Speaker 1: From the heart where innovation, money and power.
Speaker 2: Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Heidel Bloomberg's world headquarters in New York.
Speaker 1: And I'm Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 5: Coming up full. Earning's coverage ahead.
Speaker 4: Tesla shares they slum after warning about a notably slower
Speaker 4: growth rate.
Speaker 5: Details ahead, Plus.
Speaker 1: We stick with earnings and sit down with the CFO
Speaker 1: of service now as the company hits a record high
Speaker 1: on strong results.
Speaker 4: And Microsoft cunning nearly two thousand jobs in its gaming division,
Speaker 4: including Activision, will bring in the latest as the tech giant,
Speaker 4: slash is eight percent of its video game workforce, with
Speaker 4: key personnel leaving well a.
Speaker 2: Pretty ferocious news cycle.
Speaker 1: Intel is out with Ernie after the bell, but a
Speaker 1: deal announced this morning with UMC, the Taiwanese chip maker. Basically,
Speaker 1: UMC gets access to twelve nanometer technology. On the manufacturing side, Intel,
Speaker 1: in the context of its Arizona facilities, gets utilization of
Speaker 1: some prior gen hardware. This is a great win for
Speaker 1: onshoring manufacturing capacity in the US. You think the commerce
Speaker 1: department is pretty happy about it. We will look into
Speaker 1: that deal for Intel's foundry business later in the program.
Speaker 2: IBM up twelve percent.
Speaker 1: Touching a ten year high after a strong outlook in
Speaker 1: the sales context. They're warning about some workforce reduction, but
Speaker 1: the market likes the outlook on the enterprise side from IBM.
Speaker 1: And then there's Microsoft up nine tens one percent, cutting
Speaker 1: nineteen hundred jobs at both Activision and Xbox units. This
Speaker 1: happens though in M and A, doesn't it. Sometimes. We
Speaker 1: will go to Jason Schreier, our video games correspondent later
Speaker 1: in the program to really understand what's happening with Microsoft Activision.
Speaker 2: There is one single name the world's.
Speaker 1: Paying attention to today, and that is Tesla. Tesla is
Speaker 1: down significantly more than ten percent on an inch dai
Speaker 1: basis biggest drop since October. If it closes down now
Speaker 1: eleven and a half percent, that will be the biggest
Speaker 1: drop in more than a year. It's trading at its
Speaker 1: lowest level since May. Why, well, the market is zeroed
Speaker 1: in on the guidance Tessa gave that production or output
Speaker 1: growth in twenty twenty four will be significantly lower than
Speaker 1: it was in twenty twenty three, and at the same
Speaker 1: time they dropped this pretty long standing guidance of fifty
Speaker 1: percent compound annual average growth, which goes all the way
Speaker 1: back to the end of twenty twenty. Now, within that,
Speaker 1: there's a lot of optimism about AI, about Optimus, the
Speaker 1: robot FSD, and Elon Mask's role within the company, a
Speaker 1: lot to digest. Let's break it down with Tasha Kini,
Speaker 1: director of Investment Analysis in Institutional Strategies at ARC Invests,
Speaker 1: and Loatasha, I know you're super bullish on this name.
Speaker 1: Let's focus on what the market's looking at in the
Speaker 1: first instance, which is a next generation EV platform is coming.
Speaker 1: We're coming out the back of the Model.
Speaker 2: Three and why era.
Speaker 1: So output will be less in twenty twenty four from
Speaker 1: a growth perspective.
Speaker 2: Does that worry you?
Speaker 6: Yeah, well you said it.
Speaker 7: You know, we're really focused on the long term here
Speaker 7: at ARC invest which really you should be for a
Speaker 7: disruptive name like Tesla. So you know they did mention, yes,
Speaker 7: production growth for this coming year will be slower. You know,
Speaker 7: they are focused on this next generation vehicle platform and
Speaker 7: they're they're attributing you know, the part of the cautiousness
Speaker 7: on production to that and overall that's a great thing, right,
Speaker 7: you know as well as anyone that I'm excited about
Speaker 7: the robotaxi opportunity. So the fact that they're building a
Speaker 7: custom robotaxi vehicle is really exciting and shows their confidence
Speaker 7: and their autonomous capability. You know, we have FSD twelve,
Speaker 7: their latest version of the autonomous technology software in the
Speaker 7: car rolling out to customers. That again shows confidence and
Speaker 7: their capability. We also heard that Optimists might begin shipping
Speaker 7: next year, So I think, you know, Tesla is this
Speaker 7: behemoth in the AI space. It's going to be one
Speaker 7: of the greatest AI opportunities of our time, and I
Speaker 7: think to ignore that is frankly wrong when thinking about
Speaker 7: the stock.
Speaker 6: So I'm excited about it.
Speaker 1: Well, the next gen vehicle platform joins the traditional car
Speaker 1: making side of the story with the AI story, right,
Speaker 1: what did we learn? Must say it will be low cost,
Speaker 1: that they're making progress on start of production, which will
Speaker 1: start in Texas in the first instance. But he said
Speaker 1: take twenty twenty five with a grain of salt. Did
Speaker 1: you learn enough during the call about the next gen
Speaker 1: platform to fully understand where we go from here on
Speaker 1: this future ROBOTAXI concept.
Speaker 6: Yes, well, I'd say.
Speaker 7: You know, overall, I think Elon is a lot more
Speaker 7: cautious than he has been in the past with his forecast.
Speaker 7: I mean he said it on the call that he
Speaker 7: has been really optimistic with timelines, and honestly, who can
Speaker 7: blame them, because I think humans in general are pretty
Speaker 7: bad at predicting AI progress. But yes, we heard that
Speaker 7: they can start production next year on the next generation
Speaker 7: vehicle platform. You know, I think there's a lot of
Speaker 7: cause for optimism, and what they said around margins, so
Speaker 7: we saw automotive gross margins X credits tick up.
Speaker 6: In the quarter.
Speaker 7: You know, we did hear that one they're they're cutting
Speaker 7: costs on a per car basis in a way that's
Speaker 7: really unprecedented in the auto industry.
Speaker 6: And they also said.
Speaker 7: That even though you know, on their current vehicle platform
Speaker 7: they're sort of reaching the limits of that cost reduction,
Speaker 7: that doesn't mean that they're done right. So we heard
Speaker 7: on the design side, you know, it's commodity prices that
Speaker 7: flows through to.
Speaker 6: The underlying costs of the vehicle. That takes some time.
Speaker 7: So there's still optimismism there, and I think that's amazing.
Speaker 7: I mean, when you look at EV's as a whole,
Speaker 7: traditional automakers are cutting back on their electric vehicle platforms.
Speaker 7: I mean that's a bad idea because evs are already
Speaker 7: cost competitive with guess power cars us what, it's.
Speaker 6: Only going to get cheaper. So this is the future
Speaker 6: and Tesla is the leader there your models.
Speaker 4: I mean the last time it was updated, you had
Speaker 4: an expected value for share of two thousand dollars in
Speaker 4: Tesla by twenty twenty seven, predicated on the idea of
Speaker 4: this robotaxi venture on the bull and the bear case.
Speaker 4: Where do you stand right now when he is saying
Speaker 4: take twenty twenty five with a grain of salt, how
Speaker 4: much do you think we will see robotaxis become in use,
Speaker 4: in place, revenue generating by twenty twenty seven.
Speaker 7: Yeah, So you know, we're currently updating our model lookout
Speaker 7: for let's say, over the next few months, and updated
Speaker 7: price target for a master for twenty twenty eight. And
Speaker 7: actually our big ideas deck or annual research presentation on
Speaker 7: you know, the technologies that we cover as a whole
Speaker 7: is coming out soon, so that'll give you a little preview.
Speaker 7: But I'd say overall, you know we are on economy, right,
Speaker 7: you think about it in the five year term, So
Speaker 7: could they be late a few quarters?
Speaker 6: Absolutely? And again humans are bad at predicting AI, right.
Speaker 7: I could have told you comfortably the night before CHATCHBT
Speaker 7: came out and was released to the world the chatbots
Speaker 7: weren't that good.
Speaker 6: But guess what had changed overnight?
Speaker 7: And we already see from players like Waimo that robotaxies
Speaker 7: are possible. We actually already see from Tesla that robotaxes
Speaker 7: are possible because you can watch the consumer videos online
Speaker 7: that show people that have virtually no interventions than full point.
Speaker 6: To point rides.
Speaker 7: So it's just a matter of when and do I
Speaker 7: think that'll happen in the next five years? Yeah, And
Speaker 7: I think we've heard again some of the confidence in
Speaker 7: f SD twelve, which is an important milestone for them
Speaker 7: in making the road to full economy.
Speaker 4: On the call, Patasha, your thesis, an ARCS thesis on
Speaker 4: the bet of Tesla is that it is inextricably linked
Speaker 4: with AI, with robotics. Yet we hear Elmask threatening to
Speaker 4: take those two key things that innovation elsewhere if he
Speaker 4: doesn't get the twenty five percent votings control that he
Speaker 4: wants in the company.
Speaker 5: Are you worried by that threat?
Speaker 7: I think that's really overblown the fear about that. I mean, one,
Speaker 7: we are very happy to have. Elon must be incentivized
Speaker 7: to change the world. I mean, this man is clearly
Speaker 7: capable of amazing things when it comes to robotics and AI,
Speaker 7: so we want his incentives to be aligned with the
Speaker 7: future of Tesla. Also, you know, Tesla's been investing in
Speaker 7: this for you know, the past decade or so.
Speaker 6: They are years ahead of the competition when it comes
Speaker 6: to AI.
Speaker 7: To give you an example, currently Tesla vehicles are able
Speaker 7: to access over two million miles per day driven in
Speaker 7: full self driving from customers. So that's very important training
Speaker 7: data that you need to make a fully autonomous car.
Speaker 7: You know, way mow in the course of the lifetime
Speaker 7: of the project as single digit millions worth of driving data.
Speaker 7: So this is you know, Tesla is so much further
Speaker 7: ahead when it comes to scale on a I already
Speaker 7: and again I'm really excited for this coming year.
Speaker 6: Optimists.
Speaker 7: We think could be you know, general purpose robots could
Speaker 7: be roughly a tenillion dollar mark market alone in manufacturing.
Speaker 6: Even more, when you look to, say like household tasks,
Speaker 6: which could be further down the line. So there's so
Speaker 6: many exciting things ahead for Tesla.
Speaker 7: So I think the focus on you know, demand production
Speaker 7: in the short term is really just that at its
Speaker 7: short term focus when you want to be long term focused.
Speaker 4: With this name, Tasha KINI still saying vilishly thank you,
Speaker 4: director of Investment Analysis and Institutional Strategies at ARC invest.
Speaker 5: Meanwhile, we're just talking about it.
Speaker 4: How Musk is pretty much persisting with his pursuit of
Speaker 4: a bigger controlling stake in Tesla, wanting the board to
Speaker 4: approve of an increase of twenty five percent holding from
Speaker 4: the thirteen percent he currently has. Of course, he is
Speaker 4: threatening that without it, Hilbill is ai and robotics products elsewhere.
Speaker 4: During the earnings call on Wednesday, he said that with
Speaker 4: so little influence at the company at this stage, I
Speaker 4: could be voted out by some random shareholder advisory firm.
Speaker 5: I think about whether.
Speaker 4: He could be voted out, whether he should be voted out,
Speaker 4: and indeed what is holding should be with kristenhal founder
Speaker 4: and CEO of Near Impact Capital, is a social impact
Speaker 4: fund that's owned about two n eighty two thousand dollars
Speaker 4: of Testa stock as on mid year, and has waged
Speaker 4: pressure campaigns against the company for years, including via shareholder resolutions.
Speaker 5: So, Kristin, we know the era with which you come.
Speaker 4: In fact, the last time you joined the show, it
Speaker 4: was surrounding the anti Semitic controversy surrounding and Lamask and
Speaker 4: you said, he's got to go.
Speaker 5: What do you think of him?
Speaker 4: One and twenty five percent control of the company?
Speaker 5: Carline.
Speaker 8: Thanks for having me today. This is such an interesting
Speaker 8: and of course complicated CEO. So when we were talking
Speaker 8: about anti semitism, there just isn't any room in corporate
Speaker 8: America anywhere for those types of comments, and so that's
Speaker 8: where that was coming from. Of course, this CEO is
Speaker 8: very unique both on the innovation, the ability to step
Speaker 8: outside the box and completely go against the status quo,
Speaker 8: and in lots of ways that's really important. That's really
Speaker 8: you know, he's not tied to how we've done things
Speaker 8: in the past, and he wants to do things differently
Speaker 8: where we're cautious are some of these inflammatory statements. So
Speaker 8: he wants twenty five percent ownership, and yet you know
Speaker 8: he had almost that, He's had almost that in the past.
Speaker 8: I think he's down to about thirteen percent now, having
Speaker 8: used some of that money to purchase X And so
Speaker 8: what do we mean about incentives. I'd say we're also
Speaker 8: very much in agreement that we want the CEO to
Speaker 8: have incentives for the long term of the company. And
Speaker 8: yet money isn't an incentive to the world's richest man.
Speaker 8: So having those voting rights is going to be really interesting.
Speaker 8: He did make some comments in the earnings call yesterday
Speaker 8: about ISS and Glass Lewis. They do make recommendations about
Speaker 8: and many of the institutional investors follow those recommendations as
Speaker 8: far as voting rights, and so we like to have
Speaker 8: some of these recommendations coming out so that we can
Speaker 8: rein in a CEO who may need that from time
Speaker 8: to time.
Speaker 2: Kristin.
Speaker 1: What mus said about ISS was that his nickname for
Speaker 1: them was Isis, which clearly is an inflammatory comment. I
Speaker 1: know that our audience just want to understand the basics
Speaker 1: here from impact investors like NIA on their rationale, right,
Speaker 1: if there are many that just say Elon Musk says
Speaker 1: things that upset people, he says things that are controversial,
Speaker 1: but at the same time, over a ten year period,
Speaker 1: he has grown Teslas to be the clear market incumbent
Speaker 1: in evs. He's changed the game for space technology and
Speaker 1: mankind's ability to get to lower orbit.
Speaker 2: Excuse my voice, So.
Speaker 1: How important to you is that you kind of get
Speaker 1: some result here without offsetting you know what? Is quite
Speaker 1: clearly a capable leader.
Speaker 8: And thanks so much for that question. So capable leader
Speaker 8: that I would say that's up for grabs. He's certainly
Speaker 8: leading quite a few, and of course he's leading in
Speaker 8: the AI and we actually were really interested in that
Speaker 8: battery play and he's shown that that's a really important
Speaker 8: part of what they want to roll out both into
Speaker 8: twenty twenty four, twenty five and beyond. Where we have
Speaker 8: questions and concerns are some of his statements. And so
Speaker 8: comparing ISS, which is Institutional Shareholder Services, to ISIS, that's
Speaker 8: inflammatory and it doesn't even make any sense. This is
Speaker 8: a group that puts out proxy recommendations based on what
Speaker 8: they believe is good for the long term of company.
Speaker 8: They have nothing to do with ISIS, so that that's problematic.
Speaker 8: He's also made some comments recently about DEI diversity equity
Speaker 8: inclusion that really do cause concerns, particularly because we need
Speaker 8: Tesla to be to have a really strong brand, both
Speaker 8: for the consumer side, because people need to be feel
Speaker 8: really strong and great about purchasing and driving that car
Speaker 8: using that battery, also the solar for rooving. And what
Speaker 8: we're concerned about is his ability to attract retained top
Speaker 8: talent if people don't see a place for them within
Speaker 8: this innovation.
Speaker 1: Okay, Kristen Hall, near Impact Capital, we're grateful for your
Speaker 1: time on the program. Thank you, Caroline. Let's just stick
Speaker 1: a little bit longer with Tesla. We talked about the
Speaker 1: Bingo card yesterday in advance of earnings, and I thought,
Speaker 1: you know what, I'm just going to go full send.
Speaker 1: I'm going to play the game. This was the end result.
Speaker 1: Look how close I came.
Speaker 5: It's fun. It's also though important.
Speaker 4: Some of the things that perhaps he didn't actually mention
Speaker 4: DEI one of them that you didn't get.
Speaker 5: To cross off.
Speaker 4: He did insult and Ana, did you feel he'd insulted analyst?
Speaker 4: I know he cut off an executive, that was it.
Speaker 4: But I think overall this was an elon that lived
Speaker 4: up to a lot of the anticipation. Dana Hale, we
Speaker 4: give great cutos for that for coming up with this game,
Speaker 4: but I know it's something that themes on Reddit. What
Speaker 4: was the one that took you most by surprise that
Speaker 4: he actually.
Speaker 5: Did say.
Speaker 2: By surprise, I guess.
Speaker 1: The fed and I was stretching there because he basically
Speaker 1: said about interest rates.
Speaker 2: But yeah, a fun game. That was my real card.
Speaker 2: Check it out.
Speaker 4: It was a great game that you played along in
Speaker 4: live time. You've always got to follow ed throughout Twitter
Speaker 4: x as it currently is when he has his earnings.
Speaker 4: Mean while coming up, we'll continue our and coverage the service.
Speaker 4: Now this is really big technology.
Speaker 5: Service.
Speaker 4: Now let's talk about its own earnings. The results came
Speaker 4: after the bell yesterday and provided a revenue outlook for
Speaker 4: the current quarter, topping Wall Street estimates.
Speaker 5: In fact, they beat across the board.
Speaker 4: It's spurring optimism that the enterprise software provider will continue expanding,
Speaker 4: even as many peers have reported some slow and growth.
Speaker 4: Let's bring in service now, CFO, Gina Mauston two know
Speaker 4: for more and look, you do manage to outperform the
Speaker 4: rest of the sector, Gina. And what's notable is you
Speaker 4: say you've got one of the few offerings when it
Speaker 4: comes to AI with real product, real use cases, and
Speaker 4: real customers. Now I'm interested, is is there any cannibalization
Speaker 4: there when companies are thinking in this economic environment allocate
Speaker 4: towards technology. Does AI come an expense of anything else
Speaker 4: or is it in an addition?
Speaker 9: So great question, Caroline, Thanks so much for having me
Speaker 9: absolutely service. Now closed the year with another exceptional quarter.
Speaker 9: Revenues of twenty five and a half percent in constant
Speaker 9: currency CRPO, which is our current backlog basically twenty three percent,
Speaker 9: operating margin of twenty nine percent, all beating the high
Speaker 9: end of our guidance by about two hundred basis points,
Speaker 9: renewal rates of ninety nine percent, and large new logo
Speaker 9: growth continuing to accelerate, which is pretty remarkable. We achieved
Speaker 9: which she was super proud of. We achieved our long
Speaker 9: term goal of crossing ten billion in CACV, which only
Speaker 9: eight software companies have ever achieved in the past.
Speaker 5: And you're absolutely right.
Speaker 9: We have incredible Genai products in market, which launched just
Speaker 9: at the end of September, so our first full quarter
Speaker 9: of GENA and we basically saw the largest contribution for
Speaker 9: our first full quarter of any of our product released
Speaker 9: in our history. So Jennai is resonating with our customers.
Speaker 9: It's early days, but we're absolutely not seeing any cannibalization
Speaker 9: at this.
Speaker 1: Point, Gina, we were just playing bingo with Tesla's earnings call.
Speaker 1: If we had played bingo with your earning school, we
Speaker 1: would have had CRPO or in other words, current remaining
Speaker 1: performance obligations, and you like, really hit that number. But
Speaker 1: let's be honest. The street's looking at it and saying,
Speaker 1: why then, is the forward looking stuff so lukewarm. Why
Speaker 1: are you not more bullish about growth across the board
Speaker 1: for the rest of the year.
Speaker 9: Well, in fact, we actually raised our full year revenue
Speaker 9: guidance for the twenty twenty four to ten point five
Speaker 9: seven five billion from ten point four, so we actually
Speaker 9: raised our guidance for the full year given our results.
Speaker 9: So we are bullish on our momentum. We're excited about
Speaker 9: what twenty twenty four is going to show. But let's
Speaker 9: face it, the macro is still uncertain. So from a
Speaker 9: guide perspective, we want to be prouded in how we're
Speaker 9: thinking about things. We're seeing great demand across the board.
Speaker 9: I talked to investors yesterday. Our pipeline looks strong. Demand
Speaker 9: is there? Jeni is on the forefront of what every
Speaker 9: CEO and CFO are talking about and looking to invest in.
Speaker 9: So our platform right now is in a very strong position,
Speaker 9: and our company is in a strong position to continue
Speaker 9: to build on the momentum that you saw in twenty
Speaker 9: twenty three.
Speaker 4: It's such a game of dare I say frenemies, Gina though,
Speaker 4: because you, of course have a relationship very much intertwined
Speaker 4: with Microsoft and open Ai when doing your offerings for
Speaker 4: Jenai here of course helping Amazon with its own offerings
Speaker 4: over there a ws in terms of it's marketplace, I'm
Speaker 4: really intrigued as to how you continue to offer something
Speaker 4: separate and different in comparison to companies that almost want
Speaker 4: want to eat your lunch.
Speaker 9: Well, I think it's the strength of our platform. It's
Speaker 9: our relationship with our customers, it's our people, it's the
Speaker 9: fast time to value that our platform delivers for our customers.
Speaker 9: We are such a customer centric company, really understanding the
Speaker 9: needs of our customers, understanding the outcomes that they're trying
Speaker 9: to get and how our platform can help them deliver.
Speaker 9: We're super excited about some of the partnerships that we announced.
Speaker 9: One of them you talked about with AWS Service Now
Speaker 9: is now going to be available as a SaaS offering
Speaker 9: on the AWS marketplace. This that opens up our whole
Speaker 9: new market for US, whole new tam and it's a
Speaker 9: partnership that we're really excited about. We also announced a
Speaker 9: strategic partnership with Visa, which is a five year strategic
Speaker 9: alliance to use our Genai products to help transform payment
Speaker 9: services and it's end to end dispute resolution for all
Speaker 9: of their customers. And so excited to continue to partner.
Speaker 5: With these great companies.
Speaker 9: No one has to lose for us to win, and
Speaker 9: we will continue to.
Speaker 1: Outperform Service Now, CFO, Gina Mastonto no great to have.
Speaker 2: You on the show.
Speaker 5: Time now for talking tech.
Speaker 4: First up, for the first time ever, the iPhone has
Speaker 4: ranked as the top selling smartphone series in China Now
Speaker 4: according to IDC, Apple's device had the most shipments in
Speaker 4: the fourth quarter and overall in twenty twenty three. Now
Speaker 4: this comes amid all those concerns from investors about plummeting
Speaker 4: sales in the region. Meanwhile, sales of ASML's chip making
Speaker 4: machinery it boomed in China last year. Now this comes
Speaker 4: despite a secret agreement between the US and the Netherlands
Speaker 4: to actually curve deliveries to Beijing. Sources say, SML maintains
Speaker 4: that it didn't violate the deal. A spokesperson for the
Speaker 4: US National Security Council to claim to comment.
Speaker 5: Plus, Russia has.
Speaker 4: Apparently imported more than one billion dollars worth of advanced
Speaker 4: chips made in the US and European companies classified data
Speaker 4: obtained by Bloomberg, but it shows that half of the
Speaker 4: important semiconductors were manufactured by firms like Intel, amdst Microelectronics
Speaker 4: and others.
Speaker 2: Ed going on in the chip space.
Speaker 1: Sticking with st Micro, watching shares with its sales outlook
Speaker 1: for the current core to missing estimates assigned that weak
Speaker 1: demand for industrial chips continues. Revenue in the first quarter
Speaker 1: falling fifteen percent year on year to three point six
Speaker 1: billion dollars compared to four point one billion estimated by analysts.
Speaker 2: Stock down two tens percent.
Speaker 1: The other big story that is kind of driving markets
Speaker 1: is what's happening in video games. Microsoft shares are hired
Speaker 1: by a percentage point now you see throughout Thursday's session.
Speaker 1: Adding to those games, the story nineteen hundred or so
Speaker 1: jobs being cut from across Activision, which Microsoft acquired and Xbox.
Speaker 2: Personnel as well.
Speaker 1: And I mean, how often does this happen in the
Speaker 1: context of a big piece of M and A efficiencies.
Speaker 2: But what's the real story here. Let's go to.
Speaker 1: Bloomberg's Jason Schreier, our correspondent and all things video games.
Speaker 1: What do we know about the details?
Speaker 2: Jason?
Speaker 3: Yeah, we are facing a real chaos all across the company.
Speaker 3: I'm getting texts still right now. I'm getting texts from
Speaker 3: people saying they don't know if they're being laid off.
Speaker 3: Some people are finding out because their slack is deactivated.
Speaker 3: I'm told by a Blizzard spokesperson that everybody should find
Speaker 3: out by the end of the day if they'll have
Speaker 3: jobs or not, all nineteen hundred people. But yeah, it's
Speaker 3: just chaos over there right now.
Speaker 5: What took me by surprise.
Speaker 4: And I'm interested to you as well as some of
Speaker 4: the senior executives that are on the out, in particular
Speaker 4: the president Mike Barra, who I think previously said he
Speaker 4: wasn't for going and he was going to have to
Speaker 4: be dragged out, and as well as the chief design officer,
Speaker 4: who is actually a co founder m.
Speaker 8: M Yeah, Alan Adam.
Speaker 3: He's called a co founder technically is, but he's really
Speaker 3: the founder of Blizzard. He's the kind of guy and
Speaker 3: was for a very long time. Yeah, we're talking about
Speaker 3: a massive change over there. I think a lot of
Speaker 3: people kind of expected that mike Ybarra might be on
Speaker 3: the way out for various reasons, and I think that
Speaker 3: he kind of, let's say, he ruffled some feathers within
Speaker 3: Blizzard over the course of a couple of disastrous meetings
Speaker 3: last year and couple of decisions that people weren't thrilled about.
Speaker 3: But still it's a big surprise. Lilizar also cancelled one
Speaker 3: of their big games, a game that was code named Odyssey,
Speaker 3: is kind of a survival game. Comes as crazy timing
Speaker 3: this week, given that Power World, the kind of Pokemon
Speaker 3: with guns survival game that are selling bazillions of copies,
Speaker 3: just came out. But yeah, it's just it's really bloodier.
Speaker 3: I mean, I had been hearing rumors that layoffs might
Speaker 3: be coming to Blizzard, but even this is way bigger
Speaker 3: and bloodier than I expected.
Speaker 1: So I've been mentioning this in any big piece of
Speaker 1: m and A where a very big company joins another
Speaker 1: big company is merged into it. There are often layoffs
Speaker 1: because there's overlapping roles and they look for efficiencies, etc.
Speaker 1: But that kind of masks Jason the broader idea of
Speaker 1: what Microsoft was getting in its purchase of Activision Blizzard.
Speaker 1: Do we have any sense of how that integration is
Speaker 1: going and kind of what the focus of the projects
Speaker 1: are on the content and title side.
Speaker 2: Yeah, that's so.
Speaker 3: We still don't know. We're trying to find out. I mean,
Speaker 3: it's been about three months since Microsoft officially took over
Speaker 3: Activision Blizzard. When it happened, a lot of people were optimistic.
Speaker 3: Bobby Kodik, the departing chief of Activision Blizzard, was not
Speaker 3: the most popular guy among the company, so people were
Speaker 3: excited to see what might happen. Microsoft is still not
Speaker 3: communicated publicly what their vision is for Activision Blizzard, for
Speaker 3: the Call It Duty franchise for Warcraft, or Diabo for
Speaker 3: all those big games.
Speaker 2: I do know that there.
Speaker 3: Are still new projects in development within Blizzard. A lot
Speaker 3: of people have been theorizing that Microsoft might just double
Speaker 3: down on the franchises that are already successful. I don't
Speaker 3: believe that is going to be the case, but yeah,
Speaker 3: we don't know. We are hearing my colleague Dina bass
Speaker 3: is hearing that a lot of the layoffs are hitting
Speaker 3: redundant departments such as marketing and other kind of departments
Speaker 3: that you would expect to be hit by an integration
Speaker 3: one of another company that does similar sorts of business.
Speaker 5: Teen hundred people is a lot, but in context just.
Speaker 4: Eight percent of Microsoft's gaming workers. Jason Schreyer fascinating. Thanks
Speaker 4: for giving us really the inside track on all of that. Meanwhile,
Speaker 4: let's go to another extraordinary scoot coming from Bloomberg, a
Speaker 4: group named China Tech Threat. It's been sounding the alarm
Speaker 4: on the threat posed by companies vulnerable to Chinese infiltration
Speaker 4: or pressure. On the top of the list, laptop maker Lenovo,
Speaker 4: for example. Here's the twist, Dell arrival of Lenovo is
Speaker 4: one of the main sponsors of that very group. Let's
Speaker 4: bring in Bloomberg's Brodie Ford, who helped bring us to
Speaker 4: attention this particular interesting turn of events. Is not just
Speaker 4: Dell that might be sponsoring this particular company, this particular
Speaker 4: group pressure group, shall we call them?
Speaker 10: It's funny so middle school I had Lenovo. I think
Speaker 10: in this building we got Lenovo.
Speaker 2: We're used to hearing.
Speaker 10: About Chinese tech anxieties. But Lenovo is not a name
Speaker 10: we're used to hearing. But this group's been walking around
Speaker 10: town telling people, you gotta get rid of these, you
Speaker 10: gotta tear them out, you gotta, you know, pass these
Speaker 10: state level bands to not use Lenovo. And again it
Speaker 10: turns out it was Dell funding it, right, and they
Speaker 10: didn't disclose that. And we see as increasing tensions between
Speaker 10: US and China happen, companies are increasingly willing to say, hey,
Speaker 10: could this be an opportunity for us? So this is
Speaker 10: kind of a nice case study in the way that
Speaker 10: the trade war has been advancing.
Speaker 1: I look at this very detailed Bloomberg BusinessWeek story, fantastic
Speaker 1: reporting and writing, Brodie, and remind myself that Lenovo is
Speaker 1: the biggest maker of personal computers and laptops in the world.
Speaker 1: What did they have to say in response to this reporting?
Speaker 1: But I guess ultimately the question is what is it
Speaker 1: that Dell and Micron want achieved in the end down
Speaker 1: the road?
Speaker 10: Yeah, as you said, Lenovo is the world's biggest maker
Speaker 10: of PC's. PC's pretty concentrated market, right, you have HP
Speaker 10: del Lenovo. Any loss for Lenovo is going to be
Speaker 10: a win for.
Speaker 2: HP and Dell.
Speaker 10: And the backstory here is that HP and Dell really
Speaker 10: had thriving, growing businesses in China, but over time they've
Speaker 10: been regulated over there. The Chinese government has sent out
Speaker 10: mandates saying you're going to have to start using less
Speaker 10: of these and so that's when Dell and also HP,
Speaker 10: but not through the front groups, said that, hey, maybe
Speaker 10: we should start applying similar pressure. And for Micron, I
Speaker 10: mean the semiconductor industry I think is maybe a better
Speaker 10: known example of US China tensions. And so the semiconductor
Speaker 10: companies China Tech Threat has talked about are more of
Speaker 10: these kind of ascendant players who would likely compete with Micron.
Speaker 5: At some point.
Speaker 4: Well, see if it does indeed garner any interest from
Speaker 4: China as to the actions, well the money being fueled
Speaker 4: by these particular companies.
Speaker 5: Really for brilliant piece of reporting. Thanks so much, Ed.
Speaker 5: What have you've got?
Speaker 1: Well, we're going to the world of cars and Porsche
Speaker 1: going electric. The car make you just unveiled its own
Speaker 1: electric macan. I caught up with timo Resh, the new
Speaker 1: president and CEO of Porsche Cars in North America, in
Speaker 1: an exclusive interview just ahead of the launch and we
Speaker 1: discover his outlook for the company is they try to
Speaker 1: tackle the EV market here in the States, have a listen.
Speaker 11: We are pretty sure that with the launch of the
Speaker 11: McCann electric and we will pretty much not be able
Speaker 11: to cope with the demand. And definitely the first year,
Speaker 11: I think there's definitely a lot of demand. A lot
Speaker 11: of people are waiting for product like this, and this
Speaker 11: comes at a stage where the Macan as we have
Speaker 11: it in the market right now with the combustional lector,
Speaker 11: the combustion engine car has its most successful year in
Speaker 11: its history as of last year, So there's high demand
Speaker 11: for the existing platform, and I think a lot of
Speaker 11: people are looking for this new latest edge technology that
Speaker 11: does everything that the McCann already has going for it,
Speaker 11: even to a higher degree. So that for that reason
Speaker 11: I feel positive about it. And then we can really
Speaker 11: see in the year twenty twenty five and upcoming what
Speaker 11: the real relationship between the ICE version and the BEV
Speaker 11: version will be. Right in the first year, I think
Speaker 11: it's just customer demand, realm what we can supply from
Speaker 11: our factory in Germany.
Speaker 1: So well exactly so, so your supply constrained, right Timo,
Speaker 1: you know that demand for the electric Macan is going
Speaker 1: to outweigh your ability to supply. When you are phoning
Speaker 1: your counterparts in Germany, how much supply are they able
Speaker 1: to guarantee you for that first year.
Speaker 11: I can't go into details of numbers, but I think
Speaker 11: we are very much driven by providing usually always just
Speaker 11: one car lest and the market is asking for. So
Speaker 11: this is what our flexibility. Also in terms of our
Speaker 11: production pipeline, having both of these cars come out of
Speaker 11: our factory and leipstick in Germany, that gives us this
Speaker 11: perfect possibility to custom tailor our supply chain to the
Speaker 11: market demands. And for that reason, I'm sure we will
Speaker 11: hit the right spot supplying enough Macan overall, and I
Speaker 11: assume in the first couple of months there will be
Speaker 11: more demand than we can supply for the McCann Beth.
Speaker 2: Who you worried about out there?
Speaker 1: Is it the cyber truck, highestpec expensive model in the
Speaker 1: first instance that goes to the high networth individual or
Speaker 1: the big spender, or are you worried about the electro
Speaker 1: electrified offerings from some of your German peers like Mercedes
Speaker 1: for example.
Speaker 11: I think in terms of design and the Peel and
Speaker 11: technology really being cutting technology. We as Porsche can usually
Speaker 11: have a lot of people that start being convinced and
Speaker 11: being excited about the Porsche brands. So we see that
Speaker 11: there will be a lot of opportunities to get the
Speaker 11: Porsche family growing, but at the same time also get
Speaker 11: existing Porsches excited for posha fans excited for the account BEV.
Speaker 11: So there's I think a lot of opportunity in the
Speaker 11: still growing a BEV market where customers will come from
Speaker 11: and start joining the Porsche family and start this experiencing
Speaker 11: what the feeling of Posh, the Posher product is all about.
Speaker 1: Timo America was critically important to Porsche in twenty twenty three,
Speaker 1: in part because China's growth was decelerating, and I think
Speaker 1: Porsche is said twenty twenty four is going to be
Speaker 1: difficult in China as well. What kind of pressure are
Speaker 1: you under to keep the growth going here in the
Speaker 1: United States North America? More broadly, what a key market
Speaker 1: like China is slowing down?
Speaker 11: Being responsible for the North American market, I would like
Speaker 11: to focus on these topics, But if you see the
Speaker 11: overall balance of distribution of sales of Porsche, I think
Speaker 11: the Porsche brand is perfectly balanced in terms of its
Speaker 11: international distribution of sales. So this is a really, let'd say,
Speaker 11: great time to see that there is not such a
Speaker 11: huge dependency on the Chinese market as it might be
Speaker 11: for some other brands, and we see the brand being
Speaker 11: in a very good position. I think we have high desirability.
Speaker 11: You can see that in all different kinds of stud
Speaker 11: and for that reason, I also see good possibility to
Speaker 11: continue on this growth pattern of sustainable growth also hind
Speaker 11: in saints on the North American market, but also people
Speaker 11: I think, driven by customer demand, continue the success story.
Speaker 1: Timo resh portion North America President CEO Caro on a
Speaker 1: car that's long delayed.
Speaker 2: Everyone's excited about. It's good looking as well.
Speaker 5: She's pretty, I got to say. Meanwhile, coming up, look,
Speaker 5: we're going to sit down with the CEO of Fearless
Speaker 5: Fund ed as as she prepares.
Speaker 4: To go back to court to fight a discrimination lawsuit
Speaker 4: against the venture fund for its grant program to black
Speaker 4: female founders. Getting into it. It's a Broomberg technology Atlanta
Speaker 4: based venture capital firm.
Speaker 5: Fearless Fund and.
Speaker 4: Invests in businesses owned by women of color, and it's
Speaker 4: being sued over a grant program for black women entrepreneurs
Speaker 4: by the American Alliance for Equal Rights. Now that's a
Speaker 4: group run by Ever Bloom is a conservative activist who
Speaker 4: challenged affirmative action in higher education.
Speaker 5: An he won.
Speaker 4: The case is headed back to the Eleventh Circuit Court
Speaker 4: of Appeals next Wednesday, and joining us to discuss the
Speaker 4: implications this has for hervec for equity more broadly in
Speaker 4: venture And please are welcome Arion Simone, the CEO of
Speaker 4: Fearless Fund. And well, you go back to the Eleventh
Speaker 4: US Circuit Court of Appeals because it's your striver's grant
Speaker 4: contest that seems to be being focused on twenty thousand
Speaker 4: dollars grants, and just remind us go back why they
Speaker 4: take issue with allocation of money.
Speaker 12: We're being sued for alleged discrimination according to the nineteen
Speaker 12: eighty one section of the Civil Rights Act of eighteen
Speaker 12: sixty six, which is a law that was put in
Speaker 12: place for nan wides to enter into contracts. They are
Speaker 12: saying that we are discriminating according to that law.
Speaker 4: Your argument is these aren't contracts, these are grants. But
Speaker 4: more broadly, what sort of cooling effect do you think
Speaker 4: this has had on allocation of money to diverse founders
Speaker 4: when already, what is it, less just over one percent
Speaker 4: of all venture money was allocated to women of color
Speaker 4: last year.
Speaker 5: I mean even less than that.
Speaker 12: Actually it was less than that. Only a fraction of
Speaker 12: a percent last year, zero point thirty nine percent was
Speaker 12: allocated to women of color. The cooling effect that is
Speaker 12: taking place is basically the spirit of fear. People have
Speaker 12: been scared to deploy and uphold their diversity initiatives. The
Speaker 12: government has slowed down on minority grants. The eight A
Speaker 12: program even had to pause, and the cooling effect has
Speaker 12: been I got to say, very broad, it's very long reaching,
Speaker 12: the impact that this court case is having without people
Speaker 12: even being sued.
Speaker 1: Arian, thank you for joining us on Bloomberg Technology. There's
Speaker 1: a pathway for the litigation potentially to go to the
Speaker 1: Supreme Court, and I understand that their legal and cost
Speaker 1: considerations for you in the firm if that happens. But
Speaker 1: given this sort of the ultimate goals of Fearless Fund
Speaker 1: trying to support and give capital, access to capital to
Speaker 1: women of color, how do you view the opportunity to
Speaker 1: go to the Supreme Court or on the fundamental issue
Speaker 1: that's being discussed here.
Speaker 12: Ed Well I view, I'm glad you're stating it as
Speaker 12: an opportunity. It will be an opportunity to bring more awareness.
Speaker 5: To these disparities.
Speaker 12: It is unfortunate that anybody would have to go to
Speaker 12: the Supreme Court to defend themselves for the right to
Speaker 12: basically target a disparity that we're targeting. But I'm glad
Speaker 12: you definitely stated it as an opportunity.
Speaker 5: I think it's an opportunity.
Speaker 12: For people to realize we need more legislation that protects
Speaker 12: our access to capital.
Speaker 4: At any point, have you been asked to play or
Speaker 4: understand the devil's advocate side of the equation that you
Speaker 4: allocating money to only women of color is in some
Speaker 4: way well discriminate against the women of who want of college,
Speaker 4: who would love to come to you for some money.
Speaker 12: Caroline, I will say it here and I've said it before.
Speaker 12: I actually desire the same thing as Ed Bloom, a
Speaker 12: world where race doesn't matter.
Speaker 5: We have just yet to get there.
Speaker 4: I'm interested in the yet to get their part, and
Speaker 4: ultimately how much you need not just you, your voice
Speaker 4: and those that are supporting you, but what about corporate America.
Speaker 4: More broadly, your fund has been backed and in fact
Speaker 4: got follow on funding just in June from Bank of America, Costco, MasterCard.
Speaker 4: Are they speaking out for you as much as you'd
Speaker 4: like to see?
Speaker 12: I would like to see more. I would like to
Speaker 12: see a lot more corporate support. Clearly, if you believe
Speaker 12: in this vision and you've invested your capital into what
Speaker 12: we do, your dollars have spoken.
Speaker 5: But we do need your voice.
Speaker 12: So we would love for the CEOs of the corporations
Speaker 12: that have invested in us to take a stay in publicly.
Speaker 4: Correct, Have they in any way signaled they wouldn't be
Speaker 4: willing to commit capital in the future.
Speaker 12: They haven't signaled that they're willing they wouldn't be willing
Speaker 12: to commit capital in the future. But right now we
Speaker 12: are in basically the hotspot. Everybody can see us, and
Speaker 12: we do need their voice in addition to the capital.
Speaker 5: I go back to, actually, what it is your funding here?
Speaker 4: The people that are building businesses, what problems are they solving,
Speaker 4: What innovations are you seeing what entrepreneurs are making and
Speaker 4: turning your head.
Speaker 12: Oh my gosh, our entrepreneurs are amazing. They're on the
Speaker 12: cover of Ink, They're on the Ink List, They're on
Speaker 12: the Forbes List, They're on everywhere we invest in technology
Speaker 12: as well as we invest in CpG. The problems they
Speaker 12: are solving, the disparities they are meeting, the food as
Speaker 12: they're going into are far long reaching. You're talking about
Speaker 12: women of color. They're social impact isn't bred in the
Speaker 12: fabric of their business in who they are, so from fintech,
Speaker 12: from any type of ad tech to oh my god,
Speaker 12: So this goes on and on to so many products
Speaker 12: that are solving amazing problems. It's like picking a favorite
Speaker 12: child if I would have had like one. But we
Speaker 12: have about ten girls right now that we've invested in.
Speaker 12: They're all in heavy eight figure revenue and they are
Speaker 12: growing by leaps and bounds.
Speaker 4: But access to capital still remains, in theory, far more
Speaker 4: tight and slim than it is for other types of founders.
Speaker 4: Aaron Simone, thank you for coming on and spending time
Speaker 4: with us while in New York. Fill us fun CEO
Speaker 4: as she heads back to Atlanta.
Speaker 1: Okay, she and Becker's are trying to sell shares that
Speaker 1: place the value of the online fashion company as low
Speaker 1: as forty five billion. This is she in confronts mounting
Speaker 1: competition and regulatory scrutiny ahead of a much awaited debut
Speaker 1: in the United States. Boombers Crystal Z joins US with more.
Speaker 1: This is interesting. Go back to May a primary round
Speaker 1: where they valued at sixty six billion. Usually ahead of
Speaker 1: an IPO, you try and get in because you're excited.
Speaker 1: But what we're hearing is that private market deals are
Speaker 1: valuing the company lower.
Speaker 5: That's right.
Speaker 13: Our colleagues in Hong Kong is reporting that the private valuation,
Speaker 13: some of these are minority trades, evaluing the company as
Speaker 13: slow as forty five.
Speaker 5: Forty five billion.
Speaker 13: At a point they were valued at one hundred billion,
Speaker 13: So it's a significant decrease, and I think part of
Speaker 13: it is probably to do with that the IPO prospect
Speaker 13: is looking a little bit more dim than it used to.
Speaker 13: We have seen reports that the company is now subject
Speaker 13: to regulatory scrutiny, not only in China but also in
Speaker 13: the US, So that could make investor a little bit
Speaker 13: more jittery about the prospect of this company's public life.
Speaker 4: They were going to talk it up to ninety billion
Speaker 4: dollars in that IPO, so the fact that they're seeing
Speaker 4: in half of that in secondary market, albeit before the
Speaker 4: turn of this year. More broadly, put it in the
Speaker 4: context of a company that's trying to distance itself from
Speaker 4: China but still manufactures in China, it's headquarters being in Singapore.
Speaker 4: But we're very worried about the Chinese economy right now.
Speaker 4: Is that in any way filtering through more broadly tech
Speaker 4: stocks E and under pressure.
Speaker 13: So they actually do not sell in China. They do
Speaker 13: not generate revenue per se in China. They do manufacture there,
Speaker 13: they also generate use They also gather user data from
Speaker 13: the internet, and that is why the Chinese regulators are
Speaker 13: now looking at this company and be looking at economy
Speaker 13: just globally. You do see some softness in the US
Speaker 13: and the majority of the revenue do. They do focus
Speaker 13: in the US market quite a bit, selling you know,
Speaker 13: crop top five dollars, crop top to teenager, and that's
Speaker 13: the kind of spending that would soften in a market
Speaker 13: where you know, translation could go up and economic prospect
Speaker 13: is not so not.
Speaker 5: So bright anymore. Christ to say, thank you for breaking
Speaker 5: it down for us.
Speaker 4: It is a very popularly right story across the internet
Speaker 4: at the moment.
Speaker 5: We thank you for it. Meanwhile, that does it for
Speaker 5: this edition of Blue Med Technology,