>> I'M CAROLINE HYDE AT BLOOMBERG'S, THIS IS "BLOOMBERG TECHNOLOGY." WE TALK LAYOFFS, SALESFORCE, VIMEO ARE THE LATEST TO ANNOUNCE CUTS TO CURB SPENDING. THE MOST VULNERABLE AREAS IN TECH.
TESLA REBOUNDS AFTER CATHIE WOOD BUYS THE DIP. WE LOOK AT THE BULL AND THE BEAR CASE FOR THE EV MAKER. GENERATED TECH. WE DISCUSS THE RISKS AND
REWARDS FOR AI BASED PLATFORMS. BUT FIRST, CHECKING IN ON THE MARKETS. A TOPSY-TURVY SORT OF DAY. WE SAW A BREAKDOWN IN THE SELLOFF AFTER TWO DAYS, THE S&P 500 UP. SIMILAR MOVES, THE NASDAQ. BIG TECH MANAGING TO PUSH HIGHER IN THE FACE OF WHAT WAS HAWKISH MINUTES COMING OUT OF THE FEDERAL RESERVE.
IT REALLY FELT AS THOUGH MANY WERE CAUGHT OFFGUARD A LITTLE BIT ABOUT THE DETERMINATION OF THE FEDERAL RESERVE TO CRACK DOWN ON INFLATION. IT TOOK THE WIND OUT OF THE SALES OF THE MARKET. THIS REALLY SEEMS TO BE MORE FOCUSING ON THE DATA WE GOT. SLIDER INFLATION DATA IS COOLING. THE BEGINNING OF TRADE. WE ALSO LOOK AT A VERY
RESILIENT JOBS DATA. IT MAKES MANY CAUTIOUS TO REALLY BE BUYING INTO TECHNOLOGY. AS WE STILL WORRY ABOUT HOW MUCH FURTHER THE FEDERAL RESERVE HAS TO HIKE RATES. LOOKING AT THE TWO-YEAR YIELD. LET'S GO INDIVIDUAL. MICROSOFT UP BY MORE THAN 4%. WORST DAY SINCE OCTOBER. REALLY SEEING SOME -- UBS SAYING AZURE, THE BIG FOCUS ON CLOUD, MAYBE THE SLOWDOWN IS ON US. NOT JUST PULLING BACK ON SPENDING, WE SEE SOME AGING IN
THE OVERALL GROWTH STORY FOR MICROSOFT. SALESFORCE PICKING UP MORE THAN 3.5%. LOOKING AT THE LAYOFFS OF THAT COMPANY. ANOTHER COMPANY HAVING TO LAY OFF AND FOCUS ON MARGINS, TRYING TO CUT BACK SPENDING. MICRON, MORE THAN 7% HIGHER ALONGSIDE OTHER KEY CHIPMAKERS.
NEWS EARLIER THAT CHINA COULD BE CURTAILING SOME OF ITS BIG SPENDING ON MAKING A CHIP COMPETITOR TO TAKE ON THE U.S. WE HAVE A GALVAN IS ASIAN OF THOSE COMPANIES. TESLA. AFTER BEING BATTERED AND BRUISED, WE HAVE A TICK UP. UP MORE THAN 5%. IT CAN SINK MORE THAN 12% IN PREVIOUS DAYS TRADE. TESLA GETTING A LITTLE BIT OF ACTION AS WE SEE CATHIE WOOD AND THE ETF SHE RUNS BUYING THE DIP. MORE ON THAT STORY LATER. LET'S TALK ABOUT MONEY BEING
PUT TO WORK, TECHNOLOGY, MORE BROADLY IN U.S. STOCKS. LIZ YOUNG IS WITH US TO TALK ABOUT THE MOOD MUSIC IN TERMS OF INVESTORS. CAUTION, WORRY, MORE MACRO HEADWINDS. >> THERE IS, BUT NONE OF IT IS REALLY NEW. A LOT OF IT LEFT OVER FROM DECEMBER. A ROUGH MONTH IN DECEMBER. ESPECIALLY A TIME WHEN IT IS
SUPPOSED TO BE THE YEAR END RALLY THAT CAME TO FRUITION. INVESTORS HEARD AGAIN FROM THE FED ABOUT THEIR DETERMINATION TO KEEP RATES HIGHER. NOT NEW NEWS. EVERYBODY CAUGHT FLAT-FOOTED ON THOSE MINUTES HAS NOT REALLY BEEN PAYING ATTENTION. YOU ARE GOING TO KEEP RATES HIGHER. WE MAY KNOW BY THE END OF THE FIRST QUARTER WHETHER OR NOT THEY ARE DONE HIKING. I'M THE ONLY THING BAKED IN IS 25 BASIS POINTS IN FEBRUARY, ANOTHER 25 IN MARCH. IT MIGHT BE THE END OF RAISING
RATES. WE HAVE TO FIGURE OUT HOW LONG THEY PAUSE. CAROLINE: HAVE WE SEEN ENOUGH OF THAT STARTING TO BE BAKED INTO THE OVERALL VALUATIONS? PARTICULARLY IN THE WORLD OF TECHNOLOGY? BIG TECH NAMES REALLY ROLLING OVER. HAVE WE BAKED IN ENOUGH OF THE BAD NEWS WHEN IT COMES TO INTEREST RATE HIKES? >> I THINK WE HAVE BAKED IN THE IDEA OF MONETARY TIGHTENING.
THAT HAPPENED LARGELY IN 2022. THE HUGE DRAWDOWNS WE SAW, PARTICULARLY GROWTH THE AREAS OF THE MARKET. WHAT IS NOT YET BAKED IN IS WHETHER OR NOT WE ARE GOING TO CONFIRM A RECESSION. IF WE CONFIRM A RECESSION, AND I THINK WE WOULD KNOW THAT BY LABOR MARKETS STARTING TO CRACK, STOCKS LIKELY NEED TO GO DOWN FURTHER. USUALLY RECESSIONARY DRAWDOWNS ARE BEYOND 30%.
SO FAR WE'VE GOTTEN 25%. THE OTHER THING THAT I DON'T THINK IS BAKED IN IS WHEN EARNING REVISIONS COME DOWN EVEN FURTHER. THEY ARE STILL SHOWING ESTIMATES FOR 2023 AS YEAR-OVER-YEAR GROWTH BEING FLAT COMPARED TO 2022. I CAN'T IMAGINE IT WILL BE THE
CASE IN AN ENVIRONMENT WHERE REVENUES ARE LIKELY TO COME DOWN, WAGE PRESSURES ARE LIKELY TO STAY STICKY, AND COMPANIES WILL SEE THE BOTTOM LINE AND MARGINS GET PRESSURED. I EXPECT EARNINGS TO COME IN AND SHOW A CONTRACTION IN THE RANGE OF 5% TO 10%. I DON'T THINK THAT IS PRICED IN. CAROLINE: SORT OF AGREEING WITH YOU IS MIKE WILSON.
IN TERMS OF HIS CAUSES LAST YEAR AT MORGAN STANLEY. HE HAD THIS TO SAY WHEN WE HEARD THE NEWS OUT OF SALESFORCE OF THE JOB CUTS OF BIG TECH BEING A COST CUT. >> WHAT CONCERNS ME ABOUT TECH COMPANIES IS THEY ARE GROWTH COMPANIES, THEY WANT TO INVEST IN THESE DOWNTURNS, INVEST AGGRESSIVELY THROUGH ALL PERIODS OF TIME. THEY'RE GOING TO BE LATE ON THAT. THEY WILL PROBABLY NOT DO ENOUGH. IT WILL TAKE LONGER THAN YOU THINK. THE MARGIN DEGRADATION CAN BE
MORE SEVERE. CAROLINE: IS HE BRACING FOR MORE COST-CUTTING, AND INDEED PERHAPS NOT THAT EFFECTIVE COMING FROM BIG TECH? >> I HAVE A LOT OF RESPECT FOR MIKE. I HAVE BEEN CALLED A PERMABEAR BECAUSE I CONTINUE TO BE CAUTIOUS. I ALIGNED WITH A LOT OF THINGS HE'S SAYING. TECH COMPANIES CUTTING COST, HE
IS PROBABLY RIGHT, THEY ARE NOT USED TO DOING THAT. GROWTH COMPANIES TO REINVEST IN THE BUSINESS. THAT IS THE IDEA. THAT IS WHY YOU DON'T FIND A LOT OF GROWTH COMPANIES THAT PAY OUT DIVIDENDS OR ENGAGE IN STOCK BUYBACKS. THEY ARE TAKING THE CAPITAL AVAILABLE AND REINVESTING INTO THE GROWTH OF THE BUSINESS. WHERE I THINK ANY BUSINESS WILL SUFFER IN 2023 IS IF THEY WAIT TOO LONG TO CUT COSTS. IF AND WHEN THE LABOR MARKET STARTS TO SHOW SIGNS OF WEAKNESS, THE CONSUMER LIKELY PULLS BACK.
IT CAN HAPPEN VERY QUICKLY. IF COMPANIES ARE ONLY MODELING OUT ONE QUARTER, ONE HALF OF THE YEAR AT A TIME, THEY MIGHT NOT CUT COSTS QUICKLY ENOUGH IN ORDER TO PAVE IT AND CATCH THE REVENUE DEGRADATION THAT COULD HAPPEN AS A RESULT OF LOWER CONSUMER SPENDING. CAROLINE: WHAT ARE SOME OF THE UPSIDE RISKS? >> IF WE DO HAVE A RECESSION, WE NEED TO PAY ATTENTION TO THE FACT IT WOULD RESET THE BUSINESS CYCLE. I SAID THAT IN MY 2023 OUTLOOK, I WILL KEEP SAYING IT FOR THE ENTIRE FIRST HALF OF THE YEAR. WE NEED TO RESET THE BUSINESS CYCLE. WE ARE A DECIDEDLY LATE CYCLE. IN ORDER TO GET BACK TO EARLY CYCLE, A RECESSION WOULD RESET IT. THEN WE START TALKING ABOUT THE
OPPORTUNITIES WE WOULD SEE IN A CLASSIC COMING OUT OF A RECESSION SCENARIO. IN THAT CASE, I WOULD LOOK AT CYCLICALS, SMALL-CAP VALUE. IF THE MARKET GETS BELOW 3500, I WOULD LOOK AT CYCLICAL PARTS OF TECH. WE CAN START TO THINK ABOUT
THAT. THE OTHER THING IT THAT IS POSITIVE IS BONDS ARE A DECENT OPTION. THEY ARE TRADING AT GOOD VALUATIONS. THE TIME IS NOW BEFORE A RECESSION IS CONFIRMED. CAROLINE: YOU ARE TALKING TREASURIES. WHAT ABOUT CORPORATE DEBT? BLOOMBERG INTELLIGENCE TURN TO SEPARATING CORPORATE DEBT TO BE ISSUED BY THE BIG TECH COMPANIES.
>> GOOD IDEA TO DISTINGUISH THAT. I'M TALKING ABOUT TREASURIES. PARTICULARLY TWO-YEAR TREASURIES BEFORE THE RECESSION IS CONFIRMED.
CORPORATE DEBT, THE WAY WE LOOK AT THAT IS TYPICALLY THE SPREADS. THE SPREADS OVER THE 10 YEAR TREASURY, FOR EXAMPLE. CORPORATE DEBT HAS NOT SHOWN RECESSIONARY VALUATIONS AT THIS POINT. CORPORATE DEBT IS KINDLY IN THE EQUITY MARKET CAMP WITH SOME VALUATION COMPRESSION. NOT ENOUGH TO SAY WE ARE READY FOR THE RECESSION TO BE HERE OR THAT WE HAVE PRICED IN A RECESSION. I WOULD EXPECT CORPORATE DEBT AND CREDIT SPREADS IN THE HIGH-YIELD SPACE TO GO OUT WIDER BEFORE THEY COME BACK IN AGAIN.
>> WHETHER IT BE A RETAIL INVESTOR OR INSTITUTIONAL INVESTOR, ARE YOU THINKING IN THE NEXT -- WE'VE GOT SO MUCH UNCERTAINTY, UPSIDE RISKS AND DOWNSIDE CAUTIOUS TRADING, IS IT BEST TO BE BROUGHT, OR BETTER TO DO A FUNDAMENTAL ANALYSIS ON INDIVIDUAL COMPANIES? IS IT EARNINGS YOU LOOK AT, OR THE MACRO DATA? >> 2020 WAS A YEAR OF THE MACROS, MACRO DRIVEN ENVIRONMENT. 2023 WILL LIKELY HAVE MACRO FORCES TAKING OVER OUR HEADS IN THE MIDDLE OF A RATE HIKING CYCLE. I THINK THE RATE HIKING CYCLE IS BEGINNING TO MATURE. SOME OF THE MACRO FORCES WON'T BE AS INTERESTING TO THE MARKET LIKE WE HAVE ALREADY DISCUSSED. A LOT OF THE MONETARY TIGHTENING HAS REALLY BEEN BAKED IN. IT IS IMPORTANT TO LOOK AT THE FUNDAMENTALS. IMPORTANT TO LOOK AT THE
QUALITY OF A COMPANY AND ABILITY TO GENERATE REVENUE AND CUT COSTS AND MANAGE NOT ONLY WHAT THEY ARE REINVESTING IN THE BUSINESS, BUT WHAT THEY ARE ABLE TO RETURN TO SHAREHOLDERS. THAT IS WHY DIVIDEND STRATEGIES HAVE BEEN SO POPULAR. IT HAS BEEN RETURNING VALUE TO SHAREHOLDERS. FUNDAMENTALS ARE IMPORTANT, VALUATIONS ARE PROBABLY THE MOST IMPORTANT PART OF THE FUNDAMENTAL STORY IN 2023. CAROLINE: SMART WORDS AS WE LOOK AHEAD TO ANOTHER TURBULENT YEAR. WE APPRECIATE YOUR TIME. SO FAR AHEAD OF INVESTMENT STRATEGY. COMING UP.
THE CASE FOR NETFLIX AND OTHER STREAMING PROVIDERS IN THE YEAR AHEAD. OUR GUEST COMING ON, HE UPGRADED NETFLIX TOWARDS THE END OF LAST YEAR AND ABSOLUTELY WAS THE FIRST TO TURN AROUND STOCK. BEFORE WE GO, COINBASE HAS REACHED A 100 MILLION DOLLARS SETTLEMENT WITH NEW YORK REGULATORS.
HALF OF THE MONEY IS A FINE. REGULATORS FOUND THEY VIOLATED ANTI-MONEY LAUNDERING LAWS, LETTING COMPANIES OPEN ACCOUNTS WITH INSUFFICIENT BACKGROUND CHECKS. THE OTHER $50 MILLION WILL IMPROVE COMPLIANCE. SHARES CLIMBED UPWARDS OF 12%. DISCLOSURE BEING MY HUSBAND IS
A MANAGER OVER AT COINBASE. THIS IS BLOOMBERG. ♪ >> THE WAY TO THINK OF THIS IS A DUOPOLY BETWEEN GOOGLE AND ANOTHER, THEY CONTROL HALF OF THE ADVERTISING MARKET. THE OVERALL CONTROL -- HAVE GROWN.
WHAT HAS HAPPENED IS TELEVISION WITH CONNECTED TV STREAMING IS DIGITAL ALSO, BENEFITING IN THE SAME WAY DIGITAL ADVERTISING BENEFITED GOOGLE AND META. GROWTH OCCURRING. THEY ARE SPENDING MORE. IT IS DIVERSIFYING THE CUSTOMER BASE AWAY FROM JUST 1000 OR 2000 ADVERTISEMENTS TO MANY MORE. SO TELEVISION IS COMING ON STRONG AS THE THIRD BIG SCALE CHANNEL THAT IS A TRUE DIGITAL CHANNEL. CAROLINE:
MARK DOUGLAS TALKING ABOUT THE ADVERTISING INDUSTRY'S SHIFT AWAY TO THE NEW PLAYERS. SOME OF THOSE MEDIA NAMES THAT OFFER STREAMING OFFERINGS ARE AROUND LEARNING -- ARE RALLYING. ANALYSTS STILL SEEM TO SEE WEAK DEMAND, LOOSER STREAMING PROFITABILITY. SO WHAT IS THE BULL AND BEAR CASE OF MEDIA COMPANIES, AND WHICH STREAMING OFFERINGS ARE LIKELY TO RUN OUT? AN ANALYST TO LEAD THE CHARGE ON NETFLIX, KEN LEON. TALK TO US ABOUT THE IMMEDIATE SHORT-TERM RALLIES WE SEE AT SOME OF THESE COMPANIES. I MENTIONED WARNER BROS. PARAMOUNT, DOES IT TAKE YOU BY
SURPRISE? >> IT IS REALLY LOOKING AT THE BUSINESS AND WHETHER IT IS A MARKET THAT WILL GROW, AND THERE WILL BE WINNERS AND LOSERS. COMING OFF OF 2022, THE INDUSTRY MOVIES AND ENTERTAINMENT STOCKS WERE DOWN. IT SERVES AS A BOTTOM. THEN IT IS A QUESTION FOR ANALYSTS TO FIGURE OUT IF THERE COULD BE A WINNER IN A HIGHLY COMPETITIVE, NEWLY DISRUPTIVE AREA, VIDEO STREAMING. AND WHAT THAT DOES TO THEIR
BUSINESS, INCLUDING THE LEGACY AREAS, WHETHER THEY NEED BROADCAST OR FILM. IT IS COMPLEX. WE HAD TO SELL ON NETFLIX MOST OF 2022. WE SWITCHED TO A BUY, BECAUSE DOING SOUL-SEARCHING, AND MAYBE WE WERE A LITTLE TOO SEVERE ON THE VALUATION.
SAYING NETFLIX SHOULD NOT HAVE TRADED AT A PREMIUM. BUT WHAT WE THINK TODAY, THEY SHOULD BECAUSE THEY ARE REALLY FOCUSED ON WINNING. CAROLINE: TALK ABOUT THE FOCUS ON WINNING, WHETHER ENOUGH PAIN AND STRESS, CUTTING OUT THE EXTRA FAT IN THE MARGIN IS PRESERVED OVER AT NETFLIX, PARTICULARLY THE ADDED ADDITION OF REVENUE COMING FORWARD.
>> GOOD FOR 2023 AND 2024. THEY WILL HAVE NEW REVENUE STREAMS COMING FROM ADVERTISING, GOING FROM ZERO, BUT TAKING SOME FAIR SHARE AWAY FROM THE COMPANIES YOU MENTIONED, GOOGLE AND META, AND THE TRADITIONAL BROADCAST AREA. THERE IS A SECULAR SHIFT TO STREAMING. NETFLIX HAS A MANAGEMENT THAT HAS BEEN IN PLACE FOR 10 YEARS, HAVE ORGANICALLY GROWN A GLOBAL BASED TECHNOLOGY PLATFORM AND LIBRARY, AND SHOWS PEOPLE WANT TO WATCH. THEY ALSO HAVE A WIDE RANGE OF PLANS TODAY WITH A NEW PLAN OF $6.99, BUT MOST OF THE AFFLUENT VIEWERS ARE PAYING $19.99 FOR
HIGHER FEATURES AND HI DEF. WHAT ARE THE COMPETITORS DOING? EACH OF THESE HAS CHANGING MANAGEMENTS, WE ARE DEALING WITH COMPLEX MERGERS, THEY ARE NOT SURE WHAT THEY WANT TO KEEP OR WHAT THEY WANT TO SELL. THEY ARE ALSO TRYING TO FIGURE OUT IN TERMS OF HOW THEY ARE GOING TO WIN THE STREAMING AS THEY HOLD ONTO LEGACY BUSINESSES AND BROADCAST, OR OTHER AREAS LIKE PARKS. THAT IS DIFFICULT TO DO. I THINK NETFLIX HAS A CHANCE TO OUTRUN ITS COMPETITORS, AND WE ARE GOING TO SEE IT IN 2023. >> INTERESTING YOU SAID CHANGING MANAGEMENT.
ALMOST REVOLVING, WHEN YOU THINK ABOUT THE COMPANY THAT HAS PARKS. IS IT A NET POSITIVE FOR THAT BUSINESS AT THE MOMENT, PARTICULARLY ON THE FOCUS OF STREAMING? >> I HAVEN'T COVERED DISNEY OR THESE COMPANIES FOR 10 YEARS. MY OBSERVATION, BOB IGER IS COMING BACK TO DO THE JOB THAT WAS UNFULFILLED. HE MADE AN ENORMOUS ACQUISITION IN 2019. THEY ARE TRYING TO GENERATE HIGHER CASH FLOW AND EARNINGS TO RETURN TO SHAREHOLDERS.
THEY DON'T PAY A DIVIDEND OR BUY BACK STOCK. THIS IS DIFFERENT. THE STOCK IS TRADING BELOW 90. SO WE HAVE A VIEW BOB IGER WILL PROBABLY DO THINGS THAT WILL BE POSITIVE FOR SHAREHOLDERS. WE ARE NOT SURE WHAT IT IS. THEY HAVE A PUT CALL WITH COMCAST FOR HULU.
THEY HAVE TO DECIDE FROM ACTIVISTS WHAT TO DO WITH ABC OR ESPN. IT IS COMPLEX. AT THE END OF THE DAY, THE HEART OF THIS COMPANY IS NOT VIDEO STREAMING, DISNEY PLUS. IT WILL BE CHALLENGING COMPARED TO NETFLIX, WHICH IS ORGANICALLY 100% FOCUSED ON VIDEO STREAMING. THAT IS WHERE VIEWERS ARE GOING, ADVERTISERS ARE FOLLOWING. A LITTLE BIT SLOWER, BUT THEY ARE SWITCHING OVER TO THE STREAMING MARKET.
THAT WILL REALLY BENEFIT THE STRONGER PLAYERS. CAROLINE: ANOTHER STRONG DAY FOR NETFLIX TRADING ON THE DAY. UP ALMOST 5%. GREAT TO CATCH UP WITH YOU.
KEN LEON. THE DOUBLE RAISE FOR NETFLIX NEXT WEEK TO A BUY. ANOTHER STORY WE ARE WATCHING. STICKING ON THE FOCUS OF ADVERTISING.
META HAS BEEN FINED $440 MILLION BY THE EUROPEAN UNION'S MAIN PRIVACY WATCHDOG. IT HAS TO DO WITH HOW DATA IS USED FOR PERSONALIZED ADS ON FACEBOOK AND INSTAGRAM. META HAS THREE MONTHS TO ENSURE IT COMPLIES WITH EU LAWS. COMING UP, SHARES OF SALESFORCE ROSE AFTER A PRETTY PAINFUL ANNOUNCEMENT. CUTTING STAFF BY 10%.
MORE OF THE RESTRUCTURING PLANS FOR THE COMPANY, NEXT. TAKING A LOOK AT APPLE. SHARES LOSING CHINA AFTER AN UGLY MONTH. FELL 12% IN DECEMBER.
MARKET VALUE BELOW $2 TRILLION. INVESTORS ARE CONCERNED MATTERS COULD GET WORSE. DELAYS IN IPHONE PRODUCTION, CHINA'S COVID, AND WEAKENING DEMAND AS THE ECONOMY SLOWS DOWN. THIS IS BLOOMBERG. ♪ CAROLINE: THEY KEEP ON COMING. LAYOFFS IN THE TECH INDUSTRY. SALESFORCE ANNOUNCING IT WILL CUT ABOUT 10% OF THE WORKFORCE AND REDUCE REAL ESTATE HOLDINGS. JOINING US IS BRODIE FORD, WHO HELPED ANALYZE WHAT WAS PUT OUT AS A STATEMENT BY THE COMPANY.
DO WE HAVE HINTS OF WHERE GEOGRAPHIES OR ANYTHING AROUND THIS FOR SOME CUTS? >> IT APPEARS TO BE VERY BROAD-BASED. I SPOKE TO PEOPLE FROM LEGAL, TO PHILANTHROPY, SALES RECRUITING. WHEN WE SEE A LAYOFF LIKE THIS, YOU CUT THE RECRUITERS AND SALESPEOPLE.
THERE ARE ENGINEERS. IT APPEARS PRETTY BROAD. EVERYBODY KNOWS SALESFORCE IS ONE OF THE BIGGEST EMPLOYERS IN SAN FRANCISCO. IT IS AN EQUAL LAYOFF AROUND THEIR GEOGRAPHIES. 1000 PEOPLE CUT FROM SAN FRANCISCO WHEN DOWNTOWN IS STRUGGLING. CAROLINE: TO THAT END, DO WE WORRY ABOUT SAN FRANCISCO AND THE REAL ESTATE THEY HAVE THAT WILL BE COMING TO AN END ON THEIR LEASES? >> WHAT IS FUNNY, THEY ARE TALKING ABOUT LEASES, BUT THEY SAY WE ARE FORCING SOME PEOPLE BACK TO THE OFFICE. SALESFORCE SAID A YEAR OR TWO AGO, THEY WERE NEVER GOING BACK.
BUT SOME SALESPEOPLE ARE BEING FORCED BACK TO THE OFFICE, MANAGEMENT INCREASING FOCUS ON PRODUCTIVITY IN THOSE MEASURES. ARE THEY CUTTING REAL ESTATE? YEAH, BUT THE TOWER IS NOT GOING ANYWHERE. CAROLINE: EVEN IF IT WAS SINKING AT ONE POINT OR ANOTHER. IS THIS IT, IN TERMS OF ANNOUNCEMENTS? HOW DOES IT DENT THE CULTURE OR TAKE AWAY SOME OF THE ANXIETY? REPORTING WITH YOU ALMOST ON A DAILY BASIS LAST YEAR ABOUT CHANGES AT THE TOP OF THE BUSINESS, NOW IT WILL BE FILTERING DOWN. >> I WOULD SAY ALMOST NO ONE IS SURPRISED THERE WAS A LAYOFF. ALMOST EVERYONE SAID THERE WAS THAT KIND OF FEAR IN THE AIR.
THE SCALE IS UNEXPECTED. I WAS TURNING THE NUMBER AROUND 5000 AT THE TIME. IT IS AROUND 8000. I DON'T THINK MANAGEMENT IS PLANNING ANOTHER LAYOFF TOMORROW. BUT THEY ARE DOING THIS BECAUSE THEY SEE SLOWING GROWTH AND THEY NEED BETTER PROFITS. I DON'T THINK WE CAN CONFIDENTLY SAY THIS IS IT. CAROLINE: AND OUR VIEWERS WOULD AGREE.
WE TOOK TO TWITTER, MANY OF THE WEATHER BEHIND US. 54%. STILL THERE IS MORE TO COME. YOU COVER A BROAD RANGE OF COMPANIES. IS IT THOSE FOCUSED ON SELLING INTO CORPORATE BUSINESSES? WE WERE HEARING ABOUT MICRO SOFT, THE DOWNGRADE, ARE THERE WEAK SPOTS IN THE TECH SPACE RIGHT NOW? >> FOR A WHILE, IF YOU WERE ENTERPRISE, YOU WERE GOOD.
THE CONSUMER FACING MARKET IS IN DANGER. BUT AS THE CONSUMERS HAVE GOTTEN MORE IN TROUBLE, -- SOFTWARE ARE SEEING IT, TOO. IT IS STRICTLY TO THE PLACES THAT ARE SAFER. SALESFORCE, MICROSOFT. AS LONG AS THE PICTURE IS WORSENING IN TERMS OF CONSUMER DEMAND, IT WILL HIT THE ENTERPRISE PLAYERS. CAROLINE:
BRODIE FORD, THANK YOU. SALESFORCE IS NOT THE ONLY COMPANY WITH LAYOFFS. VIMEO WILL CUT 11% OF THE FULL-TIME WORKFORCE. ALSO TO FOCUS ON THEIR SUSTAINABLE PROFITABLE GROWTH. SHARES OF THE VIDEO SOFTWARE COMPANY ROSE ABOUT 5% ON THE NEWS. COMING UP, WHY CATHIE WOOD IS NOT GIVING UP ON TESLA, AND WHY ELECTRIC VEHICLES ARE FRONT AND CENTER AT CES.
>> I USE IT EVERY DAY IT MAKES DRIVING SAFER LESS STRESSFUL AND LESS TIRED AFTER DRIVING. IT IS A GREAT PRODUCT AND IT IMPROVED YESTERDAY WHILE IT WAS SITTING IN MY DRIVEWAY. THE CAR I OWNED TODAY IS BETTER THAN THE CAR I OWNED YESTERDAY.
LET'S BE HONEST, THIS IS A WORLD-CLASS PRODUCT THAT PEOPLE LOVE AND THAT MAKES THEM SAFER AND GETS THEM TO AND FROM PLACES EASIER. THAT HASN'T CHANGED AND WE EXPECTED TO CONTINUE. CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. HE WAS TALKING ABOUT THE BOUQUET SAID AT TESLA WHICH IS BEEN UNDER PRESSURE AFTER DELIVERING -- ANNOUNCING A DELIVERY MISSED.
CATHIE WOOD NO DOUBT HELPING BOUNCEBACK ON WEDNESDAY. SETH GOLDSTEIN IS WITH US. LIKE MANY OTHERS, YOU SEE THE PRICE BASICALLY DOUBLING TO ABOUT $231 WHERE THE GENERAL PRICE TARGET IS FOR THIS YEAR IN THE NEXT 12 MONTHS OR TESLA. CAN YOU TALK US TO THE REASONING WHY YOU THINK THIS IS A BUY THE DIP MOMENT? GUEST: WHILE TESLA IS SHIFTING INTO A SLOWER GROWTH MODE, THE GROWTH IS STILL THERE. A LOT OF ANCILLARY BUSINESSES LIKE FULL SELF-DRIVING ARE BEING HEAVILY DISCOUNTED AS WELL AS FUTURE COST SAVINGS.
I EXPECT PROPER GROWTH IN EXCESS OF REVENUE GROWTH EVEN IF REVENUE GROWTH IS STILL IN THE HIGH TEENS INSTEAD OF THE 50% TARGET. WE SEE A LOT OF UPSIDE AT THE STOCK IN THE CURRENT PRICES. CAROLINE: WHAT'S INTERESTING IS, YES THEY DIDN'T MISS THEIR TARGETS.
-- THEY DID MISS THEIR INTERNAL TARGETS. 40% IS STILL STRONG. WE NEED TO HAVE MORE CLARITY, MORE BASIC ANALYSIS AND FUTURE GUIDANCE COMING FROM TESLA SO WE CAN SET OUR SIGHTS MORE REALISTICALLY? GUEST: I THINK THAT CERTAINLY WOULD HELP. MANAGERS ARE SAYING WE EXPECT TO GROW 50% PER YEAR.
THAT DOESN'T REALLY HELP WITH YEAR-TO-YEAR GUIDANCE. THEY ARE GOING TO START TO SEE SOME CONSUMERS WANT TO HOLD OFF ON THE BIG TICKET ITEM THEN WAIT UNTIL THE NEXT YEAR AND WE ARE IN A SLOWDOWN. THE MORE CONFIDENCE THEY CAN GIVE US AROUND SPECIFIC TARGETS ON A YEAR-TO-YEAR BASIS IT WOULD CERTAINLY HELP THE STOCK BECAUSE INVESTORS RIGHT NOW ARE SEARCHING FOR WHAT IS THE RIGHT GROWTH RATE.
WITH TESLA, EVEN SMALL CHANGES CAN MATERIALLY CHANGE YOUR VALUATION FOR THE STOCK. CAROLINE: TALK TO US ABOUT THE INCENTIVES. IS THAT A WORRY? IS IT SHINING A LIGHT ON THE FACT THAT THE PRICE POINT IS GOING TO HAVE TO CHANGE? GUEST: TESLA WILL WANT TO MAKE SURE AS MANY OF ITS VEHICLES AS POSSIBLE WILL ULTIMATELY QUALIFY FOR THE INFLATION REDUCTION ACT TAX CREDIT.
WE ARE MODELING PRICE DECREASES FOR THAT PLATFORM. TO HELP GENERATE DEMAND GROWTH. THAT IS GOING TO HELP TESLA GROW TO WHAT WE ARE FORECASTING A LITTLE OVER 1.6 MILLION
DELIVERIES IN 2023. CAROLINE: WITH ALL OF THE DAILY TUSSLES YOU GET ON SOCIAL MEDIA OR ON AIR LIKE THIS WHETHER IT'S ABOUT THE WORRIES OF IT 40% IS STILL GOOD GROWTH RATE IF WE SHOULD BE LOOKING AT DELIVERIES RATHER THAN DEMAND, WHAT IS THE THING WE SHOULD FOCUS ON NOW WHEN IT COMES TO TESLA? CHINA, DELIVERY, DEMAND? GUEST: I THINK THERE ARE TWO KEY THINGS WE SHOULD FOCUS ON. ONE IS AS WE GO INTO 2023, WHAT WILL THE GROWTH RATE BE? I DON'T EXPECT DOUBLE-DIGIT GROWTH I AM FORECASTING 24% GROWTH NEXT YEAR AND DELIVERY THEN LET'S DO THE PROPER -- WHAT DO THE PROPER METRICS LOOK LIKE? THE FIRST QUARTER OF LAST YEAR, 30% GROWTH MARGIN IN THE AUTOMOTIVE SEGMENT AND THAT WAS BEFORE THE BERLIN AND AUSTIN FACTORIES. I DO EXPECT THE GROWTH PROFIT MARGINS WILL IMPROVE. I THINK THAT HELPS GIVE CONFIDENCE THAT THE STOCK CAN STILL WORK AND GROWTH STOCK. CAROLINE: THANK YOU AS EVER TALKING ABOUT THE GROWTH STOCK THAT IS TESLA.
LOOK AT THE COMPETITIVE SIDE OF IT ALL BECAUSE ELECTRIC NICHOLS ARE JUST ALL TESLA THERE IS SO MUCH COMPETITION. FRONT AND CENTER IS GOING TO BE ON DISPLAY AT CES IN VEGAS. WE ARE USED TO CAR COMPANIES BEING THE MAIN PROPONENTS IN THE MAIN AREAS OF DISPLAY. WHAT IS IT GOING TO BE LIKE AT CES THIS YEAR? WILL WE HAVE MORE REASONABLE GROWTH STORIES FOR THESE COMPANIES? GUEST: CES IS GETTING REAL. WHAT WE ARE SEEING THIS YEAR IS DISPLAYS OF NOT FANCIFUL THINGS. WE ARE SEEING ELECTRIC VEHICLES
THAT ARE EITHER ON THE ROAD TODAY OR THEY WILL BE. EVERYBODY IS TRYING TO CATCH TESLA. THIS YEAR IT'S ALL ABOUT PRAGMATISM AND PROFITABILITY. NOT SO MUCH ABOUT POTENTIAL AND PROFITS THAT MAY COME SOMEDAY OR NOT AT ALL. WHAT CAN YOU SHOW ME THAT WILL
DELIVER RETURN NOW? CAROLINE: PRAGMATISM AND PROFITABILITY IS BASICALLY THE PHRASE FOR EVERY COMPANY FOR THE REST OF 2023. TALK TO US ABOUT BIG INTRODUCTIONS. WHAT IS GOING TO BE UNVEILED? GUEST: STILL LANTUS, THEY ARE GOING TO SHOW A CONCEPT OF AN ELECTRIC RAM PICKUP TRUCK. THIS WILL TAKE UP THE FORD F-150 LIGHTNING. ALSO RIVIAN AND TESLA.
THAT IS ONE OF THE BIG INTROS. WE WILL ALSO SEE ANOTHER ELECTRIC TRUCK THE ENDURANCE FROM LORDSTOWN MOTORS. DIGITAL CONCEPTS FROM BMW AND MERCEDES. ALL OF THESE THINGS WILL BE THINGS THAT CONSUMERS CAN GET THEIR HANDS ON SOON. THEY'RE NOT JUST SOME RESEARCH
PROJECT IN THE LAB. CAROLINE: ONES THAT HAVE BEEN MORE ON THE ROAD HAVE BEEN SELF-DRIVING. WE KNOW THAT HAVE BEEN TRYING VERY HARD IN THIS SPACE. ARE WE GOING TO GET ANYTHING IN
THIS FOCUS POINT? GUEST: AGAIN, PRAGMATISM. WHAT WE HAVE NOW IS INSTEAD OF THE FREE RANGE ROBO TAXIS THAT WILL TAKE US EVERYWHERE, WE ARE GOING TO SEE A SELF-DRIVING TRACTOR FROM JOHN DEERE. THAT IS A SORT OF THING THAT AUTONOMY IS FOCUSED ON. IT'S THESE USE CASES THAT ARE NEEDED TODAY AND THAT WILL GENERATE A RETURN OUT. THE INFLECTION POINT WAS ARGO THE SELF-DRIVING UNIT OF FORD AND VW GOING DOWN, THAT HAS MADE THIS CES FAR MORE SOBER.
PEOPLE ARE LOOKING AT HOW CAN I MAKE A PROFIT TODAY NOT TOMORROW? CAROLINE: SOBER, PRAGMATIC, I'M NOT SURE THOSE WILL SUM UP THE ENTHUSIASM WE WILL GET FROM ED LUDLOW ON THE GROUND. DON'T FORGET THURSDAY AND FRIDAY FULL OF ENERGY BLOOMBERG TECHNOLOGY LIVE FROM CES IN LAS VEGAS. WE WILL BE CHATTING WITH SO MANY LEADERS. YOU DON'T WANT TO MISS IT.
COMING UP, AI IS ALL ABUZZ IN SIGEL CAVALLI -- SILICON VALLEY. WHAT ARE THE BEST STRATEGIES TO INVEST? THIS IS BLOOMBERG. ♪ CAROLINE: THE U.S. GOVERNMENT HAS SEIZED OR IS IN THE PROCESS OF SEIZING ROBINHOOD SHARES AS PART OF THE FRAUD CASE AGAINST SAM BANKMAN-FRIED. THE SHARES HAVE BEEN CLAIMED BY VARIOUS CREDITORS WHO FILED COURT CASES TO TRY TO CONTROL THEM. THIS IS ALL PART OF THE GOVERNMENT'S FRAUD CASE AGAINST SAM BATEMAN FREED AND OTHER OFFICIALS. MEANWHILE MAYBE CRYPTO WAS THE
HOT THING IN 2022, NOW THE HOT THING IS AI. MICROSOFT IS REPORTEDLY UPGRADING ITS SEARCH ENGINE WITH IT. OTHER TOOLS HAVE GOT US ALL PONDERING THE IMPLICATIONS THE USE CASES AS WE CREATE TEXT, IMAGES, VIDEOS, SOFTWARE, CODE, MUSIC. MY NEXT GUEST IS THINKING ON THIS MORE THAN MOST. HE IS HERE TO EXPLAIN THE FACT THAT BACK IN OCTOBER BEFORE WE GOT ENGROSSED IN IT, YOU SAID THE BIGGEST CHANGE TO THE INTERNET IS ALREADY UPON US.
YOU SAID IT WAS AI AND THE APPLICATIONS. GUEST: THANK YOU FOR HAVING US ON. WE ARE ONE OF THE LARGEST SEED FUNDS IN THE WORLD AND OUR JOB IS TO BE ON THE FRONT EDGE. WE ARE EARLY IN THIS PROCESS. WE ARE HEAVY INTO IT BECAUSE WE THINK IT'S GOING TO AFFECT EVERY INDUSTRY.
THERE'S GOING TO BE A NUMBER OF UNICORNS BUILT OVER THE NEXT FOR FIVE YEARS IN THIS AREA SO WE HAVE BEEN INVESTING HEAVILY. CAROLINE: WHICH PARTS OF THE MOST FRUITFUL RIGHT NOW? I SEE PEOPLE BEING SOMEWHAT CONCERNED ABOUT THEIR FUTURE JOB DESCRIPTIONS. WHICH ARE THE MOST PRACTICAL USE CASES YOU HAVE SEEN ALREADY? GUEST: ON OUR WEBSITE, WE HAVE PUBLISHED THE LARGEST MARKET MAP OUT THERE. 32% OF THE COMPANIES OF THE $13 BILLION INVESTED IN THEM HAS GONE INTO GENERAL AI MODELS THAT ARE NOW POWERING.
WE THINK OF THIS LIKE WE WOULD THINK OF FIBEROPTICS IN THE LATE 90'S THAT LAID THE GROUNDWORK FOR THE INTERNET. GOING FORWARD, WE THINK THERE WILL BE MORE INVESTED IN THE UPPER LAYERS OF THAT STACK. WE THINK THERE WILL BE THREE BIG WINNERS. THE FIRST IS THE COMPANIES THAT
MOVE VERY FAST TO BUILD SAAS SOFTWARE TO DO THINGS LIKE COPYWRITING OR VIDEO EDITING. WE ARE SEEING THAT ALREADY WITH COMPANIES LIKE JASPER. THE SECOND GROUP IS GOING TO BE COMPANIES THAT USE AI AT THE CORE OF THINGS LIKE MARKETPLACES AND PAYMENT STRUCTURES BUT AREN'T EXACTLY DELIVERING THE AI TO THE CUSTOMER. THEY ARE BUILDING IT IN TO CREATE A MORE COMPETITIVE BUSINESS. THE THIRD ONE IS GOING TO BE THE VISIONARIES WHO DO BUSINESSES THAT WE HAVEN'T EVEN THOUGHT OF YET. THAT'S TYPICALLY THE WAY THINGS ROLLOUT. CAROLINE: HOW DO YOU SEEK OUT THE
VISIONARIES? YOU HAVE ONE PROGRAM WHERE YOU TAKE A WHOLE LOT OF TECHNOLOGY COMPANIES YOU GET THEM TO PITCH AND WITHIN A SWIFT TURNAROUND, YOU DECIDE IF THEY ARE A BUSINESS BATTLE -- BUSINESS MODEL YOU WANT TO BE FUNDING. IS THAT THE CUTTING EDGE WERE PEOPLE HAVEN'T THOUGHT ABOUT THE PRACTICAL APPLICATION? GUEST: YES WE HAVE INTERVIEWED OVER 100 COMPANIES OVER THE LAST TWO MONTHS AND WE ARE GETTING A GOOD SENSE OF WHERE THINGS ARE MOVING AND GETTING STUCK. THE THINKING OF THE FOUNDERS YET HASN'T MOVED PAST THE OBVIOUS IDEAS. WHAT WE'RE DOING IN THESE CONVERSATIONS IS TRYING TO FIGURE OUT WHO HAS THE ABILITY TO TAKE THE LEAP FOR THE NEXT LEVEL FOR WHAT'S GOING TO BE SUCCESSFUL FOR NEXT SUMMER AND THE END OF 2023. WHAT WE'RE SEEING NOW IS THE
COPYCATS OF WHAT WE SAW AS SUCCESSFUL A YEAR-AND-A-HALF AGO. CAROLINE: I'M INTERESTED IN AS WE HAVE LEARNED SOME OF THE REPERCUSSIONS OF ALL THE MONEY IN THE WORLD AND NOT SOME OF THE SAFETY IN PLACE, THE GOVERNANCE THAT WE WOULD LIKE TO SEE AT CERTAIN BUSINESSES, HOW ARE YOU ENSURING YOU'RE GETTING THE RULES OF THE ROAD IN PLACE WHEN YOU SEND THAT COMPANY MONEY? GUEST: THE PROGRAM RIGHTS CHECKS TO COMPANIES WITH 2-10 PEOPLE. WE ARE GIVING THEM SO MUCH MONEY THAT THEY CAN START BEHAVING BADLY. THE SECOND THING IS WE SIT DOWN TO TALK TO THEM ABOUT HOW TO PUBLISH AND FOLLOW ON THEIR VALUES AND THE THINGS THEY ARE GOING TO ADHERE TO.
AI LIKE THE INTERNET CAN BE USED FOR GOOD OR BAD. WHETHER IT'S RACIST OR SEXIST COMMENTS OR USING IT TO GENERATE IMAGES THAT ARE UNSEEMLY, YOU HAVE TO HAVE RULES OF THE ROAD THAT YOU PUBLISH YOU COMMIT TO YOUR COMMUNITY AND YOU WANT TO BEHAVE ALONG THOSE LINES. CAROLINE: IS THERE ANY, DOES THIS NEED TO COME FROM A FEDERAL LEVEL? FROM AN INTERNATIONAL ORGANIZATION LEVEL TO THINK ABOUT HOW WE PUT THE RULES IN PLACE THAT WE ARE BUILDING PURPOSEFUL AI THAT IS AND THAT POSITIVE NEVER A NEGATIVE CONTRIBUTION? GUEST: WE THINK SO. WITH THICK IT OUT WITH THEIR
COMMUNITY. WE WANT THE GENERATIVE AI COMMUNITY TO DO A LOT BETTER JOB AT LAYING OUT THE PRINCIPLES AND VALUES THEY NEED TO ADHERE TO. THAT'S ALWAYS THE FIRST STEP BECAUSE AS WE EXPLORE THESE TECHNOLOGIES, WE WHO ARE BUILDING THEM UNDERSTAND THE STRENGTH AND WEAKNESSES THE BEST BUT LONG-TERM, WE NEED TO HAVE FEDERAL AND INTERNATIONAL GUIDELINES THAT WE CAN ALL ADHERE TO AND HOPEFULLY WE WILL GET THAT IN CRYPTO PRETTY SOON. CAROLINE: BRIEFLY, LOOKING AT THESE DIFFERENT COMPANIES, WHERE ARE THEY BEING BUILT? GUEST: WE ARE SEEING A LOT OF THEM IN EUROPE, ISRAEL. MOST OF THEM ARE BEING BUILT HERE IN THE U.S.. ON TOP OF THE GREAT EFFORTS THAT GOOGLE AND OTHERS HAVE DONE OVER THE YEARS, TO BUILD UP A OF MACHINE LEARNING AND ARTIFICIAL INTELLIGENCE PEOPLE. WE HAVE A LOT OF UNIVERSITIES
HERE PUTTING OUT A LOT OF PHD'S AND MASTER'S IN THIS ARIA -- AREA. WE HAVE A LOT OF GREAT TEAMS GOING AFTER THIS AS WE HAVE FOR THE LAST SIX YEARS IT'S JUST THE PROCESSING POWER AND THE COST IS COME DOWN SO MUCH IN THE LAST 24 MONTHS THAT IT EXPLODED IN THE LAST THREE MONTHS. CAROLINE: IT IS BEEN GREAT SPEAKING WITH YOU. THANK YOU FOR TAKING THIS THROUGH AHEAD OF THE CURVE.
COMING UP, WHAT SILICON VALLEY CAN EXPECT IF KEVIN MCCARTHY EVENTUALLY BECOMES SPEAKER OF THE HOUSE. THIS IS BLOOMBERG. ♪ . CAROLINE: TIME NOW FOR GOING VIRAL. #HOUSE OF REPRESENTATIVES. #C-SPAN. WEDNESDAY KEVIN MCCARTHY FAILED FOR THE SIXTH TIME TO RALLY REPUBLICANS. THAT MEANS BUSINESS WILL NOT BE CONDUCTED UNTIL IT IS SETTLED.
CURRENT CHAOS ASIDE, WHAT CAN HE -- WHAT CAN KEVIN MCCARTHY AS A LEADER MEAN FOR TECHNOLOGY? HE AIMS TO STOP COMPANIES FROM PUTTING POLITICS AHEAD OF PEOPLE. WE HAVE SEEN BIG CHANGES ALREADY FOR EXAMPLE AT TWITTER. YESTERDAY THE COMPANY ANNOUNCED AN EASING OF ITS POLITICAL ADS BAN.
THIS IS GOING TO BE SOMETHING SILICON VALLEY WILL KEEP AN ION. THAT DOESN'T FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. STAY TUNED FOR THOSE VOTES YET TO COME FROM WASHINGTON. TOMORROW, ALL EYES TURNED TO LAS VEGAS. ED LUDLOW IS GOING TO JOIN US AGAIN WITH CROWD STRIKE CEO ON HIS 2023 CYBERSECURITY OUTLOOK. PLUS DON'T FORGET TO CHECK OUT OUR OWN PODCAST. YOU CAN FIND IT ON THE TERMINAL, APPLE,
SPOTIFY, AND I HOT -- I HEART. FROM NEW YORK, THIS IS BLOOMBERG. ♪
2023-01-05