Disney Earnings | 'Bloomberg Technology' Full Show (02/08/2023)
CAROLINE: I'M CAROLINE HYDE NEW YORK. CAROLINE: AND I'M ED LUDLOW. CAROLINE: WE HAVE A LOT TO DIGEST TODAY ON THE DISNEY FRONT. IT IS FRONT AND CENTER AS THE COMPANY CUT SEVEN -- 7000 JOBS.
ED: GOOGLE SHARES TUMBLING THE RISE OVER THE ACCURACY OF THE SEARCH DRIVE AI TECHNOLOGY. WE WILL BRING YOU THE DETAILS. CAROLINE: WE WILL DISCUSS THE FIRST EVER TRADEMARK TRIAL EXAMINING NFT'S AS THE CASE TESTS CONSUMER PRODUCTS ALL THAT AND SO MUCH MORE COMING UP FOR WE GET TO THE MARKETS MARKETS WERE LOWERED TODAY. BASICALLY JUST GIVING BACK WHAT
WE GAINED YESTERDAY. DOWN 1.7%. THIS IS ABOUT THE FEDERAL RESERVE THE LINE ABOVE THE OTHER FOMC MEMBERS TALKING ABOUT NEED TO CURTAIL INFLATION. WE GET A LITTLE MORE BEARISHNESS.
WE SEE THE FIX PICKING UP SO CLEARLY VOLATILITY IN THE AIR. AS WE SEE THE FEDERAL RESERVE IS TRYING TO TALK UP MORE FOCUS ON INFLATION PERHAPS MORE HIKES. CRYPTO HAS BEEN ON THE DOWNSIDE. WE ARE HOLDING ONTO OUR GAINS BUT IT IS AT 22,950. ED:
THE BIGGEST READ FROM A STANDPOINT PERSPECTIVE ALPHABET DOWN. WORRIES ABOUT THE ACCURACY OF VIDEO THE COMPANY PUT OUT GETTING A FALSE READING OR A FALSE ANSWER TO A QUESTION POSED THROUGH AI. THE UPSIDE BUCKING THE TREND EVEN THOUGH WE ARE DOWN BROADLY NETFLIX UP 1% AS IT EXPANDS THE PASSWORD SHARING INITIATIVES.
TESLA UP 2.3%. HIGHEST NUMBER SINCE NOVEMBER. AND WHAT WE MIGHT EXPECT AND THEN UBER UP 5.5%. SEEMS TO BE RIDESHARING IS IN GOOD HEALTH AT LEAST FOR UBER. EVERYONE WANTS TO HEAR ABOUT DISNEY. SHARES REALLY ACCELERATING THEIR GAINS.
NOT NECESSARILY ON THE BEAT ON THE BOTTOM LINE BUT WHAT THEY HAD TO SAY ABOUT GOING FORWARD. TARGETING 5.5 BILLION DOLLARS IN COST REDUCTIONS. CUTTING 7000 JOBS BUT WE THE PROFIT VERY DENSE ARE THE DIRECT CONSUMER IN 2024.
THOSE ARE THE TAKEAWAYS. AS GO DEEPER ON DISNEY AND GET DIRECTION WITH ROSS CARVER. WEALTH MANAGEMENT, 2.2 BILLION DOLLARS AND HOLDS DISNEY SHARES, ROSS WHAT WAS THE MOST IMPORTANT IT FOR YOU? WHAT IS IT YOU THINK IS DRIVING THE SHARES HOW -- HIGHER? >> IT SHOWS THE BUSINESS IS NOT ONLY STABLE BUT HAS THE POTENTIAL FOR A LOT OF GROWTH. WHEN YOU LOOK AT THESE OF LOSSES, BUT SAY IT DISNEY PLUS IT WAS A HOT START IN THE INDIAN PART OF THEIR BUSINESS HOT STAR AND IT WAS A MINIMAL AMOUNT OF PEOPLE IN THE COST SUBSCRIBERS. WHEN YOU LOOK AT DISNEY PLUS AND THE ABILITY TO MAKE MONEY OFF OF THIS IN THE FUTURE AND THE COST CUTS BUT THEN HOW STRONG THE PARKS AND RESORTS BUSINESS CONTINUES TO BE AND WITH IGER BACK AT THE HELM, THE BUSINESS IS WORKING TOGETHER AT SOME POINT IN THE NEXT 12 MONTHS.
IT GETS EARNING MOMENTUM BACK. I LOVE THE REPORT, BUT I HAVE SEEN SO FAR. ED: EPS BEAT IN THE FISCAL FOURTH-QUARTER AND REITERATING THAT GUIDANCE HIT PROFIT IN THAT D TO C BUSINESS. HOW MUCH FOR YOU IS THAT IGER DOING THIS? THE EFFECTIVE -- THE EFFECT OF HIM COMING BACK IN? >> THERE IS A PSYCHOLOGICAL EFFECT AND A REAL EFFECT. WITH IGER BACK AT THE HELM DISNEY IS REALLY DRIVEN BY CONTENT AND IT'S SOMETHING A LOT OF PEOPLE FORGET THAT MAKING GREAT MOVIES IS WHAT ULTIMATELY DRIVES EVERYTHING AT DISNEY WHETHER IT'S CONSUMER PRODUCTS, PARKS, OR DISNEY US. IGER IS FOCUSED ON CONTENT AND HIS RELATIONSHIPS IN HOLLYWOOD TO GET BETTER CONTENT AND MAKE BETTER CONTENT.
IT REALLY BODES WELL FOR DISNEY OVER THE SHORT AND MEDIUM-TERM. SCARLET: LONGER-TERM, CAN THEY SQUARE THE CIRCLE OR COST CUTS AND GREAT PRODUCTION? HOW HAS THE RESTRUCTURING OF THE BUSINESS AND PERHAPS GIVING MORE POWER BACK TO CREATORS GOING TO ENSURE THEY HAVE THE BALANCE? >> I THINK A LOT OF BUSINESSES ARE DEALING WITH THIS WHERE THEY GREW A LOT OF PEOPLE OVER THE LAST FOUR YEARS AND NOW PEOPLE ARE TRYING TO WRITE THEIR BUSINESSES. SO I THINK HAVING, YOU'RE GOING TO SEE THIS IN A LOT OF COMPANIES. MAKING SURE THAT ALL OF THEIR EMPLOYEES ARE CONTRIBUTING THE AMOUNT NECESSARY TO GET THE RESULTS NEEDED FROM A FINANCIAL PERSPECTIVE IS REALLY IMPORTANT THAT IT'S ALSO PREDICATED UPON NOT HURTING YOUR ENCORE BUSINESS AND I THINK IGER IS THE PERSON TO IMPLEMENT THE STRATEGY FOR DISNEY. THAT'S WHAT I THINK THE MARKETS LIKE HIM.
LOOKING AT NEW TOY STORIES, NEW FROZEN, MY CHILDREN WILL BE THRILLED. IN LOOKING AT WHAT HE HAS BEEN SAYING ON THE CALL. TAKE A LOOK AT WHAT HE IS SAYING ON THE TERMS OF CURE RATION. >> WE WILL CURATE OUR CONTENT, WE WILL REASSESS ALL MARKETS WE LAUNCH AND DETERMINE THE RIGHT BALANCE BETWEEN GLOBAL AND LOCAL CONTENT. WE WILL ADJUST OUR PRICING
STRATEGY, INCLUDING A FULL EXAMINATION OF OUR PROMOTIONAL STRATEGY. CAROLINE: YOU REMINDED US OF HOW BIG DISNEY PLUS ARE GENERALLY D TO SEE IS IN INDIA. HOW MUCH OF A FOCUS DOES DISNEY NEED INTERNATIONALLY AT THE MOMENT? >> IT'S REALLY INTERESTING BECAUSE NETFLIX FOR EXAMPLE IS A GLOBAL BUSINESS AND YOU LOOK AT THE CONTENT TODAY AND YOU ARE GETTING CONTENT FROM LIKE ALL OVER THE PLACE. A LOT OF IT IS REALLY GOOD. THEY HAVE BEEN DOING REALLY
GOOD WITH SUBTITLES AND I THINK DISNEY NEEDS TO DO THE SAME THING. INDIA IS A HUGE MARKET FOR DISNEY PLUS HOT STAR AND IT IS A DEEP MOVIE FOCUSED CONSUMER THERE. WE'VE GOT TO MAKE CONTENT THAT REALLY SERVES THE DIFFERENT AUDIENCES THAT ARE PAYING FOR DISNEY BUT WE ALSO HAVE TO DO IT IN A WAY THAT MAKES ECONOMIC SENSE AS WELL. I THINK THAT IS A REAL CHALLENGE THAT STREAMERS BASED ON AN INTERNATIONAL LEVEL BUT FOR DISNEY, THE CORE MOVIE AND PRODUCTION MOST PEOPLE AROUND THE WORLD LIKE THAT CONTENT. DISNEY HAS A GREAT POSITION TO LEVERAGE CONTENT IN EVERY MARKET. ED: WILL THIS NEWS LIKE KATE PELTZ? WILL HE STEP ABACK A BIT FROM HIS TIME TO DO? >> I THINK PELTZ IS MISGUIDED AND I WISH HIM WELL BUT HE'S ATTACKING THE WRONG PEOPLE AND HE IS WRONG ABOUT HIS BASIC PREMISE. HE SAID DISNEY IS IN CRISIS AND
UNLIKE WHAT ARE YOU TALKING ABOUT? I DON'T THINK HE HAS THE SKILL SET TO ADD ANYTHING TO THE DISNEY BOARD. HE'S WENT TO MAKE MONEY ANYWAY. AND IT'S A TOP HOLDING BUT HAVING IGER BACK IN THE TEAM THEY HAVE AT DISSING, THIS IS THE IDEAL SITUATION AND OUTTHINK BREAKING UP THE BUSINESS EXPENDING OFF ESPN MAKES ANY SENSE. I THINK IGER IS THE RIGHT PERSON TO DO THIS AND PELT IS BARKING UP THE WRONG TREE. CAROLINE: STILL 44% BUT THERE ISN'T OPTIMISTIC RISK OVER THERE.
MEANWHILE, LET'S TALK ABOUT NETFLIX. SINCE IT IS ROLLING OUT THE PAID SHARING FEATURE. THE STREAMING SERVICE IS ANNOUNCING CANADA, NEW ZEALAND, PORTUGAL, AND SPAIN CAN ADD AN EXTRA ACCOUNT FOR UP TO TWO PEOPLE THEY DON'T LIVE WITH ANY COST. THAT IS AS IT LOOKS TO STAMP OUT COSTS -- PASSWORD SHARING OUTSIDE OF THE HOUSEHOLD. IT IS EXPECTED TO DO SO IN THE
UNITED STATES BY THE END OF THE FIRST QUARTER. ED: LET'S GET BACK AND TALK ABOUT MORE MACROS AS CARRIE SAID IN THE SHOW EARLIER. GIVING BACK WHAT HAS BEEN A PRETTY LONG RUN OF GAINS. LET'S BRING INFIDELITY DIRECTOR DENISE CHISHOLM GOING BACK TO THE 1960'S SHE'S BEEN TRACKING IT.
OF COURSE FIDELITY ASSET HAS MORE THAN $3.6 TRILLION IN ASSETS UNDER MANAGEMENT. IT'S INTERESTING, DENISE, TO SIT HERE WITH CAROLINE EACH DAY. WE GO THROUGH THE BLOW-BY-BLOW OF THE MARKETS. EVEN IF YOU GO BACK TO JUST THE START OF THE YEAR, WE HAVE GONE FROM THIS POSITION OF FORCE TO FIRST IN THE TECHNOLOGY SECTOR. SOME OF THE FUNDAMENTALS DON'T
BACK THAT UP. >> THAT OFTEN HAPPENS. YOU CAN SEE IT THROUGH HISTORY WERE STOCKS FOLLOW EARNINGS A LOT OF THE TIME. BUT NOT ALL OF THE TIME AND A LOT OF SECTORS CAN GET DISCOUNT BAD NEWS IN ADVANCE. I THINK THIS IS WHAT YOU ARE
STARTING TO SEE IN TECHNOLOGY. WHAT WE SAW LAST YEAR, ESSENTIALLY DOWNSIDE LEADERSHIP, WAS NOT JUST THE RATIONALE BEHIND THE FACT THAT INTEREST RATES WENT UP, INFLATION WENT UP, IT WAS ALSO YOUR STARTING POINT ON RELATIVE VALUATIONS. TECHNOLOGY WAS REALLY IN THE TOP FOUR SINCE WE HAVEN'T SEEN ANYTHING LIKE THAT UNTIL 2005. THAT WAS REALLY ONE OF THE KEY CATALYSTS FOR THE CORRECTION WE SAW LAST YEAR. A LOT OF THAT VALUATION HAS BEEN WORKED OFF. TECHNOLOGY IS NOT THE DOMINANT SECTOR WE HAVE SEEN OVER THE LAST DECADE WHICH ARE VERY SUPPORTIVE BUT IT'S ALSO NOT THAT VERY EXPENSIVE MARKET EITHER. CAROLINE:
WHEN IS RELATIVE? WE NEED TO SEE THE REST OF THE MARKET AND BY THAT WE MEAN BASICALLY NOT THE GROWTH STOCKS BUT MORE OF THE ENERGY NAMES, TRIED AND TRUSTED VALUE COMPANIES TO GET HIGHER EVALUATION OR DO WE NEED MORE TECHNOLOGY OF VALUATIONS? >> I THINK THERE ARE A LOT OF DIFFERENT WAYS YOU CAN MARKET OFF. YOU CAN ALSO HAVE A POSITIVE CATALYST. ONE OF THE CATALYSTS, HISTORICALLY, SOMETHING INVESTORS MIGHT BE MISSING OUT ON NOW IS DISINFLATION. WHEN INFLATION DECELERATES, YOU USUALLY HAVE MARGINS BETTER THAN EXPECTATIONS. THIS IS TRUE IN THE OVERALL MARKET ENTER ANY TECHNOLOGY. THAT IS ONE OF THE REASONS WHY
YOU HEAR PEOPLE SAY IN A HIGH INFLATIONARY ENVIRONMENT, USUALLY EARNING RECESSIONS ARE LESS BAD. IS NOT NECESSARILY THAT INFLATION IS GOOD FOR MARGINS BUT IT IS BECAUSE INFLATION IS HIGH AND CAN DECELERATE AND CAN PROVIDE A TELL WENT FOR MARGINS THAT ISN'T TYPICAL. ED: I KNOW YOU ARE A CHART WATCHER. I BRING YOU ONE OF MY OWN. THE PLUS INDEX RATIO TO THE S&P 500 ON AN EQUAL-WEIGHTED BASIS A YOU CAN KIND OF COMPARE THE TECH STOCKS TO THE AVERAGE STOCK AND KIND OF BETTER COMPARISON. WHAT WE LEARN IS BIG TECH IS SAYING AGAINST CONSENSUS BY SINGLE DIGITS. LOOK AT THE PERFORMANCE SO FAR THIS YEAR WILL THAT CONTINUE BASED ON PAST PRESIDENT? >> YES FROM AN EQUAL WEIGHTED PERSPECTIVE THERE IS A TON OF VALUATION SUPPORT IN TECHNOLOGY AND THAT IS REALLY THE INTERESTING THING. I THINK PEOPLE WANT VALUE
VERSUS GROWTH AND I THINK VALUE IN GROWTH IS WHAT YOU MIGHT NEED TO FOCUS ON. LIKE I SAID, WHEN YOU STEP BACK AND THINK ABOUT THE TECHNOLOGY SECTOR I THINK IT'S PROBABLY NOT DOMINANTLY YOUR -- YOU SAW LAST YEAR IT MIGHT BE MORE IN THE MIDDLE BUT IT DOESN'T MEAN THE INVESTORS, THERE AREN'T SPOTS YOU CAN PEEK. TECHNOLOGY LOOKS ARE MEDICALLY DIFFERENT. WHICH OF USUALLY LED TO REALLY STRONG OUTPERFORMANCE. EQUAL WEIGHTED TECHNOLOGY LOOKS FAIRLY DIFFERENT ON COME -- COMPELLING VALUATION LEVELS. CAROLINE:
IT'S INTERESTING WE HAVE BEEN TALKING TO THOSE THAT MANAGE CERTAIN STOCK EXCHANGES AND WE UNDERSTAND THAT PERHAPS NOT MANY IPOS ARE BECOMING THICK AND FAST BUT MAY BE PERFORMANCES FROM SOME OF THESE COMPANIES AND WE SPOKE TO ADINA FRIEDMAN AND WHAT SHE HAD TO SAY ABOUT HER OPTIMISM. >> I THINK THE BIG TECHNOLOGY COMPANIES HAVE HUGE OPPORTUNITIES IN FRONT OF THEM. THEY ARE LEANING IN AS HARD AS THEY CAN AND I THINK THEY ARE BRINGING THE ECONOMY FORWARD SO I MAY BIG BELIEVER OF TECH. CAROLINE:
I'M SURE IT'S HER JOB TO BE A BIG BELIEVER IN BIG TECH BUT ULTIMATELY, DENISE, WHAT ABOUT INTERNATIONAL BIG TECH? OR DO YOU THINK WE CAN BE DOMESTICALLY FOCUSED? I'M INTERESTED TO SEE IF YOU THINK IT IS GOING FORWARD. >> I THINK WE DO WANT TO BE DOMESTICALLY FOCUSED. IT IS IN PART BECAUSE AS WE JUST HEARD THE COMPANIES. WHEN I HEAR COMPARISONS GOING TO THE.COM ERA DURING THAT TIME BEFORE THE RECESSION HIT NET MARGINS WERE NETTING.
NOT ONLY ARE NET MARGINS POSITIVE THEY ARE THE HIGHEST THEY HAVE BEEN SINCE THE 1960'S. THESE ARE MUCH BETTER COMPANIES AND THAT SECULAR TREND IS DOMINANT IN THE U.S.. EACH CYCLE, THEY MADE MORE AND MORE PROFIT FOR CASH FLOW. I EXPECT THAT TREND WILL CONTINUE. ED:
DENISE CHISHOLM, DATA CURRENT OR, CHART WATCHER, THANK YOU FOR GOING WITH MY CHART. IF YOU DIDN'T LIKE IT I WAS GOING TO BLAME OUR MARKET EDITOR. THANK YOU VERY MUCH FOR YOUR TIME. COMING UP, GOOGLES AI AMBITIONS FACING HURDLES OVER ACCURACY. WE WILL BRING YOU THE DETAILS NEXT.
ROBINHOOD SHARES AND SALES. SOME INTERESTING FINANCIALS AND HERE WE ARE, 5% HIGHER. CAROLINE: THE BIG TAKEAWAY FOR ME IS THE CANCELING OF HALF A BILLION OF SHARES. SO CLEARLY FEELING THEY HAVE TO PULL BACK IN TERMS OF THEIR OWN WINS AS THEY ARE STILL TRYING TO RIGHT SIZE THIS BUSINESS.
WHILST 166 MILLION. >> SHERIFF'S SINK WEDNESDAY AFTER REPORTS THAT A VIDEO BOWS -- POSTED TWO DAYS EARLIER DEMONSTRATING AI POWERED SEARCH HAD AN IN ACCURACY. IN A CLIP BARRED IS ASKED WHAT DISCOVERIES CAN I TELL MY NINE-YEAR-OLD ABOUT IN RESPONSE IT SAID JW AS T TOOK THE VERY FIRST PICTURES OF A PLANET OUTSIDE OF OUR OWN SOLAR SYSTEM. THAT'S NOT TRUE. THE FIRST PICTURE TAKEN OF A PLANET OUTSIDE OF OUR SOLAR SYSTEM WAS TAKEN BY A VERY LARGE TELESCOPE IN 2004 WHEN IT WAS DEPLOYED AT THE END OF 2021. IT IS A CHALLENGE TO GOOGLE'S MICROSOFT WORK.
TO IMPROVE BING. GOOGLE TOLD ME THIS HIGHLIGHTS THE IMPORTANCE OF RIGOROUS TESTING WHICH WILL START THIS WEEK. IT WILL ALSO TAKE ON EXTERNAL FEEDBACK. ED:
I MEAN THE EXTERNAL FEEDBACK I WAS TALKING ABOUT WAS PROBABLY THE MARKET REACTION, SHARES FOLLOWING -- FALLING. THIS VIDEO CAME OUT ON MONDAY AND IT TOOK TWO DAYS FOR JOURNALISTS IN THE TO NOTICE. BUT ALSO ALPHABET AND GOOGLE VOICE SAID THIS IS EXPERIMENTAL RIGHT NOW. THE MARKET IS IMPATIENT. CAROLINE: AND IT'S FUNNY THEY LET OPEN AI ON THE FACT THEY WERE GOING TO SEE A LOT OF PROBLEMS BUT GOOGLE ALWAYS HAS A VICTIM OF ITS ON SUCCESS. IT DOESN'T WANT TO FRONT RUN
AND GO TO QUICKLY. IT'S INTERESTING WHEN WE ASKED OUR OWN AUDIENCE WHEN WILL GENERATIVE AI BE ACCURATE. ACTUALLY, GIVE IT 5-10 YEARS WE ARE GOING TO LET THEM TO THE DATA AND GET THE ACCURACIES OUT THERE. ED: LET'S JUST GET MORE DETAILS AND BRING DAVEY. WE WENT OVER THE BASICS OF THE STORY AROUND THE ANSWER AROUND THE TELESCOPE THAT I GUESS LET'S START WITH WHAT DOES THIS MEAN RIGHT NOW FOR ALPHABET AND GOOGLE? HAS THE RESPONSE BEEN TO WHAT'S BEEN A PRETTY MARKET DATE AND SKEPTICISM AROUND BARRED. >> I THINK GOOGLE'S RESPONSE HAS BEEN THIS IS STILL IN TESTING MODE. RIGHT NOW IT'S ONLY OPEN TO A
FEW TRUSTED TESTERS THAT HAVE ACCESS WITHIN THE COMPANY AND IT IS STILL IRONING OUT THE KINKS. WE HAVE DONE SOME REPORTING THAT THIS IS NOT SOMETHING THAT SEEMS READY FOR PRIME TIME JUST YET WHICH IS WHAT THEY ARE KEEPING IT SORT OF UNDER WRAPS TO THE WIDER PUBLIC AT LEAST FOR NOW. CAROLINE: SOME OF THE IRON HE -- IRONING IN ALL OF THIS IS WHAT FELT LIKE GOOGLE REALLY REALIZE THE HEADACHE IT MIGHT HAVE IF IT PUT SOMETHING INTO THE OPEN AND IT GOT IT WRONG. DO YOU THINK THE CODE RED THEY PULLED IS GOING TO HAVE TO BE STILL PULLED? >> I THINK TO SOME EXTENT THE MARKET PRESSURES OR SOMETHING THEY CAN'T IGNORE ANYMORE AT THIS POINT. THERE IS A HUGE THREAT FROM OPEN AI AND YOU KNOW IN THE LAST DAY WE FOUND IT'S NOT SORT OF JUST THE CHATGPT BUT MICROSOFT IS INTEGRATING A COUSIN OF CHETGPT INTO ITS SEARCH AS WELL. SO THIS IS ALREADY HITTING AT
GOOGLE'S CORE BUSINESS SEARCH AND THEY HAVE TO RESPOND. THIS IS WHAT THEY ARE DOING. ED: THE TIMING OF THIS, DAVEY, STRANGE PROBABLY BECAUSE THE VIDEO WAS PUBLISHED TWO DAYS AGO BUT THERE WAS ALSO THIS BIG EVENT IN PARIS TODAY. WHAT DID WE ACTUALLY LEARNED ABOUT THE STRATEGY FROM GOOGLE AROUND AI FROM THAT EVENT? >> IT SEEMS LIKE GOOGLE IS BEING VERY CAREFUL ABOUT ROLLING THIS OUT. THE EVENT SORT OF GAVE A LITTLE
BIT MORE BY WAY OF DEMONSTRATIONS AND EXAMPLES OF BARD. WE SAW IT SORT OF SHOWING WHAT CONSOLATIONS YOU'VE CAN LOOK FOR IN THE SKY, FOR INSTANCE. OR ADVICE ON VERY LOW STAKES SITUATIONS.
B ISAR IN A PLACE WHERE IT CAN'T GIVED MEDICAL OR LEGAL ADVICE RESPONSIBLY AND GOOGLE IS SORT OF CLAMPING DOWN ON THE EXAMPLES IT IS WILLING TO SHOW PUBLICLY. I THINK THE KEY POINT FOR PEOPLE TO UNDERSTAND IS THAT THESE LARGE LANGUAGE MODELS, THEY ARE NOT REALLY GOOD FOR CONSISTENTLY TROOP STATEMENTS. THEY ONLY SPIT OUT STATISTICALLY CONSISTENT STATEMENTS. PHRASES THAT APPEAR TOGETHER
AND THAT'S KIND OF WHERE WE ARE AT RIGHT NOW. CAROLINE: YOU BREAK IT DOWN BEAUTIFULLY. COMING UP, NON-FASHIONABLE TOKENS. SEE WHAT WE DID THERE? AND FTES. ARMIES DEFEATS MEADOWBROOK CANEY'S IN NFT INTELLECTUAL PROPERTY. ED: I'M LOOKING AT SHARES AFTER HOURS. THIS COMPANY CUTTING 19% OF ITS WORKFORCE BUT ALSO FOR THE DECEMBER QUARTER LOSS $322 CAROLINE: HERMES HAS WON A LAWSUIT.
A MANHATTAN FEDERAL JURY THE SALES VIOLATED RIGHTS TO THE BURKETT TRADEMARK. IT COULD BE A SETBACK FOR THE NFT TRADEMARK. ULTIMATELY, THIS IS ALL ABOUT A COMPANY TRYING TO UNDERSTAND REALLY WHO WINS OUT. HERMES MANAGES TO WIN OUT IN THIS CASE.
CAROLINE: WELCOME BACK. UBER SHARES TODAY UP AS MUCH AS 7% AFTER REPORTING REVENUE CLIMBING 49%. THAT BEAT ANALYSTS ESTIMATES. THE CEO TALK TO US ABOUT
EARLIER. >> FOR US WHAT WE ARE SEEING IS WHILE THERE HAS BEEN AN DOWNTURN IN TERMS OF COMPANIES NEED TO BE MORE CONSERVATIVE IN TERMS OF SPEND, THE CONSUMER IS STAYING STRONG. CONSUMER SPEND CONTINUES TO BE STRONG AND ALSO, WE ARE BENEFITING FROM A SHIFT OF CONSUMER SPEND FROM RETAIL BUYING STUFF WHEN YOU'RE HOME TO SPENDING ON SERVICES. GOING TO RESTAURANTS, TRAVELING. UBER IS BENEFITING FROM THAT. THAT'S WHY YOU ARE SEEING GROSS BOOKINGS GROWTH OF 24% WITH THE MOBILITY BUSINESS GROWING AT RECORD RATES GETTING TO RECORD LEVELS AND DELIVERY CONTINUING TO BE STRONG AS WELL. AS LONG AS THE CONSUMER STAY
STRONG, I THINK UBER WILL CONTINUE TO ADD ON TOP OF THAT THE POWER OF OUR PLATFORM OR BEING THE NUMBER ONE BRAND IN THE BUSINESS, HAVING THE STRONGEST TECH TEAM OUT THERE. IT IS A GOOD PROGRESS FOR US AND THE INDICATIONS WE GET GOING FORWARD ARE OF CONTINUED STRENGTH AS 2023 IS OFF TO A GREAT START. >> JAY POWELL SAID INFLATION IS GOING TO TAKE A SIGNIFICANT TIME TO FIGHT. WHAT ABOUT WHEN PRICES CATCH UP WITH CONSUMERS? WHAT ARE YOU WORRIED ABOUT WHEN IT COMES TO THE BUMPY PARTS OF THE ROAD AHEAD? >> WE SAW PRICES INCREASE LAST YEAR FOR US SIGNIFICANTLY. WE ARE SEEING THE PRICES MODULATE SIGNIFICANTLY INTO 2023. OUR SURGE LEVELS ARE DOWN. IN THE U.S., LESS THAN 20% OF OUR TRIPS ARE SURGING. OUR ETA'S ARE MUCH FASTER,
FASTER THAN FIVE MINUTES ON AVERAGE IN THE U.S. AS WELL. WE HAVE TO KEEP WORKING TO IMPROVE OUR SERVICE AND WHEN WE LOOK AT INFLATION, 70% OF OUR DRIVERS ARE SAYING THAT INFLATION IS PLAYING A FACTOR IN TERMS OF THEIR COMING TO EARN MONEY ON THE UBER PLATFORM. IN SOME WAYS, INFLATION MAY BE TAILWIND OUR SUPPLY. >> UBER HAS NOT HAD WIDESPREAD LAYOFFS LIKE SOME OF YOUR COUNTERPARTS. I'M THINKING DOORDASH.
AT THIS POINT WOULD YOU PROMISE THAT DOESN'T HAPPEN? >> RUNNING A COMPANY, YOU CAN'T MAKE PROMISES LIKE THAT. WE RUN THE COMPANY BASED ON PERFORMANCE. WHAT WE SAW FOR THIS QUARTER AND WHAT WE INDICATE IS OUR PERFORMANCE HAS BEEN ROBUST AND WE THINK IT WILL CONTINUE TO BE ROBUST. ED: THAT WAS THE CEO OF UBER. LET'S CONTINUE THE CONVERSATION. YOU HAVE A BUY RATING. IT WAS INTERESTING TO SEE THE BOTTOM LINE. HOW THEY ARE DOING LESS ON THE INCENTIVE SIDE FOR DRIVERS.
IS THIS JUST ABOUT IMPROVING MACRO CONDITIONS? >> THANK YOU FOR HAVING ME. THE QUARTER WAS REALLY NICE, SOLID UPSIDE ON THE TOP AND BOTTOM LINE. SPECIFICALLY IN MOBILITY SEGMENT AND THE DELIVERY SEGMENT, THE FIRST QUARTER GUIDANCE WAS ALSO VERY STRONG AND POSITIVE.
PARTICULARLY ON -- IF THEY PUT UP A NUMBER THAT WE THINK THEY CAN, IT WILL BE THE SEVENTH QUARTER WHERE UBER HAS BEEN ABLE TO REPORT THOSE EBITDA NUMBERS. THEY GAVE THE STREET A NEW KIND OF PROFITABILITY MILESTONE OR OBJECTIVE TO FOCUS ON THIS YEAR WHICH IS GAP OPERATING SHOPPER AND PROFIT. A REAL HIGH-QUALITY PROFIT METRIC RELATIVE TO WHAT THEY HAVE SHOWN SO FAR. >> FOR SO MANY YEARS, WE GOT HUNG UP ON EBITDA WHEN IT COMES TO UBER AND LYFT.
>> I THINK THE MOBILITY BUSINESS GREW SOMETHING LIKE 37%. WE WILL SEE WHAT LYFT PUTS UP IN TERMS OF THEIR GROWTH RATE AND THEY REPORT SHORTLY. WE ARE FORECASTING SOMETHING CLOSE TO 20% GROWTH IN THE BUSINESS OF LIFT. IT IS A LITTLE BIT APPLE STORE JUST BECAUSE UBER HAS AN INTERNATIONAL PRESENCE IN MOBILITY. ON THE DELIVERY SIDE, UBER IS GEOGRAPHICALLY FAR FROM -- FAR-FLUNG IN TERMS OF DELIVERY BUSINESS. THAT ACCELERATED IN THE FOURTH
QUARTER OF ABOUT 100 BASIS POINTS. THE KPIS FOR THAT BUSINESS WERE STRONG ALSO. IT SEEMS LIKE THEY ARE TAKING A CATEGORY SHARE IN BOTH OF THE SEGMENTS. CAROLINE: TALK TO US ABOUT YOUR PRICE TARGET. THAT IS $62 WHICH IS WELL-OFF
WHERE WE ARE TODAY. WHAT TAKES US THERE? IS IT HERE, NOW, THE MACRO REALITY? OR DO WE HAVE TO GO BACK TO THE BIG THINKING, THE AUTONOMOUS VEHICLES AND THE LIKE? GUEST: IT'S A LITTLE BIT OF BOTH. NOT A COPOUT ON THE QUESTION, BUT WHEN WE LOOK AT UBER, WHAT WE SEE IS A LARGE LOCAL COMMERCE ONLINE MARKETPLACE BUSINESS THAT HAS ESTABLISHED CLEAR CATEGORY LEADERSHIP IN THE MOBILITY PRODUCT.
ON ITS WAY TO A LONG-TERM COMPETITIVE STRENGTH IN DELIVERY AS WELL. GENERALLY SPEAKING, ONLINE MARKETPLACE BUSINESSES ONCE THEY ACHIEVE SCALE AND HOPEFULLY CATEGORY LEADERSHIP, THEY CAN BE HIGHLY PROFITABLE BUSINESSES. EBITDA MARGINS. THE $62 TARGET GIVES THEM A LITTLE BIT OF ADVANCE CREDIT ON GETTING THERE. ON REVENUE MULTIPLE, IT IS ONLY 3.5 TIMES THIS YEAR NOT HORRIBLY AGGRESSIVE WE DON'T THINK. CAROLINE:
BRING US BACK TO THE REALITY OF REGULATORY ISSUES. HOW MUCH OF A CONCERN ARE THEY? GUEST: IT'S ALWAYS A CONCERN. GENERALLY SPEAKING, THE RISK IS THAT IT'S WANT TO INCREASE COSTS BORNE BY UBER AND THEY WILL HAVE TO GET MORE CREATIVE HOW THEY PASS THE COST ONTO CONSUMERS. SO FAR, WHEN WE AT MARKETS OR CITIES WHERE THERE HAVE BEEN HIGHER COST OR A REGULATORY BURDEN THAT HAS RESULTED IN HIGHER FEES OR SURCHARGES, WE HAVEN'T SEEN MUCH OF A DETECTABLE NEGATIVE IMPACT ON THE BUSINESS.
THAT WON'T LAST FOREVER IF THE FEES CONTINUE TO GO UP OR THE CONSUMER STARTS TO FEEL A PINCH. SO FAR SO GOOD ON THAT FRONT. ONE THING I THINK MITIGATING THE UPWARD PRESSURE ON COSTS FROM SOME OF THESE HIGHER REGULATORY BURDEN IS WHAT'S HAPPENING IN THE LABOR MARKET AND THE FACT THAT THERE ARE PEOPLE OUT THERE LOOKING FOR GIG WORKERS AND THEY ARE COMING TO PLACES LIKE UBER AND LYFT BANK FOR OPPORTUNITIES. ED: LET'S PIVOT TO LIFT BANK. --F LYFT.
GUEST: I THINK MARGIN -- THE MARKET IS LARGE ENOUGH TO SUPPORT TWO LARGE PLAYERS. WHAT YOU LOOK AT IS SIGNIFICANTLY SMALLER BUSINESS, LOWER MARGINS. IT HAD PRE-PANDEMIC GREAT BRAND METRICS BRAND AWARENESS. IT WAS THAT KINDER GENTLER RIDESHARING COMPANY. NOT HAVING TO GO OUT AND ACQUIRE CUSTOMERS. I THINK LYFT CAN BE A NUMBER TWO, BUT I THINK IT WILL BE A DISTANT NUMBER TWO. CAROLINE: GREAT TO HAVE YOU.
THANK YOU FOR YOUR TIME. COMING UP, WE ARE GOING TO BE TALKING ABOUT A MAJOR SETBACK FOR MICROSOFT. WE DISCUSSED THE HURDLES THAT IS CURRENTLY FACING IN THE U.K.. ED YOU GOT A LOOK AT THE COMPANY ON THE MOVE. ED: I'M LOOKING AT SONO SHARES AFTER HOURS.
A BEAT ON THE TOP LINE AND BOTTOM LINE. INTERESTING GIVEN HOW MUCH COMPETITION THERE IS IN THIS SPACE. ED: I WANT TO BRING YOU ANOTHER BLOOMBERG SCOOP. ONE OF THE LARGEST CRYPTO EXCHANGE IS IS EMBROILED WITH THE SEC ABOUT -- THE PROBE IS IN ADVANCED STAGES WITH ANNOUNCEMENTS EXPECTED THIS WEEK. ANY ACTION AGAINST CRACK AND -- KRAKEN COULD HAVE RAMIFICATIONS. CAROLINE: MICROSOFT TAKEOVER OF ACTIVISION BLIZZARD IS HANGING IN THE BALANCE BECAUSE OF U.K. REGULATORS.
SHARES HAVE BEEN FALLING AS MUCH AS 4%. LET'S DIG INTO THE DETAIL. WHAT IS THE U.K. HUNG UP ON? GUEST: THE U.K. IS HUNG UP ON THE IDEA THAT ALLOWING MICROSOFT TO ACQUIRE ACTIVISION BLIZZARD WOULD HARM COMPETITION PARTICULARLY WITH SONY IN THE CONSOLE MARKET. CAROLINE: WHAT THEY SELL OFF CERTAIN PIECES? GUEST: ONE OF THE POTENTIAL ROUTE -- REMEDIES IS THAT ACTIVISION WOULD DIVEST FROM CALL OF DUTY WHICH IS THERE FLAGSHIP.
IT BROUGHT UP ACTIVISION BLIZZARD DURING A TOUGH SEASON. IT SAFE TO SAY THAT ACTIVISION BLIZZARD IS NOT HAPPY ABOUT THAT SUGGESTION AT ALL. ED: NICE TO SEE YOU. A BUSY MORNING FOR US. WE HAVE BOTH SEEN A MEMO FROM THE CEO. WHAT'S SO INTERESTING IS HE IS HE'S CLEARLY TRYING TO NORMALIZE THIS IS BEING ANOTHER STEP IN AN M&A PROCESS. THAT IS A CONSISTENT MESSAGE
FROM HIM. THE OTHER THING THAT JUMPED OUT IS HIM TALKING ABOUT COMPETITION FROM THE LIKES OF APPLE AND FACEBOOK NOT OTHER PUBLISHERS. WHY IS THAT? GUEST: IT'S TOUGH. GAMING COMPANIES WERE FOR A
LONG TIME CONSIDER THEIR OWN SEGMENT AWAY FROM TECH COMPANIES PROBABLY. OVER THE LAST DECADE, GAMING COMPANIES AND TECH COMPANIES HAVE OR AND MORE IN COMMON AS THEY EXPAND THEIR BUSINESS INTO IP, ADVERTISING, ALL SORTS OF AREAS TRADITIONALLY ASSOCIATED WITH COMPANIES LIKE APPLE AND FACEBOOK. EVEN SOCIAL MEDIA, PEOPLE SOCIALIZE OVER VIDEO GAMES AND SOME CASE JUST AS MUCH AS INSTAGRAM, SNAPCHAT ETC. ED: WE JUST COME OUT OF A BUSY WEEK OF EARNINGS IN THE VIDEOGAME INDUSTRY.
NOT JUST HERE IN THE U.S. BUT IN JAPAN WITH SONY AS WELL. HOW DID THEY PERFORM? GUEST: ACTIVISION PERFORMED OK. CALL OF DUTY REALLY BUOYED ACTIVISION'S REVENUE LAST QUARTER BECAUSE THE LAST INSTALLMENT OF THE GAME BROKE RECORDS SELLING ONE BILLION WITHIN 10 DAYS OF THE RELEASE. ACTIVISION HAD A 43% JUMP IN BOOKINGS PARTIALLY AS A RESULT OF THAT IN A TOWN THAT HAS BEEN TOUGHER OTHER GAMING COMPANIES. CAROLINE: AS WE ASK YOU TO WORK A LITTLE LATER TO COME ON THE SHOW WITH US, TALK TO US ABOUT WHERE NEXT FOR THIS STORYLINE. ARE WE WAITING FOR OTHER REGULATORS? THE U.S.? GUEST: THE U.S.
FEDERAL TRADE COMMISSION ALSO SUED TO BLOCK THE DEAL. THERE ARE A LOT OF ROADBLOCKS INSIGHT GOING FORWARD. THE CMA IS SAID TO ISSUE A FINAL RULING IN APRIL THAN MICROSOFT CAN APPEAL THAT DECISION. THE DEAL WAS SCHEDULED TO CLOSE IN JUNE.
IT IS POSSIBLE AND MAYBE EVEN LIKELY THAT THEIR DILEMMA GET EXTENDED. -- THERE DEADLINE WILL GET EXTENDED. ED: THANK YOU SO MUCH FOR JOINING US. LET'S GET MORE ON THIS STORY WITH OUR NEXT GUEST.
YOU HEARD ME TALKING ABOUT THEM TRY TO NORMALIZE THIS, TELLING STAFF THIS IS JUST ANOTHER STEP IN THE M&A TIMELINE, THE PROCEDURE. WHY DID SHARES FALL? GUEST: THAT'S REALLY GREAT WAY TO PUT IT. HE TRIED TO NORMALIZE IT. THIS IS NOT A NORMAL SITUATION. I HAVE COVERED A LOT OF TECH AND THERE'S BEEN A LOT OF REGULATORY OPPOSITION TO THINGS THAT WERE OVER-THE-TOP OR UNNECESSARY. THIS HAS BEEN A GOOD ARGUMENT. MICROSOFT DOES HAVE A MONOPOLY POSITION WITH SONY.
YOU CAN ARGUE THAT THEY HAVE A MONOPOLISTIC POSITION. BY THEIR OWN JUSTIFICATION, THEY WANT TO USE A THIRD-PARTY THAT REST ON THAT PLATFORM THAT'S WHY THEY ARE BUYING ACTIVISION. YOU ARE NOT ALLOWED TO USE A PLATFORM, A MONOPOLISTIC POSITION IN A PLATFORM TO UNFAIRLY COMPETE AGAINST OTHERS THAT ARE THIRD PARTIES ON THAT PLATFORM OR TO USE IT AGAINST OTHER PLATFORMS UNFAIRLY. THAT IS THE CRUX OF IT AND I THINK THAT'S A GOOD ARGUMENT RIGHT NOW. ED: I APPRECIATE YOU ARE NOT AN ARBITRAGE SPECIALIST. DOES ANY OF THIS CHANGE YOUR VIEW ON THE LIKELIHOOD OF THE DEAL? GUEST: NO, AND FACT I HAVE NEVER SEEN SUCH A LARGE SPREAD.
IT'S A SIGNAL THAT SAYS THE DATE -- DEAL MIGHT NOT GO THROUGH. I'VE NEVER SEEN A SPREAD LIKE THIS IN AN ACQUISITION THIS LARGE. IT IS TRADING NOW IN THE LOW 70'S.
THERE'S OBVIOUSLY A LOT OF PEOPLE WHO ARE BETTING AGAINST THIS DEAL GETTING DONE. CAROLINE: IT'S INTERESTING TALKING ABOUT HOW EXPENSIVE IT WOULD BE IF THIS DEAL DID FALL APART. IT IS NOTABLE THEY GET A NICE CASH EJECTION BUT HE CLEARLY WANTS IT TO GO THROUGH. HE SEES IT AS THE RIGHT DIRECTION FOR HIS COMPANY. GUEST: HE DOES AND VERY MUCH SO. I'M NOT SURE HE'S GOOD TO GET THERE. -- I'M NOT SURE HE'S GOING TO GET THERE.
CALL OF DUTY IS WHY MICROSOFT IS BUYING IT. THEY LOOK AT IT AS PROTO-METAVERSE WAY TO BUILD ON THE METAVERSE, NOT JUST THE TECHNOLOGY BUT ALSO THE USERS. IT IS AN INCREDIBLY PROFITABLE AND POPULAR TITLE. THE RESULTS SPEAK FOR THEMSELVES. IN THE LAST QUARTER, EA STRUGGLED BUT CALL OF VERY WELL. FOR MICROSOFT TO UNDERSTAND, THEIR PAYMENT OF $3 BILLION WOULD BE NOTHING FOR THEM. IT WOULD BE SIGNIFICANT FOR
ACTIVISION. IT'S NOT A BAD CONSOLATION PRIZE. CAROLINE: ULTIMATELY, IS THIS GOING TO PROVE A DISTRACTION AND ENOUGH OF ONE THAT WE STOP SEEING ACTIVISION BLIZZARD FIRING ON ALL SAID -- ON ALL CYLINDERS. OR DO WE SEE THE FUNDAMENTALS OF THE BUSINESS REMAIN INTACT? GUEST: I THINK WE SEE THE FUNDAMENTALS OF THE BUSINESS REMAIN INTACT PARTICULARLY WITH CALL OF DUTY.
OTHER FRANCHISES ARE GOING TO DO WELL. I THINK THE FUNDAMENTALS ARE QUITE SOLID FOR ACTIVISION. IT IS INTERESTING TO ME THERE IS SUCH A LARGE RISK SPREAD. IF THERE'S PROBABILISTIC MIDPOINT THEN IT IMPLIES THAT THE STOCK IS GOING TO GO DOWN IF THE DEAL DOESN'T GO THROUGH. I'M NOT SURE IF THAT'S THE RIGHT WAY TO LOOK AT IT BUT IT'S AN INTERESTING SITUATION THAT YOU DON'T NORMALLY SEE WITH THE SHARES TRADING SO FAR AWAY FROM A LOW CASH ACQUISITION OFFER. CAROLINE: GREAT HAVING YOU. JOHN FREEMAN, STAY WELL. COMING UP, IT'S GOING VIRAL.
LEBRON JAMES YOU HAVE TO HAVE SEEN IT. BECOMING THE ALL-TIME TOP SCORER IN THE NBA. EBAY ADDING TO THE LIST OF COMPANIES CUTTING ITS WORKFORCE.
500 EMPLOYEES WILL BE LAID OFF. THAT'S AFTER THE PANDEMIC BOOM. SHARES WENT DOWN 2% ON THE DAY. ED: LET'S GET A REMINDER OF ALPHABET, SHARES DOWN THE MOST SINCE OCTOBER. THAT AFTER A VIDEO TWO DAYS AGO IS NOTED IN THE MEDIA AS CAROLINE: LEBRON JAMES HAS A LOT OF TITLES AND NOW HE HAS THE NEW ONE.
ALL-TIME LEADING SCORER IN THE NBA. HE SURPASSED THE RECORD HELD BY KAREEM ABDUL-JABBAR. ACCORDING TO BLOOMBERG, HE IS WORTH ABOUT $1.1 BILLION. KING JAMES HAS BEEN REELING IT IN NOT ONLY IN THE CONGRATULATIONS BUT ALSO THE FACT THAT HE MANAGED TO MANAGE HIS MONEY NOT JUST IN ETF'S. ED: IT IS A GAME RECOGNIZES GAME
MOMENT. GOLDEN STATE WARRIORS ACKNOWLEDGING THE SUCCESS. IT'S GOOD FOR THE LAKERS AS WELL BECAUSE WHEN KAREEM ABDUL-JABBAR MADE THAT RECORD, HE WAS WITH THE LAKERS AS WELL. CAROLINE: SPRINGHILL COMPANY, $780 MILLION IS WHERE IT'S VALUED AT. I FORGOT THAT HE MADE A LOT OF MONEY IN BEATS AS WELL THAT SOLD OUT TO APPLE FOR AN AMAZING AMOUNT. ED: ALSO THE BRAND IMAGE. THIS IS SOMETHING EVERYONE HAS BEEN TALKING ABOUT ON TWITTER, TIKTOK, AND SEARCHING FOR ON GOOGLE.
NO SURPRISE IT'S GOING VIRAL. CAROLINE: COME BACK TOMORROW, WE WILL BE BREAKING DOWN SO MANY EARNINGS FOR YOU. ED: DON'T FORGET A LOT TO RECAP. CHECK OUT OUR PODCAST. YOU CAN
2023-02-12 04:04
