WEBVTT - Walmart+ Boosts Spending, Cisco Focuses on AI 0:00:01.520 --> 0:00:02.240 From Marhart. 0:00:02.400 --> 0:00:06.800 We're Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.160 --> 0:00:22.480 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.160 --> 0:00:27.160 I'm Caroline Heidet Bloomberg's Weld head quarters in. 0:00:27.080 --> 0:00:30.160 New York, and I'm Ed Ludlow in San Francisco. This 0:00:30.200 --> 0:00:31.400 is Bloomberg Technology. 0:00:31.600 --> 0:00:32.040 Coming up. 0:00:32.120 --> 0:00:34.520 We'll get the read on the state of the e 0:00:34.560 --> 0:00:37.040 commerce consumer as we break down the early from Walmart 0:00:37.280 --> 0:00:38.360 for strong online. 0:00:38.080 --> 0:00:42.560 Growth plus the largest maker of computer networking equipment making 0:00:42.600 --> 0:00:45.160 headway in AI and security technology. 0:00:45.159 --> 0:00:46.879 We break down Cisco's results. 0:00:47.159 --> 0:00:51.040 Meanwhile, Adien eraising twenty billion dollars of market value in 0:00:51.040 --> 0:00:53.720 one day alone after posting the slowest revenue growth since 0:00:53.760 --> 0:00:55.840 that European payments giants IPO. 0:00:56.320 --> 0:00:58.520 Here in the US, two names that we're watching in 0:00:58.560 --> 0:01:02.680 the yearnings context. The first the AI story Cisco benefiting 0:01:02.720 --> 0:01:06.000 booking five hundred million dollars of sales already on its 0:01:06.000 --> 0:01:10.200 AI products. Growth slowing, but the street seems to light 0:01:10.240 --> 0:01:12.520 the forecast. We're going to get details from our editors 0:01:12.800 --> 0:01:15.760 in the next block. Walmart now down one point six 0:01:15.800 --> 0:01:19.560 percent second consecutive quarter where the outlook's been raised. But 0:01:19.600 --> 0:01:22.080 here's the one for me. E Commerce sales in the 0:01:22.160 --> 0:01:25.080 quarter jumped twenty four percent. This is an e commerce 0:01:25.080 --> 0:01:27.760 story of Walmart. So let's get more details. Bringing Bloomberg's 0:01:27.760 --> 0:01:30.360 Brendan Case, who covers Walmart for US out of Dallas. 0:01:30.360 --> 0:01:32.959 Brendan just run us through the top line of these earnings. 0:01:33.720 --> 0:01:36.520 Yeah, so the big picture for Walmart is that they 0:01:37.080 --> 0:01:41.639 easily surpassed Wall Streets estimates for the second quarter. Little 0:01:41.640 --> 0:01:44.600 bit light on the third quarter forecast, so I think 0:01:44.600 --> 0:01:47.039 that's probably why shares are down. Another reason is that 0:01:47.080 --> 0:01:50.040 there's just been so much enthusiasm about Walmart this year 0:01:50.120 --> 0:01:52.640 that anything less than perfect is going to hurt their share. 0:01:53.960 --> 0:01:57.320 Dropping down to e commerce though, that was a real 0:01:57.600 --> 0:02:01.680 bright spot, up twenty four percent, and that's the second 0:02:01.760 --> 0:02:04.120 grade quarter of really strong. 0:02:03.800 --> 0:02:05.480 Growth in that regard. 0:02:05.800 --> 0:02:09.080 So definitely a big, a big point of pride for 0:02:09.120 --> 0:02:09.720 Walmart there. 0:02:09.880 --> 0:02:12.720 Yeah, Brandon just talked to us about what they're doing 0:02:12.800 --> 0:02:15.480 right here. Is it that they're gaining market share, Is 0:02:15.480 --> 0:02:18.560 it they're able to claw more e commerce box of 0:02:18.680 --> 0:02:21.840 their own customer already, or they're peeling it away from Amazon. 0:02:22.840 --> 0:02:24.959 So there's a couple a couple of different things to 0:02:25.080 --> 0:02:28.280 sort of unpack there, and one of them is something 0:02:28.280 --> 0:02:31.440 that doesn't have anything to do with with placing orders 0:02:31.440 --> 0:02:34.640 for groceries. It's advertising, which is included in their e 0:02:34.680 --> 0:02:39.200 commerce business. Walmart has a big, multi billion dollar advertising 0:02:39.240 --> 0:02:43.640 business that in all respects except for one, is you know, 0:02:43.960 --> 0:02:46.840 big and successful. The one way in which it isn't 0:02:46.919 --> 0:02:50.600 is that it still dramatically trails Amazon. So, you know, 0:02:50.720 --> 0:02:54.560 boosting that business is a big priority for Walmart. They're 0:02:54.560 --> 0:02:56.600 doing it, but they still have a long way to go. 0:02:57.360 --> 0:02:59.720 And then if you sort of twitch to the shopper side, 0:03:00.440 --> 0:03:02.960 what you're seeing a couple interesting trends there. You're seeing 0:03:03.360 --> 0:03:05.880 strong growth in drive up, you know, people going to 0:03:05.919 --> 0:03:08.959 the store to pick up online orders. But you're also 0:03:09.080 --> 0:03:14.440 seeing growth which actually surpassed driver up this quarter, in delivery, 0:03:14.480 --> 0:03:17.360 So you're getting more and more customers who are tapping 0:03:17.360 --> 0:03:20.280 into the delivery options that Walmart offers. 0:03:21.040 --> 0:03:23.280 Brendan, you and I wrote a story almost a year 0:03:23.320 --> 0:03:27.000 ago now together about how Walmart does have nearly as 0:03:27.000 --> 0:03:30.520 many shelf pickers for online orders as it does you 0:03:30.560 --> 0:03:33.799 know people working in physical stores. Do we get any 0:03:33.800 --> 0:03:37.480 sense from the call about structurally how Walmart's adjusting its 0:03:37.520 --> 0:03:40.320 business for this kind of surge and e commerce demand 0:03:40.400 --> 0:03:42.520 that you outline twenty four percent jump in the quarter. 0:03:43.720 --> 0:03:46.600 Yeah, they give a bit of an update on their 0:03:46.640 --> 0:03:48.560 supply chain efforts, and so what they're trying to do 0:03:48.680 --> 0:03:50.840 is they've got a lot more automation going to their 0:03:50.880 --> 0:03:53.520 big distribution centers. The other thing they're doing is they're 0:03:53.560 --> 0:03:57.080 starting to build out what they call fulfillment centers, which 0:03:57.120 --> 0:04:01.040 are inside stores but not visible to customers. And what 0:04:01.080 --> 0:04:02.880 they're designed to do is get a lot of the 0:04:03.880 --> 0:04:07.160 product pickers out of the aisles and have a dedicated 0:04:07.160 --> 0:04:11.120 part of the store that is designed to send stuff 0:04:11.120 --> 0:04:13.640 out to customers. What you're going to see in the 0:04:13.680 --> 0:04:17.440 coming years as that ramps up is just a bigger 0:04:17.480 --> 0:04:19.320 and bigger capability. 0:04:18.720 --> 0:04:20.160 To do that delivery. 0:04:20.960 --> 0:04:23.360 It looks based on the second quarter results like there 0:04:23.400 --> 0:04:25.240 is a lot of demand for that, but time will tell. 0:04:26.360 --> 0:04:29.440 Brendan great analysis. We thank you so much, Brendan, case 0:04:29.440 --> 0:04:31.320 of course of Bloomberg. Meanwhile, we want to dig into 0:04:31.320 --> 0:04:34.560 some of the advertising flare that Brendan was just outlining 0:04:34.600 --> 0:04:37.440 there and ultimately how Walmart is digging up its e 0:04:37.480 --> 0:04:41.200 commerce proess. Alistair Macleanforman's with a CEO of Tigametrics is 0:04:41.240 --> 0:04:45.080 the leading optimization platform for marketplace brands ten million dollars 0:04:45.080 --> 0:04:47.880 plus in total annual ad sales optimized. And I know, 0:04:48.480 --> 0:04:53.040 you know Walmart intimately Alistair what in the playbook. 0:04:52.560 --> 0:04:53.760 Is really working for them? 0:04:53.800 --> 0:04:56.839 How are they managing to lure over new brands for example. 0:04:58.440 --> 0:04:59.679 Well, they're brilliant results. 0:05:00.080 --> 0:05:03.320 Walmart's certainly gaining share and taken metrics, we're using AI 0:05:03.400 --> 0:05:06.560 to optimize for the largest share of brands selling on. 0:05:06.520 --> 0:05:07.640 Walmart dot com. 0:05:07.839 --> 0:05:09.680 We've got billions of dollars of data, so we knew 0:05:09.720 --> 0:05:13.800 these results would be good. The marketplace seller volume is accelerating. 0:05:13.880 --> 0:05:17.840 They're building a flywheel of selection of thousands of brands, 0:05:18.279 --> 0:05:20.960 and they're turning into a technology powerhouse. They're investing in 0:05:21.000 --> 0:05:24.080 the APIs building a lot of tech to enable AI 0:05:24.200 --> 0:05:26.919 companies just like us to go even faster. And I 0:05:26.920 --> 0:05:29.839 think that's a big part of it, the technology. 0:05:30.640 --> 0:05:34.880 You know, we kick off the show, right Carrie Bloomberg Technology, 0:05:34.920 --> 0:05:36.640 and we start talking about Walmart and some of the 0:05:36.680 --> 0:05:39.320 audience out there going Walmart, what are you talking about? 0:05:39.480 --> 0:05:44.360 But e commerce advertising? And Alistairs just brought in AI. Alistair, 0:05:45.120 --> 0:05:48.479 what's your read on how competent Walmart is in those 0:05:48.520 --> 0:05:51.839 fields relative to Amazon, because in the context of ADS 0:05:51.880 --> 0:05:55.400 or AI, we've been talking about Amazon for a while. Walmart, 0:05:55.400 --> 0:05:56.480 it's a newer conversation. 0:05:59.000 --> 0:06:02.440 Well, are doing very very well. They're investing a ton. 0:06:03.080 --> 0:06:06.080 Seth de Laire is the cro over at Walmart and 0:06:06.120 --> 0:06:10.400 the Walmart Connects segment, that's the Walmart ADS business is 0:06:10.880 --> 0:06:14.000 really growing leaps and bounds in terms of the technology 0:06:14.400 --> 0:06:17.880 and the investment, and you know, they're really moving very quickly, 0:06:18.200 --> 0:06:18.960 very very quickly. 0:06:20.680 --> 0:06:24.360 It's interesting as well, Carrie, consumers in this equation, why 0:06:24.520 --> 0:06:26.920 e commerce jump in the corrider twenty four percent is 0:06:26.960 --> 0:06:27.520 a big move? 0:06:27.920 --> 0:06:30.280 Yeah, and I mean tell us the read on data 0:06:30.320 --> 0:06:33.560 there alistair as to whether, well some of your underlying 0:06:33.600 --> 0:06:36.040 thoughts on whether the consumer is resilient at this moment, 0:06:36.040 --> 0:06:38.159 whether it's just Walmart has got all the right price 0:06:38.200 --> 0:06:40.960 points for any type of consumer in this moment, because 0:06:41.120 --> 0:06:43.240 all of us are trying to read these tea leaves. Yes, 0:06:43.279 --> 0:06:46.720 the numbers look great, but both Target and Walmart sounded 0:06:46.800 --> 0:06:50.400 pretty conservative and indeed a little cautious about the consumer 0:06:50.480 --> 0:06:50.880 right now. 0:06:51.960 --> 0:06:52.200 Yeah. 0:06:52.240 --> 0:06:54.159 I think one of the most interesting things of the 0:06:54.240 --> 0:06:56.919 data we see is the change in the Walmart consumer. 0:06:57.000 --> 0:07:01.520 I think there's this stigma that maybe Walmart is all 0:07:01.560 --> 0:07:06.680 about older shoppers or traditional shoppers, but the growth in 0:07:06.720 --> 0:07:11.120 the modern, younger consumer that's opening up their wallets. They've 0:07:11.160 --> 0:07:13.960 got one of the fastest growing apps on the mobile 0:07:14.000 --> 0:07:17.239 side of things, and there's a really really big play 0:07:17.440 --> 0:07:21.680 around omni channel. The fact that Walmart dot Com can 0:07:21.960 --> 0:07:26.280 really do things that other marketplaces cannot is really really powerful, 0:07:26.320 --> 0:07:28.080 and they can connect the dots between. 0:07:27.920 --> 0:07:30.800 Online and offline, and that's what every brand wants. That 0:07:30.920 --> 0:07:31.960 omni channel player. 0:07:32.920 --> 0:07:36.440 Just remind us how international allmarts as well, because for me, 0:07:36.480 --> 0:07:39.760 it's a purely American name, but no, it's in India, 0:07:39.960 --> 0:07:42.920 it's in Mexico. Were seeing strength. I mean, we will 0:07:43.280 --> 0:07:45.320 as UK three voices here. We all knew it for 0:07:45.360 --> 0:07:46.600 having had Asda at one point. 0:07:48.000 --> 0:07:48.880 Yes, absolutely. 0:07:49.440 --> 0:07:49.640 You know. 0:07:49.720 --> 0:07:52.840 There's of course the flip cart asset they have in India. 0:07:53.080 --> 0:07:55.720 I think what is very very interesting from an international 0:07:55.760 --> 0:07:57.720 perspective is their focus. 0:07:57.400 --> 0:08:02.440 On recruiting and acquiring those marketplace sellers from overseas to 0:08:02.600 --> 0:08:05.720 sell into Warmlot dot com. That was one of the 0:08:05.720 --> 0:08:10.680 biggest drive of Amazon's success in its marketplace the flywheel 0:08:10.720 --> 0:08:13.760 of sellers. So we're seeing Walmart doing a lot globally 0:08:14.240 --> 0:08:18.360 attracting brands from overseas, very very similar to the Amazon playbook, 0:08:18.400 --> 0:08:19.760 and it is suddenly working. 0:08:21.600 --> 0:08:25.920 Alista, if you're an advertiser, why is Walmart an attractive 0:08:25.960 --> 0:08:28.640 option relative to any other e commerce name? 0:08:29.960 --> 0:08:31.160 Well, I can tell you. 0:08:31.360 --> 0:08:33.440 The data that we have is the return on ad 0:08:33.480 --> 0:08:36.599 spend or row ASS, which is the primary metric that 0:08:36.800 --> 0:08:41.040 advertisers use to determine their ROI. Those results on Walmart 0:08:41.080 --> 0:08:44.760 and the Walmart Connect platform are fantastic. It is very 0:08:44.840 --> 0:08:48.760 very profitable to sell and advertise on Walmart dot com 0:08:49.080 --> 0:08:51.959 and really that's what's attracting. 0:08:51.520 --> 0:08:53.000 More and more of sellers coming over. 0:08:53.480 --> 0:08:57.360 It's less competitive, it's more of a greenfield. And as 0:08:57.400 --> 0:09:00.760 I said, the ROI, the row as on ads fund 0:09:00.960 --> 0:09:04.520 is really fasting class and we expect that to continue. 0:09:05.880 --> 0:09:08.559 All right, Alistair MacLean Foreman have taken metrics new name 0:09:08.600 --> 0:09:10.600 to the show. Thank you for joining us here on 0:09:10.679 --> 0:09:14.439 Bloomberg Technology and our Speaking of Walmart, China's Internet regulator 0:09:14.760 --> 0:09:17.880 are reaching out to foreign firms, including the retail giant. 0:09:18.000 --> 0:09:21.440 They plan to discuss ways to navigate Beijing's new data 0:09:21.520 --> 0:09:25.680 security rules in an effort to reassure multinationals worried about 0:09:25.720 --> 0:09:36.360 their ability to operate in China under these latest regulations. 0:09:38.000 --> 0:09:41.200 Earning still thinking fast setstick into Cisco now shares moving 0:09:41.240 --> 0:09:44.520 higher after delivering results that actually pointed to some resiliency 0:09:44.559 --> 0:09:47.280 there and demand. CEO Chuck Robins really focusing on the 0:09:47.280 --> 0:09:50.760 company's AI potential. Who'd have thought it, saying, quote, this 0:09:50.800 --> 0:09:53.480 is a huge opportunity for Cisco. We are laser focused 0:09:53.480 --> 0:09:55.640 on leading and winning in this space. 0:09:56.080 --> 0:09:58.400 Let's get more on the results. Nick Turner's with us, 0:09:58.440 --> 0:09:59.000 and Nick, I. 0:09:59.000 --> 0:10:01.720 Mean, how do they profit, how do they capitalize on 0:10:01.720 --> 0:10:02.480 this AI moment? 0:10:03.840 --> 0:10:05.160 Well, it's still pretty early days. 0:10:05.200 --> 0:10:07.240 I mean they did point to five hundred million dollars 0:10:07.240 --> 0:10:10.120 in sales from AI products. I mean we're talking about 0:10:10.120 --> 0:10:12.800 stuff that sort of helps things speed through the process 0:10:12.840 --> 0:10:16.720 of training large language models and general of AI. So 0:10:17.080 --> 0:10:18.760 just we've been focused a lot on the kind of 0:10:18.800 --> 0:10:21.640 chips that people need to run that from Nvidia and others. 0:10:21.960 --> 0:10:23.319 But obviously network's part of that. 0:10:23.559 --> 0:10:26.480 Networking is part of that equation as well, and they 0:10:26.520 --> 0:10:28.400 expect to sort of be a big player in the space. 0:10:29.280 --> 0:10:31.480 Let's geek out for a moment, because Ed, you're a 0:10:31.520 --> 0:10:33.640 manner gets excited about networking gear, aren't you. 0:10:33.920 --> 0:10:36.280 Yeah, Like you know, Cisco's like the old school name 0:10:36.320 --> 0:10:38.240 is so they can Valley write down in San Jose. 0:10:38.440 --> 0:10:41.680 But the logic's really clear, as all of the hyperscalers 0:10:42.160 --> 0:10:45.280 cloud providers want to offer more compute, they need more 0:10:45.320 --> 0:10:48.160 networking gear for the data centers, and so Cisco like 0:10:48.240 --> 0:10:50.720 sweeps in, like we got it, guys, We're the biggest 0:10:50.760 --> 0:10:51.679 networking gear player. 0:10:51.720 --> 0:10:52.400 No worries. 0:10:52.800 --> 0:10:54.839 And what was interesting though, Nick, is that you look 0:10:54.880 --> 0:10:56.840 at the forecast for the rest of the year, it 0:10:56.880 --> 0:10:58.880 didn't really have much to do with AI. They're kind 0:10:58.880 --> 0:11:01.240 of coming out of a period they were playing catch 0:11:01.320 --> 0:11:02.679 up anyway from the pandemic. 0:11:04.120 --> 0:11:06.640 No, yeah, I mean if you look at their sales 0:11:06.840 --> 0:11:09.720 forecast itself, it looks pretty bad. It's a really terrible 0:11:09.720 --> 0:11:12.400 comparison with the last year of the year they just 0:11:12.480 --> 0:11:15.480 ended because they had this huge backlog that built up 0:11:15.480 --> 0:11:19.360 when there was no supplies available, so sales surged eleven 0:11:19.400 --> 0:11:21.640 percent and now this year they're only going to grow 0:11:21.679 --> 0:11:24.520 at two percent or so. So it's obviously a big comdown. 0:11:24.600 --> 0:11:27.559 But the executives have been like, look, we knew kind 0:11:27.600 --> 0:11:30.040 of this was going to happen, and if you look 0:11:30.080 --> 0:11:33.280 at sort of growth in a more longer term perspective, 0:11:33.640 --> 0:11:34.760 it's not a huge issue. 0:11:35.600 --> 0:11:38.480 We're just entering the first quarter of FIS school twenty 0:11:38.520 --> 0:11:41.200 twenty four, so we just finished FIST school twenty twenty three. 0:11:41.240 --> 0:11:42.640 To a point, Chuck. 0:11:42.440 --> 0:11:46.240 Robbins talks a lot about recurring revenue. Just explain of 0:11:46.280 --> 0:11:49.280 recurring revenue and what Cisco's doing to make money elsewhere. 0:11:50.720 --> 0:11:53.880 Well, so, traditionally, as you said, this was the massive 0:11:53.920 --> 0:11:56.360 networking gear company that could kind of do no wrong 0:11:56.400 --> 0:11:58.200 in the old days of Silicon value, and they would 0:11:58.200 --> 0:12:01.319 sell these systems everybody needed them, you know, big hardware, 0:12:01.360 --> 0:12:04.360 expensive hardware, and maybe they would sell you some software 0:12:04.400 --> 0:12:06.920 with that. The problem is is that it does tend 0:12:06.920 --> 0:12:09.959 to be lumpy, as they say, in terms of the sales, 0:12:10.000 --> 0:12:11.360 like you'll have a lot of sales one quarter and 0:12:11.360 --> 0:12:13.480 then less the next. They're trying to get people more 0:12:13.480 --> 0:12:16.920 on a subscription model, so you're paying a certain amount 0:12:16.960 --> 0:12:19.160 each quarter, and it's just it's more reliable. 0:12:20.840 --> 0:12:24.200 Where are analysts on the view of Cisco. Where is 0:12:25.280 --> 0:12:28.240 a sentiment more broadly on this particular name. 0:12:28.240 --> 0:12:29.200 What's the run up been like. 0:12:30.400 --> 0:12:32.920 Well, I think people have been pretty excited about sort 0:12:32.920 --> 0:12:35.760 of the last year or so and just you know, 0:12:35.840 --> 0:12:38.679 optimistic that this is a you know, if you look 0:12:38.720 --> 0:12:41.000 at a year or a year or you know, the 0:12:41.000 --> 0:12:43.080 past five years or so, it's been a little bit 0:12:43.160 --> 0:12:46.240 inconsistent in general in terms of growth. I think they 0:12:46.320 --> 0:12:48.640 obviously Cisco had this moment in the last year where 0:12:48.640 --> 0:12:51.680 they really were able to you know, turn the engines 0:12:51.720 --> 0:12:55.479 on full throttle, and I think people are more optimistic 0:12:55.520 --> 0:12:58.160 than might be expected about the coming year, even though 0:12:58.160 --> 0:12:59.439 sales are decelerating. 0:13:00.520 --> 0:13:04.280 The final component we wrote about was security as a 0:13:04.559 --> 0:13:06.800 sort of standalone mark of Cisco. Really quick, Nick, what 0:13:06.800 --> 0:13:08.040 did they say about security? 0:13:09.960 --> 0:13:11.800 It was one of those you know, there's three things 0:13:11.800 --> 0:13:16.040 they sort of called out AI, data center security, and 0:13:16.120 --> 0:13:19.400 obviously those are all three huge buzzy things that people 0:13:19.400 --> 0:13:22.640 want to see you growing in, and they said they've 0:13:22.720 --> 0:13:24.960 kind of made progress in all of them. I you know, 0:13:25.080 --> 0:13:26.760 I mean, I don't know if they were quite as 0:13:26.760 --> 0:13:29.400 specific on security in terms of how much progress lately, 0:13:30.440 --> 0:13:33.120 but it's definitely going to be a key thing for them. 0:13:33.400 --> 0:13:34.880 Nick. Great to catch up with you. 0:13:34.920 --> 0:13:37.760 Thank you one of their shunning lights today in terms 0:13:37.760 --> 0:13:40.240 of earnings, all things Cisco mean while coming. 0:13:40.160 --> 0:13:41.880 Up look good all things lobal. 0:13:41.600 --> 0:13:45.400 Smartphone market there is heading for the worst year in 0:13:45.480 --> 0:13:46.240 a decade. 0:13:46.559 --> 0:13:49.160 We'll discuss why. Next to speaking of smartphones. 0:13:48.679 --> 0:13:51.880 Look Apple a big tug on the broader NASDAC and 0:13:51.920 --> 0:13:54.280 as that one hundred today, it's really pulling. 0:13:54.040 --> 0:13:56.959 Down from a points perspective. Disappointing earnings report. 0:13:56.760 --> 0:13:58.960 Goes back a week or so, but really the pressure 0:13:59.000 --> 0:14:00.920 is off this company now to liver it's latest version 0:14:00.960 --> 0:14:03.400 of the iPhone. There's plenty of juicy content on the 0:14:03.440 --> 0:14:06.760 Bloomberg about this about how well in about six weeks time, 0:14:06.840 --> 0:14:08.680 we've got to be eyeing up what the tech gine 0:14:08.720 --> 0:14:10.880 is going to be doing, having reported its third straightcord 0:14:11.000 --> 0:14:14.480 declining sales. We've got some analyst expectations out there, shares 0:14:14.720 --> 0:14:16.599 expected to rise ahead of the event. 0:14:16.440 --> 0:14:17.640 Citing historical data. 0:14:18.200 --> 0:14:20.880 But look tell you what's also not rising ed check 0:14:20.880 --> 0:14:22.240 out what's happening in the world of crypto. I just 0:14:22.240 --> 0:14:23.920 want to shine a light and that really just before 0:14:23.960 --> 0:14:26.240 the show, we took another leg lower on the world 0:14:26.280 --> 0:14:29.600 of bitcoin. And this is more about market sentiment. This 0:14:29.720 --> 0:14:32.880 is more about bomb markets, selling off yields, driving higher 0:14:32.920 --> 0:14:34.240 the dollar in focus. 0:14:36.960 --> 0:14:39.520 Yeah, rate concerns the top story. This is Bloomberg. 0:14:50.160 --> 0:14:52.640 Let's get your daily dose of talking tech. First up, 0:14:52.640 --> 0:14:56.320 Global smartphone shipments ahead for their worst year in over 0:14:56.360 --> 0:14:59.720 a decade. Shipments expected to drop six percent year over year, 0:15:00.000 --> 0:15:03.200 according to the latest Counterpoint Research estimate. That's due to 0:15:03.200 --> 0:15:06.880 a disappointing demand, particularly in the US, but a deteriorating 0:15:07.200 --> 0:15:10.560 Chinese economy plus a smartphone sales dwindle. The top three 0:15:10.720 --> 0:15:14.360 US wireless carrier carriers have lost billions in revenue. AT 0:15:14.440 --> 0:15:17.800 and T, T Mobile, and Verizon have collectively lost nearly 0:15:17.880 --> 0:15:21.000 five billion dollars in equipment sales over the past twelve 0:15:21.000 --> 0:15:23.000 months compared to the previous year. 0:15:23.040 --> 0:15:24.440 And it's not just smartphones. 0:15:24.680 --> 0:15:28.720 The world's biggest PC maker, Lenovo, missed profit estimates for 0:15:28.760 --> 0:15:32.520 the second quarter, underscoring the depth of the global electronics 0:15:32.560 --> 0:15:33.440 market downturn. 0:15:33.560 --> 0:15:36.280 Caroline, I mean, let's just talk about missing expectations for 0:15:36.320 --> 0:15:38.440 a moment. Ed We're going to pivot away to Europe 0:15:38.600 --> 0:15:42.240 because Adian wiping out more than thirteen billion, in fact, 0:15:42.280 --> 0:15:44.760 I think it's twenty in the end market value falling 0:15:44.800 --> 0:15:47.600 over as you'll see thirty almost forty percent in a 0:15:47.640 --> 0:15:50.560 training day after missing first half revenue estimates. For more 0:15:50.640 --> 0:15:53.600 on the Dutch payment processing company and on the competition 0:15:53.640 --> 0:15:56.080 that's probably rife over here in the US, bloombergs Henry 0:15:56.120 --> 0:15:58.040 Wren is joining us as well as Sarah Jacob is 0:15:58.120 --> 0:16:00.720 brilliant to have you both with us, And I mean, 0:16:00.960 --> 0:16:04.080 first and foremost, Sarah, you cover the company from a 0:16:04.120 --> 0:16:06.240 real focal point over there in Amsterdam. 0:16:06.440 --> 0:16:08.200 What did you make of these numbers? 0:16:08.240 --> 0:16:10.840 Why was it such a shock this sort of focus 0:16:10.880 --> 0:16:13.920 for growth instead of profitability and obvious with everyone else. 0:16:15.080 --> 0:16:16.120 Yes, that's right. 0:16:16.240 --> 0:16:19.360 So Adune reported earnings for the first half that bes 0:16:19.360 --> 0:16:24.640 testaments on both revenue and margins. It boasted its slowest 0:16:24.680 --> 0:16:27.840 net revenue growth since it was listed, and the company 0:16:27.880 --> 0:16:32.440 attributed this to a weaker economic climate with higher interest rates, inflation, 0:16:32.560 --> 0:16:37.040 and particularly increased price competition in North America. The other 0:16:37.080 --> 0:16:39.440 thing with Adian is that they continue to hire, and 0:16:39.480 --> 0:16:43.040 they had about five hundred and fifty employees or so 0:16:43.200 --> 0:16:45.320 in the first half, and that too has weighed on 0:16:45.440 --> 0:16:46.560 margins the first half. 0:16:47.680 --> 0:16:50.400 Henry, let's bring the shares up and talk about this 0:16:50.480 --> 0:16:53.600 big drop. What's the Street saying because forty percent drop 0:16:53.720 --> 0:16:55.160 essentially biggest drop on record. 0:16:56.280 --> 0:16:57.040 Yeah, definitely. 0:16:57.120 --> 0:17:00.320 So when you think about a growth stock like and 0:17:00.360 --> 0:17:02.840 the scariest moment that you can have is when the 0:17:02.960 --> 0:17:05.320 three things that it's no longer a growth stock. So 0:17:05.720 --> 0:17:08.080 we saw these kind of things happening with Mata before 0:17:08.119 --> 0:17:12.600 the Facebook parent when it's flagship at Apps hit the bump, 0:17:13.080 --> 0:17:15.000 and we see this kind of thing is happening with 0:17:15.080 --> 0:17:19.280 Alien for sure as well, because we saw North American 0:17:19.320 --> 0:17:24.080 revenue the growth actually halved during the first half. Now, 0:17:24.320 --> 0:17:28.680 so the issue is because we have seen several quotas 0:17:28.840 --> 0:17:32.119 so adding and missed earnings sessments, but it's the first 0:17:32.119 --> 0:17:35.040 time that we've seen seen its IPO that it missed 0:17:35.640 --> 0:17:39.960 processing revenue estimates, processing volume estimate as well. And it's 0:17:40.000 --> 0:17:42.480 not just a myss, it's a miss of eight percent. 0:17:42.920 --> 0:17:45.960 So the question is whether the company can revive its growth. 0:17:45.960 --> 0:17:49.160 We know the company has reiterated its medium term guidance, 0:17:49.440 --> 0:17:52.280 but there is now some concerns on whether the company 0:17:52.280 --> 0:17:56.719 can achieve it's growth trajectory anymore given the competition, especially 0:17:56.760 --> 0:17:57.640 in the US. 0:17:57.480 --> 0:18:00.960 And Sarah dwell on that for a moment, they have 0:18:01.160 --> 0:18:04.919 spoken out about this being this hiring, this focus on 0:18:05.040 --> 0:18:07.320 growth still, which is at honest with basically everyone else 0:18:07.359 --> 0:18:10.119 in the market. It's the longer term potential here. But 0:18:11.119 --> 0:18:13.360 is this a cultural focus that they've got at the moment, 0:18:13.400 --> 0:18:15.280 the fact they want to be hiring in this market. 0:18:15.440 --> 0:18:17.960 How do you think they managed to convince investors? 0:18:18.840 --> 0:18:22.080 Well, Adian has been very vocal about the fact that 0:18:22.119 --> 0:18:25.480 they are in an investment mode. They're preparing the company 0:18:25.520 --> 0:18:28.800 for the next growth phase. I mean they are. They 0:18:28.920 --> 0:18:33.359 listed only a few years back. So they hired about 0:18:33.920 --> 0:18:36.480 two hundred employees last year and they expect to hire 0:18:36.520 --> 0:18:39.200 a similar amount this year. So as I said, about 0:18:39.240 --> 0:18:41.960 five hundred and fifty fifty one employees in the first 0:18:41.960 --> 0:18:46.080 half itself. So the company has has said that this 0:18:46.119 --> 0:18:49.000 is their focus, although they did mention that they will 0:18:49.040 --> 0:18:50.840 slow down hiring from next year. 0:18:51.200 --> 0:18:52.320 So yes, it is. 0:18:52.359 --> 0:18:55.240 It is in contrast with a lot of their peers 0:18:55.280 --> 0:18:58.919 who have announced job cuts in the past year or so. 0:19:00.000 --> 0:19:02.960 All right, Bloomberg's Henry Rahn and Sarah Jacobut in Amsterdam, 0:19:03.040 --> 0:19:05.920 thank you so much, carry team coverage. But the reason 0:19:05.920 --> 0:19:08.400 I love this story is we're talking about a European 0:19:08.440 --> 0:19:09.680 tech name that's quite big. 0:19:10.040 --> 0:19:11.520 You read Henry's street rap. 0:19:11.560 --> 0:19:14.399 What they're worried about is that it's not competing against 0:19:14.440 --> 0:19:17.359 the big US names for merchants attention. 0:19:17.680 --> 0:19:20.200 And whether or not they're just not willing to fight 0:19:20.280 --> 0:19:22.439 on a price perspective at the moment, whether or not 0:19:22.480 --> 0:19:25.439 it's there, are they actually losing customers, customers that just 0:19:25.480 --> 0:19:27.720 are using them a little bit less, they're not, of course, 0:19:27.760 --> 0:19:29.720 in this economic environment, as willing to be. 0:19:29.680 --> 0:19:31.440 Paying up for their higher priced products. 0:19:31.560 --> 0:19:34.680 It's really interesting as to also how the competition coalesces, 0:19:34.760 --> 0:19:37.080 of course, all eyes and what is the still private 0:19:37.160 --> 0:19:40.359 juggernaut that is Stripe and how much they managed to 0:19:40.359 --> 0:19:41.560 take in terms of market share. 0:19:42.160 --> 0:19:44.600 Yeah, but a commitment to hiring while the US peers 0:19:44.600 --> 0:19:56.520 are trimming jobs was quite interesting. Welcome back to Bloomberg Technology, 0:19:56.600 --> 0:19:58.560 Ed love loow here in San Francisco. 0:19:58.080 --> 0:19:59.239 And I'm Karenine hiding New York. 0:19:59.280 --> 0:20:01.239 Let'stig into the mark it halfway through this trading day 0:20:01.280 --> 0:20:03.879 and actually, well then as that one hundred, the bigger 0:20:03.880 --> 0:20:07.080 benchmark of the mighty powers of technology, actually you sort 0:20:07.080 --> 0:20:09.960 of trading flat. We've seen the Nasdaq more broadly, the 0:20:09.960 --> 0:20:13.600 benchmark under pressure today. Sentiment has been changing. We're worrying about, well, 0:20:13.640 --> 0:20:16.120