December 2, 2024 • 42 mins
Bloomberg's Caroline Hyde discusses Intel's next steps as CEO Pat Gelsinger retires. And, retailers get set for what could be a record Cyber Monday. Plus, the future of TikTok's potential ban as President-elect Trump readies for his second term in the White House.
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Speaker 1 (00:01):
From the heart of where Innovation of Money and Power
Collie in Silicon Valley, NBN.
Speaker 2 (00:07):
This is Bloomberg.
Speaker 1 (00:08):
Technology with Caroline Hyde and Ed Ludlove.
Speaker 3 (00:24):
Live from New York. This is Bloomberg Technology coming up.
Speaker 4 (00:27):
Intel shares rise a CEO Pat Gelsinger leaves the company
after a failed turnaround effort plus Tesla and byd ramp
up discounts and incentives in China in a final push
to meet annual sales targets and tenstorrant NAB's a two
point six billion dollar valuation off the backing from Jeff Bezos.
And in Nvidia, we sit down with the CEO and
(00:48):
chip design legend Jim Keller later this hour. But first
check on these markets, a check in on Intel. We
dive straight there. We are more than three percent on
the back of the news that Intel CEOPA Gelsinger is
leaving the company and is indeed going to be two
interim CEOs that take the helm for the time being,
CFO David Sinsner Michelle Johnston Helpo's going to be serving
(01:11):
as the interim leaders as the board searchers for a replacement.
This after, of course, his departure is potentially signaling more
strategic shifts at the business.
Speaker 3 (01:20):
The investor base collaps.
Speaker 4 (01:22):
It slightly, but we get into the details with Man
Deep Singer, BlueBag Intelligence.
Speaker 3 (01:27):
Look, many would say they're surprised.
Speaker 4 (01:29):
Many would say, Look, the August numbers that came from
Intel just showed that this turnaround, this restruction was going
to be so painful, and the boarders lost confidence.
Speaker 5 (01:37):
Yeah, and look, I think it probably suggests that the
numbers for four Q don't look very good either. So clearly,
you know, the gross margin going down, and the foundry
business was a big contributor to that because even though
you know, Intel has about eighteen billion dollars of foundry revenue,
it's negative gross margins. And when you think about that
eighteen billion dollar number, how much of that business comes
(02:01):
from the outside, Like they don't have any big customers
like TSMC does. You know, when it comes to the
foundry business, it's mostly internal when you think about that
eighteen billion dollar number. So that's where you know, the
question marks were raised around Intel's capex of around twenty
five billion, which is the major reason why they are,
you know, burning fifteen billion dollars a year, and I
(02:23):
think pat had about four years to decide on the
fate of the foundry business. He actually wanted to acquire
power Semis that didn't happen because of regulatory hurdles. So
you have to ask yourself was focusing on foundry business
the right strategy and the answer probably is not, given
it hasn't turned around in the last four years.
Speaker 4 (02:42):
And yet the US government is handing them a lot
of money to build chicks to be the future of
on shoring.
Speaker 3 (02:49):
How resilient does that look?
Speaker 4 (02:50):
How resilient does well trying to do both manufacturing and
design look for the business.
Speaker 6 (02:55):
Yes, so you're absolutely right the government wants them to
succeed on the manufacturing side. The problem is the optics here.
Why would an Amazon or a Microsoft, or an Nvidia
for that matter, go to Intel foundry when they know
Intel is a competitor on the design side. And that's
where you know, divesting that foundry business will actually make it,
(03:16):
you know, more palatable for competitors like Amazon and Nvidia
to use some portion of Intel's foundry, similar to what
MD did with Global Foundaries. I mean, Global Foundry has
a lot of business outside of MD now because it's
an independent entity. So that's where the gross market profile
will still be a lot lower for the foundry business,
(03:37):
but at least the core Intel business, which is how
investors look at some of the parts of Intel and
they say, the core client PC business is still where
they dominate. I mean, look the server side, they are
leading share to Nvidia, but more than fifty percent of
the revenue still comes from core PCs. And even though
it's a saturated market, the AIVA will help spur refreshed
(04:02):
cycle at some point. We don't know it's going to
be first half or second half, but it will come.
Speaker 3 (04:07):
And it will come under new leadership.
Speaker 4 (04:09):
Mande Singh, We thank you so much on all things
Intel will have plenty more of that in a moment.
But let's just talk a little bit more about the
US focus on chips, because the Biden administration unveiled new
restrictions on China's access to vital components for chips and
artificial intelligence, and the Department of Commerce slapping additional curbs
on the sale of high bandwidth memory and chip making gear.
(04:29):
It's impacting twenty seven types of chip design and fabrication tools.
It's also blacklisted one hundred and forty more Chinese entities
than it accused of acting on Beijing's behalf. Blomberg's and
mackenzie Hawkins had a busy Thanksgiving period reporting all this out.
McKenzie and just go first and foremost as to whether
this actually looked perhaps slightly better to the market than
some had anticipated.
Speaker 7 (04:51):
So this is what's become kind of the third annual
update to these sweeping outport controls of the Biden administration
has levied on companies trying to sell chips and chip
making gear to China. But the latest controls, which were
unveiled this morning, came in slightly softer than some proposals
that officials had floated earlier this year. They didn't sanction
a handful of key Chinese companies with ties to Huawei
(05:12):
that they had discussed sanctioning, and they also exempted important allies,
notably Japan and the Netherlands, which are home to of
the most important ship tool making companies, from rules that
restrict additional types of chip making gear from being sent
to China.
Speaker 4 (05:26):
All of this context is the US trying to limit
capabilities over in China, trying to home grow a supply
chain here in the United States, which does involve Intel
just going back to that story of the day, mackenzie,
how much do you think the US government is going
to be upended by change of leadership? How much has
Intel benefited from the CHIPSACK for example.
Speaker 7 (05:48):
So Intel actually last week solidified a deal for seven
point eight billion dollars in funding from the CHIPSAC, which
is this broader fifty two billion dollar program to bring
chip manufacturing back to the United States. The company i
said it's committed to its US expansion plans, which include
more than one hundred billion dollars in investment, ninety billion
of which will come by the end of the decade,
(06:08):
and plans to execute on factories in Arizona, Ohio, Oregon,
and New Mexico. Galsinger's departure shouldn't change the company's plans
as we see it now, but of course a new
CEO will have to decide whether to pursue options that
Galsinger had left off the table, and the US government
we're watching that closely.
Speaker 4 (06:26):
They will be McKenzie Hawkins, thanks for breaking it all down. Meanwhile,
we want to get the whole circumference of the chip
sector for you now with Pierre Faragu from New Street Research.
Your first take on the announcement of Pat Gelsinger retiring.
Speaker 3 (06:40):
Were you surprised?
Speaker 8 (06:42):
I was very surprised by the abrupt news, like retiring today.
It is no transition period, so difficult, a difficult situation.
We knew the board was stands since the summer urum
early and the CEO of Cadence resigned from the board
of over the summer, and it was like reflecting like
(07:03):
difficult conversations. And so it probably looks like, you know,
Pat loss the continents of the board or didn't get
the support of the boat for his strategy anymore. And
basically probably and uh decided to leave abruptly. So so
that was a surprise now that you know, we are
four years into the turnaround. Bad direction was let's double
(07:26):
down and Intel's capabilities in manufacturing. Let's make Intel like
a leading manufacturer. Let's go large, Uh, you know, go
big and you know, leverage at a maximum. The political
support will have to do that. So that was the plan.
And the plan failed basically because TSMC's model cannot be
(07:47):
competed against. I think it's that's so we've had from
the beginning, so Intel being able to preserve manufacturing capabilities yes,
Intel being like a scalable like like a large scale
competitor to TSMC is probably not possible for like scale
and experience reasons, and that's why things failed.
Speaker 4 (08:10):
In August on that very bleak announcement of numbers that
we had and ish disastrous sell off in the shares.
Speaker 3 (08:18):
Was this restructuring.
Speaker 4 (08:19):
It involved a lot of job losses, but it did
involve also the sort of peeling away of the foundry
business to be able to be managed sort of separately
but alongside Intel. Does that stay or do we start
to see actual purchasing coming from well with the reports
previously of Qualcom being interested even the chip designer.
Speaker 8 (08:38):
ARM So the situation is going to be very very
fluid for quite some time for sure. As you mentioned
last summer, you know, the word was say to be
fighting of you know, activist activist Shoulder is getting prepared
to fight of activity smooth. The stitution is of course
(09:01):
very complex. On one hand, Intel has manufacturing capabilities. Intel
has manufacturing capabilities onshore and owned buy like a US
control company. So it's a very very unique asset, extremely
valuable in today's cheer political context, and I think Intel
needs to continue to be able to to build on that.
(09:24):
So of course there is a tempting, tempting route, which
is to say, okay, maybe Quale common Intel could merge
or Qualcome to biot Intel or try and trigger the
consolidation of that type. I don't see that as good
as a good opportunity. It's difficult to generate synergies between
Quale governing Intel. The chips qual Come do are very
different from the Intel ships. Manufacturing is a complex business,
(09:49):
so I'm not super you know, that's an area that
scares me more than anything else.
Speaker 7 (09:55):
You know, bad many.
Speaker 8 (09:56):
Decisions typically can arrive in a situation like that. What's
more interesting, I think is to be like, okay, how
can we make sure we create a sustainable US owned
on us SO manufacturing capability. And if you do that,
you have quody to admit that you're not going to
compete with TSMC. You need to partner with TSMC, right,
(10:16):
you need to find other very large partners that are
going to super oft to And of course the one
that comes to mind that has that those maybe to
the US is in video. So you know, like Engagent
partnering around manufacturing with TSMC as a partner and Vidia
as a partner would be a much more interesting route
to pursue from here.
Speaker 4 (10:35):
There is ongoing breaking news around this story and Bloomberg
leading the charge with how Pat Gilsinger was inteed forced
out after the board grew frustrated. The biggest frustration Pier
was that they missed the AI evolution jumping on and
being able to ensure that what they produced, which.
Speaker 3 (10:53):
Is GOWI, was able to compete.
Speaker 4 (10:55):
I mean, they're likely to miss that five hundred million
dollar target for this year when very is busily making
about one hundred billion a year.
Speaker 8 (11:04):
Yeah, I think it's the frustration came from the lack
of prudence of the initial plan going to be too large,
assuming you know, demand would follow as long as you
can pull together like quality, quality, supply. And yes, the
underlying causes that uh Intel ended up not being in
(11:27):
the growing part of the market, and namely it was
last summer was particularly abrupt, like you see, like the
complete failure of the Intel AI chips and the fact
that they would not be at all in the market.
Him is actually carving out a fairly sustainable niche positioning
(11:48):
in that market. So that was part of it, But
I think part probably stuck too much to his initial
plan with like a very ambitious, very large scale plan
and should have a year or eighteen months ago thought
about like you know, changing tag to smaller and more
colarborative with other players in the market.
Speaker 4 (12:09):
Because yeah, Peah, I mean much of this predated the
pack coming back in twenty twenty one. That course was
already kind of paved, and he didn't reorientate quickly enough.
Where now in terms of leadership and in terms of
Intel's place in the ecosystem very quickly, please.
Speaker 8 (12:27):
So I think INTE could be specialized in manufacturing in
the US under US control and ownership and collaborate with
the rest of the industry instead of instead of competing,
I think in like smaller scale, remaining like keeping a
position at the leading edge and leveraging the products of
(12:49):
Intel like the PC ships and the servitude that are
still very good and in very high demand.
Speaker 4 (12:54):
Right, Yeah, thank you so much for lending your expertise today,
Pierre for Ago on New Street research and all things
intell and chips. Meanwhile, sticking with the error of AI,
shares of super Micro absolutely soaring today. The company says
that an external review of its business found no evidence
of wrongdoing and the company will appoint a new CFO.
This follows, of course, that tumultuous year for super Micro,
(13:14):
which is also facing USDOJ probe following a report from
short seller Hindenburg Research. This, of course, is a company
that uses in video chips within its servers that it
sells on two key clients for up thirteen fourteen percent
over the last two training days. Meanwhile, coming up, we're
going to break down the Black Friday sales data and
trends for Cyber Monday. Mick max Richel topograph stick with us.
There's a bluebog technology. Of course, Today is Cyber Monday,
(13:48):
and Adobe expects consumers will spend a record thirteen point
two billion dollars, up six percent year on year. Online
spending is expected to peak, especially between eight and ten
pm later tonight, with fifteen point seven million dollars spent
every single minute.
Speaker 3 (14:02):
That's Eastern time.
Speaker 4 (14:03):
Of course, let's look at all of that Anergy, what
happened on Black Friday and the weekend?
Speaker 3 (14:07):
Rachel tipographs with US founder and c here mcmack.
Speaker 4 (14:09):
It's an e commerce marketing platform for multi channel brands.
It feels like a big year I'm certainly getting hit
with a lot of marketing. Is it feeling that way
for you?
Speaker 3 (14:16):
Rachel?
Speaker 4 (14:18):
It is.
Speaker 9 (14:19):
You know, despite what's happening in the economy, consumers are
showing up to really save I want to say spend,
but it's really about savings right now.
Speaker 3 (14:27):
Okay, that's interesting.
Speaker 4 (14:28):
So it's more about the deal making and how are
companies managing to access those consumers right now? What innovative
ways are they using to market across various platforms. Oh,
do we have some technological issues?
Speaker 3 (14:42):
Rachel?
Speaker 9 (14:43):
Absolutely? You know, when we look at what happened from
stinks hello, can you hear me?
Speaker 4 (14:50):
Apologies, there's a big delay, Rachel, Do carry on?
Speaker 9 (14:54):
Hello. When you look at what happened between things thank
Giving and Sunday, the majority of traffic came from social,
Meta being number one, TikTok being number two, and YouTube
being number three. If we were looking at results from Gear,
(15:14):
YouTube wouldn't have made the top three. What's really clear
right now is brands are recognizing that social is the
third shelf and wherever short video and creators are, that's
where brands are investing their dollars in their time to
gain mind share to then drive traffic to their Black
Friday deals.
Speaker 4 (15:35):
How Rachel all the companies that are doing well, the
likes of Walmot we sold release stealing a lot of
the marketshed and the targets, how are they tracking it?
How are they making sure that they've got the measurements
that proves that the investment's making sense to them?
Speaker 9 (15:54):
Absolutely. I mean, if you look at Amazon's earnings or
Walmart's earnings, it's very clear that these reach tailors are
now becoming data businesses. They're making eighty to ninety percent
margins on selling data as a service, and we all
know they're not making those margins on selling physical goods.
So when it comes to measurement, major brands are first
(16:16):
relying on retailer's first party data, but then they have
to marry that to third party sources because we can't
all be grading our own homework. So they're turning to
companies like Mickmac, Adobe Circana, which was the merger of
Iri NPD to really validate what's happening between Mickmac's data
and Adobe's data. We're pretty much seeing the same thing.
(16:37):
In Mickmac. We've seen a one percent one percent increase
in conversion rates during the Black Friday weekend this year
compared to last year. If you extrapolate that to what
Adobe seeing Adobe sawn increase in a billion dollars in revenue,
that one percent increase in conversision rate marries that one
billion dollar increase in revenue. So by marrying moremultiple sources
(17:00):
of truth, we can all start to see the picture
that consumers showed up. They were really choosy with their
dollars and they turned to places like Walmart because that's
where the value is and that's also where breadth of
merchandise is this holiday season.
Speaker 3 (17:15):
One stop shop is what people are liking.
Speaker 4 (17:16):
Rachel topograph for me, Thank you so much for the expertise,
CEO of Mick Mac.
Speaker 3 (17:27):
Time now for talking tech. First up, five Canadian news
media publishers.
Speaker 4 (17:32):
They've sued open ai for breaching copyright, alleging the company
scraps content to train its AI products. According to an
open ai spokesperson, is models are trained unquote publicly available data.
Speaker 3 (17:42):
Grounded in fair use.
Speaker 4 (17:44):
Plus Elil Musk has asked a federal court to block
open ai from pursuing an illegal quote conversion to a
for profit business. In his latest court filing, Musk repeated
earlier claims that open Ai broke its promise to him
and abandoned its founding purpose as a charity, and it
accepted backing for Microsoft back in twenty nineteen. And In
Video CEO Jenson Wang is set to meet the Thai
(18:06):
Prime Minister on Tuesday. The two were expected to discuss
investment plans and cooperation within the Thai government. The meeting
comes after and Video announced a buildout of AI data
centers and manufacturing in Thailand back in October. Now, sticking
with all things Asia, and let's just talk about China
and ev makers, in particular Tesla BUYD. We're getting data
(18:26):
that they've unleashed even more discounts and incentives in China.
This is a final push to meet annual sales targets.
Let's break down with Bloomberg's David Welch and look what
are we getting on offer here in China.
Speaker 2 (18:39):
I think they've been fighting for market share all year long,
and now everyone's trying to hit their sales goals as
we get into the last month. So reminds me when
I looked at some of these deals as Toyota's December,
to remember that they have every year in the US,
but this is electric vehicles in China, so zero percent
plus rebates on some Tesla models. They'd already announced some
discounts last week, and I think model why BYD has
(19:01):
been doing this for a while, basically launching a price
war to put pressure on their competitors gain market share.
Byd is one of the few EV makers in China.
The Chinese makes that is that even makes money, so
it's going to put a lot of pressure on its
domestic rivals. And then look, Tesla's trying to hang in
there in a tough market for foreign auto makers, so
(19:23):
they want to keep the market share up and they
want to keep the cars moving too, So very good
deals if you're looking for an EV in China right now,
and you're seeing some of that in the US as well.
Speaker 4 (19:33):
In the US, maybe some very reasonably priced zero percent
loans that are going on if you want to be
making purchases in evs.
Speaker 3 (19:40):
There are new entrants as well within China.
Speaker 4 (19:42):
Shoomi, for example, has made real inroads into the EV market.
Tesla is dependent on China in many ways, and many
wonder whether they're going to make their fourth quarter targets
in terms of sales.
Speaker 3 (19:54):
How difficult is it to navigate China?
Speaker 2 (19:58):
Very tough right now, especially if you're a foreign automaker
foreign to the Chinese market. The Europeans have had a
tough time there, so as General Motors, Tesla is trying
to really stay in the game and they're having to discount.
One of the reasons you're seeing other car companies like
General Motors and Volkswagen struggle is they're not as willing
to discount and sell cars at a loss as the
(20:18):
domestic producers are. And BYD is driving a lot of
this because they're huge, they're profitable, they're trying to grow
all over the world. They've got lower costs, so they're
able to do it in a lot of ways. And
you know, there's a bit of a Darwinian game playing
out in China where the top domestic producers who can
afford a discount are going to go for market share,
(20:39):
go for overall size and scale and push some of
the others, whether they be American and German companies or
even Tesla itself or some of their own Chinese domestic competitors,
push them out of business or into downsizing, so they
just dominate the market. One day. They're already pretty big
and they just want to be the player in the country.
Speaker 4 (20:58):
Evan Wilch with a pretty brutal help look on evs
over in China.
Speaker 3 (21:02):
Thank you so much.
Speaker 4 (21:03):
Meanwhile, let's talk about one key carmaker. Stellantis has left
without clear leadership after a surprise departure from its CEO,
Carlos Tever's, which was supported earlier by BlueBag News. This
comes at a time when Stalantis is under pressure to
halt a sales slide in the US. It's also struggled
with the European market, where demand for EBS is waning.
Just as we're just talking about Chinese manufacturers to span
(21:25):
in the region. Remember they are key when it comes
to the likes of Fiat and Jeep. Welcome back to
Blue Meg Technology and Caroline Hide in New York. Let's
get a quick check on these markets, and let's focus
in on what's happening when it comes to chips. The
(21:47):
key story of the day a five percent rise in Intel,
as the CEO, Pat Gelsinger, hired back in twenty twenty
one to turn around this iconic chip maker will leave
the job as that turnaround has thus far failed and
he's lost the confidence of the board. According to Bloomberg reporting,
in Vidia is up five ten percent. Look under his tenure.
It's twenty twenty one at Intel. Intel shares dropped sixty percent,
(22:09):
in Videa's shares rows eight hundred percent. We shine a
light on what's happening with the chip sector more broadly.
We're up two and a half percent on the socks,
and let's just shift gears a little bit talk chips
more broadly and how there's some new entrance into the
AI part of the equation. Jeff Bezos, for example, and
Samsung are betting big on AI chip startup ten Storrant
announcing a seven hundred million dollar investment, which puts the
(22:31):
company now on a two point six billion dollar valuation.
Joining us to discuss is the CEO of the company,
Jim Keller, who is himself a legend and chip making world.
Of course, your resume includes know who's who of AMD, Apple,
Tesla and indeed Intel. Jim, the money that you're raising,
what is it that you're hoping to do? You're wanting
to make a more cheaper operation and option out there
(22:52):
for AI accelerator chips.
Speaker 1 (22:55):
Yeah, that's right. We're building out the team, we're building
out our products. We're starting the ship our products, and
our real mission right now is to bring on developers
and early customers.
Speaker 4 (23:05):
Let's talk about the customers and what you offer that
isn't in the market at the moment.
Speaker 3 (23:09):
Jim, what's your selling point?
Speaker 1 (23:11):
Well, we have a couple of things we license our
IP and we're building a business on that for both
risk ICPU and AI. We're selling low cost development systems
like I'm really interested in hitting a much lower cost point.
And then we open source to our whole AI compiler
stack and people like the transparency they can see exactly
(23:31):
what the technology is doing. They actually it's turned into
a great recruiting vehicle for our software engineers.
Speaker 3 (23:38):
Interesting.
Speaker 4 (23:39):
So let's just go first to the price point, just
a cheap offering. A lot of that's done by having
less pricing components. For example, in videos, chips are incredibly expensive.
We know people pay it because of what they offer
the full stack in many ways, but they struggle from
a choke perspective on how bandwidth memory chips in particular, you.
Speaker 3 (23:59):
Don't need them, Why do you need them? Why don't
you want them?
Speaker 1 (24:02):
Well, it's partly about choices. So there's two choices. One is,
if you pick a really expensive memory technology, you'll never
get the price down right, and so you need to
then make technology decisions to lower your costs. So we
have a tensor process or architecture, we keep the data
on chip. More, we have a software stack that's very
(24:23):
good at partitioning AI workloads across multiple chips, and then
they can send information and compute packets to each other
without having to go through memory, and that lowers the
memory vandwith required and also lets it scale more naturally
across many chips.
Speaker 3 (24:39):
So I'm a new investor. You brought me on board.
I'm interested Bezos Samsung.
Speaker 4 (24:45):
But you're saying, look, I'm going to do this with
more open architecture with cheaper offerings. How much of the
market shed do you have to get? What sort of
price point are we looking at for your chip offering?
Speaker 1 (24:55):
Yeah, so this is really wild. The market is so
big to percent we have to get is actually pretty
small to be a real value proposition. You know, next
year we'll die and go to heaven if we make
two hundred million dollars. We have already booked one hundred
and fifty million in revenue. I'm really interested in finding
small players, early players. People want to own their technology.
(25:17):
People are excited about our software and hardware architecture, and
you know, I want to grow organically from there. I
think some people will focus on the big guys first,
That's not how new technology introductions go. You focus on
smaller players, people who need a differentiation. And that's what
we're really that's our mission.
Speaker 4 (25:36):
So what therefore is the mission building in in terms
of long term value of generative AI of AI applications?
Do you think that we are in some sort of
hype cycle? Do you think that actually this market is
as big as manufacturing in.
Speaker 1 (25:51):
Well, first of all, we are definitely in the hype cycle.
There's going to be multiple and people say, well, Jim,
you'll understand it's going to go down next year, and
then it's going to go up, and it's going down
low past filter all that stuff. Right, What's really going
to happen is AI is going to dominate computing over
the next ten years and we're just starting and the
hardware is going to change a lot, the software is
(26:12):
going to change a lot. Like one day you read
in the papers, LMS can do anything, and the next
day you read they've hit a limit. Ignore all that stuff.
We're just starting this. There's going to be massive transformations.
So what I really wanted tense Torrent to have is
great computer designers, general purpose CPUs, AI processors, chip design,
(26:33):
system design, software design. And then the open source stuff
is really interesting because that engages a community. People are
really passionate about that to contribute back.
Speaker 4 (26:43):
This is why you're thinking about your own talent team.
You've managed talent, as we said, sort of across the board.
You began like you're integraled to the chip design process
in the US. When you think back to DC and
then the work that you then did at AMD moving
to Apple, you were Intel, and I just have to
go there. On this day that Pat Gelsinger hands in
his well, hands his hat on off, he's going to
(27:06):
re resigning. Many would say it's because they didn't get
into AI quickly enough.
Speaker 3 (27:10):
That was prior to him. What do you make of
the transition?
Speaker 1 (27:14):
Well, it's hard to say. So I like Pat personally.
I've met him a number of times. He's a smart guy.
He really cares. I think the market focuses too much
on stuff like execution and AI transition the way you
make money. Get customers to build great products. Like Steve
Jobs is the best at this focus on the product,
(27:34):
make the best product you possibly can. And I think
they need somebody way more hands on, really focus on product,
and they need to stop talking about AI execution all
the nonsense. Right when they make the best product, the
best fab, the best chip, the best GP accelerator, they'll
do fine.
Speaker 4 (27:52):
Jim, when you're thinking about all of the errors, you
want to own. How much does US and China factor
into your growth story?
Speaker 1 (28:01):
So, first of all, we are building open source software
risk five based technology. We think that's an open platform.
There's a lot of people interested in that. At the
same time, you know, there are you know, restrictions by
the US government and trade rules. We have really good
lawyers and trade compliance people. We work very closely with
(28:23):
those those guys. We want to do the right thing
both for the business and for you know, being compliant
to what's going on. And it's a changing world and
we're very involved in that. Short run. Our business possibilities
are really big, and you know, if China plays in that,
that'll be interesting. If it doesn't, for you know, various reasons.
Speaker 4 (28:44):
That's fine, got a big valuation. Come back when you're
executing on the latest round. Thank you, Jim Keller of
ten Stone, All right, great to have you. Meanwhile, Europe's
most valuable start up, Housing has moved from software to hardware.
Company that provided AI software for drones and jet fighters
and now making weapons of its own, debuting a new
attack drone. Blum Begs mart Bergen joins US for more
(29:07):
five billion.
Speaker 3 (29:07):
Euro values start up.
Speaker 4 (29:09):
And this is all about drones potentially to be used
in terrain for example Russia issue.
Speaker 10 (29:17):
Correct, I mean, so there's a couple of things. They
have their AI software. Their main feature here is that
they say they have built software that allows these drones
to avoid GPS jamming. So a major problem in the
war in Ukraine has been Russia's electronic warfare that has
blocked GPS and effectively rendered these drones kind of useless, right,
And they say that we've built these autonomous drones they
(29:38):
can get over this GPS issue. Now they're going to
be shipping these new units. They're said, they're talking to
Ukraine and their NATO allys. And the way the company
describes it is they sort of see this as this
border deterrent, not just in Ukraine but across all the
eastern flank of countries in Europe that border Russia.
Speaker 4 (29:55):
Let's just talk a little bit about the startup itself,
pretty cagy around details of the technol energy in sales.
They didn't want to give a demonstration, but who is
backing them and who is buying from them?
Speaker 10 (30:07):
So they've had some pretty prominent backers that the most
early one was Daniel Eck who invested the Spotify founder
invested through his fund. They received some pretty big investments
from general catalysts, the US fund that's become much more
active in Europe, so getting a mixture, i say, of
European and American investors. They have had a deal with
SOB to work on the euro Jet fighter, and they've
(30:31):
also done some deals with Airbus and some drug manufacturers.
What we haven't really seen is actually, is to our
point in the story, a clear demonstration of the products.
You know, a lot of this has been sort of
bespoke AI deals and kind of working on command and
control software and making these weapons sort of more intelligent
and more autonomous. This is the first time we're going
to actually see something that they produced potentially go into
(30:54):
the battlefield. They have not shared anything about revenue or profits,
but as we know, they've raised nearly a billion dollars
to date.
Speaker 4 (31:03):
We'll see how the HX two performs when we get
that sort of detail in information.
Speaker 3 (31:08):
Mark Bergen, it's a brilliant story. Thank you.
Speaker 4 (31:10):
Coming up, look at how the fade of TikTok in
the US can impact future investments in Chinese tech. Michail
Green of lead Edge Capital that he's joining us. Next,
this is Blue Meg Technology. Let's get a check in
(31:33):
on these crypto markets for you and the moment, because
maybe we've been tempering some of the phenomenal rally that
we've seen in bitcoin. We're not nearly one hundred thousand dollars,
Mark quite ninety six thousand where it trade were off
by one point percent. The whole of crypto seems to
be partying Miami this week, but I'm looking at Mara Holding,
so we're down by five point five percent. New kid
on the block announcing how much it's buying in terms
(31:54):
of bitcoin onto its balance sheet. This, of course is
a bitcoin mining company, and micro Strategy has been doing this.
Speaker 3 (32:00):
For several years now.
Speaker 4 (32:01):
We know Michael Saylor has been plowing yet more money
into bitcoin in the last week, announcing that this morning
as well. Let's do it all with Isabelle Lee. I mean,
Michael Saylor showed us how it's done. What they own
more than thirty maybe even forty billion dollars worth of
bitcoin on a balance sheet.
Speaker 3 (32:15):
Now Mara is joining.
Speaker 11 (32:17):
It's thirty eight billion, and they're now announcing their fourth
straight week of buying. It's just really astonishing. We have
the likes of Kassie Wood really kind of rejoicing. Sounds bad,
but they're rejoicing the Trump administration because they know that
this will mean good news for the coin. And as
you can see, it really bols soed ever since Trump won.
You can see the chart, it really was just a
spike higer. And yes we're struggling to hit the one
hundred thousand mark, but we're inching ever closer there. It's
(32:38):
around ninety six ninety seven, So that's really a positive news.
And we have Trump saying on his first day he
will fire SEC chair Gary Gensler. No need for that
since Gensler said he will step down. But we have
Paul Atkins, who served as Republican SEC Commissioner being considered,
according to reports by Bloomberg.
Speaker 3 (32:54):
So it's really lots of tailwinds.
Speaker 11 (32:56):
For the space. And now we have the establishment takeover
of fifth as well.
Speaker 4 (33:01):
Yeah, I mean so interesting how at one point Tesla
was doing the same thing. Companies did have bitcoin on
the balance sheet, but really it was only Microstructurgy that
stayed committed. Now we have Mara doing the same thing.
What's interesting is we did hear from Kathie Wood saying
praising a new regime under the administration. She's pretty long
(33:22):
digital asset classes. But where else does she see positivity?
Speaker 11 (33:26):
He sees a lot of positivity, not only in crypto,
but also in fintech companies and m and a all
of that. Really all of the things that were clamped
down under this administration. Remember a lot of the CFTC
also banned a lot of acquisitions in the tech space.
So she just sees more loose regulations, softer regulations on
the space. And when it comes to bitcoin, it's not
(33:46):
just Marathon Mara Holdings or even micro Strategy acquiring bitcoin
for the US government potentially being a whale. There's a
bill that if it's passed, will require a fed to
sell some of their goal and buy bitcoin. So that's
good news for the space, but of course it will
create risks like price volatility in the run up to
that gold price might think bitcoin might rise, and of
course whoever holds what will kind of suffer or celebrate.
(34:09):
But there's really a lot of things happening in this space.
But it's interesting because now a lot of companies on
more bitcoin than others.
Speaker 4 (34:16):
It's a bali or thanks crypto, We appreciate it. Look,
crypto regulation is looming over law makers in Washington, but
it's not the only tech policy facing uncertainty. Of course,
the future of TikTok in the United States is also
up in the air, as well as impacts of President
elect Trump's threats to impost weeping tarifs, most significantly on
Chinese goods. Mitchell Green's with us founder and managing partner
and need Edge Capital, key investor in byte Dance. You've
(34:37):
been building up that investment in the secondary market, Mitchell,
and I just want to understand how much of a
weight you think US China is on it.
Speaker 12 (34:46):
Thanks Carolin for having me, and how much weight do
I think it is?
Speaker 13 (34:51):
So for us?
Speaker 12 (34:52):
We actually in our base case, assume that we have
assumed that the US business would have actually not account
for anything, and we thought it would be banned. What
you see Trump saying is looks like it may head
another way. You know, what people say and do in
Washington on both sides are two very different things. Who knows,
(35:16):
you know, I think I can't imagine the first thing
Donald Trump wants to do though, is being TikTok, especially
when a lot of his big supporters like inn Elon Mosk,
who I think is you know, probably an ads with
Mark Zuckerberg, who would be the one to benefit off
of a you know, being a TikTok band, or like
a Joe Rogan who's a huge supporter on TikTok, Right,
(35:39):
I love, I think it's pretty positive for TikTok to
have Trump in office.
Speaker 4 (35:44):
Meanwhile, Mark Zuckerberg, we understand, has been dining with Trump
over in mar A Lago last week, so maybe real
music changes there. But I'm I'm interested more broadly on
just spell out TikTok and how integral it is too
broad a bite dance investment choices of yours.
Speaker 12 (36:01):
Yes, so the Chinese business, you know, the you know,
it's been it's been rumored and reported in the press
that you know, the North American version of TikTok is
a single digit percentage of the business. It is not
a very It is not a giant part of the business.
I think it is a part of the business where
a lot of investors or potential investors in it see
(36:25):
a huge amount of opportunity. You know, I believe that
TikTok is the biggest existential threat to a business like
Facebook or you know, Instagram inside Facebook or Snapchat. I mean,
just go ask millennials in America what they use or
if you know your own kids, or just look at
their usage patterns and look at the data around like
(36:45):
daily active users and how much time has spent on
all these different apps. And TikTok is a real player.
But I can assure you Mark Zuckerberg would love to
have a band. It would be great for his business.
Speaker 4 (36:55):
But Mitchell, your expertise is so great on the show
because you led or co led some significant investments like
buy Dance, but also like Ali Barba, you're someone who
understands the consumer of China where technology is going there.
Speaker 3 (37:09):
How much harder has your life become.
Speaker 4 (37:11):
To access these sorts of deals on secondary market, for example,
to be long China investments.
Speaker 12 (37:18):
It's not very popular at the moment. We'll put it
that way, although some of the greatest investors I know say,
if you do you know, if ninety nine percent of
investors are doing, If you want to know where public
markets are doing, ask the ten smartest hedge fund investors.
And when all of them tell you one, when nine
of them tell you one thing and one tells you
the other, you know, do what the one does and
you'll probably make a lot of money. It is sure
(37:38):
now of consensus trade at the moment. Buy in China.
Speaker 3 (37:42):
But it is cheap.
Speaker 12 (37:43):
I mean, we can buy byte Dance, and we've been
buying byte Dance, you know, sub five times earnings for
a business you know, growing you know, much faster than Facebook.
So we think it's really cheap and that the risk
adjusted reward is quite attractive. And in our base case
model we model the business is zero. Look, we might
get we might get lucky. The Trump may not ban it, yeah,
(38:06):
you may. You know, the Chinese economy made start to
recover some and on any start of the imagination looking
at public Chinese comps today in the internet space. If
you look at Tencent or Ali Baba or Sea Trip,
these things trade that you know, substantially hire multiples in
five times earning. So not only are we potentially going
to get earnings growth, we're also going to get multiple
(38:27):
expansion and MOONI exit. But I can't tell you when
the company is going public, and I don't think nor
can anybody else, but tailwinds. Whereas the US political environment
six months ago. Look, look it was going to be
a huge headwind. It might become a tailwind, but you know,
time will tell.
Speaker 4 (38:44):
Mitchell Green found a managing partner of lead Edge Capital.
You like people on with contrarian ideas. This gets today's
screen Time letter bloom Meggs Lucashaw writing over the weekend
about how he's uncovered financial details about Lebron James's media
(39:06):
company that reveal quite a bit about the current state
of Hollywood. Because joins us, Now, you were pulled off
the bench from sitting and consuming content and hanging out
with family to write the newsletter, because what twenty eight
million being lost? This is a company that's valued well
in the heyday, very high.
Speaker 13 (39:22):
Yeah, well, they benefited from the streaming boom that happened, right,
You add all these companies that were making shows for
Netflix and Amazon and Disney and others, and those in
particular affiliated with famous people. Reese Witherspoon's company, Lebron James's
company raised money at valuations that really, in retrospect, made
no sense. I mean, Lebron's company got a valuation of
(39:43):
more than seven hundred million dollars when its revenue was
high seventy millions, and it lost millions of dollars. And
you know, they ended up having to pay for it
in the end because the market crashed a little bit,
and people are looking at these companies differently.
Speaker 4 (39:57):
They're managing to well get lemon out of Lemons with
a merger with full Well seventy three.
Speaker 3 (40:02):
Is that going to be Lemonade? What does that deal
look like?
Speaker 13 (40:04):
Well, look, the deal does give them more scale, and
I think that will benefit them at a time where
these companies that they're competing with are giant cutting back.
It also gives them some complimentary expertises. You know, the
Lebron's company is very good at unscripted. Full Well is
also good at unscripted, but does more live events. Lebrons
has a big branding company. I do think it's probably
squishing together to challenge businesses to try to solve a problem.
(40:28):
Sometimes that works, sometimes it doesn't.
Speaker 4 (40:30):
I mean, you talk a lot about Maverick Carter, who's
kind of the guy who's running the business on the
daily basis, and he smart things around, not building it
within Lebron James, but sort of all around Lebron.
Speaker 3 (40:42):
It's sort of like he's been the expert in the building.
Speaker 4 (40:44):
Meanwhile, everyone's trying to work out where content does work.
Speaker 3 (40:47):
Clearly it's working in the theaters right now.
Speaker 4 (40:49):
I mean Wicked and Gladiator or Moana too, seems to
be one everyone's excited about.
Speaker 13 (40:55):
Yeah, huge weekend at the box office, I mean Moan
or two, setting records the big animated or biggest Thanksgiving
opening ever, one of the biggest animated openings ever, I believe,
the biggest opening of the year, most close to four
hundred million dollars worldwide. Is just insane. And then the
you know, the good news for movie theaters. The good
news for Hollywood is that you had two other movies
out in Wicked and the sequel to Gladiator that people
(41:18):
were very excited about. I mean, the stat that blew
my mind was that seventy five percent of showtimes this
past weekend were for those three movies.
Speaker 3 (41:26):
Wow, and as kind of everyone's catered for in this scenario.
Speaker 4 (41:29):
Kids are catered for male women no matter what you're.
Speaker 13 (41:33):
Across demographics and reaction, You've got singing, You've yeah, you've
got a little bit of everything for everyone.
Speaker 4 (41:39):
But the money being made, I mean Gladiator and Wicked,
I can't imagine prediction cheap to make.
Speaker 3 (41:44):
They have to make some money.
Speaker 13 (41:45):
Yeah, Gladiator very expensive. I think they have owned two
hundred and fifty million dollars to produce. Some people say
it's more that's the one that will be the hardest
to make money on because it's probably going to top out,
you know, five hundred maybe six hundred million worldwide. Wicked,
I think maybe one p fifty one seventy five. It
will make enough to make money, and then Mwan is
going to make a fortune for.
Speaker 3 (42:04):
Disney As and all the merch. I'm already going to
hit with that. Bloomberg's Lucas Shaw, we love it. Thank you.
That does it for this edition of Bloomberg Technology. Do
not forget to check out our podcast.
Speaker 4 (42:14):
Find it on the terminal, as well as online on Apple, Spotify,
and iHeart this is a Bloomberg
From the heart of where Innovation of Money and Power
Collie in Silicon Valley, NBN.
Speaker 2 (00:07):
This is Bloomberg.
Speaker 1 (00:08):
Technology with Caroline Hyde and Ed Ludlove.
Speaker 3 (00:24):
Live from New York. This is Bloomberg Technology coming up.
Speaker 4 (00:27):
Intel shares rise a CEO Pat Gelsinger leaves the company
after a failed turnaround effort plus Tesla and byd ramp
up discounts and incentives in China in a final push
to meet annual sales targets and tenstorrant NAB's a two
point six billion dollar valuation off the backing from Jeff Bezos.
And in Nvidia, we sit down with the CEO and
(00:48):
chip design legend Jim Keller later this hour. But first
check on these markets, a check in on Intel. We
dive straight there. We are more than three percent on
the back of the news that Intel CEOPA Gelsinger is
leaving the company and is indeed going to be two
interim CEOs that take the helm for the time being,
CFO David Sinsner Michelle Johnston Helpo's going to be serving
(01:11):
as the interim leaders as the board searchers for a replacement.
This after, of course, his departure is potentially signaling more
strategic shifts at the business.
Speaker 3 (01:20):
The investor base collaps.
Speaker 4 (01:22):
It slightly, but we get into the details with Man
Deep Singer, BlueBag Intelligence.
Speaker 3 (01:27):
Look, many would say they're surprised.
Speaker 4 (01:29):
Many would say, Look, the August numbers that came from
Intel just showed that this turnaround, this restruction was going
to be so painful, and the boarders lost confidence.
Speaker 5 (01:37):
Yeah, and look, I think it probably suggests that the
numbers for four Q don't look very good either. So clearly,
you know, the gross margin going down, and the foundry
business was a big contributor to that because even though
you know, Intel has about eighteen billion dollars of foundry revenue,
it's negative gross margins. And when you think about that
eighteen billion dollar number, how much of that business comes
(02:01):
from the outside, Like they don't have any big customers
like TSMC does. You know, when it comes to the
foundry business, it's mostly internal when you think about that
eighteen billion dollar number. So that's where you know, the
question marks were raised around Intel's capex of around twenty
five billion, which is the major reason why they are,
you know, burning fifteen billion dollars a year, and I
(02:23):
think pat had about four years to decide on the
fate of the foundry business. He actually wanted to acquire
power Semis that didn't happen because of regulatory hurdles. So
you have to ask yourself was focusing on foundry business
the right strategy and the answer probably is not, given
it hasn't turned around in the last four years.
Speaker 4 (02:42):
And yet the US government is handing them a lot
of money to build chicks to be the future of
on shoring.
Speaker 3 (02:49):
How resilient does that look?
Speaker 4 (02:50):
How resilient does well trying to do both manufacturing and
design look for the business.
Speaker 6 (02:55):
Yes, so you're absolutely right the government wants them to
succeed on the manufacturing side. The problem is the optics here.
Why would an Amazon or a Microsoft, or an Nvidia
for that matter, go to Intel foundry when they know
Intel is a competitor on the design side. And that's
where you know, divesting that foundry business will actually make it,
(03:16):
you know, more palatable for competitors like Amazon and Nvidia
to use some portion of Intel's foundry, similar to what
MD did with Global Foundaries. I mean, Global Foundry has
a lot of business outside of MD now because it's
an independent entity. So that's where the gross market profile
will still be a lot lower for the foundry business,
(03:37):
but at least the core Intel business, which is how
investors look at some of the parts of Intel and
they say, the core client PC business is still where
they dominate. I mean, look the server side, they are
leading share to Nvidia, but more than fifty percent of
the revenue still comes from core PCs. And even though
it's a saturated market, the AIVA will help spur refreshed
(04:02):
cycle at some point. We don't know it's going to
be first half or second half, but it will come.
Speaker 3 (04:07):
And it will come under new leadership.
Speaker 4 (04:09):
Mande Singh, We thank you so much on all things
Intel will have plenty more of that in a moment.
But let's just talk a little bit more about the
US focus on chips, because the Biden administration unveiled new
restrictions on China's access to vital components for chips and
artificial intelligence, and the Department of Commerce slapping additional curbs
on the sale of high bandwidth memory and chip making gear.
(04:29):
It's impacting twenty seven types of chip design and fabrication tools.
It's also blacklisted one hundred and forty more Chinese entities
than it accused of acting on Beijing's behalf. Blomberg's and
mackenzie Hawkins had a busy Thanksgiving period reporting all this out.
McKenzie and just go first and foremost as to whether
this actually looked perhaps slightly better to the market than
some had anticipated.
Speaker 7 (04:51):
So this is what's become kind of the third annual
update to these sweeping outport controls of the Biden administration
has levied on companies trying to sell chips and chip
making gear to China. But the latest controls, which were
unveiled this morning, came in slightly softer than some proposals
that officials had floated earlier this year. They didn't sanction
a handful of key Chinese companies with ties to Huawei
(05:12):
that they had discussed sanctioning, and they also exempted important allies,
notably Japan and the Netherlands, which are home to of
the most important ship tool making companies, from rules that
restrict additional types of chip making gear from being sent
to China.
Speaker 4 (05:26):
All of this context is the US trying to limit
capabilities over in China, trying to home grow a supply
chain here in the United States, which does involve Intel
just going back to that story of the day, mackenzie,
how much do you think the US government is going
to be upended by change of leadership? How much has
Intel benefited from the CHIPSACK for example.
Speaker 7 (05:48):
So Intel actually last week solidified a deal for seven
point eight billion dollars in funding from the CHIPSAC, which
is this broader fifty two billion dollar program to bring
chip manufacturing back to the United States. The company i
said it's committed to its US expansion plans, which include
more than one hundred billion dollars in investment, ninety billion
of which will come by the end of the decade,
(06:08):
and plans to execute on factories in Arizona, Ohio, Oregon,
and New Mexico. Galsinger's departure shouldn't change the company's plans
as we see it now, but of course a new
CEO will have to decide whether to pursue options that
Galsinger had left off the table, and the US government
we're watching that closely.
Speaker 4 (06:26):
They will be McKenzie Hawkins, thanks for breaking it all down. Meanwhile,
we want to get the whole circumference of the chip
sector for you now with Pierre Faragu from New Street Research.
Your first take on the announcement of Pat Gelsinger retiring.
Speaker 3 (06:40):
Were you surprised?
Speaker 8 (06:42):
I was very surprised by the abrupt news, like retiring today.
It is no transition period, so difficult, a difficult situation.
We knew the board was stands since the summer urum
early and the CEO of Cadence resigned from the board
of over the summer, and it was like reflecting like
(07:03):
difficult conversations. And so it probably looks like, you know,
Pat loss the continents of the board or didn't get
the support of the boat for his strategy anymore. And
basically probably and uh decided to leave abruptly. So so
that was a surprise now that you know, we are
four years into the turnaround. Bad direction was let's double
(07:26):
down and Intel's capabilities in manufacturing. Let's make Intel like
a leading manufacturer. Let's go large, Uh, you know, go
big and you know, leverage at a maximum. The political
support will have to do that. So that was the plan.
And the plan failed basically because TSMC's model cannot be
(07:47):
competed against. I think it's that's so we've had from
the beginning, so Intel being able to preserve manufacturing capabilities yes,
Intel being like a scalable like like a large scale
competitor to TSMC is probably not possible for like scale
and experience reasons, and that's why things failed.
Speaker 4 (08:10):
In August on that very bleak announcement of numbers that
we had and ish disastrous sell off in the shares.
Speaker 3 (08:18):
Was this restructuring.
Speaker 4 (08:19):
It involved a lot of job losses, but it did
involve also the sort of peeling away of the foundry
business to be able to be managed sort of separately
but alongside Intel. Does that stay or do we start
to see actual purchasing coming from well with the reports
previously of Qualcom being interested even the chip designer.
Speaker 8 (08:38):
ARM So the situation is going to be very very
fluid for quite some time for sure. As you mentioned
last summer, you know, the word was say to be
fighting of you know, activist activist Shoulder is getting prepared
to fight of activity smooth. The stitution is of course
(09:01):
very complex. On one hand, Intel has manufacturing capabilities. Intel
has manufacturing capabilities onshore and owned buy like a US
control company. So it's a very very unique asset, extremely
valuable in today's cheer political context, and I think Intel
needs to continue to be able to to build on that.
(09:24):
So of course there is a tempting, tempting route, which
is to say, okay, maybe Quale common Intel could merge
or Qualcome to biot Intel or try and trigger the
consolidation of that type. I don't see that as good
as a good opportunity. It's difficult to generate synergies between
Quale governing Intel. The chips qual Come do are very
different from the Intel ships. Manufacturing is a complex business,
(09:49):
so I'm not super you know, that's an area that
scares me more than anything else.
Speaker 7 (09:55):
You know, bad many.
Speaker 8 (09:56):
Decisions typically can arrive in a situation like that. What's
more interesting, I think is to be like, okay, how
can we make sure we create a sustainable US owned
on us SO manufacturing capability. And if you do that,
you have quody to admit that you're not going to
compete with TSMC. You need to partner with TSMC, right,
(10:16):
you need to find other very large partners that are
going to super oft to And of course the one
that comes to mind that has that those maybe to
the US is in video. So you know, like Engagent
partnering around manufacturing with TSMC as a partner and Vidia
as a partner would be a much more interesting route
to pursue from here.
Speaker 4 (10:35):
There is ongoing breaking news around this story and Bloomberg
leading the charge with how Pat Gilsinger was inteed forced
out after the board grew frustrated. The biggest frustration Pier
was that they missed the AI evolution jumping on and
being able to ensure that what they produced, which.
Speaker 3 (10:53):
Is GOWI, was able to compete.
Speaker 4 (10:55):
I mean, they're likely to miss that five hundred million
dollar target for this year when very is busily making
about one hundred billion a year.
Speaker 8 (11:04):
Yeah, I think it's the frustration came from the lack
of prudence of the initial plan going to be too large,
assuming you know, demand would follow as long as you
can pull together like quality, quality, supply. And yes, the
underlying causes that uh Intel ended up not being in
(11:27):
the growing part of the market, and namely it was
last summer was particularly abrupt, like you see, like the
complete failure of the Intel AI chips and the fact
that they would not be at all in the market.
Him is actually carving out a fairly sustainable niche positioning
(11:48):
in that market. So that was part of it, But
I think part probably stuck too much to his initial
plan with like a very ambitious, very large scale plan
and should have a year or eighteen months ago thought
about like you know, changing tag to smaller and more
colarborative with other players in the market.
Speaker 4 (12:09):
Because yeah, Peah, I mean much of this predated the
pack coming back in twenty twenty one. That course was
already kind of paved, and he didn't reorientate quickly enough.
Where now in terms of leadership and in terms of
Intel's place in the ecosystem very quickly, please.
Speaker 8 (12:27):
So I think INTE could be specialized in manufacturing in
the US under US control and ownership and collaborate with
the rest of the industry instead of instead of competing,
I think in like smaller scale, remaining like keeping a
position at the leading edge and leveraging the products of
(12:49):
Intel like the PC ships and the servitude that are
still very good and in very high demand.
Speaker 4 (12:54):
Right, Yeah, thank you so much for lending your expertise today,
Pierre for Ago on New Street research and all things
intell and chips. Meanwhile, sticking with the error of AI,
shares of super Micro absolutely soaring today. The company says
that an external review of its business found no evidence
of wrongdoing and the company will appoint a new CFO.
This follows, of course, that tumultuous year for super Micro,
(13:14):
which is also facing USDOJ probe following a report from
short seller Hindenburg Research. This, of course, is a company
that uses in video chips within its servers that it
sells on two key clients for up thirteen fourteen percent
over the last two training days. Meanwhile, coming up, we're
going to break down the Black Friday sales data and
trends for Cyber Monday. Mick max Richel topograph stick with us.
There's a bluebog technology. Of course, Today is Cyber Monday,
(13:48):
and Adobe expects consumers will spend a record thirteen point
two billion dollars, up six percent year on year. Online
spending is expected to peak, especially between eight and ten
pm later tonight, with fifteen point seven million dollars spent
every single minute.
Speaker 3 (14:02):
That's Eastern time.
Speaker 4 (14:03):
Of course, let's look at all of that Anergy, what
happened on Black Friday and the weekend?
Speaker 3 (14:07):
Rachel tipographs with US founder and c here mcmack.
Speaker 4 (14:09):
It's an e commerce marketing platform for multi channel brands.
It feels like a big year I'm certainly getting hit
with a lot of marketing. Is it feeling that way
for you?
Speaker 3 (14:16):
Rachel?
Speaker 4 (14:18):
It is.
Speaker 9 (14:19):
You know, despite what's happening in the economy, consumers are
showing up to really save I want to say spend,
but it's really about savings right now.
Speaker 3 (14:27):
Okay, that's interesting.
Speaker 4 (14:28):
So it's more about the deal making and how are
companies managing to access those consumers right now? What innovative
ways are they using to market across various platforms. Oh,
do we have some technological issues?
Speaker 3 (14:42):
Rachel?
Speaker 9 (14:43):
Absolutely? You know, when we look at what happened from
stinks hello, can you hear me?
Speaker 4 (14:50):
Apologies, there's a big delay, Rachel, Do carry on?
Speaker 9 (14:54):
Hello. When you look at what happened between things thank
Giving and Sunday, the majority of traffic came from social,
Meta being number one, TikTok being number two, and YouTube
being number three. If we were looking at results from Gear,
(15:14):
YouTube wouldn't have made the top three. What's really clear
right now is brands are recognizing that social is the
third shelf and wherever short video and creators are, that's
where brands are investing their dollars in their time to
gain mind share to then drive traffic to their Black
Friday deals.
Speaker 4 (15:35):
How Rachel all the companies that are doing well, the
likes of Walmot we sold release stealing a lot of
the marketshed and the targets, how are they tracking it?
How are they making sure that they've got the measurements
that proves that the investment's making sense to them?
Speaker 9 (15:54):
Absolutely. I mean, if you look at Amazon's earnings or
Walmart's earnings, it's very clear that these reach tailors are
now becoming data businesses. They're making eighty to ninety percent
margins on selling data as a service, and we all
know they're not making those margins on selling physical goods.
So when it comes to measurement, major brands are first
(16:16):
relying on retailer's first party data, but then they have
to marry that to third party sources because we can't
all be grading our own homework. So they're turning to
companies like Mickmac, Adobe Circana, which was the merger of
Iri NPD to really validate what's happening between Mickmac's data
and Adobe's data. We're pretty much seeing the same thing.
(16:37):
In Mickmac. We've seen a one percent one percent increase
in conversion rates during the Black Friday weekend this year
compared to last year. If you extrapolate that to what
Adobe seeing Adobe sawn increase in a billion dollars in revenue,
that one percent increase in conversision rate marries that one
billion dollar increase in revenue. So by marrying moremultiple sources
(17:00):
of truth, we can all start to see the picture
that consumers showed up. They were really choosy with their
dollars and they turned to places like Walmart because that's
where the value is and that's also where breadth of
merchandise is this holiday season.
Speaker 3 (17:15):
One stop shop is what people are liking.
Speaker 4 (17:16):
Rachel topograph for me, Thank you so much for the expertise,
CEO of Mick Mac.
Speaker 3 (17:27):
Time now for talking tech. First up, five Canadian news
media publishers.
Speaker 4 (17:32):
They've sued open ai for breaching copyright, alleging the company
scraps content to train its AI products. According to an
open ai spokesperson, is models are trained unquote publicly available data.
Speaker 3 (17:42):
Grounded in fair use.
Speaker 4 (17:44):
Plus Elil Musk has asked a federal court to block
open ai from pursuing an illegal quote conversion to a
for profit business. In his latest court filing, Musk repeated
earlier claims that open Ai broke its promise to him
and abandoned its founding purpose as a charity, and it
accepted backing for Microsoft back in twenty nineteen. And In
Video CEO Jenson Wang is set to meet the Thai
(18:06):
Prime Minister on Tuesday. The two were expected to discuss
investment plans and cooperation within the Thai government. The meeting
comes after and Video announced a buildout of AI data
centers and manufacturing in Thailand back in October. Now, sticking
with all things Asia, and let's just talk about China
and ev makers, in particular Tesla BUYD. We're getting data
(18:26):
that they've unleashed even more discounts and incentives in China.
This is a final push to meet annual sales targets.
Let's break down with Bloomberg's David Welch and look what
are we getting on offer here in China.
Speaker 2 (18:39):
I think they've been fighting for market share all year long,
and now everyone's trying to hit their sales goals as
we get into the last month. So reminds me when
I looked at some of these deals as Toyota's December,
to remember that they have every year in the US,
but this is electric vehicles in China, so zero percent
plus rebates on some Tesla models. They'd already announced some
discounts last week, and I think model why BYD has
(19:01):
been doing this for a while, basically launching a price
war to put pressure on their competitors gain market share.
Byd is one of the few EV makers in China.
The Chinese makes that is that even makes money, so
it's going to put a lot of pressure on its
domestic rivals. And then look, Tesla's trying to hang in
there in a tough market for foreign auto makers, so
(19:23):
they want to keep the market share up and they
want to keep the cars moving too, So very good
deals if you're looking for an EV in China right now,
and you're seeing some of that in the US as well.
Speaker 4 (19:33):
In the US, maybe some very reasonably priced zero percent
loans that are going on if you want to be
making purchases in evs.
Speaker 3 (19:40):
There are new entrants as well within China.
Speaker 4 (19:42):
Shoomi, for example, has made real inroads into the EV market.
Tesla is dependent on China in many ways, and many
wonder whether they're going to make their fourth quarter targets
in terms of sales.
Speaker 3 (19:54):
How difficult is it to navigate China?
Speaker 2 (19:58):
Very tough right now, especially if you're a foreign automaker
foreign to the Chinese market. The Europeans have had a
tough time there, so as General Motors, Tesla is trying
to really stay in the game and they're having to discount.
One of the reasons you're seeing other car companies like
General Motors and Volkswagen struggle is they're not as willing
to discount and sell cars at a loss as the
(20:18):
domestic producers are. And BYD is driving a lot of
this because they're huge, they're profitable, they're trying to grow
all over the world. They've got lower costs, so they're
able to do it in a lot of ways. And
you know, there's a bit of a Darwinian game playing
out in China where the top domestic producers who can
afford a discount are going to go for market share,
(20:39):
go for overall size and scale and push some of
the others, whether they be American and German companies or
even Tesla itself or some of their own Chinese domestic competitors,
push them out of business or into downsizing, so they
just dominate the market. One day. They're already pretty big
and they just want to be the player in the country.
Speaker 4 (20:58):
Evan Wilch with a pretty brutal help look on evs
over in China.
Speaker 3 (21:02):
Thank you so much.
Speaker 4 (21:03):
Meanwhile, let's talk about one key carmaker. Stellantis has left
without clear leadership after a surprise departure from its CEO,
Carlos Tever's, which was supported earlier by BlueBag News. This
comes at a time when Stalantis is under pressure to
halt a sales slide in the US. It's also struggled
with the European market, where demand for EBS is waning.
Just as we're just talking about Chinese manufacturers to span
(21:25):
in the region. Remember they are key when it comes
to the likes of Fiat and Jeep. Welcome back to
Blue Meg Technology and Caroline Hide in New York. Let's
get a quick check on these markets, and let's focus
in on what's happening when it comes to chips. The
(21:47):
key story of the day a five percent rise in Intel,
as the CEO, Pat Gelsinger, hired back in twenty twenty
one to turn around this iconic chip maker will leave
the job as that turnaround has thus far failed and
he's lost the confidence of the board. According to Bloomberg reporting,
in Vidia is up five ten percent. Look under his tenure.
It's twenty twenty one at Intel. Intel shares dropped sixty percent,
(22:09):
in Videa's shares rows eight hundred percent. We shine a
light on what's happening with the chip sector more broadly.
We're up two and a half percent on the socks,
and let's just shift gears a little bit talk chips
more broadly and how there's some new entrance into the
AI part of the equation. Jeff Bezos, for example, and
Samsung are betting big on AI chip startup ten Storrant
announcing a seven hundred million dollar investment, which puts the
(22:31):
company now on a two point six billion dollar valuation.
Joining us to discuss is the CEO of the company,
Jim Keller, who is himself a legend and chip making world.
Of course, your resume includes know who's who of AMD, Apple,
Tesla and indeed Intel. Jim, the money that you're raising,
what is it that you're hoping to do? You're wanting
to make a more cheaper operation and option out there
(22:52):
for AI accelerator chips.
Speaker 1 (22:55):
Yeah, that's right. We're building out the team, we're building
out our products. We're starting the ship our products, and
our real mission right now is to bring on developers
and early customers.
Speaker 4 (23:05):
Let's talk about the customers and what you offer that
isn't in the market at the moment.
Speaker 3 (23:09):
Jim, what's your selling point?
Speaker 1 (23:11):
Well, we have a couple of things we license our
IP and we're building a business on that for both
risk ICPU and AI. We're selling low cost development systems
like I'm really interested in hitting a much lower cost point.
And then we open source to our whole AI compiler
stack and people like the transparency they can see exactly
(23:31):
what the technology is doing. They actually it's turned into
a great recruiting vehicle for our software engineers.
Speaker 3 (23:38):
Interesting.
Speaker 4 (23:39):
So let's just go first to the price point, just
a cheap offering. A lot of that's done by having
less pricing components. For example, in videos, chips are incredibly expensive.
We know people pay it because of what they offer
the full stack in many ways, but they struggle from
a choke perspective on how bandwidth memory chips in particular, you.
Speaker 3 (23:59):
Don't need them, Why do you need them? Why don't
you want them?
Speaker 1 (24:02):
Well, it's partly about choices. So there's two choices. One is,
if you pick a really expensive memory technology, you'll never
get the price down right, and so you need to
then make technology decisions to lower your costs. So we
have a tensor process or architecture, we keep the data
on chip. More, we have a software stack that's very
(24:23):
good at partitioning AI workloads across multiple chips, and then
they can send information and compute packets to each other
without having to go through memory, and that lowers the
memory vandwith required and also lets it scale more naturally
across many chips.
Speaker 3 (24:39):
So I'm a new investor. You brought me on board.
I'm interested Bezos Samsung.
Speaker 4 (24:45):
But you're saying, look, I'm going to do this with
more open architecture with cheaper offerings. How much of the
market shed do you have to get? What sort of
price point are we looking at for your chip offering?
Speaker 1 (24:55):
Yeah, so this is really wild. The market is so
big to percent we have to get is actually pretty
small to be a real value proposition. You know, next
year we'll die and go to heaven if we make
two hundred million dollars. We have already booked one hundred
and fifty million in revenue. I'm really interested in finding
small players, early players. People want to own their technology.
(25:17):
People are excited about our software and hardware architecture, and
you know, I want to grow organically from there. I
think some people will focus on the big guys first,
That's not how new technology introductions go. You focus on
smaller players, people who need a differentiation. And that's what
we're really that's our mission.
Speaker 4 (25:36):
So what therefore is the mission building in in terms
of long term value of generative AI of AI applications?
Do you think that we are in some sort of
hype cycle? Do you think that actually this market is
as big as manufacturing in.
Speaker 1 (25:51):
Well, first of all, we are definitely in the hype cycle.
There's going to be multiple and people say, well, Jim,
you'll understand it's going to go down next year, and
then it's going to go up, and it's going down
low past filter all that stuff. Right, What's really going
to happen is AI is going to dominate computing over
the next ten years and we're just starting and the
hardware is going to change a lot, the software is
(26:12):
going to change a lot. Like one day you read
in the papers, LMS can do anything, and the next
day you read they've hit a limit. Ignore all that stuff.
We're just starting this. There's going to be massive transformations.
So what I really wanted tense Torrent to have is
great computer designers, general purpose CPUs, AI processors, chip design,
(26:33):
system design, software design. And then the open source stuff
is really interesting because that engages a community. People are
really passionate about that to contribute back.
Speaker 4 (26:43):
This is why you're thinking about your own talent team.
You've managed talent, as we said, sort of across the board.
You began like you're integraled to the chip design process
in the US. When you think back to DC and
then the work that you then did at AMD moving
to Apple, you were Intel, and I just have to
go there. On this day that Pat Gelsinger hands in
his well, hands his hat on off, he's going to
(27:06):
re resigning. Many would say it's because they didn't get
into AI quickly enough.
Speaker 3 (27:10):
That was prior to him. What do you make of
the transition?
Speaker 1 (27:14):
Well, it's hard to say. So I like Pat personally.
I've met him a number of times. He's a smart guy.
He really cares. I think the market focuses too much
on stuff like execution and AI transition the way you
make money. Get customers to build great products. Like Steve
Jobs is the best at this focus on the product,
(27:34):
make the best product you possibly can. And I think
they need somebody way more hands on, really focus on product,
and they need to stop talking about AI execution all
the nonsense. Right when they make the best product, the
best fab, the best chip, the best GP accelerator, they'll
do fine.
Speaker 4 (27:52):
Jim, when you're thinking about all of the errors, you
want to own. How much does US and China factor
into your growth story?
Speaker 1 (28:01):
So, first of all, we are building open source software
risk five based technology. We think that's an open platform.
There's a lot of people interested in that. At the
same time, you know, there are you know, restrictions by
the US government and trade rules. We have really good
lawyers and trade compliance people. We work very closely with
(28:23):
those those guys. We want to do the right thing
both for the business and for you know, being compliant
to what's going on. And it's a changing world and
we're very involved in that. Short run. Our business possibilities
are really big, and you know, if China plays in that,
that'll be interesting. If it doesn't, for you know, various reasons.
Speaker 4 (28:44):
That's fine, got a big valuation. Come back when you're
executing on the latest round. Thank you, Jim Keller of
ten Stone, All right, great to have you. Meanwhile, Europe's
most valuable start up, Housing has moved from software to hardware.
Company that provided AI software for drones and jet fighters
and now making weapons of its own, debuting a new
attack drone. Blum Begs mart Bergen joins US for more
(29:07):
five billion.
Speaker 3 (29:07):
Euro values start up.
Speaker 4 (29:09):
And this is all about drones potentially to be used
in terrain for example Russia issue.
Speaker 10 (29:17):
Correct, I mean, so there's a couple of things. They
have their AI software. Their main feature here is that
they say they have built software that allows these drones
to avoid GPS jamming. So a major problem in the
war in Ukraine has been Russia's electronic warfare that has
blocked GPS and effectively rendered these drones kind of useless, right,
And they say that we've built these autonomous drones they
(29:38):
can get over this GPS issue. Now they're going to
be shipping these new units. They're said, they're talking to
Ukraine and their NATO allys. And the way the company
describes it is they sort of see this as this
border deterrent, not just in Ukraine but across all the
eastern flank of countries in Europe that border Russia.
Speaker 4 (29:55):
Let's just talk a little bit about the startup itself,
pretty cagy around details of the technol energy in sales.
They didn't want to give a demonstration, but who is
backing them and who is buying from them?
Speaker 10 (30:07):
So they've had some pretty prominent backers that the most
early one was Daniel Eck who invested the Spotify founder
invested through his fund. They received some pretty big investments
from general catalysts, the US fund that's become much more
active in Europe, so getting a mixture, i say, of
European and American investors. They have had a deal with
SOB to work on the euro Jet fighter, and they've
(30:31):
also done some deals with Airbus and some drug manufacturers.
What we haven't really seen is actually, is to our
point in the story, a clear demonstration of the products.
You know, a lot of this has been sort of
bespoke AI deals and kind of working on command and
control software and making these weapons sort of more intelligent
and more autonomous. This is the first time we're going
to actually see something that they produced potentially go into
(30:54):
the battlefield. They have not shared anything about revenue or profits,
but as we know, they've raised nearly a billion dollars
to date.
Speaker 4 (31:03):
We'll see how the HX two performs when we get
that sort of detail in information.
Speaker 3 (31:08):
Mark Bergen, it's a brilliant story. Thank you.
Speaker 4 (31:10):
Coming up, look at how the fade of TikTok in
the US can impact future investments in Chinese tech. Michail
Green of lead Edge Capital that he's joining us. Next,
this is Blue Meg Technology. Let's get a check in
(31:33):
on these crypto markets for you and the moment, because
maybe we've been tempering some of the phenomenal rally that
we've seen in bitcoin. We're not nearly one hundred thousand dollars,
Mark quite ninety six thousand where it trade were off
by one point percent. The whole of crypto seems to
be partying Miami this week, but I'm looking at Mara Holding,
so we're down by five point five percent. New kid
on the block announcing how much it's buying in terms
(31:54):
of bitcoin onto its balance sheet. This, of course is
a bitcoin mining company, and micro Strategy has been doing this.
Speaker 3 (32:00):
For several years now.
Speaker 4 (32:01):
We know Michael Saylor has been plowing yet more money
into bitcoin in the last week, announcing that this morning
as well. Let's do it all with Isabelle Lee. I mean,
Michael Saylor showed us how it's done. What they own
more than thirty maybe even forty billion dollars worth of
bitcoin on a balance sheet.
Speaker 3 (32:15):
Now Mara is joining.
Speaker 11 (32:17):
It's thirty eight billion, and they're now announcing their fourth
straight week of buying. It's just really astonishing. We have
the likes of Kassie Wood really kind of rejoicing. Sounds bad,
but they're rejoicing the Trump administration because they know that
this will mean good news for the coin. And as
you can see, it really bols soed ever since Trump won.
You can see the chart, it really was just a
spike higer. And yes we're struggling to hit the one
hundred thousand mark, but we're inching ever closer there. It's
(32:38):
around ninety six ninety seven, So that's really a positive news.
And we have Trump saying on his first day he
will fire SEC chair Gary Gensler. No need for that
since Gensler said he will step down. But we have
Paul Atkins, who served as Republican SEC Commissioner being considered,
according to reports by Bloomberg.
Speaker 3 (32:54):
So it's really lots of tailwinds.
Speaker 11 (32:56):
For the space. And now we have the establishment takeover
of fifth as well.
Speaker 4 (33:01):
Yeah, I mean so interesting how at one point Tesla
was doing the same thing. Companies did have bitcoin on
the balance sheet, but really it was only Microstructurgy that
stayed committed. Now we have Mara doing the same thing.
What's interesting is we did hear from Kathie Wood saying
praising a new regime under the administration. She's pretty long
(33:22):
digital asset classes. But where else does she see positivity?
Speaker 11 (33:26):
He sees a lot of positivity, not only in crypto,
but also in fintech companies and m and a all
of that. Really all of the things that were clamped
down under this administration. Remember a lot of the CFTC
also banned a lot of acquisitions in the tech space.
So she just sees more loose regulations, softer regulations on
the space. And when it comes to bitcoin, it's not
(33:46):
just Marathon Mara Holdings or even micro Strategy acquiring bitcoin
for the US government potentially being a whale. There's a
bill that if it's passed, will require a fed to
sell some of their goal and buy bitcoin. So that's
good news for the space, but of course it will
create risks like price volatility in the run up to
that gold price might think bitcoin might rise, and of
course whoever holds what will kind of suffer or celebrate.
(34:09):
But there's really a lot of things happening in this space.
But it's interesting because now a lot of companies on
more bitcoin than others.
Speaker 4 (34:16):
It's a bali or thanks crypto, We appreciate it. Look,
crypto regulation is looming over law makers in Washington, but
it's not the only tech policy facing uncertainty. Of course,
the future of TikTok in the United States is also
up in the air, as well as impacts of President
elect Trump's threats to impost weeping tarifs, most significantly on
Chinese goods. Mitchell Green's with us founder and managing partner
and need Edge Capital, key investor in byte Dance. You've
(34:37):
been building up that investment in the secondary market, Mitchell,
and I just want to understand how much of a
weight you think US China is on it.
Speaker 12 (34:46):
Thanks Carolin for having me, and how much weight do
I think it is?
Speaker 13 (34:51):
So for us?
Speaker 12 (34:52):
We actually in our base case, assume that we have
assumed that the US business would have actually not account
for anything, and we thought it would be banned. What
you see Trump saying is looks like it may head
another way. You know, what people say and do in
Washington on both sides are two very different things. Who knows,
(35:16):
you know, I think I can't imagine the first thing
Donald Trump wants to do though, is being TikTok, especially
when a lot of his big supporters like inn Elon Mosk,
who I think is you know, probably an ads with
Mark Zuckerberg, who would be the one to benefit off
of a you know, being a TikTok band, or like
a Joe Rogan who's a huge supporter on TikTok, Right,
(35:39):
I love, I think it's pretty positive for TikTok to
have Trump in office.
Speaker 4 (35:44):
Meanwhile, Mark Zuckerberg, we understand, has been dining with Trump
over in mar A Lago last week, so maybe real
music changes there. But I'm I'm interested more broadly on
just spell out TikTok and how integral it is too
broad a bite dance investment choices of yours.
Speaker 12 (36:01):
Yes, so the Chinese business, you know, the you know,
it's been it's been rumored and reported in the press
that you know, the North American version of TikTok is
a single digit percentage of the business. It is not
a very It is not a giant part of the business.
I think it is a part of the business where
a lot of investors or potential investors in it see
(36:25):
a huge amount of opportunity. You know, I believe that
TikTok is the biggest existential threat to a business like
Facebook or you know, Instagram inside Facebook or Snapchat. I mean,
just go ask millennials in America what they use or
if you know your own kids, or just look at
their usage patterns and look at the data around like
(36:45):
daily active users and how much time has spent on
all these different apps. And TikTok is a real player.
But I can assure you Mark Zuckerberg would love to
have a band. It would be great for his business.
Speaker 4 (36:55):
But Mitchell, your expertise is so great on the show
because you led or co led some significant investments like
buy Dance, but also like Ali Barba, you're someone who
understands the consumer of China where technology is going there.
Speaker 3 (37:09):
How much harder has your life become.
Speaker 4 (37:11):
To access these sorts of deals on secondary market, for example,
to be long China investments.
Speaker 12 (37:18):
It's not very popular at the moment. We'll put it
that way, although some of the greatest investors I know say,
if you do you know, if ninety nine percent of
investors are doing, If you want to know where public
markets are doing, ask the ten smartest hedge fund investors.
And when all of them tell you one, when nine
of them tell you one thing and one tells you
the other, you know, do what the one does and
you'll probably make a lot of money. It is sure
(37:38):
now of consensus trade at the moment. Buy in China.
Speaker 3 (37:42):
But it is cheap.
Speaker 12 (37:43):
I mean, we can buy byte Dance, and we've been
buying byte Dance, you know, sub five times earnings for
a business you know, growing you know, much faster than Facebook.
So we think it's really cheap and that the risk
adjusted reward is quite attractive. And in our base case
model we model the business is zero. Look, we might
get we might get lucky. The Trump may not ban it, yeah,
(38:06):
you may. You know, the Chinese economy made start to
recover some and on any start of the imagination looking
at public Chinese comps today in the internet space. If
you look at Tencent or Ali Baba or Sea Trip,
these things trade that you know, substantially hire multiples in
five times earning. So not only are we potentially going
to get earnings growth, we're also going to get multiple
(38:27):
expansion and MOONI exit. But I can't tell you when
the company is going public, and I don't think nor
can anybody else, but tailwinds. Whereas the US political environment
six months ago. Look, look it was going to be
a huge headwind. It might become a tailwind, but you know,
time will tell.
Speaker 4 (38:44):
Mitchell Green found a managing partner of lead Edge Capital.
You like people on with contrarian ideas. This gets today's
screen Time letter bloom Meggs Lucashaw writing over the weekend
about how he's uncovered financial details about Lebron James's media
(39:06):
company that reveal quite a bit about the current state
of Hollywood. Because joins us, Now, you were pulled off
the bench from sitting and consuming content and hanging out
with family to write the newsletter, because what twenty eight
million being lost? This is a company that's valued well
in the heyday, very high.
Speaker 13 (39:22):
Yeah, well, they benefited from the streaming boom that happened, right,
You add all these companies that were making shows for
Netflix and Amazon and Disney and others, and those in
particular affiliated with famous people. Reese Witherspoon's company, Lebron James's
company raised money at valuations that really, in retrospect, made
no sense. I mean, Lebron's company got a valuation of
(39:43):
more than seven hundred million dollars when its revenue was
high seventy millions, and it lost millions of dollars. And
you know, they ended up having to pay for it
in the end because the market crashed a little bit,
and people are looking at these companies differently.
Speaker 4 (39:57):
They're managing to well get lemon out of Lemons with
a merger with full Well seventy three.
Speaker 3 (40:02):
Is that going to be Lemonade? What does that deal
look like?
Speaker 13 (40:04):
Well, look, the deal does give them more scale, and
I think that will benefit them at a time where
these companies that they're competing with are giant cutting back.
It also gives them some complimentary expertises. You know, the
Lebron's company is very good at unscripted. Full Well is
also good at unscripted, but does more live events. Lebrons
has a big branding company. I do think it's probably
squishing together to challenge businesses to try to solve a problem.
(40:28):
Sometimes that works, sometimes it doesn't.
Speaker 4 (40:30):
I mean, you talk a lot about Maverick Carter, who's
kind of the guy who's running the business on the
daily basis, and he smart things around, not building it
within Lebron James, but sort of all around Lebron.
Speaker 3 (40:42):
It's sort of like he's been the expert in the building.
Speaker 4 (40:44):
Meanwhile, everyone's trying to work out where content does work.
Speaker 3 (40:47):
Clearly it's working in the theaters right now.
Speaker 4 (40:49):
I mean Wicked and Gladiator or Moana too, seems to
be one everyone's excited about.
Speaker 13 (40:55):
Yeah, huge weekend at the box office, I mean Moan
or two, setting records the big animated or biggest Thanksgiving
opening ever, one of the biggest animated openings ever, I believe,
the biggest opening of the year, most close to four
hundred million dollars worldwide. Is just insane. And then the
you know, the good news for movie theaters. The good
news for Hollywood is that you had two other movies
out in Wicked and the sequel to Gladiator that people
(41:18):
were very excited about. I mean, the stat that blew
my mind was that seventy five percent of showtimes this
past weekend were for those three movies.
Speaker 3 (41:26):
Wow, and as kind of everyone's catered for in this scenario.
Speaker 4 (41:29):
Kids are catered for male women no matter what you're.
Speaker 13 (41:33):
Across demographics and reaction, You've got singing, You've yeah, you've
got a little bit of everything for everyone.
Speaker 4 (41:39):
But the money being made, I mean Gladiator and Wicked,
I can't imagine prediction cheap to make.
Speaker 3 (41:44):
They have to make some money.
Speaker 13 (41:45):
Yeah, Gladiator very expensive. I think they have owned two
hundred and fifty million dollars to produce. Some people say
it's more that's the one that will be the hardest
to make money on because it's probably going to top out,
you know, five hundred maybe six hundred million worldwide. Wicked,
I think maybe one p fifty one seventy five. It
will make enough to make money, and then Mwan is
going to make a fortune for.
Speaker 3 (42:04):
Disney As and all the merch. I'm already going to
hit with that. Bloomberg's Lucas Shaw, we love it. Thank you.
That does it for this edition of Bloomberg Technology. Do
not forget to check out our podcast.
Speaker 4 (42:14):
Find it on the terminal, as well as online on Apple, Spotify,
and iHeart this is a Bloomberg
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