Speaker 1: I'm Caroline Hinder, Bloomberg's world headquarters and neal that I
Speaker 1: made Lovelow, also in New York City. This is Bloomberg
Speaker 1: Technology Special Day coming up. Apple racing too ready in
Speaker 1: house chips by and it has big implications for its suppliers.
Speaker 1: Shares of brock On dropped on the Bloomberg scoop will
Speaker 1: discuss in a moment, and a big tech rally loses
Speaker 1: steam as FED officials signal interest rates going beyond five
Speaker 1: pc and earnings come into focus as well as CPI.
Speaker 1: Just around the corner this Thursday, semiconductors outperform and Chinese
Speaker 1: stocks law back after Science of Government is winding down
Speaker 1: its tech crackdown on data protection, on online gaming and
Speaker 1: investments in foreign entities. We want to dig into that
Speaker 1: scoop because it did move markets, So please to say
Speaker 1: to talk about the replacements of chips and go really
Speaker 1: for its homegrown components and the implications on its supplies
Speaker 1: as well. Mark Gum and he was there with the
Speaker 1: story it did move fake time. Next, just talk about
Speaker 1: what's new here? Is it the pace at which they're
Speaker 1: doing it? So we've known for some time that Apple
Speaker 1: would be moving away from qual Calm for its cellular modems.
Speaker 1: Right now, the cellular modem, the qual Calm chip is
Speaker 1: what allows the phone to connect to data network, so
Speaker 1: you can make phone calls, connect the internet, download apps, email,
Speaker 1: basically do whatever you need to do when you're away
Speaker 1: from WiFi. So we've known that, we also now know
Speaker 1: to your point the timing of that that's going to
Speaker 1: be end of twenty four or early. It's going to
Speaker 1: start in one iPhone model. Take about three to four
Speaker 1: years for that transition to actually occur. Now, the main
Speaker 1: new piece of information is, in addition to working on
Speaker 1: its own cellular modem, Apple's working for the first time
Speaker 1: on its own WiFi chip. So that's the Broadcom component
Speaker 1: that allows the iPhone and it's other devices to connect
Speaker 1: to WiFi. And this is actually a combined chip, so
Speaker 1: it also lets the phone connect to Bluetooth as well.
Speaker 1: So it's the component not only for cellular from Qualcom
Speaker 1: that they're working on, but the component that also allows
Speaker 1: you to connect to wireless and bluetoo. So they really
Speaker 1: want to own the entire wireless stack inside of its products.
Speaker 1: How that for is the relationship between the two companies.
Speaker 1: What are executives saying about bracing of a future relationship. Yes,
Speaker 1: so the Apple Qualcom relationship has been, you know, dundling
Speaker 1: down for some time. Qualcom has publicly said the last
Speaker 1: few years that it expects for Apple to design them
Speaker 1: out of its products. Remember there was this major lawsuit
Speaker 1: over patents and royalties. Apple settled that because it really
Speaker 1: needed a five G phone with the iPhone twelve and twenty,
Speaker 1: and there was no way to come to market with
Speaker 1: the five G device unless they used Qualcom, so they
Speaker 1: needed to come to I believe it was a six
Speaker 1: year licensing agreement and a four or five year supply
Speaker 1: agreement at that time for the Qualcom modems inside of
Speaker 1: the iPhones. Now for Broadcom. Broadcom and Apple signed a
Speaker 1: fifteen billion dollar deal a couple of years ago that
Speaker 1: expires at the end of this year, right, And so
Speaker 1: that is also an indicator that there had been some
Speaker 1: trials and tribulations between the two companies. And now we
Speaker 1: know that it's pretty clear that Apple is also playing
Speaker 1: design broadcome out. But you look at any major supplier
Speaker 1: of components inside of Apple's devices, you can bet that
Speaker 1: Apple wants to work on its own in house custom solution,
Speaker 1: Mark Kara and I had to completely rip up the
Speaker 1: script for the show today because you have broken one
Speaker 1: story after another. Your other scoop this Monday was that
Speaker 1: Phil Peter sterns sorry, who was the Services VP, is
Speaker 1: leaving the company, leaving Apple according to sources. Why is
Speaker 1: that significant? This is hugely significant. So Peter Stern was
Speaker 1: a very quick riser at Apple. He's the brain, the
Speaker 1: driving force behind Apple subscription business. As part of its
Speaker 1: services business, he led the business side of Apple TV Plus,
Speaker 1: Apple Arcade, Apple News Plus, Apple Fitness Plus, as well
Speaker 1: as the marketing side of all of the the Apple services.
Speaker 1: He spearheaded bundles bundles for content within Apple TV plus
Speaker 1: the Channels service in the TVP but also the Apple
Speaker 1: One bundles. So he was really the brains behind this
Speaker 1: push in services that has made it one of the
Speaker 1: most components of the company's overall business. Now he's leaving.
Speaker 1: What that's gonna do is going to raise the profile
Speaker 1: of Oliver Schuster. He's the head of Apple Music. Now
Speaker 1: he's going to be taking on much of the responsibilities
Speaker 1: of Stern, and you can really probably Shoe and Schuster
Speaker 1: at this point as the eventual successor to Eddie q who,
Speaker 1: as we know, is the person behind all of Apple
Speaker 1: services and has been a top executive, a very senior lieutenant,
Speaker 1: a top three to five person at Apple under Steve
Speaker 1: Jobs and now under Tim cook Mark. I've just got
Speaker 1: back from Cslas Vegas, and you and I've written about
Speaker 1: this together in the past. Apple is never there, not
Speaker 1: normally in recent years at least, but there was a
Speaker 1: big discussion around a r v R and I notice
Speaker 1: your newsletter power on over the weekend looking at three.
Speaker 1: This will be a big year for Apple in the
Speaker 1: realm of a r VR, win't it. So Apple's next
Speaker 1: big thing is a mixed reality headset. It's gonna cost
Speaker 1: about three thousand dollars. They've been working on this for
Speaker 1: about seven years. They're going to introduce it sometime this
Speaker 1: spring March April time frame, talk more about it at
Speaker 1: their developer conference in June, and then released two consumers
Speaker 1: in the fall. So this is a big year for
Speaker 1: Apple in terms of a R and v R. And
Speaker 1: I'm sure you've had suppliers who are working with Apple
Speaker 1: and components without product discussing their plans at CS. The
Speaker 1: price point I mean where we expected three thousand. It's
Speaker 1: an earth shattering price point. It's going to be uh,
Speaker 1: let me do the quick math here. It's going to
Speaker 1: be about eight to ten times more expensive than the
Speaker 1: competing product from Meta, but it's also probably going to
Speaker 1: be eight to ten times better than their competing products.
Speaker 1: So I think it's really up to what consumers want
Speaker 1: to do with that, all right, bloombergs Mark gam And
Speaker 1: breaks stories every hour of the day, does the math
Speaker 1: live for us on the show. Thank you. I mean,
Speaker 1: you know, a r VR has been top of mind
Speaker 1: for you and I for a few days now. I
Speaker 1: was at CS where obviously you know that the latest
Speaker 1: consumer gadget that is the next generation that people are
Speaker 1: looking to. You've had your own bit of fun during
Speaker 1: the day on Monday, haven't you? In the realm of
Speaker 1: day r V I have, and I arrived on my
Speaker 1: city bike, So apologies for any like crow that you
Speaker 1: might be able to see in this current footage, because
Speaker 1: I did have it on in my cycling outfit. But
Speaker 1: I got to play with the Quest Pro, which I'm
Speaker 1: not sure if you like you've laid hands on the
Speaker 1: Quest too from metas now I happen to have a
Speaker 1: quest to my home, but I hadn't played with a
Speaker 1: pro check out my leggames. I'm sorry, but I was
Speaker 1: looking at all these latest tribex are was my favorite.
Speaker 1: You just saw me standing up using that. Basically I
Speaker 1: was a DJ this morning. And again it's all it's
Speaker 1: you're immersed within this idea of your being taught how
Speaker 1: to DJ, how to like build up the sounds, how
Speaker 1: to move them. Then I was doing here as I
Speaker 1: sat down, more of the focus on Horizon workspace. So
Speaker 1: this is really where perhaps Metal wants to get you
Speaker 1: excited how the future of work rooms, how the future
Speaker 1: of us interacting at work might differ. And I have
Speaker 1: to say I was impressed. And I just think before
Speaker 1: anyone's critical of things like n f t S, things
Speaker 1: like Peloton, things like the metaverse and VR, you've got
Speaker 1: to play with these things before you can have any
Speaker 1: sort of viewpoint here. And I actually really like the
Speaker 1: fact that I could be sat with just a small
Speaker 1: computer and actually through the wonder of the R and
Speaker 1: a R I could have like surround screens. I could
Speaker 1: be having this beautiful view while I worked. It's basically like,
Speaker 1: if you're going to stay in an airbnb and have
Speaker 1: a small office, you could go and do it to
Speaker 1: a really wonderful degree. I think for me, you know
Speaker 1: that when it comes down to the technology, it comes
Speaker 1: down to that price point, you know, three thou dollars
Speaker 1: for the Apple first generation of a r VR headset,
Speaker 1: and Mark mentioned it that the quest to at least
Speaker 1: is is many factors cheaper than that. But as you said,
Speaker 1: I have experienced it, you know, down in in East
Speaker 1: Palo Alto, and that I actually felt, I did feel
Speaker 1: a bit disoriented. But for me, what was amazing was
Speaker 1: the workout. You know, I'm you know, I'm a Peloton user,
Speaker 1: I'm a Jim goer, but the lightsaber game for one
Speaker 1: of a better expression. Really interesting workout, sweating. We'll dig
Speaker 1: up that footage for another time. Great, great stuff. I mean,
Speaker 1: we want to get out there. That's the whole point.
Speaker 1: So if you're watching this and you're working in the
Speaker 1: realms of a r v R, give us a call. Yeah,
Speaker 1: we want to play with these things. Coming up What
Speaker 1: to watch in tech this year? Of course, two FED
Speaker 1: officials sirring some cold water and traders this Monday, after
Speaker 1: signaling the interest rates could top five we'll discuss all
Speaker 1: of that and more with Emily Bower sock Hill of
Speaker 1: Bowerstock Capital Partners. Next, this is Bloomberg. We started off
Speaker 1: this show by telling you pretty volatile day and training overall,
Speaker 1: particularly when you're looking and actually tech stocks managing to
Speaker 1: whether this sell off, whether some of the concerns about
Speaker 1: whether the Federal Reserve is still very intent on hiking
Speaker 1: rates above five and managed to be galvanized by the
Speaker 1: reopening story from China. But what about the rest of
Speaker 1: three Let's dig into it with Emily bowerstock Hill seeo
Speaker 1: founding partner of Bowerstock Capital Partners, fifty million dollars in
Speaker 1: assets under management. Emily, great to have some time with you,
Speaker 1: and let's go broad to start this whole conversation off.
Speaker 1: When you look at the days tradeing and you try
Speaker 1: and perspective out what look like you Are you bullish?
Speaker 1: Are you are you barish? When you get in terms
Speaker 1: of your sense, Well, I would classify myself as bearish,
Speaker 1: But you know, I think that's the consensus out there
Speaker 1: right now. So I don't think there's anything terribly uh,
Speaker 1: you know, revolutionary about saying that. I think, particularly in
Speaker 1: the tech sector, you know, we are at the end
Speaker 1: of you know, we've essentially had a bubble burst that
Speaker 1: had been building for two or three years. And I
Speaker 1: started in this business back in the early two thousand's,
Speaker 1: and so I have a very vivid memory of, you know,
Speaker 1: what happened in those years after the you know, the
Speaker 1: first tech bubble burst. So I would be surprised. You know,
Speaker 1: I think that there's some really good names in the
Speaker 1: tech sector, but I would be very surprised to see,
Speaker 1: you know, a quick, happy rebound. You've got to be
Speaker 1: very selected within the sector. And I mean everyone that
Speaker 1: you talk to sort of keeps referencing the interest rate environment.
Speaker 1: That is why we saw the claps and evaluation two.
Speaker 1: But is that the story for you? Now? Do we
Speaker 1: think enough of the prices, the overall valuations have thinned
Speaker 1: out enough that it's less about that, it's more about
Speaker 1: individual stories and individual stocks. As you say, yes, I
Speaker 1: think the interest rate increases for the most part have
Speaker 1: been priced in. I think the problem here is that
Speaker 1: you look at a company like Amazon or Facebook or
Speaker 1: Shopify or Salesforce. You know, they really during the pandemic,
Speaker 1: they spent with abandoned and they they they increase their workforce.
Speaker 1: They spent very heavily on technology, and now reality is
Speaker 1: hitting and capital is much more expensive, and this is
Speaker 1: why we're seeing the layoffs and we're seeing the slowdown
Speaker 1: and spend and so I while I think the worst
Speaker 1: is behind us, and there's certainly large parts of the
Speaker 1: tech sector Apple, for example, Microsoft that are probably fairly valued,
Speaker 1: I don't think we're going to see the kind of
Speaker 1: growth rates that we saw over the last ten years
Speaker 1: over the next term. So I think it's you know,
Speaker 1: these are these are premium companies, right, I mean, I'm
Speaker 1: not suggesting that anyone goes sell their Apple or their Microsoft.
Speaker 1: In fact, it's probably a good a good time to
Speaker 1: gradually accumulate it. But don't expect the next five years
Speaker 1: to be like the last five. Emily, Caroline and I
Speaker 1: would love to get in some of the single names
Speaker 1: and specific subsectors in a moment. But there's this idea
Speaker 1: that actually, in the coming weeks, when we get fourth
Speaker 1: quarter earnings, irrespective of the trajectory for rates or the
Speaker 1: terminal rate, we're kind of bracing for this earnings recession. Right,
Speaker 1: I was looking on the Bloomberg terminal. I think that
Speaker 1: the consensus is for earnings on the NAZTAC one D
Speaker 1: to drop two percent or two point two percent. This
Speaker 1: year is an earnings recession, and earnings recession opposed to
Speaker 1: an economics procession the biggest rick risk to tech right now.
Speaker 1: I am expecting an earnings recession. I think the interest
Speaker 1: rates have increased so quickly. You know, the Fed raise
Speaker 1: seven times in two and it takes time for that
Speaker 1: to trickle through two earnings. And so I think we're
Speaker 1: going to have some earning disappointments. And you know, I
Speaker 1: think we're gonna we're gonna see that certainly through this
Speaker 1: fourth quarter reporting season. So I you know, I share
Speaker 1: the consensus view. The only thing that's alarming to me
Speaker 1: is typically when there is this much of a consensus,
Speaker 1: it's wrong. So it does give me some pause. Right,
Speaker 1: let's get to some of your top picks for three.
Speaker 1: I know that you yourself hold some of these stocks,
Speaker 1: indeed they're in your funds as well. But the names
Speaker 1: that jump out and me are not just the chip makers,
Speaker 1: but the chip equipment makers. We're showing on our screen.
Speaker 1: LAMB Research t SMC. Is there is there a broad
Speaker 1: rule of thumb you're applying here to those names. Yes,
Speaker 1: I think actually Lamb Research and Teradyne have very very
Speaker 1: similar competitive dynam m X think of them as being,
Speaker 1: you know, the equipment services of tech the white slumberge
Speaker 1: is the oil services of the energy sector. And so
Speaker 1: they are going to be a little bit more resilient
Speaker 1: in this very cyclical business. They're a little bit less
Speaker 1: affected by decisions like the one that Apple just made.
Speaker 1: They're they've got very they've got high barriers to entry
Speaker 1: because the amount of capital that has to go and
Speaker 1: build to building some of this equipment is very substantial.
Speaker 1: So I think and they all they're both very well
Speaker 1: managed companies with strong cash flow, with strong balance sheets
Speaker 1: that are that are very disciplined, and they've had to
Speaker 1: be in an industry like this, so it's their their
Speaker 1: companies to own collected dividend and you know, wait for
Speaker 1: some of this these semiico doctor issues to work their
Speaker 1: way through. You know, it was a terrible year last
Speaker 1: year down over all for the sector. So there's definitely
Speaker 1: value there if you're selective, and a lot of geopolitical
Speaker 1: risk will wrapped up in that, whether it's China US
Speaker 1: as well. I mean we've talked sort of through therefore,
Speaker 1: areas that you're kind of being cautious but still holding
Speaker 1: onto the Microsoft's, the apples, then talking about the areas
Speaker 1: that you're looking to actually like buy into. But I mean,
Speaker 1: why should you just be getting out of avoiding at
Speaker 1: all costs. This is a little bit risky, as say,
Speaker 1: but I think some of these I p o s
Speaker 1: we call them broken I p o s. I'm sure
Speaker 1: there are many people who use that term. But there
Speaker 1: were a lot of technology companies that I p oed
Speaker 1: in that I think have a long road to recovery.
Speaker 1: It doesn't mean that they're not good companies. And I
Speaker 1: would put in their palant here, a sauna, a firm,
Speaker 1: big commerce. You know, some of these companies that now
Speaker 1: are going to be stretched by how expect and so
Speaker 1: the capital is. So I would probably avoid those companies.
Speaker 1: Now I would wait. I think there's going to be
Speaker 1: a better entry point down the road. It's interesting. Emily
Speaker 1: barwasot Hill, CEO and founding partner of Bostock Capital Partners.
Speaker 1: Thank you, you know, I'm just looking at my Bloombell
Speaker 1: Caroline Palanteer, you know, not the best here in two
Speaker 1: the v makers that were the worst performers literally on
Speaker 1: then as that one she's saying, still not the time, alright,
Speaker 1: time now for your top tech calls. Starting with Jefferies
Speaker 1: placing Uber at a bias, the firm sees some upside
Speaker 1: from improving sentiment on the ride hailing company's profitability. Meanwhile,
Speaker 1: Jeffreys dropped Piers door Dash to an underperform rating and
Speaker 1: Lift at a hold. Next up, Oracle upgraded to overweight
Speaker 1: from neutral at Piper Sandler is It's cloud transformation takes hold.
Speaker 1: Piper also notes that fiscal might be a water said
Speaker 1: year for the software company, with growth in operate operating
Speaker 1: profits and earnings to share accelerating to more than ten percent.
Speaker 1: And finally, Tesla auto stock investors had a pretty rough
Speaker 1: year in two is. The industry suffered through supply change,
Speaker 1: disruptions and inventory and balances, and Tesla not spared. Therefore,
Speaker 1: Bank of America cutting its price target for the ev
Speaker 1: maker from two seven five to add and thirty five
Speaker 1: dollars and reiterating a neutral rating. Carrec interesting though Tesla
Speaker 1: managed to be rallying on the day. We want to
Speaker 1: dig into Tesla price cuts and not just on this
Speaker 1: price target. Let's talk about the price cut ramification on
Speaker 1: the actual car, particularly in China, because we know that,
Speaker 1: of course they have been cutting their prices over there,
Speaker 1: but showrooms therefore have been overwhelmed, not with potential buyer
Speaker 1: zed but protesters, people going and saying, look, you've taken
Speaker 1: down the price. What about me? What about the amount
Speaker 1: that I've just paid for my recently purchased electric vehicle?
Speaker 1: And I think all of these cut prices, I mean,
Speaker 1: what was it fourteen percent we cut last week, the
Speaker 1: second time in four months. Not only are they way
Speaker 1: cheaper to go and buyer from China than they are
Speaker 1: in the US, but you would be pretty annoyed if
Speaker 1: you just purchased one at a higher price point. Yes,
Speaker 1: second cut in China, since third cut since October or
Speaker 1: second recently, and you know, I think the executives have
Speaker 1: taken to Twitter to say these are the lowest they've
Speaker 1: ever been. And what's fascinating is the discount to US
Speaker 1: sale prices, So they're basically saying we missed the boat, Yeah,
Speaker 1: we want in. Doesn't work like that, I mean on
Speaker 1: a much smaller scale. I remember when I bought my
Speaker 1: full price Peloton many people are actually buying them, like
Speaker 1: higher than full price. I mean, if we all went
Speaker 1: back to the depths of COVID and thought about the
Speaker 1: supply chain headaches, we were all spending above and beyond
Speaker 1: on many crystals. We didn't know that was going to happen.
Speaker 1: So we now look how much cheaper that they are.
Speaker 1: But I'm not running down to Palaton and saying I
Speaker 1: want on my money back. But I can understand the
Speaker 1: frustration when they seem seemingly happen overnight, right and now
Speaker 1: Peloton follows up with more insensitives to kind of move
Speaker 1: that inventory of cheaper bikes and also trying to sell
Speaker 1: the more expensive hardware as well. I think on the
Speaker 1: e V side, what's interesting is there are many more
Speaker 1: players in China than there are here in US, and
Speaker 1: there are other well there's just other names. B y D,
Speaker 1: for example, raise prices and had a record quarter of deliveries.
Speaker 1: So I mean, but what's the price point deferential for
Speaker 1: a b y D versus a text that are they
Speaker 1: much more luxurious price point at Tesla not not the
Speaker 1: huge premium that a Mercedes for example, But there's just
Speaker 1: more choice for the consumer right here in the US,
Speaker 1: the price range is much more well said. Welcome back
Speaker 1: to Blomo Technology. I'm Caroline Hide in New York alongside
Speaker 1: in the flash mister ed Ludlow want a joy. Meanwhile,
Speaker 1: all we've gotta do is talk global. While we're both
Speaker 1: sat here in New York. We want to talk about
Speaker 1: the page potentially being turned in China for the text
Speaker 1: docks is it now? The hand sang Tech indext jumped
Speaker 1: after a top Central Bag official actually said that they
Speaker 1: clamped down on the internet sector. That's drawing to a close.
Speaker 1: Ali Baba led the rally, which comes, of course after
Speaker 1: a major squeeze on Chinese tech markets more broadly for
Speaker 1: the past two years no less, and the drop seems
Speaker 1: to have stepped from regulatory scrutiny on data production, on
Speaker 1: online gaming, and a government pushed to untangled investments in
Speaker 1: certain firms. But meanwhile, let's just think of the poster
Speaker 1: child of Chinese entrepreneurship, one billionaire Jack Mar. He's actually
Speaker 1: giving up a controlling rights of ant group that's the
Speaker 1: fintech part of his empire. Really, it's a sign that
Speaker 1: Mar is retreating yet further from his online empire following
Speaker 1: China's tech crackdowns, and he has mostly disappeared from public
Speaker 1: views since giving a speech that, of course rather criticized
Speaker 1: Chinese regulators. Just think that huge scuttling of the ANT
Speaker 1: listing still having repercussions. It still feels like such a
Speaker 1: catalyst for US listed tech shares this Monday. That and
Speaker 1: the fact that ants appointed individuals with their own voting rights,
Speaker 1: basically taking it out of Jack Mar's hands. Meanwhile, Beijing
Speaker 1: is spending big money as the US aggressively pushes for
Speaker 1: more semiconductor manufacturing market share. That includes the passage of
Speaker 1: the Chips Act, which brought more investment to US made
Speaker 1: chips or future US made chips, as well as this
Speaker 1: embargo on China chip exports from the US. Bloomberg's in
Speaker 1: King covers all things chipped for US. You've made a mind.
Speaker 1: Back in the San Francisco Bureau, we talked a lot
Speaker 1: about US policy to restrict China's access to chip making
Speaker 1: equipment and and and the latest generation of chip technology.
Speaker 1: My question to you is what has China's response been.
Speaker 1: What has China's policy been to advance their own semiconductor industry.
Speaker 1: You know, it's a very good question. I mean The
Speaker 1: way to think about this is to think about what
Speaker 1: South Korea did, think about what Taiwan did, and it
Speaker 1: took them basically thirty years to get to the position
Speaker 1: wherein where some Song is the world's largest chipmaker t
Speaker 1: SMC is arguably the world's most advantage chipmaker. China has
Speaker 1: been following that path. Unfortunately, the US are not supporting
Speaker 1: China in the way that they supported Taiwan and South Korea,
Speaker 1: and therefore China has got to this point where they've
Speaker 1: spent billions and really haven't got to the point where
Speaker 1: they can do things like withstand these restrictions that the
Speaker 1: Americans are putting upon them, and really, you know, there
Speaker 1: at a point now where they're having to re evaluate
Speaker 1: how they're going to pursue this going forward and perhaps
Speaker 1: take an even longer approach to gain that independence that
Speaker 1: they're so desperately crave. This is one of the most
Speaker 1: read stories on the Bloomberg Terminal and Bloomberg dot com.
Speaker 1: Aggressive US chip strategy forces China into a corner. You know,
Speaker 1: in that corner, they're not just throwing money at this,
Speaker 1: although they are to it to a large extent that
Speaker 1: I guess it's a policy action right where they're saying
Speaker 1: to China's state and private enterprises, you guys have to
Speaker 1: find us a technological solution here. What else are they doing? Yeah,
Speaker 1: I mean it's been a vacillating policy that you know,
Speaker 1: they've put billions to work and then they found that
Speaker 1: they didn't really get what they wanted. And then they've
Speaker 1: gone after some of those people who have actually been
Speaker 1: in charge of it and they said, look, we've wasted money,
Speaker 1: We've done this. So it's really not clear what they
Speaker 1: can do at this point because some of those key points,
Speaker 1: some of those key choke points, really in the hands
Speaker 1: of the Americans. Unless they can get the machinery and
Speaker 1: the technology from the Americans, they're going to struggle. And
Speaker 1: it's going to be a really really long road to
Speaker 1: domesticate that and take it away from the point where that,
Speaker 1: you know, they're subject to external factors. And I feel
Speaker 1: like it was the beginning of last week where some
Speaker 1: US chip companies got a bit of a bit higher
Speaker 1: because there was suddenly talk of China sort of giving
Speaker 1: up taking its foot off the accelerator when it comes
Speaker 1: to its own ship manufacturing. These rumors going to circulate
Speaker 1: in such a way. Yeah, I mean it's you know,
Speaker 1: we've we've got all kinds of rumors, all kinds of
Speaker 1: speculation going on, and including our own reporting which says,
Speaker 1: what are the Europeans going to do? What are the
Speaker 1: Japanese going to do? Are they going to get him
Speaker 1: on board? Is this situation for China going to become
Speaker 1: even more extreme? Are we heading to more of a standoff?
Speaker 1: On the flip side of that, obviously, some of the
Speaker 1: U S companies don't like the fact that they're being
Speaker 1: locked out of their largest market and clearly lobbying against that.
Speaker 1: So a lot of evan flow in terms of the
Speaker 1: conversations in places like Washington about how this is going
Speaker 1: to play out, whether we see easings or whether we
Speaker 1: see an increasing climbed down on China and the potential
Speaker 1: out you know, consequences will see in the marketplace. Just
Speaker 1: get us up to speed a little bit with just
Speaker 1: China's focus more broadly in technology and because we talk
Speaker 1: here of them clearly in defining wanting to double down
Speaker 1: and ensure that they can take on the U S
Speaker 1: when it comes to chip manufacturing. But in the same
Speaker 1: breath we were just talking about one Jack mar who
Speaker 1: basically has been in exile ever since he spoke out
Speaker 1: against the Chinese regulators. And many of these billionaires have
Speaker 1: been forced to sell down their overall ownership and certainly
Speaker 1: reduce their overall billions too. How do you think China
Speaker 1: sits with its technology right now? Again, I think that
Speaker 1: it's a fluid situation. I was speaking to a CEO
Speaker 1: who said he's concerned that, you know, the leadership in
Speaker 1: China is disillusioned with what electronics with semi conductors and
Speaker 1: the internet has done for their economy and hasn't helped them,
Speaker 1: and he's concerned that, you know, there's going to be
Speaker 1: a turning away from this, that they'll go back to
Speaker 1: heavy industry or or something else to try and you know,
Speaker 1: carve out an economic niche for China. And the other
Speaker 1: side of it is that well, perhaps China's learning it's
Speaker 1: lesson that it needs to play better in the world
Speaker 1: economy and in order for these industries to flourish, and
Speaker 1: we'll see a new era of cooperation. Hard to say
Speaker 1: which way it's going to go at the moment, and
Speaker 1: certainly in you know, the decision makers that we're talking
Speaker 1: to seem to feel like, we're going to be pursuing
Speaker 1: on a harder line with China for the foreseeable future.
Speaker 1: Bean like Caroline, and I'm sure you're head spinning from
Speaker 1: all the headlines that hit the Bloomberg this Monday from
Speaker 1: one Mark German and all his Apple reporting. I mean,
Speaker 1: the key headline to move markets was that app always
Speaker 1: going to move to use in house technology in place
Speaker 1: of broad Calm and also Qualcom chipsets and modems going forward.
Speaker 1: We've got marks take on the Apple side of this story.
Speaker 1: What is the chip maker take on this side of
Speaker 1: the story. Yeah, I mean the quick take for Qualcom
Speaker 1: is they've been talking about this for a while. We've
Speaker 1: been reporting about this for a while, and they've acknowledged
Speaker 1: it and said, you know, it's kind of a matter
Speaker 1: of time. We'll enjoy this while it lasts. And guess what,
Speaker 1: it actually lasted a bit longer than we thought. So
Speaker 1: on that side, not so much of a shock. On
Speaker 1: the Broadcom side. As recently as December, Hottan, the CEO
Speaker 1: of Broadcom, was talking about how good their WiFi chips were,
Speaker 1: their combo chips were, and how you know, why would
Speaker 1: you go anywhere else? So this is clearly more of
Speaker 1: a shock for them, and this is something that I'm
Speaker 1: sure analysts investors are going to focus on more heavily.
Speaker 1: In king Resident Brittain s f made of one at
Speaker 1: Ladlower Mine and also giving it the odd fashion tip.
Speaker 1: It feels like you guys with the night a nice
Speaker 1: sea through classes that no tie, so look thinking thank
Speaker 1: you so much. I meanwhile, like Eddie, while you're here,
Speaker 1: let's let's talk about your favorite thing, our favorite thing,
Speaker 1: and of course let's think about EVS a little bit more.
Speaker 1: But when it comes to China, what's so interesting is
Speaker 1: not just some of the price drops that Testa has
Speaker 1: been doing, but also the talent moves right. And this
Speaker 1: was a big story at the end of last year. Yes,
Speaker 1: so we're talking about Tom jew who was kind of
Speaker 1: the mastermind but behind the construction and ramp up in
Speaker 1: performance of the Shanghai plant. And as we reported about
Speaker 1: a month ago, he's been in the United States, both
Speaker 1: in the Bay Area in Fremont and in Austin basically
Speaker 1: installing his own people and trying to make those factories
Speaker 1: better because honestly, Shanghai tests production is kind of the
Speaker 1: standard that Tessa wants to hit sources tell me that
Speaker 1: this guy is serious. He works super hard, and you
Speaker 1: know we've done a profile of him on the Bloomberg
Speaker 1: tumnel The question the market has is this a future
Speaker 1: Elon's successor, because there has been a lot of talk
Speaker 1: right not only about Elon musk handling over the reins
Speaker 1: over at Twitter, but many wandering about key man risk
Speaker 1: and about ensuring that you have a deep bench for
Speaker 1: his role of CEO A Tesla's Yeah. The confusing thing
Speaker 1: is that Ellen himself talks about wanting to be on
Speaker 1: the engineering side, less about the pentil pushing side. Tom
Speaker 1: jew is also very much on the engineering side. So
Speaker 1: where we net out we don't know, but he's certainly
Speaker 1: a nim to watch in the future. It's a great
Speaker 1: read up and go have a look on dot Com
Speaker 1: on the terminal two. All right, coming up the top
Speaker 1: I p o s to watch with equities ends. Are
Speaker 1: there going to be any Well, he's got a list,
Speaker 1: we'll see. This is Bloomberg. Oh, we just tased the
Speaker 1: head to the I p o S initial public offerings.
Speaker 1: Will there be any? Yeah, look right now and focus
Speaker 1: as a few in Asia, it's been a bit busier
Speaker 1: start the year there, But what can we expect in
Speaker 1: the US and abroad? Yeah, I mean we're looking for
Speaker 1: a sense of direction and energy in the I P
Speaker 1: O markets. I thought, let's look at two and some
Speaker 1: of what happened two seven billion dollars raised globally. Two.
Speaker 1: That's a pretty significant drop around from one. And that's
Speaker 1: where context is king because what happened in one, well,
Speaker 1: we had not yet embarked on that aggressive rate policy,
Speaker 1: not just from the FED but central blanks banks around
Speaker 1: the globe, but also had the Spack wave right where
Speaker 1: a number of special purpose acquisition companies also listed there
Speaker 1: shares in hopes of acquiring target companies. That's sort of
Speaker 1: spack enthusiasm dropped off in two. A part of what's
Speaker 1: happening there was energy in China and energy in Middle
Speaker 1: Eastern markets. But actually flip up the boards and let's
Speaker 1: talk about the US because you can't quite see it.
Speaker 1: But on the far right hand side that is kind
Speaker 1: of listing volumes for two in the US around twenty
Speaker 1: four billion, nothing compared to one, and again higher rates
Speaker 1: having a real impact there. Volatility and markets also kind
Speaker 1: of the start of the conversation around recession globally clear
Speaker 1: having an impact the question, as you said, Asia or
Speaker 1: the US three, there is some green shoots and we
Speaker 1: can ask our next guest about this, but block trades
Speaker 1: there with me. Block trades are taking place to a
Speaker 1: certain extent. There's this idea that you see some secondary
Speaker 1: offerings as a precursor to some primary things down the road.
Speaker 1: I pios down the road IPOs take a really long time,
Speaker 1: that you can make a secondary transaction happen a lot
Speaker 1: more quickly. So we're looking for some optimism. But that's
Speaker 1: what happened over the last two years. And whether those
Speaker 1: trends continue, don't ask me, I ask our next guest,
Speaker 1: because there's a marketplace for these secondary some transactions in
Speaker 1: the secondary market, and well it's ecurity ZN Well. Pleased
Speaker 1: to talk about all of it with Phil Hazlet. He's
Speaker 1: a co founder on chief strategy officer that platform pre
Speaker 1: i PO investing. At the moment, any of those pre
Speaker 1: IPOs looking to our natural exit route, do you think
Speaker 1: many of them will in any way get to market
Speaker 1: this year. I think we're going to probably see some
Speaker 1: companies come to market. In the second half of two
Speaker 1: th three, we saw a pretty frozen I p O market,
Speaker 1: as you just previously alluded to, and that's starting to
Speaker 1: thaw out a little bit. But all it really takes
Speaker 1: is maybe just one or two of these bell Weather
Speaker 1: pre I p O tech companies to finally test the market.
Speaker 1: And you've got one success, you probably open up the
Speaker 1: market for a bunch of others. I know you have
Speaker 1: some specific names you're watching. Three. I kind of want
Speaker 1: to ask you the reverse question first, which is worst
Speaker 1: performers on the Nos one twenty two where Rivian Blockbuster
Speaker 1: I p O. I covered it deeply in one right
Speaker 1: six biggest I p O in U S history. And
Speaker 1: then you have Lucid second worst performer, or maybe the
Speaker 1: other way around. On then as that one hundred, they
Speaker 1: right raised a lot of money in the pipe from
Speaker 1: their trans spack transaction. Those were the two worst performers.
Speaker 1: What does that tell you about you know, some hesitancy
Speaker 1: to go public in twenty two. Maybe we looked at
Speaker 1: those two companies and said we don't want that to happen.
Speaker 1: That's right. I think those two companies are a good
Speaker 1: example of what worked in two thousand two. Why don't
Speaker 1: I show you my revenue projections for two thousand, twenty
Speaker 1: six and two thousand seven and a zero interest rate environment.
Speaker 1: And now when the rubber meets the road, you start
Speaker 1: to see companies that are operating in a three four
Speaker 1: five percent interest rate environment. You see risk come down
Speaker 1: and the risk appetite come down, which means that allocators
Speaker 1: into I p o s are now saying profits first,
Speaker 1: profit first, profit first. But you've built all of these
Speaker 1: companies with growth in mind. Right. Venture capital investors were
Speaker 1: feeding money to these companies in two thowy two at
Speaker 1: very high valuations, and the smart founders actually took that
Speaker 1: money perversely and are going to wait until they can
Speaker 1: come to market at evaluation that they think makes more sense. Well,
Speaker 1: it's interesting that perhaps it has been forcibly ground to
Speaker 1: a halt, because there's still a lot of tech companies
Speaker 1: who are listed with very deep pockets, but they can't
Speaker 1: do M and A at the moment because of regulation. Now,
Speaker 1: one company like that was ARM Holdings, and you're saying, look,
Speaker 1: they might actually look to list, they still want to
Speaker 1: go public. That's right, that's right. I think that's a
Speaker 1: simpler avenue for ARM to go through them to try
Speaker 1: to test out any type of M and A activity
Speaker 1: in the current anti trust environment. Blizzard is probably another
Speaker 1: example of, you know where it's been really hard to
Speaker 1: do large scale M and A and so you kind
Speaker 1: of think about what tools you had available as a
Speaker 1: private company about a year and a half ago. Everything
Speaker 1: was at your disposal, spacks, large acquisitions, I p o s,
Speaker 1: and you've kind of got none of them right, and
Speaker 1: so as a result, you see very little activity, except
Speaker 1: as you mentioned, we're starting to see some more activity
Speaker 1: on the secondary markets, which we typically see as a
Speaker 1: leading indicator for companies getting ready to go public. Vin
Speaker 1: Fast is a name you've identified. I kind of I
Speaker 1: didn't find it surprising, because you know, there's a large
Speaker 1: investor base that's still interested to find the next Tesla. Frankly,
Speaker 1: but again we went through that very long illustration of
Speaker 1: what happened to Lucid and Rivian. Do you not think
Speaker 1: that vin Fast is at risk of of the same
Speaker 1: reception that those two names got. It's a great question.
Speaker 1: Has exposure to a slightly different geography, which I think
Speaker 1: an opportunity um but also I think there's a lot
Speaker 1: of learnings from the gosh, you know, fifty or seventy
Speaker 1: five e V and light our companies that have gone
Speaker 1: public on what you really have to show to investors,
Speaker 1: the reality of actual contracts, of actual deliverables, of actual
Speaker 1: supplied trains up and running, uh and falling short of those,
Speaker 1: I think you're going to have a really tepid ip
Speaker 1: O response. And so I think there's a lot of
Speaker 1: learnings for companies that are coming out that basically said,
Speaker 1: thank goodness, we didn't do this a year ago. I
Speaker 1: want to ask you about the burden of proof. You
Speaker 1: know I continued covering Rivian Gone, the Bloomberg look at
Speaker 1: the course Le Earning story, and you know I've been
Speaker 1: writing them at the time. The I po, as you say,
Speaker 1: revenue is distant, is the burden of proof now higher
Speaker 1: where pre revenue companies in particular are kind of a
Speaker 1: no go for investors? Or is that still an opportunity.
Speaker 1: I think you're absolutely right. You've got to be a
Speaker 1: company doing hundreds of millions of dollars of revenue if
Speaker 1: you want to be one of these companies that goes
Speaker 1: public in two thousand twenty three. The way I see
Speaker 1: it is that investors are not willing to pay for
Speaker 1: that risk of the unknown anymore. Um, you're kind of
Speaker 1: seeing it and why things are going completely quiet. The
Speaker 1: positive side though, is that all of those unicorn companies
Speaker 1: of which there's a thousand plus, many of them are
Speaker 1: at the hundred or even billion dollar revenue level, and
Speaker 1: I think those are the companies you're going to see
Speaker 1: that are going to test the markets. And so really
Speaker 1: the kind of the water mark you would have seen
Speaker 1: for an I p O fifteen twenty years ago, maybe
Speaker 1: thirty million in revenue for a million in revenue. Leading
Speaker 1: up to the dot com bubble, it was eyeballs, right,
Speaker 1: and now we've kind of recalibrated and said you have
Speaker 1: to show revenue growth and you have to show a
Speaker 1: path to profitability. Note but far earlier and maybe a
Speaker 1: very loyal fan base like a Reddit for example. But
Speaker 1: I'm interested for you said that in the secondary market,
Speaker 1: you have seen a little bit of pick up. Who
Speaker 1: is buying, who is selling? Who are the players that
Speaker 1: are at the moment. Yeah, it's a great question. The
Speaker 1: buyers we've seen are pretty it's pretty interesting. And new
Speaker 1: phenomenon is adventure capital firms and growth equity firms, which
Speaker 1: typically invest just in primary capital races are finding that
Speaker 1: that market as well as completely shut. You know, Sequoia
Speaker 1: goes to a company and says, I saw you raise
Speaker 1: a ten billion last year. Look at the market house
Speaker 1: five five billion, and that founder tells them to kick
Speaker 1: rocks right, Why would I do that? I already have
Speaker 1: a bunch of cash on hand. Uh. And so those
Speaker 1: venture capital firms are saying, well, if I want to
Speaker 1: invest these companies at market prices, I've got to look elsewhere.
Speaker 1: And a lot of times they find that they're eager
Speaker 1: sellers in the secondary market, which, to answer your question,
Speaker 1: are employees ex employees and maybe your early investor that
Speaker 1: had a lot of returns on paper and have some
Speaker 1: very angry limited partners saying where's my cash? Right? And
Speaker 1: if you can realize that now there would be a
Speaker 1: good idea, just totally fascinating. Yeah. I'm not speeches, but
Speaker 1: what I would say is that, you know, there's a
Speaker 1: long list of names that we didn't even get to,
Speaker 1: and my find very quickly has got about ten seconds.
Speaker 1: But pent up demand? Is there a bit of angst
Speaker 1: in investors that they want a big I PO Yeah,
Speaker 1: I think investors want to see an I P O
Speaker 1: and they want to see success. Right. If you didn't
Speaker 1: invest in lean hogs and crude oilto you didn't really
Speaker 1: make any money, right, And so I think people just
Speaker 1: want to be part of a winning strategy again. And
Speaker 1: so seeing some of these really healthy pre apio tech
Speaker 1: companies come to market, I think we'll really kind of
Speaker 1: open up the gates. Phil could talk to you for
Speaker 1: a very long time. Come back at cuity Zen co
Speaker 1: founder Phil Haslett, where some activity apparently is going on,
Speaker 1: and I think that is an interesting one. I mean
Speaker 1: at the moment, I like that. Read that read it
Speaker 1: was on the list. Yeah, read it's coming back to
Speaker 1: its own Did you see what barth and beyond? Right? Yeah,
Speaker 1: there's still like Dallas. Is it's fair? You know, Phil
Speaker 1: is one name. He did a very good job going
Speaker 1: through a list of us. But there is so much
Speaker 1: skepticism out there. You know, everyone agrees. First half of
Speaker 1: this year in the technology sector at least very unlikely
Speaker 1: to see a big i PA or even a little IPA.
Speaker 1: I'm sorry. Yeah, there's gonna be an awful lot of
Speaker 1: people talent who are wanting to buy a house, have children,
Speaker 1: make life steps, and they need to be able to
Speaker 1: have a liquidity event in some way, shape or form
Speaker 1: a whole lot of news in the world of soccer.
Speaker 1: Or look, there's two Brits here. It's called football in
Speaker 1: across the world. It's going viral today because Kata Sports
Speaker 1: Investment Fund. It's looking at well, the Premier League no
Speaker 1: less for its next big investment, Manchester United, Liverpool FC,
Speaker 1: Totdham Hotspur's they're among the clubs being targeted by KATA.
Speaker 1: No deal apparently is imminent, but some clubs, including Liverpool
Speaker 1: and MANU, they are open to a sale. Meanwhile, the
Speaker 1: Premier League already has two clubs with Middle Eastern owners,
Speaker 1: Man City by Aberdabi based City Football Group and Newcastle
Speaker 1: United recently acquired by the Consortium for Saudi Arabia's Wealth Fund.
Speaker 1: Now remember already going viral of late had been Nick
Speaker 1: Kata was hosting the most expensive World Cup ever, more
Speaker 1: than two hundred billion invested in infrastructure over the past decade.
Speaker 1: But what caught my iron on only on Twitter was
Speaker 1: these deals and potential investments. Was one man that's pretty
Speaker 1: close to your heart. What Gareth Bale? What was it
Speaker 1: the third most Google thing today on Google Trends? Gareth
Speaker 1: Bale retiring age thirty three. I'm surprised, I'll be honest.
Speaker 1: You know, he had a disappointing World Cup by all accounts.
Speaker 1: He was the Whales, which is a nation of three
Speaker 1: million people. By the way, this tolobal superstar from you know, Tottenland, Throich,
Speaker 1: Real Madrid, and then went on to play for l AFC.
Speaker 1: And he hasn't really said while he's retiring of and
Speaker 1: then this is a transition and a change in his life.
Speaker 1: But I think a lot of people were like, really, yeah,
Speaker 1: so you couldn't even watch him on the West Coast
Speaker 1: living in San Francisco and watching foot always been really hard.
Speaker 1: But I am surprised he's retiring and he is a
Speaker 1: global superstar from Wales, joining the pantheon of legends like
Speaker 1: Tom Jones, Katherine Zeta Jones, all the Joneses. But you know,
Speaker 1: it's a real surprise. And look taking to Instagram, taking
Speaker 1: to Twitter, not just people of Whales, but fans of
Speaker 1: football across the world. I think they're surprised that he's
Speaker 1: hanging up his boots. And isn't it just notable the
Speaker 1: way in which these announcements are made. He did it
Speaker 1: with a public statement immediately onto Twitter, onto social media,
Speaker 1: directly to his fans. It's just a new way in
Speaker 1: which people sort of well suggests their their life's curvature
Speaker 1: and whether or not you're putting a CV on LinkedIn
Speaker 1: or whether you're telling everyone about your next job move
Speaker 1: by the power of various social media. It's definitely that
Speaker 1: you waited. I'm sad, but thank you, Gareth Bale. That's
Speaker 1: all I'll say. Wow, that does it for this emotional
Speaker 1: addition of romag technology. I'm so pleased you are here
Speaker 1: all weeks. The emotional about Gareth Bell, but we're also
Speaker 1: going to be pretty excited about space, right Dan Hart,
Speaker 1: version Orbit CEO, and I think maybe someone else joining
Speaker 1: us tomorrow. Don't forget to check out our podcast wherever
Speaker 1: you find your podcast Terminal, Apple, iHeart Radio, and Spotify.
Speaker 1: This is Bloomberg