals to come
Speaker 7: to the US for consumer electronics and really just the
Speaker 7: evolution of everything including AI, and so the rarer supply
Speaker 7: chain needs to really develop, kind of like the energy
Speaker 7: supply chain is evolved. And if you think about the
Speaker 7: energy supply chain in the US. The US is the
Speaker 7: largest energy producer in the world. AI is going to
Speaker 7: need a lot of electricity. The US has a lot
Speaker 7: of natural gas, and so that's a benefit, and that
Speaker 7: allows the US to maintain its AI dominates because of
Speaker 7: the natural gas and the ability to produce low cost
Speaker 7: electricity in the US. And that's just because of the
Speaker 7: supply chain for in the energy sector is very well developed.
Speaker 7: So where Earth needs to follow a similar fashion.
Speaker 3: A big story on the Bloomberg Terminal today written by
Speaker 3: McCall calligue Common Rhinikey is titled AI Boom transforms utilities
Speaker 3: from haven to storing growth stocks, and we're looking at
Speaker 3: the idea that the utility sectors up more than forty percent,
Speaker 3: third best performing group in the s and P.
Speaker 2: Five hundred.
Speaker 3: This is, to an extent, your wheelhouse. You are trying
Speaker 3: to participate in what's happening in AI broadly through energy,
Speaker 3: infrastructure and production. When you make of that reporting, Rob.
Speaker 7: I think it's very I think there's a lot of
Speaker 7: room to run if you just think about all these
Speaker 7: cool things that AI does and the fascinating things that
Speaker 7: AI does. Really the foundation of all of that are
Speaker 7: two things. It's data and it's electricity basically, and those
Speaker 7: are the foundational elements. And so it has taught us
Speaker 7: what we're doing is we're investing in the critical enablers
Speaker 7: basically and the infrastructure that enables all of these great
Speaker 7: AI opportunities going forward. So there's a lot of investment
Speaker 7: opportunities and electricity, as you highlighted, we need a lot
Speaker 7: more electricity.
Speaker 2: Basically.
Speaker 7: The next decade is going to be the age of electricity.
Speaker 7: We think that electricity is going to become the new oil.
Speaker 7: The US is going to maintain and it's global AI
Speaker 7: dominance because of its ability to produce low cost electricity.
Speaker 7: So companies like in my backyard Eenergy, it's actually a
Speaker 7: classic example of what you're talking about. It's going to
Speaker 7: actually increase its growth rate by almost fifty percent because
Speaker 7: there's new AI data centers coming to Kansas City, Missouri,
Speaker 7: where I happen to live. But this is happening all
Speaker 7: over the place. We even have bitcoin miners basically, and
Speaker 7: this is really the interesting part if you think about it,
Speaker 7: bitcoin miners are actually converting, transforming from being bitcoin miners
Speaker 7: to data center operators. Why well, because they have the
Speaker 7: electricity and the ability to simply transform their business and
Speaker 7: become really an entirely new business model, and then their
Speaker 7: valuations are being uplifted as well. Companies like Riot Platforms,
Speaker 7: Wolf are Tero, Wolf are a couple of examples who
Speaker 7: of companies that have been doing this.
Speaker 3: What you are trying to participate in tangibly, rob is
Speaker 3: the building of data centers or what will power them.
Speaker 3: But when I look at the portfolios that you manage
Speaker 3: and some of the ETF products, you've kind of broadened
Speaker 3: out to some of the names that we would more
Speaker 3: classically associate with servers.
Speaker 2: Dell is an example.
Speaker 3: What prompted you to make that move go beyond the
Speaker 3: energy thesis?
Speaker 7: Well, we just think if you think about AI, AI
Speaker 7: is the future, right, AI is the future economy, so
Speaker 7: if electricity is.
Speaker 2: The new oil.
Speaker 7: But if you think about really what we're looking at
Speaker 7: is we don't think we think what's underrepresented investor portfolios
Speaker 7: is simply this the enablers, the infrastructure, the companies that
Speaker 7: are enabling all of this AI development. So what does
Speaker 7: that mean, Well, that means data storage devices, network switches.
Speaker 7: Those are just a couple of examples electricity. Electricity generation
Speaker 7: are another couple of examples, cabling as well as servers,
Speaker 7: and so all of this underlying infrastructure is really really important.
Speaker 7: It's the foundation really for the future of AI, and
Speaker 7: it's these enablers that we think aren't represented in investor portfolios.
Speaker 7: So we created a product called the Tortoise AI Infrastructure
Speaker 7: Active ETF that really offers investors a way to invest
Speaker 7: in the active enablers.
Speaker 3: Rob Bummel, Senior portfolio manager at Tours's Capital, thank you
Speaker 3: so much for joining us here on Bloomberg Tech. Now
Speaker 3: coming up, let's get back to that story. Warner Brothers
Speaker 3: Discovery says it's reassessing its strategic options as multiple parties
Speaker 3: are said to be so birkling the media giant. We
Speaker 3: have more on that next. This is Boomberg Tech. I
Speaker 3: told you at the top of the show. Shares of
Speaker 3: Warner Brothers Discovery are up significantly after the company revealed
Speaker 3: it's expanding a strategic review of the business. The owner
Speaker 3: of CNN, HBO and the Warner Bros. Movie Studio had
Speaker 3: been planning to split into two companies anyway, but it's
Speaker 3: now considering a wider arrail of deal. Scenarios including sale
Speaker 3: and spin off options in light of quote unsolicited interests.
Speaker 3: Let's get to our media editor Felix Gillette. Some of
Speaker 3: this we knew about, some of it not. So the
Speaker 3: point is is that Warner Brothers, Discovery It's board and
Speaker 3: leadership are recognizing that the market's putting some value in
Speaker 3: its different properties. Just go through each of the options
Speaker 3: that the board says that it's considering.
Speaker 8: Yeah, I mean, I think now it's officially for sale.
Speaker 8: We knew that it was basically the was happening, but
Speaker 8: now the options they're looking at is. You know, earlier
Speaker 8: this year they announced this reorganization. They were going to
Speaker 8: set it up the company so that there was going
Speaker 8: to be the studios and the streaming business on the
Speaker 8: one hand, separated from the legacy cable TV channels. Then
Speaker 8: you have you know, David Ellison from Paramount from Paramount
Speaker 8: Skydance jumping in and saying, oh, I'd like the whole
Speaker 8: thing before the split. And now they're saying, Okay, we
Speaker 8: have interest from other parties for potentially the whole thing,
Speaker 8: potentially parts of it. In the meantime, we're going to
Speaker 8: go ahead with this reorganization as we soared through the
Speaker 8: different options, but you know, presumably there'll be a lot
Speaker 8: of interest in the studio streaming side, less so from
Speaker 8: the legacy cable TV channels.
Speaker 3: Right, this jump of ten percent puts the stock on
Speaker 3: track for its best stays since early September, the stock
Speaker 3: of the entity known as Warner Brothers Discovery. That's a
Speaker 3: nice timeline. It shows us like the evolution of what
Speaker 3: is now Warner Brothers Discovery. There are media reports out
Speaker 3: there this morning Felix about the names that could be
Speaker 3: circling Weird reported Paramount Skuydeounce, but it's probably broadened that, right.
Speaker 8: Yeah, I mean, I think the other names that are
Speaker 8: being tossed out there that analysts have mentioned Netflix, you know,
Speaker 8: Comcast potentially you know in Amazon and Apple. Anyone that
Speaker 8: has a streaming service has to take a look at
Speaker 8: this because you know, Warner Brothers Discovery has one of
Speaker 8: the biggest, richest libraries of IP and the planet. They've
Speaker 8: got Harry Potter, they've got the DC universe with Batman
Speaker 8: and the Superman. They've got you know, the Hobbit universe
Speaker 8: with all the Lord of the Rings stuff. So that's
Speaker 8: just you know, some of the franchises. Everyone needs to
Speaker 8: take a look at this, and so there is to
Speaker 8: be interesting real.
Speaker 3: Quick Netflix after the bell. What's the one thing we
Speaker 3: need to look out for.
Speaker 8: I think look at the advertising numbers. You know, they've
Speaker 8: invested a lot in live events. They've had a very
Speaker 8: strong quarter in terms of engagement. Our franchises are really
Speaker 8: kicking in the high gear. They had Squid Game, they
Speaker 8: had you know, the most popular movie in their history
Speaker 8: with K Pop Demon Hunters. So look for that engagement.
Speaker 8: They won't be talking subscriber numbers. But I'd be very
Speaker 8: curious to see if the same thing about advertising growth.
Speaker 3: All they've been saying to Wall Street is judge us
Speaker 3: by financial metrics.
Speaker 2: Move on from subscribing numbers.
Speaker 3: I don't know that we can Bloomberg's Felix to that,
Speaker 3: Thank you very much. Call Weave has no plans to
Speaker 3: bump up it's nine billion dollar bid to data Center
Speaker 3: provide a core scientific despite concerns and opposition from shareholders
Speaker 3: that the offer was too low. CEO Michael and Trader
Speaker 3: told Bloomberg's Tom Giles earlier in London, the price is fair.
Speaker 9: We're very comfortable that the way that we have priced
Speaker 9: it is appropriate for us. If there's someone else that
Speaker 9: would like to step in, they can step in. But
Speaker 9: you know, we're excited, we think it makes sense. We
Speaker 9: continue to think it makes sense, and you know it
Speaker 9: will go to a vote, but you won't see us
Speaker 9: bump our price or increase our price.
Speaker 2: Let's get the analysis.
Speaker 3: Bloomberg Intelligence Senior techanalyst Aanar rag Rana. In July, when
Speaker 3: this bid came in, you wrote that it was prudent
Speaker 3: because of the share price performance of core Weave.
Speaker 2: In August, you.
Speaker 3: Wrote that actually they might have to think about upping
Speaker 3: the bid a bit because a pushback. On October thirtieth,
Speaker 3: shareholders are going to vote on it either way.
Speaker 2: What's the current thesis, Sanaag.
Speaker 10: Yeah, and I think you've given what the CEO is
Speaker 10: publicly saying. It doesn't look like they're going to up
Speaker 10: the offer, and so you know, I think this is
Speaker 10: probably going to end in probably a stalemate, unless the
Speaker 10: shareholders feel that gold Beab is the right place for them.
Speaker 2: You know.
Speaker 10: Having said that, if you look at the data center space,
Speaker 10: there is a lot of demand. So I don't think
Speaker 10: both parties will regret. You know, which other direction it
Speaker 10: goes frankly.
Speaker 3: So Anraik help educate our audience. You said, the right
Speaker 3: place for them. What is it that core Scientific does
Speaker 3: differently from core Weave, which we call on this program
Speaker 3: neo cloud.
Speaker 10: Yeah, so for colviv it's in the mean the simplest
Speaker 10: way is they're going to rent out GPUs for you
Speaker 10: to help with your computing needs. In the case of
Speaker 10: core Scientific, they're helping create those data centers. Then the
Speaker 10: core weav is going to put their GPUs inside. So
Speaker 10: it's a slightly different business, but at the end of
Speaker 10: the day, it's part of the same value chain. It's
Speaker 10: all getting funded by a lot of AI workloads that
Speaker 10: are out there. So both both companies have their own
Speaker 10: space in the ecosystem. They do slightly different things.
Speaker 3: Real quick, Anna Rag core Weave on the demand side
Speaker 3: and the supply side is doing a lot of deals.
Speaker 2: Can they cope with all of this?
Speaker 10: I think the biggest question is at what pace can
Speaker 10: people go out and create these data centers and install
Speaker 10: the GPUs and get their revenue out of it. We
Speaker 10: actually have so much now in terms of evidence of
Speaker 10: rbos or bookings coming in from multiple vendors. You know
Speaker 10: whether that's Microsoft Meta or open Aye. The problem is
Speaker 10: how do you go out and then delivered on it?
Speaker 3: His researches must read on the Bloomberg terminal. Anaagrana of
Speaker 3: Bloomberg Intelligence, thank you very much. Meanwhile, Amazon says its
Speaker 3: cloud services have now been fully restored after a fifteen
Speaker 3: hour outage that impacted a variety of websites and apps,
Speaker 3: but its reputation has taken a hit. Bloomos Matt Day,
Speaker 3: who covers Amazon and AWS, joins us and that was,
Speaker 3: you know, the headline of your day to story today.
Speaker 3: We've looked at how analysts have reacted to this. How
Speaker 3: severe was this outage compared to AWS historic outages for.
Speaker 11: Example, So it looks like it's at least they're most
Speaker 11: significant in several years. We've got to go back to
Speaker 11: about twenty twenty one for one. That's even in the
Speaker 11: same ballpark. Fifteen hours is a lot like the TYPICALWS hiccup.
Speaker 11: You know, they'll announce something is on the fritz, you know,
Speaker 11: the a couple of stats updates later, maybe a couple
Speaker 11: hours later, things are back.
Speaker 2: This this was a big one.
Speaker 11: This took out their biggest data center region and took
Speaker 11: it out for most of the day throughout the US
Speaker 11: East Coast workday. This is a really big deal for
Speaker 11: company that prides itself on on uptime and reliability.
Speaker 3: What was difficult in covering this in real time during
Speaker 3: the show yesterday was Amazon shares were higher, so you're like, okay,
Speaker 3: that's an interesting reaction of the market. But what helped
Speaker 3: us understand it was the scale of which AWS or
Speaker 3: the Internet relies on. AWS just explain their position in
Speaker 3: cloud computing and maybe by extension, why it was so
Speaker 3: severe and widespread.
Speaker 11: Therefore, so Amazon basically invented the business of selling rented
Speaker 11: computing power. They are the largest actor in that space,
Speaker 11: something like a third of the market, and really just
Speaker 11: the Internet goes through their data centers, especially in Northern Virginia,
Speaker 11: right you know Apple streaming your phone bill. Sometimes I
Speaker 11: try to pay mine yesterday it was not down. So
Speaker 11: they're just a key hub for so much of capitalism, frankly,
Speaker 11: and if it's not them, it's one of their rivals
Speaker 11: like Microsoft or Google.
Speaker 3: And over a two day basis, this tocks up four
Speaker 3: percent and a rag honor of Bloomberg Intelligence. Just on
Speaker 3: the show and in your story, you cite his research,
Speaker 3: which is that what could the potential reaction of customers
Speaker 3: be here to AWS. Maybe they'll look at spreading their
Speaker 3: workloads across different cloud providers.
Speaker 11: You can see some hedging bets, which is the trend
Speaker 11: we've seen in recent years anyway, to be bor rather
Speaker 11: within companies, rather than relying on a single cloud provider.
Speaker 11: They might take a step back and move their business
Speaker 11: among the big guys. And that's definitely the risk for
Speaker 11: Amazon coming out of an event like we owed yesterday.
Speaker 3: Bloomberg's Matt Day, who's visiting us in San Francisco from
Speaker 3: Seattle and has been all across the AWS outage. Thank
Speaker 3: you very much. Welcome back to Bloomberg Tech. Let's go
Speaker 3: to check in on defense tech stocks now. With both
Speaker 3: Northrop and Lockheed Martin out with their earnings results, Bloomberg
Speaker 3: TV's markets correspondent Norah Melinda joins us to break them down,
Speaker 3: and let's start with Northrop.
Speaker 12: Well, and it seems as there are a lot of
Speaker 12: high expectations heading into this report. Now, the company did
Speaker 12: raise it's earning's forecast for the year, but what Wall
Speaker 12: Street is really parsing right now is the fact that
Speaker 12: it cut its full year sales guide to a range
Speaker 12: that was below the average analyst estimate, and so work
Speaker 12: is still continuing to accelerate at the company, specifically on
Speaker 12: its sentinel missile program. But you are seeing people being
Speaker 12: quite critical right now, particularly about that cut to its
Speaker 12: full year guide.
Speaker 3: Lockheed is maybe the bigger fish, and there are headlines
Speaker 3: coming out from the call.
Speaker 2: What do we need to know?
Speaker 12: Yes, lots of headlines flying here for Lockheed Martin. They
Speaker 12: did have better than expected earnings that they reported, but
Speaker 12: they did trim their free cash flow guide down a bit,
Speaker 12: and so that's what you are seeing a lot of
Speaker 12: people hinging on right now. The CEO did say that
Speaker 12: he sees the Golden Dome US missile defense project as
Speaker 12: a driver of future growth here, and he did say
Speaker 12: that the company has a record one hundred and seventy
Speaker 12: nine billion dollars in backlog. Lots of parts here.
Speaker 3: All important things we've been tracking all year long. Bloombogs,
Speaker 3: Norm Melinda, thank you very much. Speaking of defense tech,
Speaker 3: German defense tech company Helsing was featured at the Bloomberg
Speaker 3: Tech Summit in London earlier today. The company's co CEO,
Speaker 3: Torsen Ray sat down with Bloomberg text Tom McKenzie and
Speaker 3: discussed remaining issues with the supply chain as well as
Speaker 3: a potential defense tech bubble.
Speaker 2: Listen to this.
Speaker 13: I think there's definitely a bubble right now, and the
Speaker 13: reason for it is what I said earlier in twenty
Speaker 13: twenty one, not a single EUROPEANBC in particular wanted to
Speaker 13: touch defense. Now everyone has moved into defense, and you know,
Speaker 13: including the crypto caravan that's moved from crypto now into
Speaker 13: defense and is trying to spend its money there.
Speaker 3: Let's get to semiconductors. Texas Instruments is set to report
Speaker 3: third quarter results after the closing bell to day is
Speaker 3: and this way where the tariff uncertainty could cloud the
Speaker 3: company's outlook. Here with more Bloomberg Z and King, who
Speaker 3: leads coverage of the chip industry for US. It's a
Speaker 3: China story with Texas Instruments, a business where more analogue
Speaker 3: types of chips are in demand or they're not.
Speaker 14: Yeah, I mean fundamentally, the numbers for this company are
Speaker 14: great on the way back, ten percent a quarter in
Speaker 14: terms of revenue growth sounds pretty good. The concern, as
Speaker 14: you say, is what's going on whether some of that
Speaker 14: kind of rebound in orders is related to China and
Speaker 14: people getting ahead of what they see as increasing trade
Speaker 14: barriers and TI not being able to serve China, or
Speaker 14: you know the various you know things that are at
Speaker 14: play in terms of the variables, and so that's what's
Speaker 14: driving the sentiment around the stock.
Speaker 3: Help the Bloomberg Tech audience understand the supply chain. We've
Speaker 3: talked a lot about how in the context of high
Speaker 3: performance compute GPUs that go in stage centers and on
Speaker 3: shoring effort, what's going on with Taiwan, But with those
Speaker 3: more analog type chips, is it the same story that
Speaker 3: it's a supply chain dependent on China or in an
Speaker 3: end market dependent on China.
Speaker 14: At the moment, the supply chain is dependent upon Texas Instruments, right.
Speaker 14: This is a company that's in everything. If you've got
Speaker 14: an on and off switch on a device, there's going
Speaker 14: to be some form of Texas Instruments chip in there.
Speaker 14: The issue has come as as China has been restricted
Speaker 14: from going high end shift in terms of the digital
Speaker 14: products you just mentioned, has shifted its emphasis to try
Speaker 14: to make more kind of analog and embedded processing stuff,
Speaker 14: which is a competitor. TI throw in trade tensions, and
Speaker 14: the concern is that China will try more and more
Speaker 14: to domesticate its own supply and that won't eventually be
Speaker 14: good for TI, says, don't worry about it. We understand
Speaker 14: how competitive this is. We'll just get better.
Speaker 3: We've heard a lot from the President about AI chips,
Speaker 3: and a lot of those AI chip company CEOs have
Speaker 3: some influence in DC. Do this leaders at companies like
Speaker 3: Texas Instruments have the same influence and does the President
Speaker 3: think about them as much?
Speaker 14: Well, all we can do is talk about what TI
Speaker 14: is doing. They are, in many senses, the perfect picture
Speaker 14: that Trump wants to have of the world, and that
Speaker 14: they're building factories in this country. They're building in Sherman, Texas,
Speaker 14: not too far from their headquarters. They've bought a plant
Speaker 14: in lehi and U which they're refitting, and they're saying, look,
Speaker 14: you know, we're investing in the US. So in that sense,
Speaker 14: they're doing the right thing for this administration. Obviously, the
Speaker 14: economics of that will have to be seen and how
Speaker 14: they play out, but for now they're there.
Speaker 3: Bimbos and King, thank you very much for a wider
Speaker 3: look at the tech sector. Beth kindig Iofund lead tech
Speaker 3: analyst joins us sin. Beth, you have come on this
Speaker 3: program many times and we have talked about Nvidia principally
Speaker 3: lead edge AI accelerators and GPUs. But as you listen
Speaker 3: there to Ian's preview of Texas instruments, how focused are
Speaker 3: you on that portion of the chip market more analogue
Speaker 3: semis that go into all manner of things we rely
Speaker 3: on each day.
Speaker 15: It's great to see you again, Ed, you have it
Speaker 15: exactly right. I'm very, very hyper focused on the AI market. Therefore,
Speaker 15: the companies I track are a little bit different than
Speaker 15: the broader semiconductor industry. For example, we have Vertive Recording
Speaker 15: this week, we Anthhonol. Now those are both key suppliers
Speaker 15: into AI systems. Whether or not those suppliers will be confirmed,
Speaker 15: you know, for more and more orders, that's always a question,
Speaker 15: but ultimately they are key components within the AI systems
Speaker 15: that in video shipping. I'm very excited to see initial
Speaker 15: reports around the health of the AI market, especially like
Speaker 15: you just spoke about, because some people believe it's an
Speaker 15: AI bubble.
Speaker 3: The onshoring of the supply chain story focused on those
Speaker 3: bigger names at first, right, you know, in Video is
Speaker 3: very aggressive to point out all of its capital commitments
Speaker 3: to this nation and taking the first Arizona produced chips
Speaker 3: from TSMC.
Speaker 2: That's been in the headlines.
Speaker 3: But do you see evidence that there is opportunity for
Speaker 3: investors to invest into something being built out in America
Speaker 3: that goes beyond and Invidia.
Speaker 15: Yes, I would say in general, you know, the onshoing
Speaker 15: process will take years. In terms of truly domesticating our
Speaker 15: domesticating our supply chains, that will take years. And that's
Speaker 15: not actually my central focus. My central focus could be
Speaker 15: best encapsulated by the fact that in Vidia they're having
Speaker 15: one of their biggest product moments ever, which is a
Speaker 15: huge statement. As you know, I've covered this stock very
Speaker 15: closely for many years. They have Blackwell, Black Whele alter shipping,
Speaker 15: but they're moving from eight GPUs to seventy two GPUs
Speaker 15: and that's that piece that I'm explaining is a big
Speaker 15: moment for Nvidia. What that means is that the supply
Speaker 15: chain should erupt in the upcoming quarter and the next
Speaker 15: quarter because that complexity has just.
Speaker 16: Gone up nine x.
Speaker 15: So I'm very very focused there less on timing of
Speaker 15: onshoing this manufacturing right.
Speaker 3: I'm going to be in Washington, DC next week for
Speaker 3: GtC DC, the second edition of the Year of GtC.
Speaker 3: When those kinds of events happen, how high is the
Speaker 3: bar for Nvidia to come out and say something on
Speaker 3: the product or technology side that moves the needle for investors.
Speaker 15: Yeah, I guess I'll be a contrarian again and I
Speaker 15: will say, yeah, if Nvidia can give us more on Reuben,
Speaker 15: knowing that Blackwell but black Well Aulter shipping, they're shipping
Speaker 15: in volume, I'm very positioned for that.
Speaker 16: Anything forward looking for in video.
Speaker 15: At this point, let's just say we have this conversation
Speaker 15: this time next year. I would want to hear more
Speaker 15: about Reuben, which may actually come more in March.
Speaker 3: The big news story, I suppose the last twenty four hours,
Speaker 3: beyond the ADWS outage, which I don't know how that
Speaker 3: impacted you, has been rares you know, the specific headline
Speaker 3: an American deal with Australia, which is kind of being
Speaker 3: interpreted as this countenance to what China is using as
Speaker 3: levers in the negotiation. How do you look at the
Speaker 3: markets in the moment and how they're reacting to rare
Speaker 3: earths and the news flow of the day.
Speaker 15: I certainly would have loved to have owned some of
Speaker 15: those rare earth stocks.
Speaker 16: Some are up, you know, almost four hundred percent this year.
Speaker 15: Look, you know, China's using it as a bargaining chip
Speaker 15: in response to US restricting our excellent design companies. You know,
Speaker 15: these two economies have battled it out for decades. And
Speaker 15: so even though these these things are important to track,
Speaker 15: we are so interdependent at this time with China and
Speaker 15: other regions that you know, I don't think it's something
Speaker 15: that you would exit AI stocks for. If anything, you know,
Speaker 15: I would just look at this as many global powers
Speaker 15: are concerned about how are we going to keep up
Speaker 15: the manufacturing because demand is so so high, demand is
Speaker 15: outstripping supply. That piece is much more important to me
Speaker 15: as an investor than all the little nuances as to
Speaker 15: how we get there and supply.
Speaker 3: You use the phrase bargaining chip a pardon the pun
Speaker 3: on your behalf, But the calculus for people like David
Speaker 3: Sachs is that that is the negotiation rare effs on
Speaker 3: the China side in exchange for access to deprecated chips
Speaker 3: on the US side, and principally in Vidio deprecated chips. Right,
Speaker 3: do you have a better sense, bef of where that
Speaker 3: negotiation is heading.
Speaker 15: I could see it being resolved favorably for both sides.
Speaker 15: You know, we've heard from in Nvidia's CEO that he
Speaker 15: would really.
Speaker 16: Like to restore those relations.
Speaker 15: So even if you take some of our industry leaders,
Speaker 15: they all want to see, you know, as much working
Speaker 15: together as possible.
Speaker 16: Of course, is that reasonable.
Speaker 15: I do think that geopolitically, AI will continue to be
Speaker 15: a point of tension. Is just so powerful in terms
Speaker 15: of what it can do for GDP, And I think
Speaker 15: it just goes back to that, which is because it's
Speaker 15: so powerful as to how it can grow GDP, it's
Speaker 15: a really the best investable opportunity of our lifetime. And
Speaker 15: that's the piece I would really focus on.
Speaker 3: Bethkindg of Io fund, I always appreciate the deep analysis,
Speaker 3: Thank you very much. With no end to the US
Speaker 3: government shut down insights, some companies that are looking to
Speaker 3: go public are seizing an unusual opportunity. Guidance from the
Speaker 3: SEC lets them file less detailed paperwork and have those
Speaker 3: filings automatically declared effective after twenty days. I want to
Speaker 3: get out to Bloomberg's IPO. Reporter Bailey Lipshaltz, this is
Speaker 3: the subject of the hashtag ECM watch column, which I
Speaker 3: am a religious reader of and if you're watching this,
Speaker 3: you also should subscribe. But it's really interesting. Like for me,
Speaker 3: I'm like, that sounds very spacky. Explain the mechanism here.
Speaker 3: You can file more limited paperwork and then it just
Speaker 3: kind of poop.
Speaker 2: It just lingers ed.
Speaker 17: And this is a route or strategy that we've seen
Speaker 17: a few companies that are on file publicly, something that
Speaker 17: you wouldn't do without kind of the path to going
Speaker 17: public well plotted out. So we saw these companies flip
Speaker 17: public thinking about in avon or beta technologies and basically
Speaker 17: you're stuck kind of in a limbo. And so the
Speaker 17: way to work around that with this new sec guidance
Speaker 17: is you come up with the share price range that
Speaker 17: you're willing to accept and then market and you come
Speaker 17: up with a number of shares you want to sell,
Speaker 17: You file that publicly with Edgar through US regulators, and
Speaker 17: then twenty days from now it's effective and that would
Speaker 17: enable you to price your IPO and sell those shares,
Speaker 17: which is different than a so called delaying amendment, which
Speaker 17: really allows companies to kind of have a complete hold
Speaker 17: on that process, which normally you would file, wait fifteen
Speaker 17: days for a seasoning period, then come out with a
Speaker 17: price range, meet with investors, and then sell it week later.
Speaker 17: This is a bit more difficult, but obviously a working
Speaker 17: strategy that we're seeing some companies use.
Speaker 3: One of the cool points in the reporting is that
Speaker 3: wool Street has been surprised by this, like we're saying
Speaker 3: an unusually high number are able to go through in
Speaker 3: this shutdown. By the way, there you go hashtag ECM watch,
Speaker 3: don't miss it.
Speaker 2: Just explain why this is a surprise.
Speaker 17: It's a surprise because a lot of bankers and lawyers
Speaker 17: would want to run a tightly choreographed process. When you
Speaker 17: use this workaround, you're exposed to the market with the
Speaker 17: expected valuation and the expected IPO size.
Speaker 2: For twenty days.
Speaker 17: So that's not normal if bankers and lawyers don't really
Speaker 17: like having that over a seven day period.
Speaker 2: So when you have a market that.
Speaker 17: Is living truth social posts, a true social post, or
Speaker 17: press conference to press conference, or in the thick of
Speaker 17: earning season, if you're a company that's using this workaround.
Speaker 17: To go public, you're exposed to broader market risks, geopolitics
Speaker 17: and otherwise, and you're also exposed to earnings from your peers.
Speaker 17: So if you're looking to go public at a sixteen
Speaker 17: multiple and your peer group underperforms and drops a twenty percent,
Speaker 17: all of a sudden, your price looks a lot more
Speaker 17: wonky than you would have expected. And it's also difficult
Speaker 17: to get investor attention in.
Speaker 2: This is Bloomberg Tech. I think you mentioned Navon.
Speaker 3: There are other tech names out there that are kind
Speaker 3: of call in the situation, just very quick case studies.
Speaker 17: Yeah, Navon using a tight price range. They're expected a
Speaker 17: price later next week, towards the Halloween date. That'll be
Speaker 17: interesting type book. And then Beta Technology is a el
Speaker 17: evotal company using a broad range with Cornerstone, it's going
Speaker 17: to be a different one that a price a couple
Speaker 17: of days after that.
Speaker 2: You've got to get it done by Halloween.
Speaker 3: It's basically the biggest holiday of this part of the
Speaker 3: year for many people. Bloomberg's Bailey Lipschaltz, great job, Thank
Speaker 3: you very much. VM Software, owned by private equity firm
Speaker 3: Insight Partners, agreed to buy Security AI for about one
Speaker 3: point seventy three billion dollars in cash and stock, adding
Speaker 3: software that helps secure corporate data used in AI applications,
Speaker 3: make software for backing up and recovering data after ransomware
Speaker 3: attacks and other breaches, and it's looking to protect clients
Speaker 3: from new threats posed by AI. The deals expected to
Speaker 3: close the first week of December. Okay, coming up, Touro
Speaker 3: CEO Andre Hadad joins us talk about the company's plan
Speaker 3: to attract drivers with a low commitment alternative to owning
Speaker 3: a car. That's next, This is Windberg tech car sharing marketplace.
Speaker 3: Touro is launching what it calls a low commitment alternative
Speaker 3: to car ownership carsoers. We be able to rent cars
Speaker 3: for months of the time. But the program comes as
Speaker 3: US car sales remains strong despite tarris and economic uncertainty.
Speaker 3: There is a lot to discuss with Touro's CEO, Andre Hadad,
Speaker 3: who's here with us in San Francisco. Okay, let's just
Speaker 3: start by explaining the mechanism. How does this work?
Speaker 2: So it's pretty simple.
Speaker 18: You know you're if you've known Turo, you know that
Speaker 18: we offer car rentals now for many years. Typically our
Speaker 18: car rental trips were a few days at a time
Speaker 18: typically for travel. Now you can actually book a car
Speaker 18: for multiple months at a time, and you pay on
Speaker 18: a monthly basis, as if you're paying a monthly lease
Speaker 18: or a monthly financing repayment on a monthly basis. But
Speaker 18: there's no upfront commitment, so there's no money down, So
Speaker 18: money down, Yeah, there's no deposit, there's no commitment for
Speaker 18: an extended period of time. You can sign up for
Speaker 18: one month and extend for another few months, or you
Speaker 18: can sign up for three months and extend or reduce.
Speaker 3: But here's the disconnect Andre that it's I know it
Speaker 3: is a peer platform. In other words, the cars on
Speaker 3: Touro are owned either by individuals or as you and
Speaker 3: I have discussed, people that have made a business as
Speaker 3: having a small fleet of vehicles. How does that tension
Speaker 3: work of somebody saying, Okay, here's my car, I'm going
Speaker 3: to rent it out for a few months.
Speaker 18: Well, there's a lot of people on tour as you mentioned,
Speaker 18: that are now professional hosts who are running a business
Speaker 18: on top of our platform, and they're really interested in
Speaker 18: getting maximum utilization for their vehicles, and they're also able
Speaker 18: to acquire vehicles from their neighbors and from their friends
Speaker 18: and from their family members. We call them co hosts,
Speaker 18: so it's not just their own cars. Typically, these power hosts,
Speaker 18: as we call them, they have a few cars of
Speaker 18: their own, but they're actually fleet sizes much larger because
Speaker 18: they are co hosts for many other car owners who've
Speaker 18: given them their cars so that they can monetize them
Speaker 18: on their behalf. And so these hosts are looking for
Speaker 18: ways to maximize their utilization. So they're very excited about
Speaker 18: the launch of monthly because it enables, you know, multi
Speaker 18: months of utilization and one trip instead of having lots
Speaker 18: of different trips on a month basically sets the price.
Speaker 18: Our hosts set the price, so we actually guide them
Speaker 18: to provide the most effective price. So we give them
Speaker 18: recommendations on pricing, and we find that many of our
Speaker 18: hosts are following our recommendations. For this launch, we have
Speaker 18: dramatically lowered our monetization, so now our trip fees are
Speaker 18: down to zero on monthly trips, so.
Speaker 2: We're submit for you.
Speaker 18: Then in the long run, well, we're actually monetizing our
Speaker 18: trips only on the host side and with the sale
Speaker 18: of protection, so there are three ways we monetize our trips.
Speaker 18: We've got our trip fee, our protection fee, and then
Speaker 18: our host fees. We've kept the host fee, we've kept
Speaker 18: the protection fee, but we've zeroed out our trip fee
Speaker 18: because we want to make sure that these monthly rentals
Speaker 18: are as affordable as possible.
Speaker 3: In the time that I've known you, you've always been
Speaker 3: directed by data and evidence. What do you see about
Speaker 3: the future of car ownership? The threat that I see
Speaker 3: to Toro has been what Tesla proposes to do right,
Speaker 3: operate a robotaxi fleet where Tesla owners can submit their
Speaker 3: car to anticipate in a row. It's actually fleet X. Essentially,
Speaker 3: there's a lot of car ownership questions.
Speaker 18: A lot of car ownership questions. As you mentioned in
Speaker 18: the beginning of the show. While car sales are resilient,
Speaker 18: they're still down from their peak, and we've never recovered
Speaker 18: from the peak of twenty seventeen when we hit seventeen
Speaker 18: and a half million vehicles sold in the country. And
Speaker 18: I believe that we've really reached peak car. You know,
Speaker 18: we're never going to go back to seventeen and a
Speaker 18: half or eighteen or larger numbers because people are looking
Speaker 18: at different ways to access cars, and we believe that
Speaker 18: Turo has a big role to play now that we've
Speaker 18: expanded our product offering to attack you know, much larger TAM.
Speaker 18: You know, the car ownership TAM is a trillion dollars,
Speaker 18: whereas the car rental TAM is only one hundred billion.
Speaker 2: So we're pretty excited about this launch. Andre, you and
Speaker 2: I have a tradition.
Speaker 3: It's where I ask you about IPO and given that
Speaker 3: circumstances have changed on over the last year, Yes, what's
Speaker 3: the latest thinking.
Speaker 18: The latest thinking is, we still don't think it's the
Speaker 18: right time for us. You know, we're taking a lot
Speaker 18: of big decisions internally to retool some parts of the business.
Speaker 18: We're excited about this slanch, as I mentioned, we think
Speaker 18: it expands our opportunity much larger and much larger market.
Speaker 18: We think that's going to help accelerate our growth and profitability.
Speaker 18: So we look forward to be back and talking about
Speaker 18: the API at some point in time.
Speaker 2: Well, I'll hold you to that commitment.
Speaker 3: Andre Hadad turo Ceo, thank you very much for joining us.
Speaker 3: That does it for this edition of Bloomberg Tech. The
Speaker 3: big story in the markets has been Warner Brothers Discovery
Speaker 3: the board coming out, saying they're looking at a range
Speaker 3: of strategic options, including sticking with an existing plan to
Speaker 3: split the business, maybe spinning something off, maybe considering a sale.
Speaker 3: Bloomberg then reported that those circling include Netflix and Comcast,
Speaker 3: adding to the prior reporting that Paramounts Guidance was also
Speaker 3: thinking of a bid. When we broke that news in
Speaker 3: the last hour, it was Comcast shares that reacted more strongly. Netflix,
Speaker 3: of course, team reports earnings after the bell, so is
Speaker 3: treading water. For that reason, Warner Brothers Discovery on track
Speaker 3: for his biggest jump since early September. Don't forget check
Speaker 3: out the podcast. Loads of you have been coming up
Speaker 3: to me all over the country saying that you listen
Speaker 3: to the show in the form of the pod, and
Speaker 3: you know where to find it online. iHeart Spotify and
Speaker 3: on Apple and of course on all the Bloomberg platforms.
Speaker 3: Much more to come this week. Stay with us. This
Speaker 3: is Bloomberg Tech.