1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,200 --> 00:00:27,880 Speaker 2: All right, more just monster numbers being thrown about in 7 00:00:27,920 --> 00:00:30,920 Speaker 2: this AI game. Open AI heid erase one hundred and 8 00:00:30,960 --> 00:00:35,160 Speaker 2: ten billion dollars in new investment at a seven hundred 9 00:00:35,200 --> 00:00:41,360 Speaker 2: and thirty million dollar pre money valuation. Extraordinary, straordinary amounts 10 00:00:41,400 --> 00:00:44,160 Speaker 2: of money being raised. All the big names are involved here. 11 00:00:44,680 --> 00:00:45,400 Speaker 3: I need a little help. 12 00:00:45,400 --> 00:00:46,320 Speaker 4: We all need a little. 13 00:00:46,080 --> 00:00:48,479 Speaker 2: Help here, Caroline Hyde be tech co anker joints us 14 00:00:48,479 --> 00:00:52,120 Speaker 2: Here in our Bloomberg Interactive Broker studio. The hits keep coming, Caroline, 15 00:00:52,159 --> 00:00:54,680 Speaker 2: I mean the investments keep coming, and from big names. 16 00:00:54,720 --> 00:00:55,279 Speaker 3: We all know. 17 00:00:56,320 --> 00:00:57,480 Speaker 2: What do you make of it? 18 00:00:57,480 --> 00:01:00,800 Speaker 5: It makes for an interesting relationship of Open Air Microsoft 19 00:01:00,840 --> 00:01:04,080 Speaker 5: going forward, because this is Amazon coming in, which already 20 00:01:04,200 --> 00:01:07,480 Speaker 5: has a very strong relationship with anthropic Remember, and we've 21 00:01:07,480 --> 00:01:10,760 Speaker 5: seen a lot of crossover of big strategic investors and 22 00:01:10,840 --> 00:01:15,199 Speaker 5: venture capitalism putting money into both key frontier labs. What's 23 00:01:15,240 --> 00:01:17,520 Speaker 5: interesting in this agreement is not only the whopping scale 24 00:01:17,520 --> 00:01:19,560 Speaker 5: of money. Fifty billion is going to be coming from Amazon, 25 00:01:19,560 --> 00:01:21,480 Speaker 5: and we don't quite know if that is Thure cash 26 00:01:21,560 --> 00:01:23,840 Speaker 5: or actually whether it's more in cloud costs that just 27 00:01:23,840 --> 00:01:26,560 Speaker 5: get sucked up by Amazon instead, or indeed whether it's 28 00:01:26,560 --> 00:01:27,520 Speaker 5: GPUs and chips. 29 00:01:27,840 --> 00:01:30,399 Speaker 6: But we also think that thirty billions coming. 30 00:01:30,280 --> 00:01:32,720 Speaker 5: From in video, so the deepening tie continues there and 31 00:01:32,760 --> 00:01:34,800 Speaker 5: clearly therefore some gpusm in video are going to be 32 00:01:34,840 --> 00:01:38,200 Speaker 5: intertwined in open AI's compute needs as well as Amazon 33 00:01:38,319 --> 00:01:41,360 Speaker 5: Zone Tranium chips and the likes. But we're also seeing 34 00:01:41,720 --> 00:01:44,280 Speaker 5: well as well as Massiyoshi Son being a big player 35 00:01:44,280 --> 00:01:46,679 Speaker 5: in all of this, Microsoft being less of a player. 36 00:01:46,720 --> 00:01:49,400 Speaker 5: And remember open ai first got its big chunk of 37 00:01:49,480 --> 00:01:50,600 Speaker 5: change from Microsoft. 38 00:01:50,680 --> 00:01:52,520 Speaker 6: Microsoft was the key backer of. 39 00:01:52,520 --> 00:01:54,760 Speaker 5: The company, had exclusive rights to a lot of open 40 00:01:54,800 --> 00:01:58,960 Speaker 5: AI's technology within the Azure platform. Well, now the frontier 41 00:01:59,000 --> 00:02:01,440 Speaker 5: offering coming from open an that's basically the new offering 42 00:02:01,480 --> 00:02:03,640 Speaker 5: to help build agents, which is all anyone can talk 43 00:02:03,640 --> 00:02:06,280 Speaker 5: about at the moment, that's going to be exclusive on AWS. 44 00:02:06,560 --> 00:02:06,880 Speaker 3: Oh wow. 45 00:02:06,880 --> 00:02:07,800 Speaker 6: So all of this is just. 46 00:02:07,760 --> 00:02:12,640 Speaker 5: An interesting rearrangement of technology partners and just how people 47 00:02:12,639 --> 00:02:13,640 Speaker 5: are deepening their ties. 48 00:02:13,840 --> 00:02:16,400 Speaker 7: I like your word rearrangement because we have open aico. 49 00:02:16,480 --> 00:02:19,560 Speaker 7: Sam Altmann saying that he doesn't think his company's fundraising 50 00:02:19,800 --> 00:02:23,040 Speaker 7: is looking called circular as long as revenue keeps going. 51 00:02:23,080 --> 00:02:25,160 Speaker 7: And I feel like this is a conversation we've been having. 52 00:02:25,400 --> 00:02:29,000 Speaker 7: It's like the self funding loop and is it risky? 53 00:02:29,080 --> 00:02:30,679 Speaker 7: But he's saying it's not circular. 54 00:02:30,960 --> 00:02:32,560 Speaker 6: Well, and Video has had to try and prove this 55 00:02:32,560 --> 00:02:33,480 Speaker 6: point time and time again. 56 00:02:33,520 --> 00:02:36,600 Speaker 5: And Video has been putting money into neo clouds like 57 00:02:36,639 --> 00:02:39,320 Speaker 5: core Weave, which had its numbers today, putting money into 58 00:02:39,520 --> 00:02:41,760 Speaker 5: the likes of an Anthropic and an open AI, which 59 00:02:41,840 --> 00:02:43,000 Speaker 5: ultimately all want. 60 00:02:42,919 --> 00:02:44,000 Speaker 6: Chips from in video. 61 00:02:44,320 --> 00:02:47,560 Speaker 5: But many would say, look, it's not just circular financing, 62 00:02:47,680 --> 00:02:51,160 Speaker 5: is actually strategic financing, because how better to understand how 63 00:02:51,200 --> 00:02:53,840 Speaker 5: your technology works best is if you partner this closely 64 00:02:53,880 --> 00:02:55,400 Speaker 5: and you can understand the way in which. 65 00:02:55,200 --> 00:02:57,600 Speaker 6: Your GPUs, your CPUs be used in the future. 66 00:02:57,680 --> 00:03:00,400 Speaker 5: So for the cynics among us, yes, it looks like 67 00:03:00,440 --> 00:03:02,280 Speaker 5: the same big players are all moving money from one 68 00:03:02,280 --> 00:03:04,119 Speaker 5: place to the other within each other. 69 00:03:04,520 --> 00:03:06,840 Speaker 6: But for perhaps the more practical it's. 70 00:03:06,680 --> 00:03:09,520 Speaker 5: That well who heals has the cash pile to be 71 00:03:09,639 --> 00:03:13,359 Speaker 5: able to continue to build the flywheel effect to a 72 00:03:13,400 --> 00:03:16,079 Speaker 5: generative AI here at the moment, and open ai has 73 00:03:16,120 --> 00:03:18,480 Speaker 5: an enormous amount of compute needs. That's what they keep 74 00:03:18,480 --> 00:03:20,560 Speaker 5: saying time and time against Sarah Friar as a CFO. 75 00:03:20,639 --> 00:03:22,720 Speaker 5: Sam Altman is the CEO saying the thing that's holding 76 00:03:22,720 --> 00:03:24,520 Speaker 5: back our revenue. And remember they guided us to a 77 00:03:24,560 --> 00:03:27,720 Speaker 5: new kind of revenue stratosphere of to URN eighty billion 78 00:03:27,760 --> 00:03:28,400 Speaker 5: by next year. 79 00:03:29,000 --> 00:03:31,720 Speaker 6: The way they get there is by computer increasing, not 80 00:03:31,880 --> 00:03:32,400 Speaker 6: anything else. 81 00:03:32,440 --> 00:03:35,720 Speaker 5: They've got all the parts they need to build revenue 82 00:03:35,840 --> 00:03:37,920 Speaker 5: from the twelve billion that they raise that they made 83 00:03:38,040 --> 00:03:40,520 Speaker 5: in twenty twenty five. But what they really need is 84 00:03:40,560 --> 00:03:43,680 Speaker 5: the galvanization of infrastructure, and that comes from power and 85 00:03:43,720 --> 00:03:44,840 Speaker 5: that comes from compute. 86 00:03:44,960 --> 00:03:48,520 Speaker 2: I mean, open AI says, chat GPT has more than 87 00:03:48,600 --> 00:03:52,680 Speaker 2: nine hundred million weekly active users, more than fifty million 88 00:03:52,800 --> 00:03:57,480 Speaker 2: consumer subscribers and more than nine million paying business users 89 00:03:57,800 --> 00:03:59,280 Speaker 2: that rely upon chet GPT. 90 00:04:00,240 --> 00:04:01,000 Speaker 3: That's deployment. 91 00:04:01,000 --> 00:04:03,600 Speaker 2: That Are they the biggest yet, I'm not even sure 92 00:04:03,600 --> 00:04:05,320 Speaker 2: how we define the market better. Are they the biggest 93 00:04:05,320 --> 00:04:06,600 Speaker 2: in consumer? 94 00:04:06,680 --> 00:04:07,080 Speaker 8: For sure? 95 00:04:07,320 --> 00:04:08,800 Speaker 5: Like in terms of like this is the size and 96 00:04:08,840 --> 00:04:12,120 Speaker 5: scale of people using the problem is is of course 97 00:04:12,160 --> 00:04:15,800 Speaker 5: Google how are you measuring Google? Many would say, like, 98 00:04:16,160 --> 00:04:18,479 Speaker 5: is it the person who my mum who goes onto 99 00:04:18,520 --> 00:04:20,640 Speaker 5: Google Search and gets an AI overview? Or is it 100 00:04:20,680 --> 00:04:23,120 Speaker 5: someone who downloads the Gemini app and uses it in 101 00:04:23,160 --> 00:04:24,440 Speaker 5: a distinct kind of model. 102 00:04:24,520 --> 00:04:26,839 Speaker 6: So there's two ways in which you can compare and contrast. 103 00:04:27,080 --> 00:04:30,200 Speaker 5: But certainly open Ai has beaten out Anthropic from a 104 00:04:30,520 --> 00:04:33,720 Speaker 5: how many people are using their standalone application, nine hundred 105 00:04:33,720 --> 00:04:34,760 Speaker 5: million is a huge amount. 106 00:04:35,000 --> 00:04:36,560 Speaker 6: But from an enterprise. 107 00:04:36,160 --> 00:04:39,000 Speaker 5: Perspective, many would say Anthropic has led the charge there, 108 00:04:39,000 --> 00:04:41,240 Speaker 5: and that's why open ai has really been doubling down 109 00:04:41,279 --> 00:04:44,400 Speaker 5: on this agentic focus and AWS is going to be 110 00:04:44,400 --> 00:04:46,040 Speaker 5: call to that, putting it in within Bedrock. 111 00:04:46,400 --> 00:04:49,480 Speaker 7: There's also a headline from Anthropic they're refusing to Pentagon's 112 00:04:49,520 --> 00:04:52,560 Speaker 7: lead as contract terms. They want to limit surveillance and 113 00:04:52,560 --> 00:04:56,000 Speaker 7: autonomous weapons. Are those reasonable asks for a company supplying 114 00:04:56,040 --> 00:04:57,440 Speaker 7: AI to the military. 115 00:04:57,520 --> 00:04:58,400 Speaker 6: The military would say no. 116 00:04:58,680 --> 00:05:00,760 Speaker 5: The military would say locking mar and has no power 117 00:05:00,800 --> 00:05:03,240 Speaker 5: over us to dictate how we use the weapons. We 118 00:05:03,320 --> 00:05:05,560 Speaker 5: just purchased them and us and there are laws that 119 00:05:05,600 --> 00:05:08,640 Speaker 5: we have to abide by, and there's humanitarian things that 120 00:05:08,680 --> 00:05:11,320 Speaker 5: we sign up for, and the way in which we 121 00:05:11,360 --> 00:05:14,800 Speaker 5: police war worldwide. However, from anthropics perspective, and if you'd 122 00:05:14,880 --> 00:05:17,080 Speaker 5: been keeping up with out Dario Amide, the CEO has 123 00:05:17,080 --> 00:05:19,839 Speaker 5: been writing of late. He put out a big piece 124 00:05:19,960 --> 00:05:22,680 Speaker 5: thought leadership piece in January talking about the adolescence of 125 00:05:22,720 --> 00:05:26,800 Speaker 5: technology and his worries and concerns about geopolitics, the use 126 00:05:26,880 --> 00:05:29,440 Speaker 5: of generator of AI for surveillance, the use of generative 127 00:05:29,440 --> 00:05:33,240 Speaker 5: A biotech and warfare. So no wonder he's still thinking 128 00:05:33,240 --> 00:05:36,240 Speaker 5: along these worklines. He's given us all the breadcrumbs to 129 00:05:36,279 --> 00:05:38,640 Speaker 5: know that this is how it feels. They just earlier 130 00:05:38,680 --> 00:05:40,320 Speaker 5: in the week, remember sort of put out this odd 131 00:05:40,360 --> 00:05:43,400 Speaker 5: statement saying they're stepping back to from some of their 132 00:05:43,920 --> 00:05:48,159 Speaker 5: safety as a core mission purpose. But within that statement 133 00:05:48,200 --> 00:05:50,120 Speaker 5: they really made clear it's because the government doesn't care. 134 00:05:50,320 --> 00:05:53,640 Speaker 5: The government has not been increasing their focus on AI 135 00:05:53,680 --> 00:05:55,200 Speaker 5: ethics in the way that they thought they would. 136 00:05:55,480 --> 00:05:58,320 Speaker 3: Stay with US war from Bloomberg Intelligence coming up, care 137 00:05:58,360 --> 00:05:58,640 Speaker 3: for this. 138 00:06:02,480 --> 00:06:06,160 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 139 00:06:06,240 --> 00:06:09,359 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 140 00:06:09,360 --> 00:06:12,679 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 141 00:06:12,720 --> 00:06:15,839 Speaker 1: you get your podcasts, or watch us live on YouTube. 142 00:06:16,480 --> 00:06:17,800 Speaker 3: Dell technology shares. 143 00:06:18,360 --> 00:06:20,800 Speaker 2: They jumped pretty big here after the company gave an 144 00:06:20,800 --> 00:06:25,040 Speaker 2: outlook for sales of its artificial intelligence service that exceeded estimates. 145 00:06:25,080 --> 00:06:27,719 Speaker 2: As John said, stocks up nineteen point four percent today. 146 00:06:27,800 --> 00:06:30,320 Speaker 2: Not bad for a big, big company. Ninety seven billion 147 00:06:30,360 --> 00:06:32,440 Speaker 2: dollars in market cap. Would you know Joins is here 148 00:06:32,480 --> 00:06:36,520 Speaker 2: senior technolog channels for Bloomberg Intelligence. That's a serious print 149 00:06:36,560 --> 00:06:38,760 Speaker 2: for Dell. What's what's going on there? 150 00:06:38,880 --> 00:06:41,800 Speaker 9: I mean John just said, look, you're having these massive 151 00:06:41,800 --> 00:06:47,920 Speaker 9: investments by from OAI right open OAI. So essentially all 152 00:06:47,960 --> 00:06:50,800 Speaker 9: of these data center deployments are really starting to materialize, 153 00:06:50,839 --> 00:06:53,520 Speaker 9: un tell us starting to benefit from it, and. 154 00:06:53,600 --> 00:06:56,479 Speaker 7: They're entering a year with a forty three billion dollar backlog. 155 00:06:56,560 --> 00:06:59,680 Speaker 7: Does that give investors real visitibility? Or is the backlog 156 00:07:00,160 --> 00:07:05,080 Speaker 7: vulnerable to supply chain constraints and maybe pricing resets. 157 00:07:05,160 --> 00:07:09,120 Speaker 9: Well, that's a fantastic question. Right on the pricing reset, 158 00:07:09,120 --> 00:07:11,560 Speaker 9: I don't think so. I think there's a little bit 159 00:07:11,600 --> 00:07:14,480 Speaker 9: of a leverage on Dells side because and videos holding 160 00:07:14,520 --> 00:07:18,640 Speaker 9: the cars with the GPU chips, right, But in terms 161 00:07:18,720 --> 00:07:22,440 Speaker 9: of the supply environment, Dell does the supply chain very 162 00:07:22,520 --> 00:07:26,840 Speaker 9: very well, and the revenue guidance not only for the 163 00:07:26,880 --> 00:07:32,240 Speaker 9: AI server side but also traditional servers NPCs. They're managing 164 00:07:32,280 --> 00:07:34,200 Speaker 9: it a lot better than we thought, so they should 165 00:07:34,200 --> 00:07:36,560 Speaker 9: be fine on the supply side for the rest of 166 00:07:36,600 --> 00:07:36,880 Speaker 9: the year. 167 00:07:37,160 --> 00:07:41,400 Speaker 2: How big is the AI related product revenue for Dell 168 00:07:41,760 --> 00:07:44,000 Speaker 2: and how's that grown and what do you expect it 169 00:07:44,040 --> 00:07:44,280 Speaker 2: to go to? 170 00:07:44,400 --> 00:07:48,040 Speaker 9: Well, if we think about just the AI server piece 171 00:07:48,120 --> 00:07:52,000 Speaker 9: by itself, it is twenty five billion for this year, 172 00:07:52,560 --> 00:07:55,000 Speaker 9: doubling to fifty billion. I mean, we're talking about incredible 173 00:07:55,040 --> 00:07:58,239 Speaker 9: numbers doubling to fifty billion next year. We've also seen 174 00:07:58,880 --> 00:08:02,400 Speaker 9: that sort of momentum from super Micro as well that 175 00:08:02,440 --> 00:08:05,640 Speaker 9: they reported a couple of several weeks ago. But on 176 00:08:05,720 --> 00:08:10,080 Speaker 9: the AI PC front, they just started to pick up steam. 177 00:08:10,080 --> 00:08:13,679 Speaker 9: Still small portion of the business, but you know, quite frankly, 178 00:08:14,120 --> 00:08:16,320 Speaker 9: every PC is eventually going to be an AI So 179 00:08:16,400 --> 00:08:17,440 Speaker 9: what's an AI PC? 180 00:08:18,000 --> 00:08:19,360 Speaker 3: What is that practicality? 181 00:08:19,400 --> 00:08:24,240 Speaker 9: Yeah, you know, I'll tell you. In practicality, very little 182 00:08:24,320 --> 00:08:29,200 Speaker 9: for you and I right, it's a chip that can 183 00:08:29,240 --> 00:08:32,640 Speaker 9: handle a lot more processes, uh, and do it a 184 00:08:32,679 --> 00:08:33,280 Speaker 9: lot faster. 185 00:08:33,800 --> 00:08:33,959 Speaker 10: Right. 186 00:08:34,360 --> 00:08:37,080 Speaker 9: I've been actually been playing around with cloud code as 187 00:08:37,120 --> 00:08:40,560 Speaker 9: part of my work, and essentially what I'm doing is 188 00:08:41,559 --> 00:08:44,800 Speaker 9: trying to use some of the processing that's on the 189 00:08:44,840 --> 00:08:47,680 Speaker 9: on the PC. What I suspect is is that as 190 00:08:47,960 --> 00:08:52,679 Speaker 9: corporates try to bring in AI into their workflow, they 191 00:08:52,720 --> 00:08:55,880 Speaker 9: are going to look specifically for aipcs going forward. 192 00:08:56,400 --> 00:09:00,720 Speaker 7: The company says memory chips memoryship prices are right thing rapidly. 193 00:09:00,800 --> 00:09:04,720 Speaker 7: Do you think that the margins and those segments will 194 00:09:04,720 --> 00:09:09,400 Speaker 7: be sustainable if the component prices also keep climbing. 195 00:09:09,480 --> 00:09:11,840 Speaker 9: Yeah, So I think this is one of the reasons 196 00:09:11,840 --> 00:09:16,840 Speaker 9: why the stock is up so much. Right, the sentiment 197 00:09:16,880 --> 00:09:20,120 Speaker 9: going into the print was really really negative, primarily because 198 00:09:20,320 --> 00:09:25,760 Speaker 9: of the component and memory pricing HPQ. HP said on 199 00:09:26,440 --> 00:09:29,800 Speaker 9: just the other day that the memory pricing doubled over 200 00:09:29,840 --> 00:09:33,160 Speaker 9: the past month, the round pricing alone, right, so that 201 00:09:33,200 --> 00:09:37,920 Speaker 9: eight away margins. We actually did the math memory pricing 202 00:09:38,160 --> 00:09:41,120 Speaker 9: plus a higher mix of AI servers. That's eating away 203 00:09:41,160 --> 00:09:45,200 Speaker 9: one hundred, one hundred basis points of gross margin. And 204 00:09:45,840 --> 00:09:48,560 Speaker 9: the thing is is that just a relative scale of 205 00:09:48,600 --> 00:09:52,160 Speaker 9: the AI server revenues is helping to lift EPs altogether. 206 00:09:52,440 --> 00:09:55,520 Speaker 11: So talk to us about the shortage of chips out there. 207 00:09:55,600 --> 00:09:57,280 Speaker 2: So we hear from a lot of your companies and 208 00:09:57,320 --> 00:09:59,760 Speaker 2: other companies in the tech stack, What is it? 209 00:10:00,000 --> 00:10:00,440 Speaker 10: Why is it? 210 00:10:01,080 --> 00:10:02,320 Speaker 3: How does it get fixed? 211 00:10:02,400 --> 00:10:07,040 Speaker 9: We can blame AI on everything, yes, Right, So essentially 212 00:10:07,640 --> 00:10:12,360 Speaker 9: AI servers take they use HBM high bandwidth memory that 213 00:10:12,360 --> 00:10:14,680 Speaker 9: that's stacked, and it's sucking up a lot of the 214 00:10:14,679 --> 00:10:17,720 Speaker 9: memory capacity that's out there. If we come off of 215 00:10:17,760 --> 00:10:21,680 Speaker 9: the COVID period. Essentially, the memory makers, whether it's Microns, 216 00:10:22,120 --> 00:10:25,160 Speaker 9: skhih Nicks or Samsung, they were hesitant to building out 217 00:10:25,200 --> 00:10:27,360 Speaker 9: more capacity because they just didn't know if this AI 218 00:10:27,440 --> 00:10:29,480 Speaker 9: thing was going to be real. And now it's starting 219 00:10:29,520 --> 00:10:32,520 Speaker 9: to catch up to them. It's causing this domino effect 220 00:10:32,559 --> 00:10:38,480 Speaker 9: of everything else, servers, smartphones, PCs, They're just scrambling for 221 00:10:38,520 --> 00:10:39,280 Speaker 9: supply right now. 222 00:10:40,080 --> 00:10:43,280 Speaker 7: How do you read the buybacks around ten billion dollars? 223 00:10:43,360 --> 00:10:46,200 Speaker 7: Is that confidence in future cash flow or more like, 224 00:10:46,840 --> 00:10:48,680 Speaker 7: oh no, the stock is still undervalued. 225 00:10:48,920 --> 00:10:51,960 Speaker 9: Well, you know when the stock was at one twenty, 226 00:10:52,080 --> 00:10:55,120 Speaker 9: I'm sure, Michael Delta the stock was undervalued and I 227 00:10:55,200 --> 00:10:57,800 Speaker 9: wanted to read a lot more confidence not only in 228 00:10:57,880 --> 00:11:01,520 Speaker 9: the business outlook, but also in cash generation. Right, we 229 00:11:01,960 --> 00:11:05,120 Speaker 9: are hearing mixed things on the cash generation front from 230 00:11:05,120 --> 00:11:06,240 Speaker 9: from my hardware companies. 231 00:11:06,240 --> 00:11:09,880 Speaker 2: At least, did I d C takedown I d C 232 00:11:10,080 --> 00:11:13,040 Speaker 2: is the the third party independent data provider for pretty 233 00:11:13,080 --> 00:11:15,480 Speaker 2: much the whole technology industry. Did they take down their 234 00:11:15,520 --> 00:11:16,680 Speaker 2: forecast for PCs? 235 00:11:16,800 --> 00:11:18,040 Speaker 9: Was it took them long enough? 236 00:11:18,240 --> 00:11:18,440 Speaker 11: Yeah? 237 00:11:19,360 --> 00:11:25,439 Speaker 9: No, No, we had minus seven percent unit declines. 238 00:11:25,600 --> 00:11:27,760 Speaker 2: Is that because there's enough chips to make the PCs? 239 00:11:27,800 --> 00:11:32,120 Speaker 9: It's it's twofold, right, not enough chips? And number two, 240 00:11:33,000 --> 00:11:37,440 Speaker 9: PCs are very very elastic, right from a demand supply 241 00:11:37,559 --> 00:11:41,000 Speaker 9: demand perspective. And essentially what they did was they cut 242 00:11:41,000 --> 00:11:43,680 Speaker 9: their forecast from minus three percent to minus eleven percent 243 00:11:44,080 --> 00:11:46,560 Speaker 9: on the PC side, and they also cut their forecast 244 00:11:46,600 --> 00:11:49,880 Speaker 9: the smartphones to minus thirteen percent. Right, there's a couple 245 00:11:49,920 --> 00:11:52,640 Speaker 9: of things going on. The PC makers are going to 246 00:11:52,679 --> 00:11:56,720 Speaker 9: focus more on the high margin businesses, right, so it 247 00:11:56,880 --> 00:12:01,760 Speaker 9: leaves the lower end PCs at alert, so they're not 248 00:12:01,800 --> 00:12:05,000 Speaker 9: going to start supplying those. And also the low end 249 00:12:05,000 --> 00:12:08,080 Speaker 9: market tends to be a lot more price sensitive, so 250 00:12:08,280 --> 00:12:09,920 Speaker 9: they're probably not going to upgrade. 251 00:12:10,440 --> 00:12:12,640 Speaker 7: And then we have server and networking margins. I think 252 00:12:12,679 --> 00:12:17,080 Speaker 7: those came above expectations. Is THELL gaining pricing power in 253 00:12:17,200 --> 00:12:20,560 Speaker 7: AI hardware or is it just because maybe they're executing 254 00:12:20,600 --> 00:12:22,719 Speaker 7: better than their peers? How do you read that? 255 00:12:22,840 --> 00:12:25,280 Speaker 9: Yeah, so there's a couple of things going on as well. 256 00:12:26,160 --> 00:12:29,600 Speaker 9: The first thing is is that they're raising prices right, 257 00:12:30,679 --> 00:12:33,480 Speaker 9: and the term sheets are getting shorter. Instead of like, 258 00:12:33,720 --> 00:12:38,160 Speaker 9: you know, three months, it's two weeks, so that that's 259 00:12:38,160 --> 00:12:43,120 Speaker 9: happening as well, it's less price elastic. And then on 260 00:12:43,160 --> 00:12:45,240 Speaker 9: top of that, from a margin perspective, as you we 261 00:12:45,240 --> 00:12:49,440 Speaker 9: were talking about earlier, storage has a higher margin overall, 262 00:12:49,920 --> 00:12:52,800 Speaker 9: and the storage business actually is doing very very well. 263 00:12:53,080 --> 00:12:55,240 Speaker 11: Quite frankly, stay with us. 264 00:12:55,440 --> 00:12:57,800 Speaker 3: More from Bloomberg Intelligence coming up after this. 265 00:13:01,679 --> 00:13:05,360 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 266 00:13:05,440 --> 00:13:08,559 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 267 00:13:08,559 --> 00:13:11,880 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 268 00:13:11,920 --> 00:13:15,040 Speaker 1: you get your podcasts, or watch us live on YouTube. 269 00:13:15,840 --> 00:13:19,280 Speaker 7: Got big earning Saturday, Core Weave, and it wasn't good 270 00:13:19,280 --> 00:13:21,080 Speaker 7: because a stock fell by the most and more than 271 00:13:21,160 --> 00:13:24,160 Speaker 7: six months. That's after the company reported a better than 272 00:13:24,200 --> 00:13:27,720 Speaker 7: expected loss and boosted capital expenditure. So this s burred 273 00:13:27,840 --> 00:13:31,760 Speaker 7: some concerns that the company is overspending on infrastructure. And 274 00:13:31,960 --> 00:13:34,959 Speaker 7: who else can talk to us about this better than 275 00:13:35,000 --> 00:13:38,720 Speaker 7: ANAA Grana. He's Bloomberg Intelligence technology analyst. All the way 276 00:13:38,720 --> 00:13:42,480 Speaker 7: from Chicago. So ANAURAG revenue exploded to one point nine 277 00:13:42,480 --> 00:13:45,840 Speaker 7: billion last year, but losses widen. Is this a classic 278 00:13:46,320 --> 00:13:48,720 Speaker 7: gross at any cost when it comes to the AI 279 00:13:48,800 --> 00:13:51,120 Speaker 7: story or is it something a little more concerning. 280 00:13:52,679 --> 00:13:54,720 Speaker 8: Yeah, I mean that's what the CEO is saying that Listen, 281 00:13:54,760 --> 00:13:57,360 Speaker 8: we have so much back orders of you know, sixty 282 00:13:57,360 --> 00:13:59,480 Speaker 8: plus billion dollars in orders, and we really need to 283 00:13:59,480 --> 00:14:01,520 Speaker 8: fill it and we're going to go spend as much 284 00:14:01,520 --> 00:14:04,720 Speaker 8: as we can. And today it seems investors are not 285 00:14:04,880 --> 00:14:07,480 Speaker 8: liking it. But you know, I think what happened was 286 00:14:07,600 --> 00:14:10,360 Speaker 8: they gave a bit of a outlook of what the 287 00:14:10,400 --> 00:14:12,760 Speaker 8: expenses are going to be and they missed on that. 288 00:14:12,840 --> 00:14:15,760 Speaker 8: And I think people are extremely no, I wouldn't say extremely, 289 00:14:15,800 --> 00:14:19,160 Speaker 8: but somewhat concerned that, you know, whether they have the 290 00:14:19,240 --> 00:14:22,640 Speaker 8: capital down the road to keep on continuing this particular flow. 291 00:14:22,800 --> 00:14:25,120 Speaker 8: I think that's really what it comes down to, is 292 00:14:25,400 --> 00:14:28,400 Speaker 8: where is the profitability going to come and at what point? 293 00:14:29,040 --> 00:14:31,560 Speaker 8: Because as we know, some of these businesses, you have 294 00:14:31,640 --> 00:14:34,480 Speaker 8: to invest upfront and then realize the profit later. 295 00:14:34,920 --> 00:14:37,240 Speaker 4: Yeah, you got to back up for me and explain 296 00:14:37,320 --> 00:14:39,520 Speaker 4: the basis, what in gun's name is a neo cloud. 297 00:14:41,480 --> 00:14:43,600 Speaker 8: Yeah, well that's just the nomenclature. But at the end 298 00:14:43,640 --> 00:14:45,640 Speaker 8: of the day, this is just a cloud. At the end, 299 00:14:45,720 --> 00:14:47,520 Speaker 8: you know, you are. What you do is you open 300 00:14:47,520 --> 00:14:50,680 Speaker 8: a data center, you buy GPUs from Nvidia, and then 301 00:14:50,720 --> 00:14:52,840 Speaker 8: you rent it out to people. It's a very simple 302 00:14:52,880 --> 00:14:55,920 Speaker 8: business model, nothing so complicated about it. But what happens 303 00:14:56,000 --> 00:14:58,960 Speaker 8: is you need to put that upfront capital to create 304 00:14:58,960 --> 00:15:01,280 Speaker 8: that data center. Then you need to buy the chips 305 00:15:01,320 --> 00:15:03,640 Speaker 8: and put it in there, and then after that is 306 00:15:03,640 --> 00:15:06,520 Speaker 8: what you start realizing the revenue when people use it. 307 00:15:07,000 --> 00:15:09,440 Speaker 8: We have enough evidence that the backlog of that is 308 00:15:09,560 --> 00:15:13,080 Speaker 8: absolutely stellar. Right now, there is so much demand. These 309 00:15:13,080 --> 00:15:16,320 Speaker 8: guys are running around and trying to you know, put 310 00:15:16,360 --> 00:15:19,240 Speaker 8: the data centers together and then go out and service that. 311 00:15:19,480 --> 00:15:22,120 Speaker 8: So there is a mismatch between how much you're putting 312 00:15:22,160 --> 00:15:25,080 Speaker 8: in terms of cost versus what's coming in as revenue. 313 00:15:25,160 --> 00:15:28,080 Speaker 4: Well, can you explain a little for what's how interwoven 314 00:15:28,160 --> 00:15:30,760 Speaker 4: are they with Nvidia at this point and what's the 315 00:15:30,800 --> 00:15:31,680 Speaker 4: significance of that. 316 00:15:33,120 --> 00:15:35,200 Speaker 8: Well, think of this as Nvidia is selling the chips, 317 00:15:35,200 --> 00:15:38,440 Speaker 8: they are really the distribution arm for the services around it, 318 00:15:38,640 --> 00:15:41,360 Speaker 8: and Video is a shareholder in cod viave and this 319 00:15:41,400 --> 00:15:43,600 Speaker 8: is a pure play you could say, in Vidia Shop 320 00:15:43,640 --> 00:15:47,160 Speaker 8: where it's basically going out and renting their chips out there. 321 00:15:47,360 --> 00:15:50,040 Speaker 8: Now it is and again this is not so much 322 00:15:50,040 --> 00:15:52,640 Speaker 8: in Vidia trying to just you know, give them capital 323 00:15:52,680 --> 00:15:53,480 Speaker 8: to stay in business. 324 00:15:53,680 --> 00:15:55,040 Speaker 11: They actually have orders from. 325 00:15:54,920 --> 00:15:57,880 Speaker 8: Everybody we know, whether it's Microsoft or Meta or a 326 00:15:57,920 --> 00:16:00,640 Speaker 8: bunch of a lot of enterprises as well well. So 327 00:16:00,800 --> 00:16:03,160 Speaker 8: I mean, core Weve has real orders that it needs 328 00:16:03,160 --> 00:16:05,920 Speaker 8: to fulfill. The question again, as I said, is how 329 00:16:05,960 --> 00:16:08,800 Speaker 8: much you have to put up front for those chips 330 00:16:08,800 --> 00:16:12,160 Speaker 8: and services versus how much you're going to realize as revenue. 331 00:16:12,520 --> 00:16:15,479 Speaker 7: And seventy seven percent of revenue came from just two customers, 332 00:16:15,480 --> 00:16:19,760 Speaker 7: with Microsoft accounting for nearly two thirds. How big of 333 00:16:19,760 --> 00:16:22,280 Speaker 7: a red flag is that, or if it's even a 334 00:16:22,320 --> 00:16:24,440 Speaker 7: red flag for IPO investments. 335 00:16:25,200 --> 00:16:26,920 Speaker 8: Yeah, to me, it's not a red flag. It is 336 00:16:26,960 --> 00:16:29,280 Speaker 8: a concentration issue. I get that. But at the end 337 00:16:29,320 --> 00:16:31,240 Speaker 8: of the day, I think Microsoft is good enough in 338 00:16:31,320 --> 00:16:33,240 Speaker 8: terms of you know, they will pay the bill to 339 00:16:33,280 --> 00:16:35,600 Speaker 8: code if they have promised some revenue, so I'm not 340 00:16:35,640 --> 00:16:39,080 Speaker 8: concerned about that part. But Codevieve is now seeing a 341 00:16:39,120 --> 00:16:42,120 Speaker 8: lot more demand from other vendors. That's also not an issue. 342 00:16:42,200 --> 00:16:44,280 Speaker 8: As I said, this is not a demand issue. The 343 00:16:44,400 --> 00:16:47,080 Speaker 8: question at hand is because one of the things code 344 00:16:47,080 --> 00:16:48,800 Speaker 8: Weave has to do is it has to go out 345 00:16:49,160 --> 00:16:52,440 Speaker 8: borrow money, issue some bonds, and then go out and 346 00:16:52,480 --> 00:16:53,720 Speaker 8: create new data centers. 347 00:16:53,840 --> 00:16:55,320 Speaker 11: So it's a financing question. 348 00:16:55,600 --> 00:16:57,480 Speaker 8: How much the rate of that is going to be, 349 00:16:57,640 --> 00:16:59,800 Speaker 8: how much they're going to charge for these services. So 350 00:17:00,160 --> 00:17:02,520 Speaker 8: I mean it's it's pretty much a most of a 351 00:17:02,560 --> 00:17:04,399 Speaker 8: cost overrun story at this point. 352 00:17:04,920 --> 00:17:07,159 Speaker 4: Do they give much clarity on when this is all 353 00:17:07,200 --> 00:17:07,880 Speaker 4: going to pay off? 354 00:17:09,280 --> 00:17:11,960 Speaker 8: They basically said, listen, long term margins are very good. 355 00:17:12,040 --> 00:17:14,880 Speaker 8: They are expecting margins to improve in the second half 356 00:17:14,920 --> 00:17:18,080 Speaker 8: of twenty twenty six. But you know, they gave some 357 00:17:18,200 --> 00:17:22,240 Speaker 8: guidance for operating income or adjusted operating income for four 358 00:17:22,320 --> 00:17:24,960 Speaker 8: Q and they came below that. So the big question 359 00:17:25,040 --> 00:17:27,000 Speaker 8: for the analyst is, you know, you're telling me that 360 00:17:27,040 --> 00:17:29,399 Speaker 8: it's going to improve in the second half of twenty 361 00:17:29,440 --> 00:17:31,560 Speaker 8: twenty six. You know, whatever, it doesn't happen. So I 362 00:17:31,560 --> 00:17:34,760 Speaker 8: think there are some doubts around that capabilities as this point. 363 00:17:34,920 --> 00:17:35,160 Speaker 11: And. 364 00:17:37,080 --> 00:17:39,800 Speaker 7: So the company could ask for a valuation north of 365 00:17:39,800 --> 00:17:42,320 Speaker 7: thirty five billion dollars in this market. Do you think 366 00:17:42,359 --> 00:17:45,480 Speaker 7: that's justified by the fundamentals or do you think it's 367 00:17:45,880 --> 00:17:48,200 Speaker 7: kind of driven by AI momentum. 368 00:17:49,200 --> 00:17:51,520 Speaker 8: And I think the question always happens is, you know, 369 00:17:51,560 --> 00:17:55,200 Speaker 8: one week, the entire AI infrastructure world is very happy 370 00:17:55,240 --> 00:17:57,080 Speaker 8: and you know, bubbly, and then the next week people 371 00:17:57,119 --> 00:17:59,879 Speaker 8: start getting concerns. The question what the code weave has 372 00:17:59,880 --> 00:18:01,880 Speaker 8: to show right now is they have to go out 373 00:18:01,920 --> 00:18:03,720 Speaker 8: and raise some debt. 374 00:18:03,880 --> 00:18:05,840 Speaker 11: I mean, you know that's tied to their. 375 00:18:05,800 --> 00:18:08,560 Speaker 8: Contracts, and we'll see what's the cost of that debt, 376 00:18:08,640 --> 00:18:11,879 Speaker 8: because that's going to dictate how the next funding is 377 00:18:11,920 --> 00:18:13,600 Speaker 8: going to be on the you know, I call it 378 00:18:13,640 --> 00:18:16,000 Speaker 8: not so much funding ground but more so a debt 379 00:18:16,080 --> 00:18:18,240 Speaker 8: raised round and how that's going to go about. 380 00:18:20,520 --> 00:18:22,879 Speaker 3: Stay with us more from Bloomberg Intelligence coming. 381 00:18:22,840 --> 00:18:23,560 Speaker 2: Up here for this. 382 00:18:26,680 --> 00:18:30,359 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 383 00:18:30,440 --> 00:18:33,560 Speaker 1: weekdays at ten am Eastern on Apple, Coarclay and Android 384 00:18:33,560 --> 00:18:36,880 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 385 00:18:36,920 --> 00:18:40,040 Speaker 1: you get your podcasts, or watch us live on YouTube. 386 00:18:40,760 --> 00:18:43,879 Speaker 2: Let's get dig into deeper this little deal there in 387 00:18:43,880 --> 00:18:46,480 Speaker 2: the media space, Warner Brothers, Discovery again, the news being 388 00:18:46,480 --> 00:18:47,520 Speaker 2: Netflix walking away. 389 00:18:47,560 --> 00:18:49,560 Speaker 3: So now paramounts guidance. 390 00:18:49,640 --> 00:18:50,440 Speaker 2: It's their deal. 391 00:18:50,600 --> 00:18:51,160 Speaker 3: Good for them. 392 00:18:51,359 --> 00:18:54,040 Speaker 2: And let's check in with Keitha Ranganath and she covers 393 00:18:54,080 --> 00:18:57,760 Speaker 2: all the media stocks for Bloomberg Intelligence. Keith, we got 394 00:18:57,920 --> 00:19:01,560 Speaker 2: Netflix stock trading higher. I guess the the shareholders like 395 00:19:01,640 --> 00:19:03,080 Speaker 2: them kind of passing on this deal. 396 00:19:04,320 --> 00:19:08,040 Speaker 10: Yeah, big relief rally, Paul, you know, I mean this 397 00:19:08,320 --> 00:19:11,199 Speaker 10: was always kind of muddying the narrative. I mean we've 398 00:19:11,240 --> 00:19:14,560 Speaker 10: spoken about this multiple times. Netflix is such a clean, 399 00:19:14,800 --> 00:19:19,120 Speaker 10: organic growth story and them just pursuing Warner Brothers Discovery, 400 00:19:19,119 --> 00:19:21,800 Speaker 10: I mean just kind of added so much of uncertainty. 401 00:19:21,880 --> 00:19:24,320 Speaker 10: You know, you have the regulatory risks of course, integration 402 00:19:24,440 --> 00:19:27,639 Speaker 10: execution risks. Plus we were talking about something like, you know, 403 00:19:27,680 --> 00:19:31,160 Speaker 10: their dead levels going up to beyond hundred billion dollars, 404 00:19:31,880 --> 00:19:34,199 Speaker 10: and yes, they do have the financial firepower, but at 405 00:19:34,200 --> 00:19:37,040 Speaker 10: the end of the day, they have always been builders 406 00:19:37,119 --> 00:19:40,439 Speaker 10: versus buyers. And once again they showed, you know that 407 00:19:40,520 --> 00:19:43,359 Speaker 10: they deserved. You know, they've always gained this reputation of 408 00:19:43,400 --> 00:19:46,920 Speaker 10: being very, very disciplined spenders when it comes to M 409 00:19:46,960 --> 00:19:50,159 Speaker 10: and A, and I think they once again exercised that 410 00:19:50,280 --> 00:19:52,560 Speaker 10: discipline and investors are cheering. 411 00:19:52,960 --> 00:19:55,120 Speaker 7: So it seems that this is a smart move according 412 00:19:55,119 --> 00:19:57,919 Speaker 7: to analysts, including you, This signal that the company is 413 00:19:57,960 --> 00:20:01,680 Speaker 7: confident in its organic growth versus and a especially in 414 00:20:01,720 --> 00:20:03,760 Speaker 7: a very crowded streaming market. 415 00:20:04,720 --> 00:20:07,160 Speaker 10: Yeah, Isabelle, I mean that had you know, been the question. 416 00:20:07,200 --> 00:20:09,679 Speaker 10: I think that's what spooked investors so much when they 417 00:20:09,720 --> 00:20:13,040 Speaker 10: actually went ahead with this eighty three billion dollar deal 418 00:20:13,119 --> 00:20:16,520 Speaker 10: for Warner, about whether they were actually seeing a slowdown internally, 419 00:20:17,200 --> 00:20:19,840 Speaker 10: and them not just abandoning the deal but also going 420 00:20:19,840 --> 00:20:23,440 Speaker 10: ahead and resuming buybacks once again just kind of signals 421 00:20:23,480 --> 00:20:27,280 Speaker 10: confidence in their underlying growth model. So I think, you know, 422 00:20:27,520 --> 00:20:30,480 Speaker 10: we know very well that they're operating metrics are really strong. 423 00:20:30,520 --> 00:20:32,800 Speaker 10: I mean, this is a company that has guided to 424 00:20:33,080 --> 00:20:35,880 Speaker 10: double digit revenue growth. We're we're going to see about 425 00:20:35,880 --> 00:20:39,160 Speaker 10: twelve to fourteen percent revenue gains this year. We're looking 426 00:20:39,160 --> 00:20:43,400 Speaker 10: at operating margin expansion of almost you know, a thousand 427 00:20:43,520 --> 00:20:46,000 Speaker 10: basis points. It's gone up ten percent over the past 428 00:20:46,080 --> 00:20:49,560 Speaker 10: two years. So and of course we also have fabulous 429 00:20:49,720 --> 00:20:52,160 Speaker 10: you know, free cash flow generation. So all of their 430 00:20:52,200 --> 00:20:54,720 Speaker 10: you know, financial lever levers and all of their growth 431 00:20:54,760 --> 00:20:59,080 Speaker 10: drivers very much in play place, and you know, not 432 00:20:59,240 --> 00:21:01,879 Speaker 10: having this disc action anymore just helps them kind of 433 00:21:01,920 --> 00:21:05,159 Speaker 10: really double down on their organic growth story. 434 00:21:05,880 --> 00:21:08,240 Speaker 2: On the other side of the equation, KEITHA, Uh, be 435 00:21:08,320 --> 00:21:11,360 Speaker 2: careful what you wish for. So paramount They've got this 436 00:21:11,480 --> 00:21:16,200 Speaker 2: great asset in Warner Brothers Discovery. What do we what's 437 00:21:16,280 --> 00:21:19,359 Speaker 2: the street think about this management team at Paramounts pretty 438 00:21:19,400 --> 00:21:23,480 Speaker 2: much unknown, untested this mister Ellison from the media community. 439 00:21:23,640 --> 00:21:27,000 Speaker 2: Is there any report card to date? Do we think 440 00:21:27,080 --> 00:21:29,040 Speaker 2: there's a market think that this is a man team 441 00:21:29,040 --> 00:21:30,720 Speaker 2: that can make this acquisition work? 442 00:21:31,920 --> 00:21:34,800 Speaker 10: They probably can, Paul, I mean they do have you know, 443 00:21:34,960 --> 00:21:39,800 Speaker 10: financial Uh, they do have some financial firepower here, although 444 00:21:40,080 --> 00:21:42,960 Speaker 10: I would point out that leverage at this company is 445 00:21:42,960 --> 00:21:45,040 Speaker 10: going to be extraordinarily high. We're looking at pro former 446 00:21:45,200 --> 00:21:48,159 Speaker 10: leverage of around almost seven times, so those are you know, 447 00:21:48,240 --> 00:21:50,600 Speaker 10: dangerously high levels. Yeah, and it's something that they're going 448 00:21:50,680 --> 00:21:52,600 Speaker 10: to have to contend with. But at the same time, 449 00:21:52,640 --> 00:21:55,000 Speaker 10: you know, they've spoken to synergies. We're looking at about 450 00:21:55,080 --> 00:21:58,199 Speaker 10: six billion dollars in synergies that they've committed to. And 451 00:21:58,480 --> 00:22:02,000 Speaker 10: remember this is a team where the fairly tech heavy bent, 452 00:22:02,200 --> 00:22:04,240 Speaker 10: so that might be something that kind of really serves 453 00:22:04,280 --> 00:22:07,960 Speaker 10: them well as they poise themselves for this new streaming future. 454 00:22:08,000 --> 00:22:10,560 Speaker 10: You know, you do have now they kind of are 455 00:22:10,600 --> 00:22:13,640 Speaker 10: to turbo charging their content offering, their turbo charging their 456 00:22:13,680 --> 00:22:17,320 Speaker 10: streaming business, and they have all of the you know 457 00:22:17,359 --> 00:22:20,320 Speaker 10: pieces in place to make this a really good business. 458 00:22:20,320 --> 00:22:22,000 Speaker 10: We'll have to wait and see how they execute, but 459 00:22:22,040 --> 00:22:24,160 Speaker 10: you're right, I mean, the management team is a little 460 00:22:24,160 --> 00:22:25,879 Speaker 10: bit of an unknown, although you know, we do have 461 00:22:25,960 --> 00:22:29,800 Speaker 10: Jeff Shell who has experienced from NBC. But again, it's 462 00:22:29,800 --> 00:22:31,400 Speaker 10: going to be a little bit of a weight and watch. 463 00:22:31,520 --> 00:22:33,760 Speaker 7: And Netflix also said they plan to invest twenty billion 464 00:22:33,800 --> 00:22:36,800 Speaker 7: this year in films and shows. Is that enough to 465 00:22:36,880 --> 00:22:40,959 Speaker 7: keep them ahead again in this really competitive to streaming wars. 466 00:22:41,560 --> 00:22:44,480 Speaker 10: Yeah, the twenty billion that they committed was actually a 467 00:22:44,520 --> 00:22:47,400 Speaker 10: pretty significant step up, Isabelle, from prior years. I mean, 468 00:22:47,440 --> 00:22:50,240 Speaker 10: we've seen them increasing content costs by roughly about six 469 00:22:50,280 --> 00:22:52,000 Speaker 10: to seven percent. This year was going to be a 470 00:22:52,040 --> 00:22:55,240 Speaker 10: much more significant jump to about ten percent. And this 471 00:22:55,320 --> 00:22:57,720 Speaker 10: is just basically Netflix saying that they are willing to 472 00:22:57,800 --> 00:23:00,920 Speaker 10: diversify into different forms of content. I mean, the big 473 00:23:00,960 --> 00:23:04,520 Speaker 10: investments that they're making are in live in sports and 474 00:23:04,680 --> 00:23:08,280 Speaker 10: international content just to kind of keep up that engagement 475 00:23:08,320 --> 00:23:11,240 Speaker 10: metric and make sure that you know, they keep building 476 00:23:11,280 --> 00:23:14,399 Speaker 10: on that competitive mode that they already have. And now 477 00:23:14,880 --> 00:23:16,800 Speaker 10: you know the icing on the cake for them with 478 00:23:16,840 --> 00:23:19,000 Speaker 10: this Warner Dealers that they're getting two point eight billion 479 00:23:19,040 --> 00:23:22,680 Speaker 10: dollars in termination fees. So hey, much more K dramas, 480 00:23:22,720 --> 00:23:23,800 Speaker 10: I guess. 481 00:23:23,960 --> 00:23:28,679 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 482 00:23:28,840 --> 00:23:32,800 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 483 00:23:33,040 --> 00:23:36,320 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 484 00:23:36,400 --> 00:23:40,280 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 485 00:23:40,320 --> 00:23:43,600 Speaker 1: can also watch us live every weekday on YouTube and 486 00:23:43,800 --> 00:23:46,480 Speaker 1: always on the Bloomberg terminal