TSMC's US Grants and JPMorgan's CEO on AI | Bloomberg Technology
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE, IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I AM CAROLINE HYDE AT BLOOMBERG'S WORLD HEADQUARTERS IN NEW YORK. ED LUDLOW IS OFF. THE U.S. AWARDS TSMC $11.6 BILLION IN GRANTS AND LOANS IN ORDER TO BOOST A MYSTIC SEMICONDUCTOR MANUFACTURING. WHAT THE MOVE MEANS FOR U.S. CHIP PRODUCTIONS.
AND JPMORGAN CEO LIKENS ARTIFICIAL INTELLIGENCE TO THE INVENTION OF THE STEAM ENGINE. WE WILL DISCUSS HIS VIEWS ON HOW THE TECHNOLOGY IS CHANGING THE WORLD AND HIS FORCE. AND LOU CHECKS ALREADY BACK AT ELON MUSK -- BLUE CHECKS ARE BACK AT ELON MUSK'S X. DETAILS ON THAT AND SO MUCH MORE. WE FOCUS ON THE PUBLIC MARKETS
AS WE LOOK TOWARDS CPI PRINT WEDNESDAY, ALL EYES FOCUSING ON WHAT THE BOND MARKET IS DOING. YIELDS UP THREE BASIS POINTS. THE HIGHEST LEVELS FOR THE ENTIRETY OF THIS YEAR. BUT IT IS NOT PULLING BACK ON ANY SORT OF RISK-TAKING IN THE EQUITY MARKET SO FAR. THE NASDAQ STILL PUSHING UP, SO KEEP AND I ON KEY NAMES -- KEEP AN EYE ON KEY NAMES. BITCOIN STILL CHARGING TO NEW HIGHS.
71,756, SO BACK NEAR THOSE ALL-TIME HIGHS. TESLA, BEST PERFORMER ON THE NASDAQ 100, UP 5%. THIS IS A BEATEN UP STOCK, WORST PERFORMER ON THE S&P 500 SO FAR THIS YEAR, TRYING TO SHIFT THE NARRATIVE, MOVE FROM DELIVERIES BEING WEAK AND CHEAPER MODELS AND INSTEAD WANTS US TO FOCUS ON ROBO TAXIS. LOOKING AT AMAZON AND COACHING ON ALL RECORD HIGHS, AT 187 AS A GET MORE DESIRE TO PUSH INTO THIS STOCK PUSHES IT HIGHER. THE KEY STORY OF THE DATE, TSMC, TAIWANESE SEMI CONDUCTOR GIANT, GETTING $11.6 BILLION IN GRANTS AND LOANS TO BE PUTTING ITS THIRD FAB IN PHOENIX, ARIZONA, THE LATEST INFRASTRUCTURE PLATES TO ENSURE WE HAVE DOMESTIC TRIPS MADE HERE IN THE UNITED STATES THAT COULD BE THE UNDERPINNING OF ARTIFICIAL INTELLIGENCE.
THE STOCK UP 2.2 5%. WHAT DOES THAT MEAN ON THE BROADER ECOSYSTEM? -- HOW IMPORTANT IS IT THAT WE GET FOREIGN EXPERTISE INTO THE U.S. TO CONTINUE WITH THE SUPPLY CHAIN THAT HAS PROVEN TO BE BROKEN ON PREVIOUS MINDS OF TWO OR THREE YEARS AGO. >> GOOD MORNING. THE VALUE TO THE U.S. OF HAVING MORE DOMESTIC MANUFACTURING AT THE LEADING EDGE OR CLOSE TO THE LEADING EDGE OF SEMICONDUCTORS IS STRATEGICALLY IMPORTANT. WE ARE ALL LOOKING AT
GEOPOLITICAL INSTABILITIES AND RISKS, PARTICULARLY THE ASIA-PACIFIC, SO THIS BUILDS ON TAIWAN SEMI'S ABILITY TO SPREAD THEIR MANUFACTURING AROUND THE WORLD. THEY ALREADY HAVE ANNOUNCED PLANS FOR JAPAN AND GERMANY. THEY HAVE OPERATIONS IN THE U.S., BUT REALLY LIMITED. THIS WILL BRING TO THE U.S. A SIGNIFICANT PORTION OF SOME MANUFACTURING CLOSE TO THE LEADING EDGE BY THE TIME IT IS DONE. THAT WILL HELP STABILIZE THINGS.
IT WILL ALSO THE RISK TAIWANESE SEMI CONDUCTORS A BIT FOR INVESTORS. CAROLINE: WHAT IS INTERESTING IS OTHER COMPANIES, ONE CUP -- WHEN WANTING TO COME INTO THE U.S., HAVE FORMED A LIMITATION ON LABOR. WE HAVE THE RIGHT JOINED UP APPROACH HERE -- DO WE HAVE THE RIGHT JOINED UP APPROACH HERE? JOANNE: WHEN I WAS WORKING AT ALBANY NOW TACKED AS PART OF THE TEAM TO BRING PEOPLE TO UPSTATE NEW YORK, WE HAD TO INVEST IN THE LOCAL INFRASTRUCTURE, NOT JUST LABOR, BUT ALSO MACHINE SHOPS AND OTHER SUPPORT TO A FABRICATION FACILITY. INTEL IS GOING TO FACE THOSE CHALLENGES IN OHIO.
TAIWAN SEMI AT LEAST ALREADY HAS PLENTY OF OPERATIONS IN PHOENIX, AND THEY WILL HAVE TO DO MORE, SO TRAINING PROGRAMS IN CONDUCTION WITH TECHNICAL AND COMMUNITY COLLEGES HELP TO CREATE THAT. FORTUNATELY, CHIP MANUFACTURING PLANTS AND THAT BEING -- THESE SUBSIDIES ARE NOT REALLY ABOUT CREATING JOBS. PROBABLY MOST OF THE JOBS ARE IN THE CONSTRUCTION OF THE PLANT ITSELF PIER 1'S THE PLANT IS UP AND RUNNING, MAYBE 1000 OR SO PEOPLE. IT IS NOT A HUGE NUMBER. WE DO HAVE GREAT ENGINEERING SCHOOLS IN THIS COUNTRY, AND ONCE THE JOB OPPORTUNITIES ARE THERE, YOU TEND TO SEE MORE KIDS FLOW INTO THOSE PROGRAMS.
PLUS, ADD IN CUSTOMIZED TRAINING PROGRAMS FROM THE COMPANIES. CAROLINE: SO ANY THINK OF TSMC BEING ONE MAKING THE MOST OF SUBSIDIES, LOAN GRANTS, SO, TOO, IS INTEL. HOW MUCH DO YOU THINK THIS MONEY WILL FILTER INTO FOREIGN ENTITIES OR MORE LOCAL U.S. PRESENCE? JOANNE: THE LEADING EDGE IN MANUFACTURING, UNFORTUNATELY, FOR U.S. COMPANIES HAS BEEN TAKEN OVER BY TAIWAN SEMI AND SAMSUNG. INTEL MADE SOME MISTAKES IN THEIR PLANNING FOR MANUFACTURING DESIGN. THEY CHOSE A PATH THAT
ULTIMATELY DID NOT WORK OUT VERY WELL. NOW, PAT GELSINGER IS TRYING TO SHIFT THAT PATH TO THE MORE MODERN ALTERNATIVE. IT WILL TAKE YEARS AND BE MORE COSTLY. IN TERMS OF THE U.S. STRATEGIC GOAL OF GRADING MORE SUPPLY OF CHIP MANUFACTURING IN THIS COUNTRY, WE HAVE NO CHOICE BUT TO INCLUDE FOREIGN COMPANIES LIKE TAIWAN SEMI AND SAMSUNG. WE WILL SEE ULTIMATELY IF INTEL
IS SUCCESSFUL IN BRINGING THEIR MANUFACTURING UP TO SNUFF, BUT RIGHT NOW, THEY ARE TRAILING EDGE. CAROLINE: MOVING ON, ULTIMATELY WHETHER IT TAKES RISK OUT FOR THE INVESTORS, DOES IT REALLY TAKE THE RISK OUT OF SUPPLY CHAIN CONCERNS GOING INTO THE NEXT 10, 20 YEARS THAT WE HAVE SEEN THAT HIT SO HARD DURING COVID? JOANNE: NO. I THINK YOU ASKED THAT QUESTION DELIBERATELY TO GET A "NO" ANSWER. THERE'S JUST A GLOBAL INTEGRATION OF MANUFACTURING, NOT JUST IN CHIPS, BUT AS WE SAW DURING COVID, ALSO IN PROTECTIVE CLOTHING AND DEVICES. WE DON'T EVER REALLY WANT TO UNDO THAT. WE VALUE, INCREDIBLY, AND BENEFIT INCREDIBLY FROM TRADE AND HAVING COUNTRIES SPECIALIZE IN MANUFACTURING THE THINGS THAT THEIR COMPARATIVE ADVANTAGE FAVORS.
AND WE GET CHEAPER GOODS BECAUSE OF IT. CONSUMERS BENEFIT AROUND THE WORLD BECAUSE OF THAT SEPARATION OF PRODUCTION BY SPECIALTY. SO WE DO NOT EVER WANT TO UNDO TRADE FORCE, BUT WE WANT TO SHORE UP ECONOMIC AND POLITICS TO KEEP DISRUPTIONS AS -- TO SUPPLY CHAINS AS LOW AS WE CAN. EVENTUALLY, ANOTHER PANDEMIC COMES ON AND WE WILL HAVE PROBLEMS, SO WE WILL HAVE TO ONSHORE MORE CRITICAL PRODUCTION OF ITEMS. CAROLINE: WHAT IS INTERESTING IS CHIP EQUIPMENT MAKERS ARE ANOTHER KEY PLAYERS THAT BENEFIT FROM THE GRANTS AND LOANS AND SUBSIDIES THE U.S. GOVERNMENT CURRENTLY HAS.
ANY OF THE KEY PLAYERS THAT CURRENTLY COME TO MIND? -- ANY OTHER KEY PLAYERS THAT CURRENTLY COME TO MIND? JOANNE: THE -- FOUR APPLIED CHEERIOS, ASML, KLA, ALL THE CHIP GUYS, AND ALL THE SMALLER EQUIPMENT SUPPLIERS. THERE IS A LOT OF BENEFICIARIES. THIS IS A VERY LARGE INDUSTRY. IT IS PRETTY BROAD. ALSO, THE COMPANIES THAT USE THESE MANUFACTURERS, NVIDIA, AMD, APPLE, THEY ALL BENEFIT BY HAVING A SOURCE OF SUPPLY THAT IS MORE GLOBALLY DIVERSIFIED AND, THEREFORE, LESS SUBJECT TO GEOPOLITICAL RISKS. CAROLINE: WE ALWAYS LOVE HAVING YOUR PERSPECTIVES. JOANNE FEENEY OF ADVISORS
CAPITAL MANAGEMENT, THANK YOU SO MUCH FOR JOINING THIS MONDAY. COMING UP, WE HAVE BEEN BREAKING DOWN JIMMY DOWNING -- JAMIE DIMON'S ANNUAL LETTER TO SHAREHOLDERS AS HE DISCUSSES ARTIFICIAL INTELLIGENCE. MEANWHILE, WAREHOUSE A REAL LOCKUP ON IT FOR SECTOR PLAYS? THIS JAPANESE NAME, TOWA, IS AT 400% OF LATE, BECAUSE IT REALLY DOES DEFINE EQUIPMENT MAKING, HOW YOU ENSURE YOU HAVE THE CHIPS. TOWA A KEY JAPANESE NAME. FROM NEW YORK, THIS IS
"BLOOMBERG TECHNOLOGY." CAROLINE: JAMIE DIMON'S ANNUAL LETTER TO SHAREHOLDERS OUT, AND GUESS WHAT THE FOCUS IS? ARTIFICIAL INTELLIGENCE. WHY HE IS ONCE AGAIN CALLING IT OUT IN HIS LETTER WITH SONALI BASAK.
2019 WAS THE FIRST TIME HE MENTIONED ARTIFICIAL INTELLIGENCE IN HIS LETTER, BUT THIS TIME, IT IS THE KEY DRIVER. SONALI: IT IS THE SCALE AND SCOPE IN WHICH HE MENTIONS IT THAT IS DIFFERENT. WE KNOW JPMORGAN HAS INVESTED A LOT OF MONEY IN THIS. WHAT IS DIFFERENT THIS TIME AROUND? THE SCALE AT WHICH THEY ARE USING IT.
USE CASES HAVE JUMPED FROM ABOUT 300 A YEAR AGO TO ABOUT 400 NOW. IMPORTANTLY, THE NUMBER OF DATA SCIENTISTS AND MACHINE LEARNING EXPERTS HAVE ALSO BEEN RISING AT JPMORGAN. INTERESTINGLY ENOUGH, LAST YEAR WHEN HE MENTIONED ARTIFICIAL INTELLIGENCE, IT WAS ONE OF THE SPECIFIC ISSUES, BUT IT WAS STILL BEHIND CLIMATE. THIS TIME, HE LISTED AS THE FIRST AND FOREMOST ISSUE FOR J.P. MORGAN AHEAD. CAROLINE:
TO PUT FINER DETAIL ON IT, WHAT WAS IT, 2000 MACHINE LEARNING EXPERTS THEY HIRED, AND AN ADMISSION THAT THE TALENT POOL WILL HAVE TO CHANGE. HE IS WILLING TO SAY THERE HAVE TO BE JOBS LOST. SONALI: AND THE ONES NOT LOST HAVE TO BE RETRAINED. IN ADDITION TO THE JOBS, THE
INVESTMENT BEING MADE IS ALSO VERY INTERESTING. THEY INVESTED ABOUT $2 BILLION TO BUILD NEW DATA CENTERS, AND HE SEES THIS MOVEMENT TO THE CLOUD AS INEXTRICABLY LINKED TO THE AI REVOLUTION, IF YOU WILL, AND HAS SAID THIS MOVEMENT TOWARDS AI IN SOCIETY AT LARGE IS AS REVOLUTIONARY AS THE STEAM ENGINE OR THE ADVENT OF THE INTERNET. SO DATA CENTERS ARE REALLY INTERESTING FOR J.P. MORGAN.
ABOUT 30% LAST YEAR OF THEIR APPLICATIONS HAD MOVED TO THE CLOUD. BY THE END OF THIS YEAR, IT WILL BE 70%. THAT TRANSFORMATION IS DRASTIC WHEN YOU LOOK AT A YEAR-OVER-YEAR CHANGE. CAROLINE: WE LIKE TO FOCUS ON THE FACT JAMIE DIMON HAS BEEN THERE SAYING YOUR KIDS WILL ONLY HAVE THREE AND A HALF WORKWEEKS, THEY WILL HAVE CANCER FREE BECAUSE OF THIS AI TECHNOLOGY, BUT HE DOES GO INTO CLOUD AND TECHNOLOGY MORE BROADLY. SONALI: HE DOES. IT IS SPLATTERED THROUGHOUT THE ENTIRETY OF THE LETTER.
INTERESTINGLY AS WELL, HE TALKS ABOUT THIS YEAR-OVER-YEAR, BUT THE COMPETITIVE SET NOT JUST FROM FINTECH BUT THE LIKES OF APPLE, AND THE LANGUAGE GETS MORE PRONOUNCED AS YOU GO ON. WHEREAS LAST YEAR HE BRINGS UP APPLE PAY, APPLE CARD, CERTAIN SERVICES, THIS YEAR HE SAYS IT HOLDS MONEY, LENDS MONEY, MOVES MONEY, AND EFFECTIVELY ASKED -- ACTS AS A BIG AND BRINGS US UP IN THE PLAY OF REGULATION. IT UNDERSCORES HIS INTENSITY TO NOT ONLY KEEP UP BUT CHANGED J.P. MORGAN AS WE LOOK AHEAD. CAROLINE: AND MAYBE YOU WOULD SAY THE CLOSE RUNNER TO HIS TALK ABOUT TECHNOLOGY IS HIS LESS THAN GUARDED APPROACH TO REGULATORS THROUGHOUT THE ENTIRETY OF THE LETTER. SONALI BASAK ALWAYS ABLE TO JUMP UP WITH US. WE THINK HER FOR IT. ARTIFICIAL INTELLIGENCE DOMINATING THE MARKETS -- WE HAVE SEEN MARKETS NEAR RECORD HIGHS, WHETHER THE S&P 500, THE NASDAQ. ARE YOU ANTICIPATING THAT
REMAINS THE CASE, EVEN AS WE WORRY ABOUT THE CPI PRINT, FOR EXAMPLE, IN THE U.S.? >> THANKS FOR HAVING ME. WE BELIEVE THAT THIS EQUITY BULL MARKET, LED BY ARTIFICIAL INTELLIGENCE, WILL CONTINUE, EVEN THOUGH THERE MAY BE BUMPY INFLATION DATA TODAY.
WE HAVE ALREADY SEEN HOW IT HAS PERFORMED. I THINK THEY ARE MORE -- AS LONG AS INFLATION IS NOT OUTRAGEOUS, THERE IS NO SHOCK, AS LONG AS BOND YIELDS ARE BEING STABILIZED, THE MARKET RALLY CAN CONTINUE. CAROLINE: DOES IT BROADEN? THERE IS AN INTERESTING PIECE SHOWING WALL STREET, AT THE MOMENT, TRYING TO FIND A DIFFERENT WAY OF PLAYING THE AI OPTIMISM. YES, YOU ALREADY PUT YOUR MONEY INTO NVIDIA, BUT WHAT ABOUT SOME OF THE EMERGING MARKET PLAYERS? WHAT ABOUT THE INFECTED TO BE HAD ELSEWHERE? WE JUST SHOWED A JAPANESE NAME, TOWA, THE HAS DONE PARTICULARLY WELL. JANET: ABSOLUTELY. WE FAVOR A BASKET OF EXPOSURE TO SEMI CONDUCTOR EQUIPMENT MAKERS, RELATED NAMES. NVIDIA WOULD BE THE DOMINANT PLAYER, BUT EQUALLY, WE THINK THERE ARE PLENTY OF OPPORTUNITIES ACROSS THE ENTIRE SEMICONDUCTOR VALUE CHAINS.
SOME OF THE OTHER PLAYERS, FOR EXAMPLE, IN MEMORY, IN INFRASTRUCTURE, IN INTELLECTUAL PROPERTY, THEY MAY NOT YET HAVE THE RECOGNITION OR SIGNIFICANT RALLY LIKE NVIDIA, BUT THERE ARE PLENTY OF OPPORTUNITIES. WE FEEL THAT IT IS A GOOD WAY TO PLAY AN EQUAL BASKET OF STOCKS EXPOSED TO THAT, RATHER THAN JUST A FEW SELECTION STOCKS. CAROLINE: IT IS INTERESTING. YOU MENTIONED NVIDIA. SOME OF THE RISK AMID THE EXUBERANCE WITH THAT NAME HAS BEEN ITS RELATIONSHIP TO CHINA, THE FACT THAT ULTIMATELY IT DEPENDS ON CHINA FOR ITS MARKET AND MANUFACTURING. HOW MUCH DO YOU THINK CLINICAL HEADWINDS ARE SOMETHING WE NEED TO CONSIDER IN THE SECOND HALF OF THE YEAR? JANET: YOU ALWAYS NEED TO CONSIDER GEOPOLITICAL FACTORS, BUT I DO THINK, IN THAT CASE, U.S.
STOCKS ARE LIKELY TO OUTPERFORM, IF YOU TALK ABOUT AI STOCKS, FOR INSTANCE. AS WE HAVE ALL SEEN ALREADY, THERE ARE PLENTY OF SUBSIDIES, LOANS, AND GRANTS FOR COMPANIES TO PRODUCE IN AMERICA. SO THE ENTIRE VALUE CHAIN, THEY SHIP MORE MORE TO AMERICA, SO I THINK THE AMERICAN COMPANIES MAY BE LESS IMPACTED BY THESE GEOPOLITICAL RISKS. OBVIOUSLY, THE CHINA PLAY, WE ARE NOT VERY INTO THAT, AND THERE COULD BE RISK IF THERE ARE MORE TRADE AND GEOPOLITICAL TENSIONS. I DO THINK AMERICAN STOCKS WILL BE BETTER IN THESE INCIDENTS. CAROLINE: JANET MUI, WE THINK BEFORE THE GLOBAL PERSPECTIVE. WE HAVE A CONVERSATION ON
CYBERSECURITY WITH A FORMER CHIEF OF STAFF OF CISA, KIERSTEN TODT. THAT IS UP NEXT. THIS IS "BLOOMBERG TECHNOLOGY." ♪ CAROLINE: TIME NOW FOR TALKING TECH.
FIRST UP, PATTY CROSS GROVE RETURNING TO THE WEB SUMMIT TECH CONFERENCE. THE MOVE COMES AFTER HE RESIGNED IN OCTOBER OF LAST YEAR AFTER HE MADE A POLITICAL STATEMENT ON THE CONFLICT BETWEEN ISRAEL AND HAMAS. COSGROVE THE COFOUNDER CONFIRMED THE NEWS ON X HE IS RETURNING AS CEO. AND ALIBABA IS SLASHING CLOUD
PRICES. THE MOVE COMES AMID A SURGE IN DEMAND FOR CLOUD TO SUPPORT THE GLOBAL BOOM IN AI DEVELOPMENT AS WELL AS COMPLICATED INTERNAL RESTRUCTURING. SOME KEY LAWMAKERS STRUCK A DEAL ON NATIONAL DATA PRIVACY. THE LANDMARK AGREEMENT REACHED BY THE HOUSE ENERGY AND COMMERCE CHAIR AND THE SENATE COMMERCE CHAIR WOULD BE THE FIRST TIME ESTABLISHED FEDERAL CONSUMER DATA PRIVACY RIGHTS WOULD BE FORMED AND WOULD ALLOW AMERICANS TO SUE COMPANY SUCH AS GOOGLE AND META OVER VIOLATIONS. MEANWHILE, THE DEPARTMENT OF HOMELAND SECURITY IS OUT WITH A REPORT ON MICROSOFT THAT WAS PRETTY DAMNING.
IT ASSESSED A MICROSOFT EXCHANGE ONLINE INTRUSION. LET'S DIG INTO WHAT THAT REPORT SHOWED, THE LIMITATIONS, AND OVERALL THE CYBERSECURITY SPACE AS IT SITS NOW. FORMER CYBERSECURITY AND INFRASTRUCTURE SECURITY AGENCY CHIEF OF STAFF KIERSTEN TODT JOINS US NOW. WE DO NOT WANT TO OVERLOOK THIS. IT CAME AT THE BEGINNING OF LAST WEEK, BUT IT ALMOST HIGHLIGHTED 101 CYBERSECURITY ETIQUETTE THAT SEEMED TO HAVE FAILED AT MICROSOFT. CAN YOU DETAIL A BIT ABOUT WHAT YOU THOUGHT ABOUT THE REPORT? KIERSTEN: SO THE CYBER SAFETY REVIEW BOARD, IT WAS LAUNCHED IN 2020 ONE AND EXECUTED IN 2022.
THIS WAS THE THIRD INVESTIGATION CONDUCTED. LAST AUGUST, THE SECRETARY OF HOMELAND SECURITY SAID THE REVIEW BOARD WAS GOING TO LOOK INTO THIS INTRUSION THAT OCCURRED IN MAY AND JUNE. WHAT IT FOUND MOST PACIFIC LAY WAS IN THE INTRUSION WAS PREVENTABLE AND SHOULD HAVE NEVER OCCURRED. THE INTRUSION ITSELF HACKED INTO THE EL SYSTEMS OF OVER 500 INDIVIDUALS IN 22 ORGANIZATIONS, BUT SPECIFICALLY, IT HACKED INTO THE EMAIL OF THE U.S. SECRETARY OF COMMERCE, GINA
RAIMONDO, AND THE U.S. AMBASSADOR TO CHINA, NICK BURNS, PRIOR TO A VISIT TO CHINA. WHAT THE REVIEW BOARD ATTRIBUTED THIS BREACH, THAT SHOULD HAVE BEEN PREVENTABLE, TO WAS THE FACT IT IDENTIFIED MICROSOFT AS HAVING POOR SECURITY PROCESSES, A LACK OF TRANSPARENCY INTO THE BREACH, AND A LAX CORPORATE CULTURE WHEN IT COMES TO CYBERSECURITY. CAROLINE: AND WE HAVE GOT TO REMEMBER THE FRUSTRATIONS GINA RAIMONDO SHOWED, PARTICULARLY IN THE TRIP TO CHINA AND WHAT WAS ULTIMATELY -- THE HUAWEI PHONE SUDDENLY PRESENTED AND EVERYONE REALIZING PERHAPS SOME OF THE LIMITATIONS ON TECH FROM U.S. TO CHINA PERHAPS IS NOT DOING THE JOB MANY HAD THOUGHT. I AM INTERESTED IN THE THREAT ACT KNOWN AS STORM 0058. HOW MUCH SHOULD MICROSOFT HAVE
BEEN ABLE TO PREVENT ALL OF THIS, OR HOW MANY OTHER RISKS ARE THEY OVERCOMING ON A DAY-TO-DAY BASIS? WE ARE SHOUTING OUT ONE PARTICULAR FAILING, BUT HOW DETERMINED ARE THEY TO ACHIEVE WHAT THEY WANT TO DO? KIERSTEN: THIS IS THE BIG CONCERN, BECAUSE WE CONTINUE TO SEE THESE TYPES OF JUST HAPPENING FROM MICROSOFT VULNERABILITIES. I HAVE A FORMER COLLEAGUE AT CISA THAT TALKS ABOUT THE FACT WE CALL IT VULNERABILITIES, BUT THEY ARE DEFECTS. THESE VULNERABILITIES OF INFRASTRUCTURE INCREASES. THIS IS A NATIONAL SECURITY RISK, BECAUSE MACRO SOFT IS UBIQUITOUS ACROSS THE FEDERAL GOVERNMENT -- MICROSOFT IS UBIQUITOUS ACROSS THE FEDERAL GOVERNMENT. IT IS ONE OF THE LARGEST TECHNOLOGY PLAYS IN THE WORLD, BUT IMPORTANTLY, THE U.S. FEDERAL GOVERNMENT HAS ITS ESSENTIAL SERVICES UNDERPINNED BY MICROSOFT TECHNOLOGY.
THESE ARE THE SERVICES THAT SUPPORT NATIONAL SECURITY. WHEN THERE ARE VULNERABLE HE'S IN THE MICROSOFT SYSTEM, THAT TRANSLATES ONTO OUR NATIONAL SECURITY SAFETY. CAROLINE: ARE THEY MUCH WORSE THAN OTHERS? KIERSTEN: WHAT WAS INTERESTING ABOUT THIS REPORT WAS, EARLY ON, WHEN THE INVESTIGATION INITIATED, MICROSOFT SAID LET'S MAKE THIS A CLOUD SERVICE PROVIDER INVESTIGATION. THE REPORT DID THAT, AND IT TALKED ABOUT THE OTHER COMPANIES, AMAZON, GOOGLE, ORACLE, ALL HAVING BETTER SECURITY PRACTICES. THE KEY PIECE IS THIS IS NOT NECESSARILY A COMMERCIAL COMPETITIVENESS ISSUE, OTHER THAN GOVERNMENT LOOKING AT OPTIONS, BUT IN THE NEAR TERM, THIS IS A NATIONAL SECURITY ISSUE, BECAUSE WE HAVE GOT TO BE PAYING ATTENTION TO THE RESILIENCE, SAFETY, AND SECURITY OF OUR INFRASTRUCTURE, WHICH IS UNDERPINNED BY TECHNOLOGY CREATED IN THE PRIVATE SECTOR. ONE OF THE MOST TELLING PIECES WAS, LAST OCTOBER, THE DIRECTORS OF INTELLIGENCE FROM THE FIVE EYES CAME TOGETHER IN SILICON VALLEY IN AN UNPRECEDENTED MEETING TO MEET WITH THE CEOS OF THOSE TECHNOLOGY COMPANIES TO SAY WE HAVE A REAL THREAT FROM CHINA, AND YOU MAY NOT HAVE BUILT YOUR COMPANY AS A NATIONAL SECURITY COMPANY, BUT YOUR TECHNOLOGY IS NOW PART OF THE NATIONAL SECURITY OF THIS COUNTRY.
CAROLINE: KIERSTEN TODT, IT IS SO GREAT TO GET YOUR EXPERTISE ON THIS. THANK YOU FOR REMINDING US WHY IT IS SO CRUCIAL. COMING UP, X MAKES A U-TURN ON A VERIFICATION AS IT RULES OUT PREMIUM FEATURES FOR FREE TO POPULAR USERS. DETAILS OF THAT TECH COME NEXT. MEANWHILE, LET'S LOOK AT THE REST OF THE COMPANIES DOMINATED BY ELON MUSK. CURRENTLY UP SOME 6% ON TESLA. IT IS POISED TO RECOVER ITS TOP POSITION AT CATHIE WOOD'S MAIN FUND AS IT HAS BEEN BUYING THE DIP IN THE SHARES OF THE ELECTRIC CARMAKER. 5.8% AS THEY START TO
ARTICULATE A VISION FOR ROBOTAXIS, ONE OF THE KEY REASONS ARC HAS BEEN SO LONG >> APPLE HAS ANOTHER NEW NEXT BIG THING UNDER EXPLORATION -- HOME ROBOTS. THE COMPANY HAS TEAMS WITHIN ITS AI AND HARDWARE ENGINEERING ORGANIZATIONS EXPLORING THE FEASIBILITY OF EARNING ROBOTICS -DRIVEN DEVICES TO MARKET. THE COMPANY IS TESTING A TABLETOP DEVICE THAT USES A ROBOTIC ARM TO MOVE AROUND AND IPAD DISPLAY. FOR INSTANCE, IF THE USER IS ON A FACETIME CALL, THE SCREEN CAN MOVE TO MIMIC THE HEAD MOVEMENTS, LIKE A NOD OR TURN OF THE HEAD AS THE PERSON ON THE OTHER END OF THE CALL.
THE MORE INTERESTING PRODUCT IS A HOME ROBOT SIMILAR TO THE AMAZON ASTRO THAT CAN FOLLOW A USER AROUND THE HOME. SOME IDEAS FOR THAT INCLUDE VIDEOCONFERENCING AS WELL AS A PIE-IN-THE-SKY AMBITION FOR THE ROBOT TO BE ABLE TO CONDUCT HOUSEHOLD CHORES, SUCH AS CLEANING DISHES BEFORE THEY GO INTO A DISHWASHER. ANY RELEASES PROBABLY MANY YEARS AWAY, IF IT HAPPENS AT ALL. I'M MARK GURMAN. THIS IS BLOOMBERG. CAROLINE: LET'S GET A CHECK IN ON THESE MARKETS. OVERALL, EQUITY MARKETS MANAGING TO DRIFT HIGHER. MASTEC 100 UP 0.1%. THAT MIGHT BE IN THE FACE OF
BORROWING COSTS THAT CONTINUE TO RISE ON THE BOND MARKET. TWO YEAR YIELDS UP ANOTHER BASIS POINT. THE 10 YEAR YIELD UP AT THE HIGHEST SINCE NOVEMBER OF LAST YEAR. WHY? WORRY ABOUT INFLATIONARY PRESSURE. WE WILL GET MORE DATA WEDNESDAY, THE CBR PRINT. -- THE CPI PRINT. BITCOIN, UP 3.3% OFF OF RECENT HIGHS.
BUT MANAGING TO RALLY THROUGH THE WEEKEND. MOVING ONTO INDIVIDUAL NAMES WE HAVE BEEN KEEPING A CLOSE EYE ON. TSMC, WE ARE HIGHER ON THE DAY. $11.6 BILLION COMING IN GRANTS AND LOANS FOR THIS PARTICULAR
CHIPMAKER TO BUILD FURTHER FAB UNITS. ALL ABOUT THE SUPPLY CHAIN IN THE UNITED STATES. ASML COULD BE A KEY PLAYER IN THIS AREA AS WELL.
BLOOMBERG OUT WITH A PIECE THAT ASML COULD DO WELL FROM THE CHIPS ACT IN THE UNITED STATES. TESLA, BEST PERFORMER ON THE NASDAQ 100 TODAY, UP MORE THAN 5%. ALL OF THIS AS WE SEE, PERHAPS, FOCUS MORE ORIENTATED ON ROBOTAXIS. ELON MUSK SAYING THE EV MAKER WILL DELIVER ON ITS LONG PROMISED ROBOTAXI ON OCTOBER 8, YEARS AFTER HINTING AT PLANS FOR A DEDICATED ROBOTAXI IN 2019. SHARES OF TESLA WERE RALLYING ON THIS NEWS AFTER THE ANNOUNCEMENT, EVEN AS THE COMPANY HAS RECENTLY BEEN STRUGGLING WITH WEAK SALES, COMPETITION FROM CHEAP CHINESE ELECTRIC VEHICLES, PLENTY OF CONCERNS THAT HAVE PUSHED THE SHARE LOWER THROUGHOUT THE COURSE OF 2024. LET'S SWITCH GEARS AND LOOK AT WHAT ELSE ELON MUSK HAS BEEN FOCUSING OF -- AT OF LATE.
THE BLUE CHECK SYSTEM HAS BEEN RESERVED TO PAID SUBSCRIBERS UNTIL NOW. MUSK RECENTLY DECIDED TO GRANT THE STATUS MARK FOR FREE TO THOSE WITH ENOUGH FOLLOWERS. BECAUSE OF WHAT IT HAS BECOME, SOME QUALIFYING USERS NOW SOUND A LITTLE EMBARRASSED TO HAVE A BLUE CHECKMARK BACK, AND THEY WANT THEIR FOLLOWERS TO KNOW THEY ARE NOT PAYING FOR IT. PLEASE WELCOME BLOOMBERG'S AARON CARR TO THE SHOW.
GIVE US SOME OF THE ANECDOTAL EVIDENCE SOME OF THE PEOPLE HAVE BEEN WORRIED ABOUT. >> IN RECENT DAYS, WE HAVE SEEN A LOT OF THESE HIGH-PROFILE USERS WHO HAD NOT BEEN PAYING TWITTER AND HAD THEIR BLUE CHECK MARK REVOKED SUDDENLY SEEING THE VERIFICATION STATUS OF HERE IN THEIR PROFILES AGAIN SAYING, NUMBER ONE, I DID NOT PAY FOR THIS, AND NUMBER TWO, I WANT TO TURN IT OFF. THERE IS AN OPTION WITHIN THE SETTINGS MENU, SO SOME HIGH-PROFILE PRODUCER OF THE WIRE, DAVID SIMON, HE WAS COMPLAINING, SAYING HE WAS NOT PAYING FOR THIS BLUE CHECK MARK, THAT HE WOULD NEVER, THAT HE DOES NOT SUPPORT ELON.
WHAT THIS SIGNALS IS THE BLUE CHECK MARK HAS GONE FROM BEING A STATUS VERIFICATION TO BEING SOMETHING MORE MEANINGLESS, IF NOT DEVOID OF VALUE, MAYBE OVERLY POLITICIZED. IT MEANS MORE THAN THIS IS YOUR TRUE IDENTITY AND YOUR SOMEONE OF NOTE. IT REALLY HAS HAD THIS SORT OF CONTROVERSY INSTALLED, EMBEDDED IN THAT BLUE CHECK MARK SINCE ELON MUSK TOOK IT OVER 18 MONTHS AGO. CAROLINE: GO BACK TO THE CHANGE OF HEART FOR ELON MUSK HIMSELF. WHAT HAS NOT BEEN WORKING UNDER
THE SYSTEM? AUSTIN: WHEN HE TOOK IT OVER ABOUT A YEAR AND HALF AGO, HE FELT THE PROCESS WAS CORRUPT. IT WAS ESSENTIALLY GIVEN OUT TO CELEBRITIES, POLITICIANS, OTHER NOTABLE FIGURES, BRANDS, AND HE FELT THE PROCESS WAS NONSENSICAL, AS HE DESCRIBED IT. HE FELT IT WAS UNCLEAR WHO COULD GET IT OR WHO COULDN'T. SO HE REVOKED IT EN MASSE FOR A LOT OF VERY FAMOUS PEOPLE, WHICH INVOKED A LOT OF CHAOS, AND THE SYSTEM HE REPLACED IT WITH REQUIRE YOU TO PAY FOR PREMIUM SUBSCRIPTION, AND YOU WOULD GO THROUGH A REVIEW PROCESS TO GET A BLUE CHECKMARK. THE ISSUE WAS ALL THE PEOPLE
WHOSE BLUE CHECKS WERE REMOVED DID NOT REENGAGE WITH THE PLATFORM. THEY SAW IT AS A SIGN OF PROTEST. THEY CRATED SO MUCH CONTENT AND ENGAGEMENT ON THE FORM -- SOMEONE LIKE LEBRON JAMES WAS SAYING, I HAVE TO PAY FOR MY OWN BLUE CHECKMARK NOW? ON THE REVERSE AND, YOU SAW THAT REVERSE END KUMUTHA PEOPLE SUPPORTING ELON MUSK BUYING THE BLUE CHECKMARK. IT BECAME OVERLY POLITICIZED, AND NOW, AGAIN, I AM NOT REALLY SURE WHAT A BLUE CHECKMARK MEANS IF YOU HAVE IT IN YOUR PROFILE. DOES IT SAY YOU ARE WHO YOU SAY YOU ARE OR DO YOU SUPPORT ELON? CAROLINE: LET'S TALK ABOUT FREE SPEECH AND THE GLOBAL ASPECT OF IT. OVER IN BRAZIL, IT SEEMS AS THOUGH THERE IS A PUSH BY CERTAIN JUDGES OVER THERE TO WANT TO CLAMP DOWN ON THE USE OF TWITTER AND X AND CERTAIN VOICES TO BE HEARD ON THE PLATFORM. NOW, ELON MUSK IS SAYING HE IS
LIFTING CERTAIN RESTRICTIONS IN BRAZIL, BASICALLY DEFYING COURT ORDERS OVER THERE. CAN YOU GIVE US WHAT HAS BROUGHT US TO THIS MOMENT? AUSTIN: HE HAS DEFIED A COURT ORDER AND ESSENTIALLY REACTIVATED CERTAIN ACCOUNTS THAT THE COURT HAD ORDERED BANNED. IT IS STILL EARLY IN THE DETAILS. WE DO NOT KNOW WHAT ACCOUNT HAD BEEN REACTIVATED, WE DO NOT KNOW WHY THEY WERE ORDERED BLOCKS, BUT A JUDGE OPENED AN INQUIRY INTO THE -- BLOCKED, BUT A JUDGE OPENED AN INQUIRY INTO THE MATTER. BUT IT REALLY SYMBOLIZES ELON'S SO-CALLED FREE SPEECH SORT OF TEAR IS -- PURISM. HE HAS PRESENTED HIMSELF AS THIS FREE SPEECH ADVOCATE THAT WILL DO ANYTHING TO PROMOTE PRINCIPLES OVER PROFIT, AS HE PUT IT ON X, THAT HE WAS GOING TO REACTIVATE THESE ACCOUNTS FOR THE GOOD OF FREE SPEECH.
HE WOULD EVEN LEAVE BRAZIL, SHUT DOWN THEIR OFFICE, SACRIFICE THEIR REVENUE, IF NEED BE. THAT IS THE BRAND ELON TRIES TO PROJECT. BUT WE HAVE ALSO SEEN MANY HYPOTHETICAL INSTANCES OF THIS IN THE U.S., WHERE HE REMOVED JOURNALISTS WHERE HE DISAGREED WITH THEIR REPORTING. THERE WAS A FAMOUS INSTANCE WHERE ELON, WHEN PEOPLE WERE PROTESTING AND TRYING TO GET AD SUPPORTERS TO BLOCK THEIR SUPPORT OF TWITTER, HE CONSIDERED BANNING THOSE USERS WHO TRIED TO BOYCOTT THE PLATFORM, SO WE HAVE THIS TENSION POINT BETWEEN ELON'S VALUES AND X'S BUSINESS MODEL, WHICH HAS BEEN STRUGGLING TO GENERATE REVENUE SINCE ELON ACQUIRED IT. IT IS A GOOD QUESTION ABOUT WHY HE IS STANDING UP FOR THESE PARTICULAR ACCOUNTS AND WHETHER OR NOT HE WOULD ACTUALLY COMMIT TO THAT AT THE EXPENSE OF X'S REVENUE DOWN THERE. CAROLINE:
PROBABLY LOSE ALL REVENUE IN BRAZIL AND HAVE TO SHUT DOWN OFFICES THERE, AS HE POSTED HIMSELF. AUSTIN CARR, THANKS FOR BRINGING US UP TO SPEED. COMING UP, THE FIGHT OVER DIVERSITY IN CORPORATE AMERICA CONTINUES.
WE WILL DISCUSS ALL OF THIS WITH HELLO ALICE CO-FOUNDER, ELIZABETH GORE. MEANWHILE, LET'S KEEP TRACK ON SOME GLOBALLY TRADED STOCKS RIGHT NOW. ATOS IN FRANCE, A FRENCH I.T. COMPANY, PRETTY EMBATTLED.
IT WILL PRESENT A DEBT RESTRUCTURING PLAN AS THE COMPANY'S TOP SHAREHOLDER WANTS TO ALTER AN ALTERNATIVE RESCUE PLAN. LOOK AT HOW THEY SHARE PRICE RALLIED OVER THE COURSE OF THE EUROPEAN TRADING DAY. THIS IS "BLOOMBERG TECHNOLOGY." THIS IS BLOOMBERG. HELLO ALICE IS A FINTECH STARTED OFFERING GRANTS, NETWORKING OPPORTUNITIES, AND ACCESS TO ENTREPRENEURS.
-- THIS IS DESPITE BEING ON THE FRONT LINES OF A LITIGATION LAW OVER DIVERSITY IN CORPORATE AMERICA. SIX MONTH AGO, HE WAS HIT BY A LAWSUIT FILED BY AMERICA FIRST LEGAL, WHICH HAS LODGED AT LEAST SIX OTHER DI RELATED SUITS ELSEWHERE. HE CLAIMS A GRANT PROGRAM BY HELLO ALICE, KAREN FOR BLACK -- CO-RUN FOR BLACK-OWNED SMALL BUSINESSES IS DISCRIMINATORY. WE WILL DIVE INTO THIS ONGOING
LEGAL BATTLE AND THE ULTIMATE GROWTH OF THE BUSINESS. HELLO ALICE COFOUNDER AND PRESIDENT ELIZABETH GORE IS WITH US. IT COMES AT A TIME WHEN THE EEI DISCUSSION PENDULUM HAS SWUNG SIGNIFICANTLY. THERE IS THIS VIEW THAT ALLOCATING GRANTS TO PEOPLE OF COLOR IS SOMEHOW DISCRIMINATING AGAINST WHITE FOUNDERS. HOW HAS THAT BEEN INTERSECTION FOR THE BUSINESS, OR HAS IT BEEN A GALVANIZING FORCE? ELIZABETH: IT HAS BEEN A GALVANIZING FORCE PAY WE HIT 1.5 MILLION SMALL
BUSINESSES ON THE PLATFORM, AND WE SERVE EVERYONE AT HELLO ALICE. THE FIVE .5 MILLION SMALL BUSINESSES -- 5.5 MILLION SMALL BUSINESSES LAUNCHING IN THIS COUNTRY, IT IS A GREAT TIME TO BE IN FINTECH. WE HAVE DONE $40 MILLION IN PHILANTHROPY AND GRANTS, AND WE ARE PROUD THOSE HAVE GONE TO WOMEN, PEOPLE OF COLOR, VETERANS, AND WHITE MALES.
WE WANT TO MAKE EVERYONE IS INCLUDED IN THE SMALL BUSINESS ECOSYSTEM. IT IS CRITICAL. CAROLINE: HAS ANY OF YOUR USER BASE, ANY PROSPECTIVE CLIENTS, EVER BROUGHT THIS UP, THE FACT THAT YOU'RE GIVING GRANTS TO MINORITIES, I FEEL DISCRIMINATED? ELIZABETH: NO. IN FACT, WHEN WE ANNOUNCED WE WERE BEING SUED, WE HAVE HAD HUNDREDS OF THOUSANDS OF LETTERS OF SUPPORT, EMAILS, PEOPLE COMING OUT -- WE ARE BASED IN HOUSTON, TEXAS. WE HAVE OUR VETS COMING OUT IN SUPPORT OF AFRICAN-AMERICANS, WOMEN COMING OUT IN SUPPORT OF MEN.
THE SMALL BUSINESS COMMUNITY, PARTICULATE AFTER COVID, HAS REALLY GALVANIZED. CAPITAL IS TIGHT RIGHT NOW, BUT THEY ARE REALLY A SAVVY COMMUNITY.THEY HAVE TO HAVE EACH OTHER. IF YOU LOOK AT MAIN STREET, ALL
THOSE SHOPS ARE WORKING TOGETHER TO SCALE EVERYTHING WE NEED IN THIS COUNTRY, SO THAT SUPPORT IS THERE FROM EVERYONE. WE HAVE NEVER HEARD A COMPLAINT ABOUT IT, EVER. CAROLINE: WHEN YOU ARE A FUNDRAISING OUT THERE, HOW MUCH DO YOU HAVE TO TALK ABOUT POTENTIAL INVESTORS ABOUT USES OF THE MONEY FOR A BUSINESS CASE OR A LEGAL CASE? ELIZABETH: THERE IS A LOT OF TENSION WHEN THE CASE FIRST CAME OUT.
THERE WAS CONCERN ABOUT THE "LEGITIMACY" OF OUR BUSINESS, AND I AM HERE TO SAY WE ARE NOW ONE OF THE FASTEST PLATFORMS FOR FINANCIAL TECHNOLOGY OFFERING CREDITS AND LOANS TO SMALL BUSINESSES. WE ARE ABOUT TO BE PROFITABLE, WHICH IS REALLY EXCITING FOR A FINTECH. BUT YOU HAVE TO DISCLOSE. A LAWSUIT IS A LAWSUIT.
THAT IS WHY WE THINK THESE ARE VERY DISTRACTING. THEY ARE A WASTE OF MONEY. EVERYTHING WE HAS DONE IS PERFECTLY LEGAL. WE WANT TO MAKE MONEY FOR OUR INVESTORS, OUR SMALL BUSINESS OWNERS. I AM HAPPY TO SAY, DESPITE ALL OF THIS, WE HAVE SIGNIFICANTLY GROWN. IT TOOK INVESTORS A MINUTE TO STEP BACK, WHAT IS THIS, WILL IT IMPACT ME? THEY ARE CAPITALISTS AT THE END OF THE DAY.
NO MATTER WHAT, THEY CAME BACK IN AND FUNDED US. CAROLINE: SO YOU REMAIN COMMITTED TO THE PHILANTHROPIC ENDEAVORS. ELIZABETH: ABSOLUTELY. CAROLINE: WHAT ARE YOU COMMITTED TO IN TERMS OF TECHNOLOGY? ELIZABETH: WHAT IS EXCITING IS THE EVOLUTION OF AI. MY CO-FOUNDER CAROLYN ROD HASZ -- RODZ HAS BEEN ON THE FOREFRONT OF IT. -- THAT BUSINESS SCORE IS BEING USED BY EVERYONE FROM WELLS FARGO TO CHASE. IT IS A GREAT TIME FOR OUR
BUSINESS. WE ARE GOING NOWHERE. CAROLINE: A COMEBACK AS THE LEGAL THIS WEEK CONTINUES. WE THANK YOU FOR YOUR TIME. HELLO ALICE PRESIDENT ELIZABETH GORE. COMING UP, RICH GREENFIELD AT LIGHTSHED PARTNER. THIS IS "BLOOMBERG TECHNOLOGY."
CAROLINE: TENS OF MILLIONS OF AMERICANS ARE GEARING UP TO LIMBS THE SOLAR ECLIPSE TODAY, -- GLIMPSE THE SELECT LIST TODAY, WHEN THE SUN WILL BE ALMOST ENTIRELY COVERED BY THE MOON. IT IS THE FIRST TIME IN CENTURIES THAT -- THE MAIN SPECTACLE IS EXPECTED TO LAST ONLY ABOUT A FOUR MINUTE PERIOD. IT WILL STILL COST THE U.S. 30 GIGAWATTS OF SOLAR ENERGY, THE OUTPUT OF ROUGHLY 30 NUCLEAR REACTORS. LET'S SHIFT GEARS.
MOVIE PRODUCER DAVID ELLISON IS IN NEGOTIATIONS TO TAKE PART OF PARAMOUNT. HE AND HIS BACKERS AGREE TO PAY A LITTLE MORE THAN $2 BILLION. WE WANT TO BREAK ALL OF THIS DOWN WITH SOMEONE WAS BEEN WRITING ABOUT IT SIGNIFICANTLY, LIGHTSHED PARTNERS RICH GREENFIELD.
THEY LIKE THIS OFFER FROM ELLISON. DO YOU LIKE THE STEEL? RICH: FIRST OF ALL, WE HAVE NOT SEEN EXACTLY WHAT THE DEAL LOOKS LIKE AND WHAT ALL THE DIFFERENT PIECES ARE, BUT I THINK IF YOU ARE THE NATIONAL AMUSEMENTS, WHICH IS EFFECTIVELY THE REDSTONE FAMILY, THEY WANT AN OWNER THAT IS GOING TO LOVE THE ASSET, TAKE CARE OF THE ASSET, IN MUCH THE WAY THE REDSTONE FAMILY HAS TAKEN CARE OF THE PARENT STUDIO FOR DECADES FOR THAT IS ONE OF THE BIG ATTRACTIONS HERE, BECAUSE WHAT THIS TRANSACTION IS IS NOT A SALE. NATIONAL AMUSEMENTS IS SELLING THEIR STAKE TO SKYDANCE, BUT IT APPEARS THE REST OF SKYDANCE BEING FOLDED IN, SO ESSENTIAL IT IS PARAMOUNT BUYING SKYDANCE AND SKYDANCE TAKING CONTROL OF HIM OVERALL, PARAMOUNT. THIS IS NOT A SALE. IT IS NOT SEEN THAT NATIONAL AMUSEMENTS WANTS TO SELL THE ENTIRETY OF PARAMOUNT TO PRIVATE EQUITY AND SEE THE COMPANY BROKEN UP INTO PIECES OR SOLD FOR PARTS. THAT DOES NOT SEEM TO BE
SOMETHING THEY WANT. WHAT A LOT OF INVESTORS FORGET THIS IS A CONTROLLED COMPANY. JUST BECAUSE PUBLIC SHAREHOLDERS WANT SOMETHING DOES NOT MEAN THE COMPANY HAS TO PROCEED DOWN THAT PATH. THAT IS THE DANGER OF A
CONTROLLED COMPANY WHEN YOU ARE INVESTING. IF YOU DO NOT LIKE IT, DO NOT INVEST IN CONTROLLED COMPANIES. CAROLINE: BECAUSE ULTIMATELY YOU MAY END UP WITH A SLIGHTLY DILUTED DEAL THAT LEAVES YOU SLIGHTLY POORER. WHAT IS THE NARRATIVE THAT NOW NEEDS TO BE BUILT BY ELLISON OR ANYONE ELSE, THE CURRENT BOARD NUMBER SHIP OF PARAMOUNT TO SAY, IN THE LONG TERM, THIS WILL REVIEW BENEFITS? RICH: IF YOUR CONTROLLED SHAREHOLDER DOES NOT WANT TO SELL THE ENTIRE COMPANY, YOU HAVE ESSENTIALLY THREE CHOICES, IF YOU ARE SITTING IS THE PARAMOUNT BOARD.
YOU CAN DO NOTHING, LITERALLY JUST OPERATE STATUS QUO. I THINK THE BOARD RECOGNIZES. CURRENT STRATEGY IS NOT WORKING. PARAMOUNT+ BLEEDING $1 BILLION, $2 BILLION, NOT A MEANINGFUL PLAYER IN STREAMING WARS, SO I DO NOT THINK THEY WANT TO MOVE FORWARD WITH THE CURRENT STRATEGY. THEY COULD FIRE MANAGEMENT, TOTALLY PIVOT STRATEGY, FOLLOW THE ARMS DEALER OF CONTENT STRATEGY THAT SONY HAS PURSUED.
THAT DOES NOT FEEL LIKE SOMETHING THEY WOULD BE COMFORTABLE DOING. THE THIRD PIECE IS DO A TRANSACTION THAT, IN THE NEAR TERM, WOULD BE DILUTED TO PUBLIC SHAREHOLDERS, IT GIVES LONG TERM -- THERE IS A LONG-TERM PITCH TO THE BOARD THAT I GUESS MAKES SENSE IN TERMS OF HOW THEY ARE GOING TO INVEST, BUILD PARAMOUNT+ INTO SOMETHING BIGGER, USE MORE TECHNOLOGY, AND I THINK THAT IS THE WHOLE IDEA THAT THE BOARD IS DEALING WITH. IF IT IS REALLY ONLY DO NOTHING OR DO A TRANSACTION THAT IS DILUTIVE, YOU MAY UNDERSTAND WHY THEY MAY LIKE THEDILUTIVE TRANSACTION, BECAUSE THE STATUS QUO IS NOT WORKING FOR PARAMOUNT, AND THE COUNTRIES AND MORE AND MORE TROUBLE. THE ONLY REASON THE STOCK IS ABOVE $10 A SHARE WAS THE HOPE OF A TRANSACTION, IDEALLY A SALE TO A THIRD PARTY. NOW THE QUESTION IS HOW CHEAP WILL SKYDANCE END UP WITH THIS ASSET, BECAUSE I THINK INVESTORS ARE FINALLY REALIZING TODAY THAT THE SALE TO A THIRD PARTY IS NOT HAPPENING.
CAROLINE: THAT HAS BEEN PASSED OVER, APOLLO GLOBAL MANAGEMENT SELLING OFF SPECIFIC ASSETS. WARNER BROS. SEEMED TO HAVE BEEN DEAD ON ARRIVAL. I AM INTERESTED IN THE KNOLOGY
BIT. DAVID ELLISON HAS SOME POWERS, MOST OBVIOUSLY WITH HIS FATHER AND ORACLE CARE WHAT CAN IT BRING TO PARAMOUNT? 6 -- RICH: LOOK AT WHAT SKYDANCE DID ON THE TECHNOLOGY SIDE. THEY HIRED ONE OF THE KEY ANIMATORS OF PIXAR -- HE HAS A 1000 PERSON ANIMATION BUSINESS.
JOHN LASSETER IS NOW AT SKYDANCE, AND THEY RECENTLY ANNOUNCED THEIR SLATE OF FILMS IS MOVING FROM APPLE TV+ TO NETFLIX, SO THEIR FIRST MAJOR RELEASE JOHN HAS HAD FULL CONTROL OVER COMES OUT AT THE END OF THIS YEAR. THEY THINK THEY HAVE ANNEXED "FROZEN." -- THEY THINK THEY HAVE THE NEXT "FROZEN."
THEY HAVE -- IF YOU ARE SITTING AT THE PARAMOUNT BOARD, YOU ARE IN A TOUGH SITUATION. STOCK IS DOWN DRAMATICALLY. YOU HAVE THE YEAR-TO-DATE UP, BUT IF YOU LOOK AT THE LAST SEVERAL YEARS, THIS HAS NOT BEEN A GOOD STOCK. THE MANAGEMENT TEAM HAS MADE WHAT APPEARS TO BE CRITICAL MISTAKES BY ENTERING THE STREAMING WARS BELIEVING THEY COULD COMPETE WITH THE NETFLIXES AND THE DISNEYS.
THEY CLEARLY CAN'T, SO THE QUESTION IS, WHAT DO YOU DO? START SHUTTING THINGS DOWN, FIRE EVERYONE, OR LOOK FOR A STRATEGIC MERGER THAT, EVEN IF IT IS NOT GREAT IN THE SHORT TERM FINANCIALLY, GIVES LONG-TERM GROWTH POTENTIAL OR AT LEAST A STORY THE BOARD CAN GET, DOUBLE WITH? MY GUESS IS THE BOARD IS GETTING COMFORTABLE WITH THAT STORY BEING THE BEST ALTERNATIVE. CAROLINE: THAT STORY STILL BEING WRITTEN AS WE STAND. RICH GREENFIELD, GREAT TO HAVE TIME WITH YOU TODAY. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." YOU DO NOT WANT TO MISS OUR PODCAST. IF YOU'RE BASED IN
NORTH AMERICA, HAVE FUN VIEWING THAT ECLIPSE. STAY SAFE WITH YOUR EYES. THIS IS "BLOOMBERG TECHNOLOGY."
2024-04-11 18:55
