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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarclay, and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Investors are partying like it's nineteen ninety nine. Investors an Oracle,

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Speaker 2: that is. And that's because the last time the stock

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Speaker 2: rally this much was nineteen ninety nine. Stocks up. As

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Speaker 2: John just said, nearly. You weren't even a line back then,

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Speaker 2: the two of you.

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Speaker 3: Oh go on, we remember the dot com bubble days.

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Speaker 2: So I want to bring in Annie Rograna, now Bloomberg

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Speaker 2: Intelligence technology analyst. He was around in nineteen ninety nine,

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Speaker 2: coming to us from our Chicago bureau. Okay, so we

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Speaker 2: know that you know it was a blowout quarter AI

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Speaker 2: just driving things there. But I want to talk a

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Speaker 2: little bit about traditional software, which is what this company

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Speaker 2: is all about, the fact that that's not really working

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Speaker 2: at Oracle. But it doesn't seem like investors care today.

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Speaker 4: On rug Yeah, so your Oracle is a very unique

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Speaker 4: company because it has your traditional software, but also a

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Speaker 4: few years ago it started a cloud business called Oracle

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Speaker 4: Cloud Infrastructure, something very similar to what Aws tees or

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Speaker 4: Microsoft Azure. And one of the advantages it has is

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Speaker 4: it just rents out it's you know, servers for people

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Speaker 4: to go out and train their AI models or you know,

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Speaker 4: run their applications on it. So this is really a

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Speaker 4: new business for them, you know, it just came up

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Speaker 4: the last few years, and that's where the biggest growth

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Speaker 4: is and that's what's driving the stock.

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Speaker 3: That's what's driving the stock, and that's probably where Oracle

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Speaker 3: is driving its spending as well. What's happening with the

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Speaker 3: rest of the company, it's operations, its software business. Is

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Speaker 3: it still cutting costs for instance, and reducing headcount?

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Speaker 4: Yeah, I think you're absolutely right about it. So the

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Speaker 4: advantage Oracle has compared to let's say a company like

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Speaker 4: core v for Nebus, is that it has a very

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Speaker 4: high margin database business and very high margin application business.

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Speaker 4: These businesses have gross margins, you know, let's say, north

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Speaker 4: of ninety percent. Now when you marry that with a

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Speaker 4: massive AI infrastructure business where you need to spend a

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Speaker 4: lot of money, that's problematic for somebody that doesn't have that.

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Speaker 4: But Oracle has that luxury that it can spend billions

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Speaker 4: of dollars. You know, before yesterday we were thinking they're

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Speaker 4: going to spend you know, somewhere in the low thirty

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Speaker 4: billion range, which was already higher than what they had guided.

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Speaker 4: And you know, even the street was expecting. They came

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Speaker 4: out and said they're going to spend over thirty five

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Speaker 4: billion and you know the next financial year. So that's

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Speaker 4: a lot of money going into expanding data center, buying

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Speaker 4: chips by you know, creating a new infrastructure to fulfill

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Speaker 4: this demand.

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Speaker 2: Now, also we should note that a number of analysts

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Speaker 2: are raising the price target on Oracle. TD Cowan caught

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Speaker 2: my eye, raising the target to three hundred and seventy

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Speaker 2: five dollars from three hundred and twenty five dollars a share.

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Speaker 2: But when you look at the competition here, Microsoft, Amazon,

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Speaker 2: on Alphabet, what does Oracle or how does Oracle differentiate

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Speaker 2: itself not only for the customer the client, but for investors.

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Speaker 4: Yeah, And one of the things I would say is

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Speaker 4: everybody is having a good time in this particular party.

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Speaker 5: It's not just you know, one company that's gaining it.

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Speaker 4: It's just the size of their business is far smaller

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Speaker 4: than it is for let's say AWS or Microsoft. You know,

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Speaker 4: in the last financial year, the revenue was you know,

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Speaker 4: roughly about ten billion or so. Aws's rund rate is

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Speaker 4: one hundred and twenty five billion. Microsoft's business is seventy

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Speaker 4: five billion. Google's business is fifty billion. So you know, please,

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Speaker 4: you know, you've got to take that with the context

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Speaker 4: of how big Oracle's cloud infrastructure is compared to some

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Speaker 4: of the bigger vendors.

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Speaker 3: Out there, you know, honorog it feels like Oracle kind

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Speaker 3: of came from out of nowhere with its you know,

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Speaker 3: contributions to the AI space and being such a big player. Certainly,

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Speaker 3: the bookings of almost half a trillion dollars caught my

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Speaker 3: eye on It's more than four times what it was

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Speaker 3: the same time last year. Are there any other kind

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Speaker 3: of dark horses out there that you would be keeping

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Speaker 3: your eye on that could be the next Oracle, which

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Speaker 3: is already feels like it's the next in VideA.

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Speaker 4: Yeah, I think one of the things you have to

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Speaker 4: think about it is it's not easy to come up

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Speaker 4: with this structure or a business like this, because you

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Speaker 4: need billions of dollars to create a data center or

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Speaker 4: to lease out a data center then buy equipment like

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Speaker 4: in Vidia chips and computing equipment. There are a handful

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Speaker 4: of companies like you know, Core beav of Nebus, which

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Speaker 4: are smaller neo cloud players that specialize in renting and

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Speaker 4: VideA GPUs to customers. Now, the bigger vendors have the

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Speaker 4: capital that they are also expanding it. But again, as

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Speaker 4: I said, given the size of the increment that they

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Speaker 4: are seeing, you know, you're not getting that same growth rate.

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Speaker 2: Do you think there's a little over exuberance though in

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Speaker 2: the market today with Oracle stock up nearly forty percent,

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Speaker 2: especially with so much talk about whether or not we

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Speaker 2: are in an AI bubble and what happens if it

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Speaker 2: starts to deflate.

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Speaker 5: Yeah.

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Speaker 4: See, one of the things you have to remember is

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Speaker 4: for Oracle, at least they have this backlock of autos

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Speaker 4: coming in and it's coming you know. For example, one

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Speaker 4: of the biggest customers right now is OPENINGI If Opening

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Speaker 4: Eye continues to expand revenue at a good pace over

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Speaker 4: the next several years, they are going to be spending

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Speaker 4: a lot of money to train their models in order

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Speaker 4: to stay ahead.

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Speaker 5: So I think there is a lot of relationship over there.

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Speaker 4: If let's say you and I don't use chat GPT

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Speaker 4: as much, that would have an impact on opening Ay's revenue.

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Speaker 4: That would have impact downstream revenue on all the other players,

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Speaker 4: you know, whether that's in video oticle.

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Speaker 5: But frankly speaking, we are not there yet, you know.

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Speaker 3: I'm looking at the mag seven members and how they're

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Speaker 3: performing today. In video is up almost five percent, Amazon

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Speaker 3: down one point nine percent, Alphabet which is the parent

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Speaker 3: of Google up marginally up one point zero point one percent,

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Speaker 3: and Microsoft getting six tens of one percent.

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Speaker 6: It doesn't feel like this is a situation.

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Speaker 3: Where it's a zero sum game Oracle wins and Microsoft,

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Speaker 3: Google and Amazon lose, or is it no?

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Speaker 4: So there are a few companies that fall into this pocket,

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Speaker 4: you know, and those include Amazon Web Services, Microsoft.

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Speaker 5: Google Cloud Code, viv Oracle.

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Speaker 4: And Mhibius for example. So these are the ones that

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Speaker 4: are seeing extra spending right now. But when you look

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Speaker 4: at on the application side, you know, whether that salesforce

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Speaker 4: or workday, those guys are not seeing that benefit because

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Speaker 4: they're not in that infrastructure game. So there's a huge

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Speaker 4: difference between the two vendors, or between the two category

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Speaker 4: of vendors, right now we are more in the built

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Speaker 4: phase of AI, not the implementation phase of AI.

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Speaker 2: You know, it's hard to believe, Scarlet, but this stock

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Speaker 2: and is now worth more than has a larger market

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Speaker 2: cap than Walmart, Eli, Lilly, JP, Morgan Chase.

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Speaker 3: Yeah, that is pretty remarkable. And again it feels like

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Speaker 3: it kind of came from out of nowhere.

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Speaker 2: You're right on that very recently, which is why I

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Speaker 2: brought up you know, Amazon, Microsoft, right on your rog

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Speaker 2: I mean, the fact that those were the names we

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Speaker 2: were really talking about when it came to AI, and

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Speaker 2: then sort of Oracle comes out of out of the blue.

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Speaker 4: Yeah, but that's the whole point. This particular infrastructure. If

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Speaker 4: you're going to run large models, it's very unlikely you

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Speaker 4: can do it in house. I mean, you can do it,

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Speaker 4: but you require a lot of investment going in. You're

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Speaker 4: better off renting out data center capacity or computing capacity

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Speaker 4: from one of the cloud vendors. And Oracle has the

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Speaker 4: money to spend it, and they have the relationship with

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Speaker 4: Nvidia to get those GPUs, And on top of that,

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Speaker 4: they're offering this to customers and saying here's my equipment,

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Speaker 4: come and test it out the way you like it. Amazon,

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Speaker 4: on the other hand, for example, sells it as a

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Speaker 4: package and that's where you're not. You're seeing some distinction

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Speaker 4: and also the size. As I mentioned before.

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Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 6: We're keeping an eye on Novo Nordisk, the drug maker.

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Speaker 3: Remember they are the company behind Ozembic and Mogovi has

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Speaker 3: decided to cut nine thousand jobs and also cut its

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Speaker 3: profit forecasts as well.

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Speaker 6: So let's bring in Sam Fazzelli.

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Speaker 3: He is Bloomberg Intelligence, Director of Research for Global Industries

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Speaker 3: and Senior Pharmaceuticals, our go to guy for all things

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Speaker 3: on global drug makers, and Sam for Novo Nordisk. This

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Speaker 3: is part of a broader restructuring that the new CEO

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Speaker 3: is undertaking. Can you tell us a little bit more

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Speaker 3: about the changes taking place?

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Speaker 5: Yeah? Sure, and very nice to see you again. All.

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Speaker 7: So, the story here is that this is not the

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Speaker 7: first time they've lowered guidance for the year. I mean

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Speaker 7: this time there's an impact on the EPs front from

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Speaker 7: obviously the cost of restructuring, assuming they can get it

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Speaker 7: all done this year, but it's a pretty chunky one

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Speaker 7: nine thousand people, about eleven percent of the workforce, and

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Speaker 7: a lot of that coming from Denmark. If you read

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Speaker 7: the essence of the press release that they put at

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Speaker 7: there's a couple of things that they bring out.

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Speaker 5: They want to invest more on R and D.

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Speaker 7: Well, what I think this is telling you is that

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Speaker 7: the growth that they have planned for the next five years,

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Speaker 7: they may be thinking maybe that won't come as test

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Speaker 7: as we were expecting it because of competition from Lily,

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Speaker 7: compounders and other products potentially coming to market to the

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Speaker 7: pace that they were hoping. So if you want to

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Speaker 7: keep investing in R and D, you need to liberate

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Speaker 7: some cash. And also it looks like that they're also

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Speaker 7: thinking about changing the way that they're doing their marketing

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Speaker 7: because of the different channels that they're getting involved with

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Speaker 7: direct to consumer. That is not something that FORUMA has

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Speaker 7: done very often before. In fact, only Lily had done

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Speaker 7: it prior to this, also for obesity drugs. So maybe

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Speaker 7: the costs of that are different, and there's an element

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Speaker 7: that that they've referred to in there, which is a

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Speaker 7: culture of performance related reward, and you think to yourself, well,

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Speaker 7: what was it before? So it seems like that they

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Speaker 7: want to make it much harder. Focus on you've got

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Speaker 7: to deliver because we need the growth. So that's the

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Speaker 7: interesting wle to watch, you.

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Speaker 2: Know, Sam, I think to a lot of casual investors

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Speaker 2: who don't deep dive into you know, Novo Nordisk the

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Speaker 2: way you might say, would look at this and say, listen,

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Speaker 2: they have the most popular weight loss drugs, right, will

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Speaker 2: go vi o Zembek. Why is this company having these

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Speaker 2: problems when you drill down or is it just a

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Speaker 2: problem with having to scale too quickly? Is it that

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Speaker 2: the company isn't nimble enough to sort of change with

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Speaker 2: the times.

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Speaker 7: Well, Novodordis has been a poster child of how you

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Speaker 7: grow from a small company selling to a relatively basic

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Speaker 7: set of products twenty thirty years ago to one that's

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Speaker 7: become essentially one of the innovators in the space. They

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Speaker 7: brought the first jil we want to market, so we

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Speaker 7: can't hold them for that. It's just that I think

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Speaker 7: this growth that they had to go through where the

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Speaker 7: planning was done, you know a lot of I mean,

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Speaker 7: we have one hundred billion dollar market potential for or

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Speaker 7: obesity as a whole, right, so it's just difficult, I think,

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Speaker 7: to judge into this space. And maybe the previous CEO

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Speaker 7: had looked and said, I'm pretty sure we're going to

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Speaker 7: be fifty percent of that market. We need to plan

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Speaker 7: for that growth. And then two things changed. Competition from

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Speaker 7: really is superintense. They have what I would call it

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Speaker 7: a better drug in terms of the efficacy profile that's

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Speaker 7: been shown in head to A trials. And then of

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Speaker 7: course you've got on top of that, compounders that don't

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Speaker 7: seem to be don't seem to be going away. They

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Speaker 7: keep taking cheaper generics or generics manufactured. They'll try and

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Speaker 7: making the drugs. So that's where I think the new

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Speaker 7: Area issue is in that we all expected the FDA

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Speaker 7: to really clamp hard down on that and they haven't

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Speaker 7: made issues, you know, statements, but they're allowing them. They

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Speaker 7: even found areas outside the US where these compound compounders

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Speaker 7: can get their.

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Speaker 5: Drugs from, which is counterintuitive. So those are the issues.

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Speaker 3: Yeah, So it feels like NOVA Nordics gave up its

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Speaker 3: first mover advantage, but has it lost its lead completely

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Speaker 3: in the US obsity market to Elila Lee permanently or

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Speaker 3: is this still very much a wide open contest.

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Speaker 7: No, I mean we have I can't remember what the

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Speaker 7: latest number is in terms of what percentage of people

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Speaker 7: who would benefit for these from these drugs who should

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Speaker 7: be able to get them around it. But it's not

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Speaker 7: in the big percentages. I'm pretty sure it's in the

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Speaker 7: single digit percentages. So there's a lot of room to

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Speaker 7: play for. I think our estimate, and I hope I'm

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Speaker 7: not completely off on this, was about one hundred and

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Speaker 7: eighty nine million people could be in these drugs by

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Speaker 7: twenty thirty. That's enormous. There's lots of other people coming

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Speaker 7: with orals with other things. It's not a matter of

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Speaker 7: having lost the lead. Yes, really surprised. Within slightly different mechanism,

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Speaker 7: it's still the same but with a better drug. There's

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Speaker 7: still room for innovation here, which is what the company's saying.

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Speaker 7: We need to save to keep investing in that innovation.

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Speaker 7: So that's the area I think that they're highly focused on.

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Speaker 3: That Stay with us. More from Bloomberg Intelligence coming up

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Speaker 3: after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern Apple Coarclay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: It's a tough day for investors and Synopsis or the

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Speaker 2: chip design software provider missed Wall Street's estimates, hurt by

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Speaker 2: weakness and its design IP business. I want to bring

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Speaker 2: in naraje Ptel, now Bloomberg Intelligence senior software analyst, for

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Speaker 2: more on this. So give us the larger story behind

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Speaker 2: this disappointment. I think is an easy word to use

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Speaker 2: for this. I mean, I don't know. I feel like contostors.

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Speaker 2: Yeah right, all right, Narage, what's your take?

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Speaker 8: Yeah, this is a major shock to the investor community,

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Speaker 8: and I think you see it in the stock price.

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Speaker 8: Specifically the company's design IP business that's about thirty percent

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Speaker 8: of sales. It has been growing fifteen percent annually and

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Speaker 8: their leader in a subcategory called interface IP. This business

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Speaker 8: now is going flat. It was tracking to fifteen percent

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Speaker 8: growth as of two Q and the remaining two quarters

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Speaker 8: are big shock. This quarter was down nine percent. Next

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Speaker 8: quarter it's going to be down some more. And this

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Speaker 8: catalyst came out of the blue, I would say for

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Speaker 8: a lot of the investor community because design IP has

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Speaker 8: a lot of tailwinds related to AI complex chip design

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Speaker 8: as well as all this advanced architecture that the semiconductor

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Speaker 8: design companies like in video, Broadcom, Intel are pursuing.

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Speaker 3: So can we blame or can the company blame factors

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Speaker 3: beyond its control and here and referring of course to

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Speaker 3: trade war tariffs for that or is this something that

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Speaker 3: Synopsis just wasn't prepared for.

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Speaker 8: Yeah, there's a lot of interesting points there, Scarlett, and

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Speaker 8: I think when we're looking at trade war, yes, a

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Speaker 8: little bit of an issue. And the China Eda band

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Speaker 8: that initiated end of May that lasted about six weeks,

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Speaker 8: that was introduced by the Bureau of Industry and Security

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Speaker 8: in the US. But their major peer cadence and competitor,

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Speaker 8: which is second in market share, they reported several weeks

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Speaker 8: ago they had the same macro issues and they actually

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Speaker 8: tuned up their guidance. So this may be a little

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Speaker 8: more company specific than macro factors. And I think what's

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Speaker 8: hinting us that they made big investments to catch up

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Speaker 8: Intel foundry relative to some of the other competing founderies

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Speaker 8: with their IP and this hasn't returned any type of

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Speaker 8: scale on the revenue side for them, and this reality

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Speaker 8: really hit them this quarter and for the next several quarters.

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Speaker 2: So did the CEO Gazi say anything on that post

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Speaker 2: earnings call to give investors a little light at the

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Speaker 2: end of the tunnel here an indication of how they're

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Speaker 2: going to turn things around at Synopsis.

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Speaker 8: Yeah, I think it was a little marky in terms

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Speaker 8: of the numbers to make a deal with Ansis that

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Speaker 8: was about thirty five million dollars in mid July. This

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Speaker 8: should have added about six hundred million in total revenue,

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Speaker 8: So the numbers didn't add up to their guidance of

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Speaker 8: seven billion. So a little light in terms of adding

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Speaker 8: this acquisition that closed. So that's going to be a

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Speaker 8: little bit of a digestion period, we think, and it's

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Speaker 8: going to take several quarters for the investor community to

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Speaker 8: settle in. And I think, you know, we're facing this

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Speaker 8: issue where they have a lot of AI related tailwinds.

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Speaker 8: You're building more complicated chips, you're using a lot more

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Speaker 8: interface IP for these chips, and they're the market leader

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Speaker 8: in this market, so things aren't adding up. I guess

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Speaker 8: when we look at, you know, the story and the

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Speaker 8: narrative that they've communicated over the last several quarters, the

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Speaker 8: AI story that we're hearing from Nvidia and Broadcom, and

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Speaker 8: some of the investments that are occurring across the ecosystem.

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Speaker 3: So very quickly here is there any bright Is there

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Speaker 3: any good news in this reported anything to hang your

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Speaker 3: hat on if you are a long term investor and

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Speaker 3: you don't want to give up yet.

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Speaker 8: Yeah, I think this space is an oligopoly Cadence and Synopsis.

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Speaker 8: There's no new entrants, competitive pricesure pressure is very low,

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Speaker 8: there's no substitute for technology. You have to use their

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Speaker 8: tools to design chips, and the more advanced the chips get,

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Speaker 8: the more features you introduce. You introduce a lot of

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Speaker 8: verification and sign off steps to make sure all the

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Speaker 8: electrical characteristics are working. You're not generating too much heat.

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Speaker 8: You have mechanical structures, so you have to use their IP.

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Speaker 8: You have to use their EDA Electronic Design Automation tools.

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Speaker 8: They're thirty five percent share. Cadence is at thirty two

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Speaker 8: percent share, and you have Siemen said about sixteen percent.

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Speaker 8: So you don't have a lot of alternatives here, and

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Speaker 8: once you build on any of these platforms, it's very

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Speaker 8: hard to switch because your engineers are used to the

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Speaker 8: type of data and the type of tool sets and

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Speaker 8: the type of bugs that they produce and go through

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Speaker 8: their workflow.

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Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am.

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Speaker 6: He's done on.

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Speaker 1: Apple, Coarclay, and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: I am taking a look at Chewy right now, the

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Speaker 2: online pets supply retailer, taking it on the chin today.

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Speaker 2: Profit falling in its fiscal second quarter, and that's despite

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Speaker 2: an uptick in sales. The company did add more customers

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Speaker 2: last quarter. Let's break this down though, with Diana rosserro

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Speaker 2: Penya Bloomberg Intelligence as consumer staples analyst. So, Diana tell me,

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Speaker 2: I mean this looks like a mixed quarterly report from Chewy.

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Speaker 2: What has gotten investors so hot and bothered here?

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Speaker 9: Yes, I think what investors were trying to see in

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Speaker 9: this report was that there was an inflection point in

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Speaker 9: the industry, and I don't necessarily think that they have

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Speaker 9: founded in this report.

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Speaker 2: Sales was higher than.

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Speaker 9: The company the investors expected, but margin guidance ebidult guidance

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Speaker 9: was kept and that was, you know, a little bit

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Speaker 9: of any you know, bad news for the company and

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Speaker 9: the industry as at a whole.

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Speaker 2: Talk to me about innovating in this industry, because I

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Speaker 2: would think that if you just stop innovating, that's when

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Speaker 2: you start to have the problems. Is that starting to

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Speaker 2: happen with Chewi. I mean, it is a leader in

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Speaker 2: this space, but does it need to still be one

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Speaker 2: step ahead of the curve and innovate here?

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Speaker 9: Well, yes, and I think that is one of the

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Speaker 9: things that they were trying to communicate during their earnings call.

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Speaker 9: They are actually investing and that is going to probably

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Speaker 9: offset some margin momentum going forward at least the second

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Speaker 9: half of the year. They have led of offices now in

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Speaker 9: four states.

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Speaker 2: I've seen that, Yes, exactly.

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Speaker 9: They actually launched Chewy Plus, which is a membership program

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Speaker 9: and apparently has been very successful. And also they have

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Speaker 9: launched private brands with get Real, which is a fresh

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Speaker 9: frozen dog food brand.

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Speaker 2: So the company also added a pretty decent amount of

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Speaker 2: active customers, right one hundred and fifty thousand on a

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Speaker 2: sequential basis. So now it's total customer base is nearly

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Speaker 2: twenty one million. How much more room is there do

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Speaker 2: you think to grow because we know people will spend

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Speaker 2: big on their pets.

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Speaker 9: Yes, and what we're seeing is probably gonna see a

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Speaker 9: greater contribution on the pricing side compared to the customer base.

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Speaker 9: And that again, that's another reason. While they did show

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Speaker 9: positive momentum on customer base, it was still you know,

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Speaker 9: in the mid single sit digits, which is not necessarily

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Speaker 9: significant growth or growth that they had seen before. So

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Speaker 9: you know, we still see an equal contribution for the

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Speaker 9: customer base, but it's not necessarily as impressive as he

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Speaker 9: was years before.

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Speaker 2: I'm curious if they talked at all on the post

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Speaker 2: earnings call about tariffs and how that might be impacting.

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Speaker 2: I would imagine a number of their products are coming

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Speaker 2: from overseas, China in particular, when you're talking about some

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Speaker 2: of these pet toys as well.

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Speaker 9: Yes, and they did not quantify the hit that it

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Speaker 9: was going to be on because of Good Soul, but

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Speaker 9: they have mentioned that private label. Their private brands are

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Speaker 9: significantly affected by tariffs, and that is one of the

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Speaker 9: reasons they probably help margin guidance for the year because

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Speaker 9: they they said that they're going to invest in pricing

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Speaker 9: and be more competitive.

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Speaker 2: Who does Chewi see as their biggest competitor, I would.

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Speaker 9: Say Amazon, and also and mortar retailers like pat Smart

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Speaker 9: and Petco And.

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Speaker 2: So what about the horizon? I mean, I don't know

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Speaker 2: how far they went out, but what are projected projections?

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Speaker 2: What kind of guidance are they offering investors?

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Speaker 9: So they only have noted the annual guidance. They don't

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Speaker 9: necessarily want to speculate on other things. But you know,

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Speaker 9: they they still think that there's a lot of momentum

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Speaker 9: in the industry, and I think investors are not necessarily

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Speaker 9: that they do not agree on the long term potential,

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Speaker 9: but they're more worried about what the six months are

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Speaker 9: going to bring. The next six months.

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Speaker 2: Yeah, and in terms of profit, what what was the

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Speaker 2: pressure on profit? They said it was tied to share

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Speaker 2: based compensation. There were also some related tax issues. Can

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Speaker 2: you just tell us a little bit more about that?

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Speaker 9: Yes, that was another thing, and you know what they

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Speaker 9: mentioned there was, I mean, margins grew and you know

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Speaker 9: it was it was gross margin was up ninety basis

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Speaker 9: points year every year. But they mentioned that that was

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Speaker 9: going to be the high point of the manage expectation exactly.

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Speaker 9: And that is why what the you know, the investor

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Speaker 9: community was was phoning in.

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