Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from San Francisco. This is Bloomberg Technology Coming up.
Speaker 2: President Trump says Chinese leader Shijingping is very tough to
Speaker 2: make a deal with tech response to his late night
Speaker 2: social media post.
Speaker 3: Plus Global Foundaries, the biggest US based provider of made
Speaker 3: to order chips announces a plan to spend sixteen billion
Speaker 3: to bolster domestic production.
Speaker 2: And Bloomberg makes public for the first time dashcam footage
Speaker 2: and details from the late twenty twenty three when a
Speaker 2: Tesla using FSD was in.
Speaker 4: A fatal crash.
Speaker 2: But first we check in on these markets and alternatively
Speaker 2: higher Look, we've once again got.
Speaker 4: Bad news being good news.
Speaker 2: Slower services than expected in terms of economic data, slow
Speaker 2: in jobs growth than expected means will the Federal Reserve
Speaker 2: give some push to the economic perspective? Now's that one
Speaker 2: hundred trades up, some three tens of percent ed Go
Speaker 2: on a hood.
Speaker 4: What's moving this market?
Speaker 3: Yeah, we've got some big stories in the show today.
Speaker 3: Let's start with one that's coming up very soon. Global
Speaker 3: Foundaries up two percent. An accelerating and expanded investment in
Speaker 3: the United States for cutting edge production capacity. Tesla is
Speaker 3: down under pressure a big Bloomberg report making public for
Speaker 3: the first time some dashcam footage of a crash in
Speaker 3: twenty twenty three when a Tesla using FSD struck and
Speaker 3: killed someone. We will get the details later. And then
Speaker 3: HPE Hewlett Packard Enterprise up six tens percent, strong revenue growth.
Speaker 3: Tariffs are an impact. And then here's the activist investor question.
Speaker 3: We speak to the sea later in the.
Speaker 4: Hour, important conversation.
Speaker 2: But let's get back to what has been really the
Speaker 2: focus of the market this morning. Was President Trump doubling
Speaker 2: down on tensions with China. Like in a post on
Speaker 2: truth Social overnight, the President called Chinese leader Shiji Ping very.
Speaker 4: Tough and extremely hard to make a deal with.
Speaker 2: For more in Moost, Katie land Lines is standing by Kaylee.
Speaker 2: What is the impact on corporate America and indeed tech
Speaker 2: America at that.
Speaker 5: Well, it's going to depend, frankly on how the President
Speaker 5: and president she decided to move from here. As Trump
Speaker 5: says that China is proving and she's specifically very tough
Speaker 5: to deal with. It seems he's also proving tough to
Speaker 5: get on the phone, as the White House has four
Speaker 5: days now said that a phone conversation between Trump and
Speaker 5: She will happen in the near future as they try
Speaker 5: to sort out what both sides have accused each other
Speaker 5: of as being violations of the trade agreement that was
Speaker 5: just struck in Geneva that of course, brought tariffs down
Speaker 5: from the incredibly high levels in exchange for some other
Speaker 5: non tariff barriers being removed, at least in the US's mind,
Speaker 5: China was set to start granting licenses once again for
Speaker 5: exports of critical minerals and rare earths to US companies
Speaker 5: that have been choked off from them. Knowing that China
Speaker 5: has a choke hold on rare earth supply, they control
Speaker 5: about seventy percent of that market, and those rare earths
Speaker 5: are needed for a lot of national security purposes in
Speaker 5: the US. Obviously advanced technology around things like fighter jets,
Speaker 5: for example, or nuclear control rods. These are things that
Speaker 5: the US and many US companies actually need access to
Speaker 5: in order to do their production work. In the US
Speaker 5: is saying that China is keeping them from getting those
Speaker 5: materials not moving as quickly as the US desires. China,
Speaker 5: on the other hand, is accusing the US of also
Speaker 5: violating the agreement, as we have seen a further ratcheting
Speaker 5: up of export controls in different areas, including around jet
Speaker 5: parts but also chip design software for example. We continue
Speaker 5: to see an expansion of the areas in which the
Speaker 5: US is not allowing export into the Chinese markets, and
Speaker 5: all of this raises the risk that if an agreement
Speaker 5: cannot be made or kept to, that tariffs between these
Speaker 5: two largest economies could go higher again, which obvious have
Speaker 5: massive implications for companies that are reliant on Chinese imports
Speaker 5: in order to make their goods.
Speaker 3: Bloomberg Balance of Power hosts Katie lyons, thank you very much.
Speaker 3: Just days after leaving his position in government, Elon Musk
Speaker 3: has been criticizing President Trump's signature legislation, his Big, Beautiful
Speaker 3: Tax and Spending Bill, calling it a budget busting abomination.
Speaker 3: The Tech Titans public condemnation pits him against the President
Speaker 3: at a critical time, as Trump is personally lobbying holdouts
Speaker 3: on that bill.
Speaker 2: Cara, Now, let's look at how the US government is
Speaker 2: affecting American chip sector, which of course is something that
Speaker 2: President Trump has been vocal about. Ed global founderies, it's
Speaker 2: the biggest US based provider of May to order chips,
Speaker 2: today announcing plans to invest sixteen billion dollars to expand
Speaker 2: its chip manufacturing and advance packaging capabilities across facilities in
Speaker 2: New York and in Vermont A. Please to welcome CEO
Speaker 2: Tim Breen to the show. Tim, how much is this
Speaker 2: a reaction to the geopolitical landscape and to Trump's desire
Speaker 2: to bring manufacturing into the US.
Speaker 6: Yeah, well, thank you for having me. So it's really
Speaker 6: a long term trend where we see the needs for
Speaker 6: the technologies that we make here in the US just
Speaker 6: growing significantly as semiconductors play a broader role in kind
Speaker 6: of every aspect of our life, from the cars we drive,
Speaker 6: the phones in our pockets, even satellites in space, and
Speaker 6: the data centers we're building around the world. And that
Speaker 6: role is growing, and obviously that needs to be met
Speaker 6: by increased investment. And the US has an imbalance between
Speaker 6: what is designed here and what is created here from
Speaker 6: innovators like the ones mentioned in our announcement today, and
Speaker 6: what is manufactured, and you know, GF is doing its
Speaker 6: part to grow that capacity, and that's a long term
Speaker 6: investment for us and part of a long term trend.
Speaker 2: And there had been long term signals that you were
Speaker 2: making this investment. I think it was a late last
Speaker 2: year you talked about the thirteen billion dollars over the
Speaker 2: next ten years.
Speaker 4: So how much of this is net new?
Speaker 2: Is that three billion dollars in terms of R and
Speaker 2: D the real new bit hit tim.
Speaker 6: Yeah, So we're building on our existing plans, and those
Speaker 6: plans are already underway. So this is a great chance
Speaker 6: for us to go faster, go bigger, and also bring
Speaker 6: more innovation. And I think especially the the changes we're
Speaker 6: seeing with the role of AI, both in the cloud,
Speaker 6: in the edge, and all of the connectivity in between,
Speaker 6: just means we need to be ready for the demand
Speaker 6: that's coming our way. And so yes, it's more building
Speaker 6: on those investments we've already started.
Speaker 3: I've studied your capital expenditures and basically you average about
Speaker 3: one point four billion dollars every year. So I go
Speaker 3: back to Caroline's question the sixteen billion dollars, what's new
Speaker 3: in it? What is the composition of that funding and
Speaker 3: where does the funding come from.
Speaker 6: Yeah, so we have a clear plan to fund this
Speaker 6: over the coming years, and I think you know, obviously,
Speaker 6: our CAPEX investments are based on customer demand, and so
Speaker 6: we'll be able to accelerate those as that demand materializes.
Speaker 6: And we're seeing that renewed interest in US based manufacturing
Speaker 6: from you know, many of these companies we've talked about,
Speaker 6: and so we'll be able to modulate our CAPEX investments
Speaker 6: to match the demand.
Speaker 7: And obviously that's what we try to do as a company.
Speaker 3: Qualcom is is a pretty high digits customer for you,
Speaker 3: right and when the news broke within minutes there's an
Speaker 3: email in my inbox and a quote from Christy them
Speaker 3: on it's interesting because you are listing many partners and
Speaker 3: customers as beneficiaries of this initiative. Which customers are you
Speaker 3: going to prioritize and why?
Speaker 6: You know, we have a number of great companies that
Speaker 6: have supported this announcement and then you know, in many
Speaker 6: cases they've been our partners for you know, decades in
Speaker 6: some cases, and so quotcom is a great example of
Speaker 6: a company that's always prioritized global sourcing, having optionality and
Speaker 6: definitely producing here in the US and it's a true
Speaker 6: anchor for US in our US factories, especially in New York,
Speaker 6: and so I think we're going to be continuing to
Speaker 6: work with all of these customers to meet their requirements,
Speaker 6: and those requirements are changing, right. They're bringing new technologies
Speaker 6: to market, they're penetrating new markets on their own. Quo
Speaker 6: become a great example of penetrating new industries like automotive,
Speaker 6: which is again a strength for US, and so very
Speaker 6: happy to support more of that right here in the US.
Speaker 2: It's more expensive to do things here in the US.
Speaker 2: How much are costs slightly to go up? How much
Speaker 2: more can you charge by bringing your manufacturing here?
Speaker 6: Well, manufacturing scale matter, and that's why for US, building
Speaker 6: on existing factories that have already been up and running
Speaker 6: with good yields, with high quality makes it more efficient.
Speaker 6: And so when you've learned how to do it now,
Speaker 6: for in the New York case, over a decade and
Speaker 6: even longer in Vermont, you know how to do it
Speaker 6: at a better cost structure, and obviously investing more gives
Speaker 6: you that scale advantage. But the other advantage for customers
Speaker 6: is that they have flexibility, They have optionality in where
Speaker 6: they manufacture and so they can do one design and
Speaker 6: have it made all over the world for their requirements
Speaker 6: they have for different markets, including here in the US.
Speaker 6: So actually we think this for them actually represents a
Speaker 6: cost saving over the long haul.
Speaker 3: Tim. There's also reports out of Germany this morning that
Speaker 3: you are investing there. What's the latest with that.
Speaker 6: Yeah, So today's announcement is very much focused on our
Speaker 6: US plans and it's clearly the area we see the
Speaker 6: biggest mismatch between supply and demand, and so we'll be
Speaker 6: a large part of our investment plan going forward. We
Speaker 6: have a great facility in Germany and dress then we'll
Speaker 6: continue to upgrade that and expand it over time.
Speaker 7: Nothing like the.
Speaker 6: Scale we see in the US in terms of new
Speaker 6: investments in the short haul, but again a great opportunity
Speaker 6: to get meet board our European customers need out of
Speaker 6: that facility.
Speaker 2: Tim, Do you need more from the government in terms
Speaker 2: of funding. You got money from the Chipsack late last year,
Speaker 2: and of course that's been in many ways talked down
Speaker 2: by the current administration. Do you need more funding from
Speaker 2: the government or is this the way to do things?
Speaker 2: With capital partnerships and indeed with capital expenditure from yourself.
Speaker 6: Yeah, I think all of these investments always need to
Speaker 6: be done in partnership. We're really grateful for the support
Speaker 6: of this administration. They've been impeccable partners. They understand our
Speaker 6: business and where we're going. We get great support from
Speaker 6: them in various different forms, and not just for building
Speaker 6: the supply, but also encouraging the demand to come back
Speaker 6: on shore.
Speaker 7: And I think that's a super helpful partnership for us. Obviously,
Speaker 7: we can't do this without our customers.
Speaker 6: That's the reason we exist, and so them being a
Speaker 6: part of the story and bringing back that demand to
Speaker 6: the US is also an essential part of underrunning these investments.
Speaker 7: And so look, it's all about partnership.
Speaker 8: Tim.
Speaker 3: What's Apple's role in this and how are you going
Speaker 3: to be working with them differently as part of this expansion.
Speaker 8: Yeah.
Speaker 6: I think Apple's been very clear that for them, there's
Speaker 6: a huge amount of semiconductor content that goes in all
Speaker 6: of the incredible devices they bring to market. And you know,
Speaker 6: if you took your iPhone out of your pocket and
Speaker 6: opened it up, you'd find an incredible array of different.
Speaker 7: Technologies in there.
Speaker 6: Many of them are technologies that you have produces and
Speaker 6: some here in the US and some will bring back
Speaker 6: to the US as we go forward, And so yeah,
Speaker 6: they're obviously very keen to see more domestic manufacturing.
Speaker 7: And the fact we have such a long standing partnership means.
Speaker 6: We know each other well, we know what we do
Speaker 6: well together, and they're keen for us to do more,
Speaker 6: as they've indicated.
Speaker 3: Global foundary Seeo Timbering. Great to have you on Bloomberg Technology.
Speaker 3: Thank you very much. Now coming up, federal regulators are
Speaker 3: investigating whether it's Tesla's full self driving system is dangerous
Speaker 3: after a fatal crash involving the technology in late twenty
Speaker 3: twenty three. This is Bloomberg Technology a z Elon Must's
Speaker 3: house driver robo taxis in Austin. Federal regulators are investigating
Speaker 3: whether the system it calls full self driving is dangerous
Speaker 3: even with a human behind the wheel. That's after a
Speaker 3: fatal crash in November twenty twenty three involving a driver
Speaker 3: using the system. Bloomberg is publishing images and partial footage
Speaker 3: of that crash for the first time, which had warned
Speaker 3: the audience the content you're about to see, which Bloomberg
Speaker 3: News obtained via a public records request may be disturbing
Speaker 3: to some viewers. A Tesla Model Y with full self
Speaker 3: driving engaged round the curve at highway speed. The sun
Speaker 3: was low, the visibility was poor. The car didn't stop.
Speaker 3: Moments later, the Tesla using FSD hit seventy two year
Speaker 3: old Jonah Story, who is standing helping direct traffic at
Speaker 3: the scene of an earlier crash outside of Phoenix. She
Speaker 3: was pronounced dead at the scene. Bloombergs Crey Trudell, who
Speaker 3: broke the story with Donahle, joins us now for today's
Speaker 3: Bloomberg Big Take. And I think the most important question,
Speaker 3: the question that we are getting most is why is
Speaker 3: it important that we release the details of a crash
Speaker 3: that happened in November of twenty twenty three.
Speaker 9: Great, Yeah, there's a lot of pushback on that, you know,
Speaker 9: for the obvious reasons of yeah, it's now June twenty
Speaker 9: twenty four, right, and yet what makes the twenty five
Speaker 9: very significant excuse me, twenty twenty five. What makes us
Speaker 9: crash very significant for Tesla is the fact that this
Speaker 9: is something that led to a federal investigation. This investigation
Speaker 9: is ongoing, and this speaks to the sort of complexities
Speaker 9: of the way that the US has approached regulating this technology.
Speaker 8: Right.
Speaker 9: I think when you listen to you on Must talk
Speaker 9: about his driverless ambitions, he talks about, you know, regulatory
Speaker 9: approval and sort of gives this impression that there are
Speaker 9: these hurdles that that Tesla needs to clear as long
Speaker 9: as you're making your cars with things like steering wheels
Speaker 9: and you know, other components that sort of quote unquote
Speaker 9: normal car has. You can put a car on the
Speaker 9: road today and and say we think this is ready
Speaker 9: to be driverless. NITSA doesn't have to say, you know,
Speaker 9: safe or unsafe, thumbs up or thumbs down. And you
Speaker 9: know what they what they are doing is picking up
Speaker 9: on crashes that are reported like this one, picking out
Speaker 9: patterns in them. In this case, this crash along with
Speaker 9: some others. Uh, you know, there were consistencies in terms
Speaker 9: of conditions that the system seems to have trouble dealing with.
Speaker 9: And NISA is saying, look, we need to investigate this
Speaker 9: and whether or not your system is safe in these conditions,
Speaker 9: and that is a risk for investor and obviously you know,
Speaker 9: worthy of reporting, you know, putting aside the fact that
Speaker 9: you know This is a tragic situation, and you know,
Speaker 9: forty thousand people you know, die on us roads every year.
Speaker 9: Much as that's a worthy ambition to try and change that.
Speaker 9: If you're Tesla, you know, it's rare that we look
Speaker 9: at those desks as closely as we have the opportunity to.
Speaker 3: Here.
Speaker 2: It's emotional for seventy one year old Jonas Story's family,
Speaker 2: it is for Carl Stock as well, who is the
Speaker 2: Tesla driver. Craig push us forward though on the technology
Speaker 2: front here though, because there are key differences between for example,
Speaker 2: Lida with Waimo and what Tesla has been using and
Speaker 2: is in any way an interpretation is the technology and
Speaker 2: how it reacts to low sun and certain of those
Speaker 2: themes that you're seeing among these crashes.
Speaker 9: Yeah, that's a really key aspect of this story because
Speaker 9: you know, Elon Musk has has sort of taken this
Speaker 9: view that all Tesla needs is cameras, that it doesn't
Speaker 9: need more expensive radar and even more expensive light our sensors,
Speaker 9: and he's kind of out on a limb in this regard.
Speaker 9: Weimo has a very different approach. They, of course, you know,
Speaker 9: offer a system that does not have to be supervised,
Speaker 9: whereas full self driving to this point needs to be
Speaker 9: to be supervised by a human. And WEIMO because it's
Speaker 9: offering that level of capability and taking that approach of
Speaker 9: we want to put cars on the road without anybody
Speaker 9: behind the wheel. They have a much more robust, much
Speaker 9: more expensive sensor set. And I think, you know, part
Speaker 9: of the sort of question here is, you know, is
Speaker 9: is there sort of a safety shortcoming if you're relying
Speaker 9: on on these cameras, especially in conditions like this one.
Speaker 9: You can see from the video footage that it's quite hard,
Speaker 9: you know, to see what's ahead from from the cameras
Speaker 9: on the front of this model y and you really
Speaker 9: don't see the the pedestrian who was tragically killed until
Speaker 9: the very last moment.
Speaker 4: Pray Trudell, phenomenal reporting. We thank you for bringing it
Speaker 4: to us.
Speaker 3: Epic Games twenty twenty five edition of its Unreal Fest
Speaker 3: conference just kicked off yesterday in Orlando. The game developers
Speaker 3: showed off the tech behind the witcher for This Was Everywhere,
Speaker 3: and also showed off some of its AI created tools.
Speaker 3: Bloomberg caught up with CEO Tim Sweeney for an upcoming
Speaker 3: episode of the Circuit with Emily Chang. He weighed in
Speaker 3: on a competition in the AI space and also Apple strategy.
Speaker 10: Well AI is interesting because the Google's Android operating system
Speaker 10: is open to third party AI assistants, and we're seeing
Speaker 10: some really roverse competition. There is perplexity, and others provide solutions.
Speaker 10: Apple so far has been closed. Not only are they
Speaker 10: like stifling other companies from producing AIS after their works
Speaker 10: as in Reed and to iOS as here he does,
Speaker 10: but they're failing to deliver their own AI and that's
Speaker 10: very unfortunate. I think iOS is an area where the
Speaker 10: entire ecosystem, an entire platform should be opened up to
Speaker 10: third party competition. Apple should get out of the way
Speaker 10: and that awesome developers make Arson software and then let
Speaker 10: the best win.
Speaker 4: Now, let's talk about the wellness industry.
Speaker 2: It's forecast to hit nine trillion dollars by twenty twenty
Speaker 2: eight according to a study from Global Wellness Institute. But today,
Speaker 2: a leading software provider for businesses in that sector have
Speaker 2: announced a major rebrand to bring three companies Mind, Body
Speaker 2: Booker class Pass under a new parent brand called playlist Player.
Speaker 2: CEO Fritz Lamon joins us us Now and Fritz why
Speaker 2: do this? What is it that you're going to be
Speaker 2: able to do in terms of efficiency here when you're
Speaker 2: bringing these three names in a closer alignment.
Speaker 8: Well, you teed me up beautifully there.
Speaker 11: You know, we have built three highly successful different brands.
Speaker 11: Class Pass which gives people a way to book fitness
Speaker 11: spas and salons and even food and beverage take out
Speaker 11: increasingly Booker, which is vertical SaaS that's powering businesses that
Speaker 11: run spa salons or appointments. And then mind Body, whose
Speaker 11: bread and butter is giving you know, kind of the
Speaker 11: operating system to the wellness industry or mostly studio fitness owners,
Speaker 11: but also PT and others serving up wellness. And so
Speaker 11: it didn't make sense for us to have a brand
Speaker 11: that was just one of our three successful businesses. And
Speaker 11: really we wanted to sort of say, hey, look, we
Speaker 11: are now building a common platform of AI tools, an
Speaker 11: app partner, ecosystem, consumer distribution that can let us go
Speaker 11: serve experiences businesses. So yes, wellness businesses and the fitness
Speaker 11: and beauty and spons long world as we already do,
Speaker 11: but our aspiration, we believe we've earned the right to
Speaker 11: go even bigger and to build software for anybody delivering
Speaker 11: great experiences in their town, and to give consumers apps
Speaker 11: that help them discover and book this stuff and really
Speaker 11: give them a playlist for their life if you will.
Speaker 4: So, how much bigger does it get?
Speaker 2: You're already forty thousand salons of SPA seventy three thousand
Speaker 2: and gyms and workout places and across thirty countries.
Speaker 4: How much does this enlarge your total addressable market?
Speaker 11: I mean again, you team me up beautifully there. The
Speaker 11: wellness economy is massive right in the US. It's over
Speaker 11: two trillion dollars, and so I think we'd be fine.
Speaker 11: You know, our investors would would have a great outcome
Speaker 11: hopefully if we continue to execute within the wellness vertical.
Speaker 11: But the fact that we built these our scale has
Speaker 11: allowed us to build this industry leading AI stuff, this
Speaker 11: consumer aggregation, so we can help these businesses get more
Speaker 11: reach and distribution and not have to pay social media companies,
Speaker 11: you know, crazy ad rates to get users. The fact
Speaker 11: that we have big, big partnerships ecosystems so you can
Speaker 11: take advantage of premium tools that are built into our software.
Speaker 8: You know, we want to go much bigger.
Speaker 11: And you know there's twenty million small businesses in the US,
Speaker 11: and you know, only only a sliver of those are wellness,
Speaker 11: so we think it substantially increases our addressable market.
Speaker 3: Fritz, what's the total active user base of the combined
Speaker 3: and see how many people now will be on that platform.
Speaker 11: I can't speak to the specifics on even though you know,
Speaker 11: sharing metrics and financials my favorite topic.
Speaker 8: The powers that.
Speaker 11: Be have have have prevented me from sharing any any
Speaker 11: any specific details. But you know, we're we're reaching tens
Speaker 11: of millions of consumers in the US, We're operating in
Speaker 11: thirty one countries across multiple verticals, and we want to
Speaker 11: get an order of magnitude bigger in terms of our
Speaker 11: impact and our reach.
Speaker 3: IPO get the name out there.
Speaker 8: You know, we can't really comment on our plans.
Speaker 11: We have investors who are super long term focused and
Speaker 11: right now we're in a position where we don't need
Speaker 11: to raise capital and so you know, we'll keep an
Speaker 11: eye on the markets and see how they evolve and
Speaker 11: see where the world takes us. Right now, we're just
Speaker 11: focused on how can we touch as many businesses and
Speaker 11: help them achieve their potential as we can?
Speaker 8: How many how can we help as many.
Speaker 11: Consumers get out of their screens and truly kind of
Speaker 11: build the anti tech tech company where instead of manipulating
Speaker 11: you and and damaging your mental health, we're trying to
Speaker 11: get you off your screens and into your city having
Speaker 11: rewarding experiences.
Speaker 8: So that's our focus for now.
Speaker 3: Fritz Lemon, CEO of Playlists, thank you very much for
Speaker 3: joining us.
Speaker 2: Welcome back to Bluemerg Technology. I'm Caroline Hyde in San
Speaker 2: Francisco today with.
Speaker 3: You Ed, and I am Ed Ludlow. It's great to
Speaker 3: be back together. Markets are moving on geopolitical headlines and
Speaker 3: other things. Take it away.
Speaker 2: Yeah, and actually we're sort of trading tentatively higher on
Speaker 2: the NASNAT boar broadly. But I want to get into
Speaker 2: a couple of names right here, right now, because Apple
Speaker 2: actually managing to shake off what is yet another down crade,
Speaker 2: this one coming from Laura Martin over at Needham putting
Speaker 2: it to a hold. We now got twenty holds on
Speaker 2: Apple and we're actually racking up a few cell ratings.
Speaker 4: Up four teen percent.
Speaker 2: The issue here for needom is once again the lack
Speaker 2: of AI spontaneity and grasp of generative AI within the
Speaker 2: overall offering and indeed therefore slowing of a sales.
Speaker 4: Cycle potential with the next round of phones.
Speaker 2: So we're up four tenths of percent there cloud strike
Speaker 2: actually coming off of our lows, we're still down four percent.
Speaker 2: At one point we were down by some seven percent
Speaker 2: pre market. This is as numbers actually met exceeded expectations
Speaker 2: for their fiscal first quarter, but not good enough when
Speaker 2: it comes to perhaps where we're seeing ARR this compared
Speaker 2: to this time last year, the net new ARR hasn't
Speaker 2: recovered from, of course, what was a massive wipeout blackout
Speaker 2: that CrowdStrike caused in July of twenty twenty four.
Speaker 3: Head, okay, let's go to another on the top stories.
Speaker 3: Salesforce's agreement by Informatica for eight billion dollars came a
Speaker 3: year after initial talks collapsed, but then the acquisition target
Speaker 3: lost a third of its market value. The result, according
Speaker 3: to Salesforce executives and people close to the negotiations, is
Speaker 3: evidence of the software giants more disciplined approach to deal
Speaker 3: making and it's patients. Bloombergs Leanna Baker leads the deal's team.
Speaker 3: This is just like a classic Bloomberg Tech story. This
Speaker 3: is what happened behind the scenes. Two things, Salesforce learning
Speaker 3: the value of patients, and then you know, the two
Speaker 3: people at the helm with those companies probably paid a
Speaker 3: big role.
Speaker 12: If you look at where Salesforce stock has been since
Speaker 12: the Informatica deal was announced, it's not doing too well.
Speaker 12: It's actually down more than what Informatica is worth. So
Speaker 12: Mark Benioff here is sort of defending the deal to
Speaker 12: Wall Street, and Salesforce is using words like discipline and
Speaker 12: patients to show that they're a different acquirer than they
Speaker 12: were just a few years ago when they bought Slack,
Speaker 12: when you know later they came under in the crosshairs
Speaker 12: of activists in vesters. So they're trying to show that
Speaker 12: they're a different sort of m and a acquirer now
Speaker 12: still a serial one, but maybe not paying as much
Speaker 12: as they would have even a year ago when they
Speaker 12: first started talks with Informatica, and the need.
Speaker 2: For Informatica became ever more necessary in a way, as
Speaker 2: Jenner to Ai just became the focal point for Salesforce
Speaker 2: of Mark Benioff. But how did they therefore keep the
Speaker 2: conversation alive? How did they show this discipline over the
Speaker 2: twelve months.
Speaker 12: So we reported in the story that the CEOs stayed
Speaker 12: in touch. As you know, when two companies come together,
Speaker 12: it's kind of like a marriage, it takes a while
Speaker 12: to get comfortable. And we also know that there was
Speaker 12: interest in Informatica, not just from Salesforce. We reported that
Speaker 12: Cloud Software Group, a big privately held private equity back company,
Speaker 12: was also interested in. Mark Benioff did say we were
Speaker 12: lucky to get this company because it does seem like
Speaker 12: it was a competitive auction. Goldman Sachs was working with Informatica,
Speaker 12: JPMorgan was working with Salesforce, and it just took a
Speaker 12: long time to come together, but it did accelerate ahead.
Speaker 3: Of our scoop.
Speaker 12: They had a handshake agreement before we reported it a
Speaker 12: few weeks ago.
Speaker 2: Yeah, Milbyding, I've forgot that handshake with them. We thank you,
Speaker 2: Leanna Baker. It's been great reporting throughout. Let's discuss it
Speaker 2: further with someone who has a lot of focus on
Speaker 2: that particular deal and others. Brand Ruda is co managing partner,
Speaker 2: and Coco Pemira, which is an investor in Informatica, And
Speaker 2: what's so interesting, Ryan is perhaps you say that a
Speaker 2: dollar back today is worth more than a dollar back perhaps.
Speaker 4: A year ago.
Speaker 2: How has liquidity changed, how's this deal making changed?
Speaker 13: Yeah, I mean the probably Thanks Carolyn ed good to
Speaker 13: see you guys.
Speaker 14: The environment for private equity has been really tough in
Speaker 14: terms of getting liquidity back to investors. You've had extending
Speaker 14: investment horizons for a lot of businesses. That's usually actually
Speaker 14: good news in the case of like an informatica, which
Speaker 14: we've been invested in for a decade at this point,
Speaker 14: kind of leading to this transaction, but it's been very
Speaker 14: hard to get liquidity. And actually this kind of liquidity
Speaker 14: to our investors is particularly valuable because it's coming from
Speaker 14: a strategic it's an all cast transaction. It's not private
Speaker 14: equity to private equity, which from an LP's perspective is fine,
Speaker 14: but also it tends to be left pocket right pocket.
Speaker 14: They might actually be an investor in that private equity
Speaker 14: fund that's buying from the private equity fund.
Speaker 13: That they're an investor in as well.
Speaker 14: So this is particularly precious DPI, as we say, distribution
Speaker 14: to paid ins like real liquidity relative to the value
Speaker 14: of what's in the fund. So We're very proud, very
Speaker 14: happy with this transaction at this particular point in time especially,
Speaker 14: and so.
Speaker 2: How repeatable is that, how many strategic buyers are out
Speaker 2: there with the guts the determination to keep following these
Speaker 2: sorts of processes.
Speaker 13: We think strategic activity.
Speaker 14: Certainly, the interest that we're seeing is very high in
Speaker 14: the kinds of businesses that we back, and i'd say
Speaker 14: for our investment philosophy, it's really strong.
Speaker 3: You know.
Speaker 13: Informatica is one of these great stories.
Speaker 14: Of really product led growth that we try to back
Speaker 14: for long periods of time. And that's what actually strategic
Speaker 14: buyers want. They're not trying to buy in EBITDA optimized
Speaker 14: gutted private equity portfolio. What they want is really well
Speaker 14: invested product sets. And so if you have businesses that
Speaker 14: are doing that, like we do with our technology portfolio,
Speaker 14: it generates a lot of strategic interest. So we expect
Speaker 14: that it's certainly very active today in terms of dialogue,
Speaker 14: and we expect that's going to continue.
Speaker 3: I was really looking forward to this conversation because of
Speaker 3: the private equity lens rather than what is more common
Speaker 3: on the show, which is venture back deals. But what
Speaker 3: they have in common, right, is the exit environment and
Speaker 3: what types of exits are on the horizon. D S
Speaker 3: D sales full Symformatica as a sort of starting gun
Speaker 3: and signal of more activity to come in different formats,
Speaker 3: particularly thinking about this administration and the regulatory environment that
Speaker 3: would allow something like that to happen.
Speaker 14: Yeah, I mean we think what a lot of the strategic,
Speaker 14: big strategic buyers that we see are looking at is
Speaker 14: actually generally pretty appreciated currencies in their own stock price,
Speaker 14: a lot of liquidity, and then the need and the
Speaker 14: excitement to really get their story together for the emerging
Speaker 14: and kind of really accelerating AI landscape, and informatic is
Speaker 14: exactly that. So you want to find businesses that are
Speaker 14: going to help, you know, codify kind of what you're
Speaker 14: going to be able to do in that AI world,
Speaker 14: and Informatica is like right in the middle. So for
Speaker 14: those like you, if you have assets that kind of
Speaker 14: bolts of that story. And there's like so many companies
Speaker 14: that are out there in the private ecosystem today, you know,
Speaker 14: it's a bit of a smorgas board.
Speaker 3: Is twenty five dollars a share, good like it's great
Speaker 3: for us.
Speaker 14: Yeah, I mean this has been a it's more than
Speaker 14: six billion dollars to our investors.
Speaker 13: Wow, it's a.
Speaker 14: Very very significant, large, multiple billion dollar gain.
Speaker 3: I asked that because of the reporting right that you know,
Speaker 3: one year on from their initial talks, a big fact
Speaker 3: was the downward pressure on the stock that allowed them
Speaker 3: to proceed. And I don't know how you view it.
Speaker 3: You might say, well, what might have been at thirty
Speaker 3: dollars or thirty five I don't know.
Speaker 14: Yeah, I mean there's a lot of volatility in the
Speaker 14: world today. You see you kind of everywhere. What we'd
Speaker 14: focus on is like the point what matters to us
Speaker 14: is the point to point over ten years, not over
Speaker 14: twelve months, and over that period of time.
Speaker 8: I mean.
Speaker 13: The really cool thing about Informatica.
Speaker 14: And there's a lot in there, is that the products
Speaker 14: that salesforce is buying with this company are overwhelmingly products
Speaker 14: that we created with the management team host the going
Speaker 14: private in twenty fifteen, So the cloud business was really
Speaker 14: zero at the time we invested in them. We saw
Speaker 14: a team that we really fu could build a next
Speaker 14: generation cloud data management platform that's guiding the company's guiding
Speaker 14: into more than a billion of ARAR this year from
Speaker 14: a starting point of zero, not a lot of private
Speaker 14: equity back to software businesses can say that they've done that.
Speaker 14: So from that kind of point to point level, like
Speaker 14: we're thrilled, our investors are very happy with the transaction,
Speaker 14: and look, it's a very good home.
Speaker 13: I think Salesforce will get a lot out of Informertica.
Speaker 2: I know the way you said, there's a lot of
Speaker 2: volatility in the globe right now because you're a global
Speaker 2: footprint kind of pee in fact, for ED and I
Speaker 2: we think about your European chops because that's the place
Speaker 2: that we come from.
Speaker 4: I'm interested as to how therefore the landscape differs. We
Speaker 4: talk about us exceptionalism. Is that where the deal is
Speaker 4: going to happen. Is it global in nature?
Speaker 14: Well, we think, I mean a side effect or kind
Speaker 14: of a very direct consequence of what's going on in
Speaker 14: the world today and particularly in this country, is that
Speaker 14: the commitment that we see in Western Europe about investing
Speaker 14: in Europe is very high. It's about the highest that
Speaker 14: I've seen it in my investing career.
Speaker 8: And so.
Speaker 14: That's going to have like really interesting benefits to the
Speaker 14: economies there, to the innovation pace, and frankly it's overdue.
Speaker 14: I mean, look at all the hyperscalers based in the US.
Speaker 14: We are looking more at bringing the best of Silicon
Speaker 14: Valley into Europe. As we've always and there's never been
Speaker 14: a better time in our view to have a very
Speaker 14: deep European origination network to be able to invest behind
Speaker 14: where a lot of that innovation is going to come.
Speaker 2: We were just showing actually some newsletter coming out of
Speaker 2: our European colleagues, Mark Bergen, who's writing about how this
Speaker 2: glimmer of hope is on the returns that are yet
Speaker 2: to be born in Europe for the VC community, for
Speaker 2: the P community.
Speaker 4: What needs to get done here in terms of actually
Speaker 4: starting to see IPOs.
Speaker 2: For darlings like Revolute or actual exits. Is it going
Speaker 2: to be actually your kind of companies that help foster.
Speaker 4: The M and A side of things.
Speaker 14: Yeah, we'd be very like we're here in Europe and
Speaker 14: we think the capital base that we've got to be
Speaker 14: able to invest in the businesses that are really growing
Speaker 14: and really building the next generation of innovators and disruptors
Speaker 14: in Europe, that's a very fine thing to be. There
Speaker 14: will be plenty of capital now from US and folks
Speaker 14: who look like us in the private markets and the
Speaker 14: piper up markets really do need to come around again
Speaker 14: in Europe and kind of open the way that they
Speaker 14: are opening in the US pretty successfully now as well.
Speaker 14: But there will be we think, with what we have
Speaker 14: like plenty of private capital will be able to pick
Speaker 14: up those companies at the same time.
Speaker 3: Brian Ruder, Permira, co managing partner CO ce a great
Speaker 3: feel together here in San Francisco, Thank you very much.
Speaker 8: So.
Speaker 3: Coming up, the CEO of HPE Antonia and Nary Joins
Speaker 3: US discussed the company's earnings and what it expects to
Speaker 3: see a reduced impact from tariffs US. Next, this is
Speaker 3: Bloomberg Technology.
Speaker 2: Yet more announcements of investment in the US by big
Speaker 2: data center players. This one Amazon coming out saying they're
Speaker 2: going to be investing ten million dollars in North Carolina.
Speaker 2: At the moment, it's expanding its AI infrastructure, creating we
Speaker 2: understand about five hundred new high school jobs. What's interesting though,
Speaker 2: ed here is the commitment to reskilling the training, the
Speaker 2: education programs, the fact that they want to be really
Speaker 2: bringing about more engineers in particular. That is what a
Speaker 2: lot of people have been worried about this move to generator.
Speaker 2: AI moved to manufacturing, whereas the skill base his Amazon
Speaker 2: committing ten billion dollars a lot of AI hardware and infrastructure,
Speaker 2: but with that some support for skills as well.
Speaker 12: Ed.
Speaker 3: Yes, we're thinking about where their data centers are on
Speaker 3: the East coast and southeast coast particular of this country.
Speaker 1: Okay.
Speaker 3: HPE says tariffs will have a smaller than expected impact
Speaker 3: on sales this year. AI revenue also beat and assessmates,
Speaker 3: but the company continues to face headwinds, and that includes
Speaker 3: an activist investor. HPE CEO Anthony Andery joins us. Now,
Speaker 3: I find what you said about tariffs and how that's
Speaker 3: reflected in the numbers so interesting because the hyperscalers, for example,
Speaker 3: told us that one reason capital expenditures were raised in
Speaker 3: that period is the reflection of the higher cost of
Speaker 3: doing business because of tariffs. For you, it's like almost
Speaker 3: the opposite story.
Speaker 15: Yeah, good morning, Ed, thanks for having me. Look, we'll
Speaker 15: raise our guide thence for a number of factors. Number one,
Speaker 15: because of all the work we have done throughout a
Speaker 15: very diversified supply chain, we find ways to mitigate the
Speaker 15: tariffs obviously the USMCA plays a role in that. But
Speaker 15: at the same time, we know we are performing better
Speaker 15: in many of our businesses and we have had a
Speaker 15: number of targeted actions to continue to mitigate any impact
Speaker 15: from the tariff.
Speaker 8: And that's us today as we know it.
Speaker 15: But the reality is that the original impact we communicated
Speaker 15: at the earnest call in Q one now is significant lesser,
Speaker 15: and therefore, together with the cost actions, together with the
Speaker 15: better performance of the business and the lesser impact on tariff,
Speaker 15: we raise the bottom range of our guide by eight cents.
Speaker 3: And Sony, is it possible for you to quantify for
Speaker 3: us the sort of sales channel impact that you provide
Speaker 3: from video? So we talk endlessly about all of the
Speaker 3: projects domestic and overseas, and videos involved in the great buildout.
Speaker 3: It's you know so well, and I spend hours tearing
Speaker 3: servers apart. Nothing happens without HPE and others assembling the designs.
Speaker 3: I just want a number on it, that's the thing.
Speaker 8: Yeah, Well, hard.
Speaker 15: To put a numbered because you know, many of these
Speaker 15: buildouts are happening as we speak, and it takes a
Speaker 15: little bit of time to go from an agreement with
Speaker 15: a customer working with US and Nvidia to building a
Speaker 15: deploying it and then eventually put it in production. But
Speaker 15: I can tell you, look, we are have a deep,
Speaker 15: long standing relationship with Nvidia. We are covering all segments
Speaker 15: of the market where it's these big large buildouts in
Speaker 15: the service provider space, whether it's.
Speaker 8: Sovereign or enterprise.
Speaker 15: And one of the things I'm really proud is that
Speaker 15: the work we put together with Nvidia LA last year
Speaker 15: when we announced the Nvidia competing by HP and a
Speaker 15: private cloud, AI is growing very rapidly. In fact, one
Speaker 15: third of the new orders we booked in Q and
Speaker 15: Q two were from enterprise. But at the same time,
Speaker 15: we are completing one of the largest deployments on the
Speaker 15: GB two hundred as we speak, and that's a very
Speaker 15: large deployment.
Speaker 13: And then we said.
Speaker 15: That our backlog grew quarter over quarter now is three
Speaker 15: point two billion dollars on a commulative basis.
Speaker 8: For the last two.
Speaker 15: Years, we booked over nine billion dollars and we have
Speaker 15: a multiples of the backlog in our pipeline.
Speaker 2: That one billion attributed to AI in particular is good,
Speaker 2: but it's not as much as Dell, for example. I
Speaker 2: hate to put it so on the nose in that way, Antonio,
Speaker 2: But how much is perhaps Elliott on your board or
Speaker 2: others around you sort of saying, look, capitalize on AI
Speaker 2: even more.
Speaker 15: Yeah, now there has nothing to do. Look, the previous
Speaker 15: quore that we book ourselves a very large order, which
Speaker 15: is the one we are deploying today, and that was
Speaker 15: not the all didn't do that. So this is a
Speaker 15: lumping business and you will see us also talking about
Speaker 15: some of the large orders as we may get in
Speaker 15: the current quarter of subsequent quarter. So you know this
Speaker 15: goes back and forth. But ultimately you have to play
Speaker 15: with discipline and our goal is to grow in the
Speaker 15: eye and the rest of the business with a capital
Speaker 15: structure that works because the reality is that there is
Speaker 15: revenue growth, then there is profit accretion, and then is
Speaker 15: working capital. And the working capital is something you have
Speaker 15: to watch very very closely because the timing from winning
Speaker 15: a deal to the time of revenue recognition in these
Speaker 15: large deals can be long and therefore you impact cash
Speaker 15: flow from operation. So we're trying to balance all of
Speaker 15: that while we delivering our commitments from the revenue growth
Speaker 15: and on the EPs.
Speaker 2: Growth, well, you delivered in terms of six percent revenue
Speaker 2: growth on the quarter. We appreciate it, Antonio andry Hpeco
Speaker 2: for joining us.
Speaker 3: The enterprise gets a lot of attention when it comes
Speaker 3: to AI option, but consumer technology is poised to be
Speaker 3: upended by AI as well. At least that's according to
Speaker 3: today's VC Spotlight guests. Ambudetski, a partner at Nea and
Speaker 3: Nan joins us now on set San Francisco. I mean, like,
Speaker 3: you know, chat GPT is the easiest example, the lowest
Speaker 3: hanging fruit. You know, the user base is all of
Speaker 3: us going on our iOS based app saying oh sorry
Speaker 3: or thank your police. Could I ask this question? Crashing
Speaker 3: the GPUs? But I think that's kind of what you're
Speaker 3: looking for in your thesis, right, the next version of that.
Speaker 16: Well, thank you so much for having me on. And
Speaker 16: you're exactly right. We're at the beginning of an incredible
Speaker 16: new consumer AI renaissance if you think about it, We're
Speaker 16: now in the third subwave of the AI super cycle.
Speaker 16: Twenty twenty three gave us large language models, twenty twenty
Speaker 16: four gave us multimodel the ability to generate voice video images,
Speaker 16: and twenty twenty five is now the year of agentic
Speaker 16: capabilities and applications. Incredibly exciting time to build the new
Speaker 16: generation of consumer category creating companies. If we look back
Speaker 16: companies like Uber, Spotify, Netflix, we cannot imagine living without
Speaker 16: these consumer products today, and we're at the beginning of
Speaker 16: a new wave of consumer applications today.
Speaker 3: I don't know about carry, but I feel like the
Speaker 3: stories we're covering this domain a largely early stage companies.
Speaker 3: They are moving so fast.
Speaker 16: Yes, we are early, but what's really exciting right now
Speaker 16: is how quickly consumers are adopting AI tools AI applications.
Speaker 16: The stats are absolutely remarkable. We're seeing faster consumer adoption
Speaker 16: than any of their prior tech waves. If you look
Speaker 16: at it today, eighty percent of consumers already use zero
Speaker 16: click search AI search for over forty percent of their searches.
Speaker 16: And gen Z, which is always the tip of the
Speaker 16: sphere for new consumer products, ninety three percent of gen
Speaker 16: Z knowledge workers are using two or more AI tools
Speaker 16: every single day. So consumers are experimenting, They're hungry for
Speaker 16: new tools, and they want more.
Speaker 4: Who isn't adopting fast enough?
Speaker 2: I mean, is there Sometimes there's a handring element that maybe.
Speaker 4: This agenda divide as well. Is that something a seatbone
Speaker 4: out and someone will take to research.
Speaker 16: Yeah, we're starting to see more research reports and consumer adoption.
Speaker 16: One of the interesting disparities is that if you look
Speaker 16: at mainstream US consumers, only twenty seven percent of US
Speaker 16: consumers are using AI tools regularly versus let's say seventy
Speaker 16: nine percent among AI experts, really the people who are
Speaker 16: building and working in Silicon Valley today. So there's an
Speaker 16: interesting trust and awareness gap that still exists, and that
Speaker 16: creates the perfect opportunity for consumer product companies to come
Speaker 16: along MA CAI useful, MAKEI really relevant in people's everyday lives.
Speaker 16: You know, they may not even know it's AI behind
Speaker 16: the scenes. They're just going to be incredible new consumer products,
Speaker 16: and they have to be trusted brands. Trust is a
Speaker 16: really important element in building consume AA products.
Speaker 2: I mean, Apple is a trusted brand and it seems
Speaker 2: to be being really slow and it's getting and it's
Speaker 2: getting stooled in China. My regulate it is how much
Speaker 2: do you need the juggnal of Apple and indeed Google
Speaker 2: and Android to push through generative A on I day
Speaker 2: and then you get more eleven labs twelve labs companies
Speaker 2: that you'll you're backing to build into.
Speaker 16: That well, I think those companies are incredible distribution partners
Speaker 16: and their investment in the AI ecosystem, the infrastructure, the GPUs,
Speaker 16: the model capabilities is really important. But ultimately startups are
Speaker 16: always the best position to take risks, to innovate, create
Speaker 16: magical new products that people love, and I think it's
Speaker 16: incumbent on these large players to find the right partners
Speaker 16: in the startup ecosystem really quick.
Speaker 3: I wanted to get your reaction to Johnny I've io
Speaker 3: and open AI because the bigger picture question is is
Speaker 3: there a world beyond the smartphone interaction or PC interaction
Speaker 3: in form factors When you look for a company they're
Speaker 3: developing for I don't even know what.
Speaker 16: Well, so far we have not needed a new device
Speaker 16: for hundreds of millions of consumers right to try these
Speaker 16: new AI tools. But the interesting thing is, I think
Speaker 16: the desire for an AI native and many companies have it.
Speaker 16: Not just OPENINGI is also a signal that we want
Speaker 16: a more open ecosystem, one where developers can freely build
Speaker 16: AI native applications that connect to our devices. So will
Speaker 16: there be new AI native devices whether it's eyewear or
Speaker 16: you know something on your lapel that that didn't work. Yeah,
Speaker 16: well we'll see them very very soon.
Speaker 2: And it's great to have you here, great to have
Speaker 2: her in the studio and Petski partner at Nea. All
Speaker 2: things consume AI. Well, that does it for this edition
Speaker 2: of Bloombag Technology, though ed. But we've got some big
Speaker 2: conversations have today.
Speaker 3: Yeah, tune in tonight as the Tech Summit kicks off
Speaker 3: in San Francisco, first with a conversation with Alphabet CEO
Speaker 3: cinderpitch Ie, and we'll be on the road tomorrow for
Speaker 3: a special edition of Bloomberg Technology Live from the Summit.
Speaker 3: Don't forget the podcast from San Francisco. This is Bloomberg Technology.