Tesla’s Europe Sales Fall, IBM and ServiceNow Beat | Bloomberg Technology
>> FROM THE HEART OF WHERE -->> 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: LIVE FROM NEW YORK IN SAN FRANCISCO THIS IS "BLOOMBERG TECHNOLOGY." SERVICE NOW CHOMPS EARNINGS RESULT SHOW RESILIENCE.
OUR CONVERSATION WITH THE CEO. AND TESLA SALES SLUMP IN EUROPE AS IT IS OVERTAKEN BY BW. WE CHECK IN ON THE MARKETS AND IT IS HOPE WE MIGHT GET SOME SORT OF REPRIEVE FROM THE FEDERAL RESERVE. MAYBE RATES COULD MOVE AS SOON AS JUNE. IT HAS BEEN HINTED AT BY SOME KEY PEOPLE. WE ARE UP 1.8%. BIG TECH RALLIES FOR THE THIRD STRAIGHT DAY OF GAINS ON THE NASDAQ. WE HAVE ADDED $1 TRILLION OF
MARKET CAPITALIZATION. I AM LOOKING AT BITCOIN COME THE DISCONNECT IN TERMS OF STOCKS. WHAT HAVE YOU GOT? ED: IT IS THE COMPANIES THAT HAVE REPORTED EARNINGS ALREADY. A LOT OF PEOPLE WERE SURPRISED BY THE STRENGTH OF TEXAS INSTRUMENTS RESILIENT DEMAND. THESE WERE THE ANALOG CHIPS AND THEY SEEM TO DO WELL. LATER IN THE HOUR IAN KING WILL BREAK IT DOWN FOR US.
THERE IS IBM. SERVICE NOW COME RESILIENCE IN DEMAND. WINNING GOVERNMENT CONTRACTS. IBM LOSING GOVERNMENT CONTRACTS. PEOPLE ARE WORRIED ABOUT HOW
THEY ARE INTERPRETING THE ECONOMY GOING FORWARD. WE WILL HEAR FROM BOTH OF THOSE CEOS. THEN ALPHABET IS AFTER THE BELL. AT THE SAME TIME THERE IS THE NEWS FLOW OUT OF THE DOJ ANTITRUST REMEDIES, PUSHING HIGHER 1.6%. THIS EVENING ALPHABET SETS THE TONE FOR MEGA CAPS AND WE HAVE A LOT OF QUESTION ABOUT THE MAG SEVEN. THE TONE WILL DICTATE BIG TECH EARNINGS MORE BROADLY. YOU HAVE SO MANY RISKS.
RISING TARIFFS, ANTITRUST, AI UNCERTAINTY. THE STOCK HAS ALREADY BEEN SLAMMED SO FAR. HOW ANXIOUS ARE INVESTORS? >> THERE IS SO MUCH UNCERTAINTY SURROUNDING ALPHABET, EVEN MORE THAN SOME OF THE OTHER MAG SEVEN NAMES.
ALPHABET HAS LESS DIRECT EXPOSURE TO TARIFFS BUT THERE IS STILL A LOT OF CONCERN ABOUT THE REGULATORY PICTURE ABOUT THE RISK OF COMPETITION WITH NAI. -- WITHIN AI. ALL OF THIS HAS BEEN IMPACTING THE STOCK. IS IT GOING TO LOSE OUR DOMINANT POSITION WITH THE BIGGEST MARKET WHICH IS INTERNET SEARCH. ALL OF THESE PEOPLE WONDERING HOW THEY WILL FARE THIS QUARTER AND WHAT THEY WILL SAY ABOUT THE ECONOMIC BACKDROP.
IT IS MEANINGFUL FOR THE BROADER BIG TECH SPACE. >> LET'S TURN TO IBM. THE COMPANY BEAT FIRST QUARTER EXPECTATIONS WITH REVENUE BOOSTED BY STRONG SOFTWARE SALES BUT SHARES FALLING AS THE COMPANY WARNED OF DELAYED CONTRACTS DUE TO ECONOMIC UNCERTAINTY.
IBM CEO SPOKE TO CAROLINE AND SAID "IT IS A DYNAMIC ENVIRONMENT WHERE THINGS ARE CHANGING. WE WANT TO STAY FOCUSED ON THE BUSINESS AND THERE IS A LOT OF BUSINESS TO BE HAD. PEOPLE WORLD -- PEOPLE WILL REMAIN INVESTED." I THINK ABOUT THE SHIFT TO SOFTWARE AND CONSULTANCY. THERE IS WHAT THEY SAID AND
WHETHER WHAT THEY SAID IS REFLECTED IN THE FORECAST. DOES IBM UNDERSTAND HOW THE ECONOMY IS CHANGING RIGHT NOW? >> TO BE FRANK I WAS SURPRISED THE STOCK IS DOWN BECAUSE THEIR CONSULTING BUSINESS IS EXTREMELY SUSCEPTIBLE TO DOWNGRADES OR DECELERATION. IT WAS OK. IT SEEMS TO ME THAT MAY BE GOING INTO THE QUARTER INVESTORS WERE LOOKING FOR BETTER COMMENTARY AROUND SOFTWARE SPENDING. SOFTWARE DID DECELERATE WHICH IS WHAT I WAS AT LEAST EXPECTING BUT ONE OF THE COMMENTS THAT GOT MY ATTENTION WAS THE COMPANY'S GUIDANCE DOES NOT TAKE INTO ACCOUNT ANY MATERIAL DETERIORATION IN ECONOMIC CLIMATE OR SPENDING CLIMATE AND THAT IS PROBABLY WHAT IS CAUSING HIP HOP. -- WHAT IS CAUSING A LITTLE BIT OF A HICCUP BECAUSE WE KNOW IF THE TARIFF STOCKS CANNOT HOLD TRUE THAN SOME OF THE SPENDING WILL HIT HEARTBREAK THAT HAS AN IMPACT ON SECOND-HALF GROWTH, NOT JUST FOR IBM BUT THE ENTIRE SERVICES AND SOFTWARE SECTOR. CAROLINE: A DEEP DIVE ON IBM.
WE THANK YOU. LET'S GO BROADER WITH EARNINGS. NRF AND IS WITH US. -- ANNA RAFFIN IS WITH US JOINING US AS AN INVESTMENT STRATEGIST. I'M CURIOUS WHAT WE GLEAN FROM IBM. HE SAID HE PUTS A LOW PROBABILITY ON NEGATIVE GLOBAL GDP AND HE IS TRYING TO SAY HIS BUSINESS IS RESILIENT TO ANY MACRO HEADWINDS BUT HE IS ALSO TELLING US I AM WORRIED ABOUT THE IMPLICATION OF THE U.S., THE SENTIMENT AGAINST AMERICAN BUSINESSES. HOW ARE YOU HEARING THAT DURING THIS EARNINGS SEASON? ANNA: I THINK THERE IS A LOT OF UNCERTAINTY. THE TARIFF TALK IS PAUSING A
LOT MORE DAMAGE IN TERMS OF RELATIONSHIP AND I THINK THAT WILL BE -- IS PAUSING A LOT MORE DAMAGE -- IS CAUSING A LOT MORE DAMAGE IN TERMS OF RELATIONSHIPS. WHAT HAPPENS TO BEING ABLE TO TRUST EACH OTHER AND DOING BUSINESS TOGETHER? I THINK THIS WILL BE A LONGER-TERM DAMAGE TO BE HONEST WITH YOU. CAROLINE: -- ED: YOU ARE DAMNED IF YOU DO AND IF YOU DON'T. HIS THESIS WAS IBM IS NOT TAKING INTO ACCOUNT THE DETERIORATING ECONOMIC ENVIRONMENT. SAY THEY HAD CUT GUIDANCE. WHAT YOU THINK THE INVESTOR WANTS TO HEAR FROM THE COMPANY? A CUT FOR ADJUSTMENT TO GUIDANCE OR JUST HOLD? ANNA: ANNA: I'M NOT SURE IF YOU CAN GIVE GOOD GUIDANCE AT THIS POINT.
THE TARIFFS ARE ONE THING. IT IS UNILATERAL. HOW IT TRICKLES DOWN TO ACTUAL SUPPLY CHAINS AND BUSINESSES AND WHAT CHOICES MANAGEMENT TEAMS MAKE IN THE FACE OF THE HEADWIND IS THE UNKNOWN. IN TERMS OF NEGATIVE GDP, PERHAPS. THERE MIGHT BE OTHER ALLIANCES THAT MIGHT BE MADE. IN TERMS OF GUIDANCE, IT IS ALMOST DIFFICULT TO KNOW. IF THEY WERE TO GIVE GUIDANCE I THINK WE HAVE TO TAKE A HUGE GRAIN OF SALT.
RIGHT NOW I THINK THE BEST IS TO HOLD AND WATCH. ED: ON ANGLE OUT OF TEXAS INSTRUMENTS IS THAT A GOOD FIRST THREE MONTHS OF THE YEAR BUT THEY SAID THAT WAS NOT NECESSARILY REFLECTIVE OF PEOPLE FRONT RUNNING TARIFFS. HOW DO YOU INTERPRET THAT? WE HAD A LOT OF SOFT DATA FROM PC SHIPMENTS THAT VERY MUCH TOLD US IN THE WORLD OF TECHNOLOGY COMPANIES WERE FRONT RUNNING TARIFFS IN THE FIRST FEW MONTHS OF THE YEAR. ANNA: I THINK COMPANIES DID THAT , CONSUMERS DID THAT.
WE DO NOT HAVE THAT MUCH INFORMATION BECAUSE LIBERATION DAY WAS A MONTH AGO. TIME THIS TO THE FED SPEAK THIS MORNING ABOUT HOW WE MAY HAVE SOME ECONOMIC NUMBERS BY JUNE TO BE ABLE TO DO SOMETHING. I THINK THAT IS TOO EARLY. IN TERMS OF FRONT RUNNING AS
WELL AS JUST HOLDING AND WAITING AND WATCHING. I DO NOT THINK THERE'LL BE ENOUGH DATA FOR INVESTORS OR POLICYMAKERS TO DO ANYTHING DEFINITIVELY. CAROLINE: IF YOU ARE AN INVESTOR AND IF YOU NOT SOLD OUT PRIOR TO ANY OF THIS TURBULENCE DO YOU JUST STAY THE COURSE. YOU REMAIN LONG NAMES YOU BEEN COMMITTED TO PRIOR TO THIS AND HOLD STEADY UNTIL WE COME OUT THE OTHER SIDE OF WHAT IS A SELF-INDUCED PERIOD OF INSTABILITY? ANNA: SELF-INDUCED IS RIGHT. BECAUSE MANAGEMENT CANNOT MAKE REAL DECISIONS IT IS DIFFICULT FOR INVESTORS TO SAY SELL BY. IT IS A WAIT AND SEE. IF YOU'RE A LONG-TERM INVESTOR I DO NOT THINK ANY OF THE PROPOSITIONS WE HAVE AROUND AI OR TECH IS CHANGING.
TECH IS STILL QUALITY. THEY HAVE VERY GOOD BALANCE SHEETS. TECH IS STILL UTILITY IN THE FACT THAT MODERN LIFE DOES NOT WORK WITHOUT TECH. IF YOU'RE A LONG-TERM INVESTOR STAYING THE COURSE IS NOT A BAD IDEA EITHER.
ED: WHICH CORNER OF THE TECHNOLOGY MARKET WILL COME HURDLING OUT OF WHATEVER COMES NEXT? ANNA: HARDWARE HAS TAKEN A LOT OF HITS BECAUSE OF NOT ONLY TARIFFS BUT THE STRANGE RELATIONSHIP WITH CHINA. I THINK HARDWARE IS MAY BE OVERSOLD AND MAY BE STILL A GOOD BET. YOU WILL NEED HARDWARE TO DEVELOP SOFTWARE. THAT IS NOT GOING AWAY. I DO NOT THINK THERE IS ANYTHING BAD TO SAY FOR THE LONG TERM FOR HARDWARE. I WOULD SAY MAY BE THE BAD NEWS WOULD NOT HIT HARDWARE AS MUCH AS IT MAY SOFTWARE GIVEN IT HAS SOLD OFF SO MUCH. ED: YOU WILL NEED HARDWARE TO DEVELOP SOFTWARE IS LINE SEMINARY USING. COMING UP CAROLINE'S
CONVERSATION WITH SERVICE NOW CEO BILL MCDERMOTT. THAT IS ONE YOU DO NOT WANT TO MISS . THIS IS BLOOMBERG. ♪ CAROLINE: SERVICE NOW SHARES SURGING, BEST DAY SINCE 2013 AFTER EARNINGS SHOWED SOFTWARE DEMAND WAS RESILIENT DESPITE THE THREAT OF TARIFFS.
I SPOKE WITH THE CEO, BILL MCDERMOTT, ABOUT HIS ROSY OUTLOOK. BILL: WHY WE ARE SO WELL-POSITIONED FOR THIS MOMENT IS COMPANIES TODAY -- LET'S TAKE THE AUTO INDUSTRY. TARIFFS ARE ON THE TABLE IN THAT INDUSTRY IS AFFECTED. THESE COMPANIES HAVE TO THINK ABOUT THE MARKETPLACE VERY DIFFERENTLY. THEY HAVE TO REORIENT THEIR SUPPLY CHAINS IN REAL TIME AND ONLY AI CAN DO THAT. YOU SAY WHY DID THEY HAVE TO DO THAT? THERE ARE 30,000 PARTS THAT GOING TO MANUFACTURING A SINGLE VEHICLE.
THEY MAY NOT BE ABLE TO PASS ON THE $10,000 INCREASE TO THE CONSUMER. COMPANIES LIKE SERVICE NOW CAN GET THEM TO TEAR TWO AND THREE SUPPLIERS, SIGN UP NEW SUPPLIERS COME POSITION THESE COMPANIES TO WIN. THIS IS TRUE IN ANY INDUSTRY, IT CAN BE INSURANCE, RETAIL, MANUFACTURING. IT IS ALL IN THE FOCUS OF SERVICE NOW TO HELP THESE COMPANIES INNOVATE. CAROLINE:
LET'S GO FROM PRIVATE COMPANIES TO THE PUBLIC SECTOR. I KNOW YOU HAVE WON A FEDERAL CONTRACT BUT MANY OF A LOT OF ANXIETY ABOUT WHAT DOGE MEANT FOR YOU. YOU SAY DOGE LOVES YOU. WHY? BILL: WE ARE LASER FOCUSED ON ELEVATING GOVERNMENT AND HOW IT SERVES THE AMERICAN PEOPLE IN THE U.S.. DOGE HAS FORMED THE STANDARDS THAT OTHER GOVERNMENTS ARE FOLLOWING. OUR PUBLIC SECTOR BUSINESS WAS UP 30% YEAR ON YEAR.
WE HAD SIX NEW PUBLIC-SECTOR LOGOS. WE HAVE 11 FEDERAL DEAL GREATER THAN A MILLION AND TWO OF THEM WERE GREATER THAN 5 MILLION. THIS IS A BIG MOMENT BECAUSE WE ARE THE ONLY SOFTWARE PLATFORM I AM PERSONALLY AWARE OF THAT CAN TAKE OUT BILLIONS IN COSTS IN GOVERNMENT AROUND THE WORLD AND CERTAINLY THE UNITED STATES IS LOOKING AT THAT CLOSELY AND WE ARE EXCITED. CAROLINE:
HAVE YOU SPOKEN TO ELON MUSK ABOUT THE WORK HE IS DOING? HOW DID YOU MAKE SURE YOU ARE PROTECTED TO BRING THE EFFICIENCY? BILL: YOU HAVE TO REMEMBER THE AGENCIES ARE RUN BY AMAZING PUBLIC SERVANTS AND GREAT LEADERS AND DOGE IS DOING THE RIGHT THING. THEY WANT TO MAKE GOOD FOR THE AMERICAN PEOPLE SO THE TAXPAYERS GET THEIR BENEFITS. OUR PLATFORM IS FRONT AND CENTER IN HELPING THEM DO THAT. THERE ARE SYSTEMS IN THERE SINCE 1929. THAN THE 20TH CENTURY ARCHITECTURE WHERE ALL OF THESE LEGACY SYSTEMS WERE DEPARTMENTAL HE ORGANIZED AND THERE WAS MAVERICK BUYING OVER DECADES OF DIFFERENT ADMINISTRATIONS. WE CAN COME IN THERE AND
CONSOLIDATE ALL OF THESE SPENDS ONTO THE SERVICE NOW PLATFORM AND REPLACE HUNDREDS OF SYSTEMS AND WHO WOULD NOT WANT TO DO THAT. CAROLINE: SERVICENOW CEO BILL MCDERMOTT. BRODY FORD IS WITH US. WE WERE ALSO PRIZED OF THE RESILIENCE VERSUS THE PUBLIC SECTOR. THEY ARE SHOWING OBLIGATIONS ARE REALLY STRONG. BRODY: IT HAS BEEN A FUNKY MOMENT FOR THE ECONOMY.
IF YOU ARE A SOFTWARE FAN YOU ARE NOT IMPACTED BY TARIFFS. WHAT SERVICENOW HAS SHOWN US IS MAYBE NOT A LOT. THE STOCK WAS DOWN 20% HEADED INTO THE RESULTS.
EXPECTATIONS WERE LOW. THEY DID SURPASS THAT AND THEY WERE ABLE TO SHOW THAT AT LEAST FOR THE TIME BEING NOT A LOT OF IMPACT FROM ALL OF THE ECONOMIC CHAOS AND FEAR WE HAVE BEEN SEEING. ED: WHAT HE HAD TO SHADE SHOWED CONFIDENCE AND WE SHOULD PROBABLY FOCUS ON THE FOUR YEAR GUIDANCE BECAUSE THE GUIDANCE DEFINITELY REFLECTS THE POLITICAL UNCERTAINTY AND PERHAPS CAUTION. BRODY: IF YOU FACTOR IN THE CURRENCY IT WAS JUST THE SLIGHTEST CUT FROM THEIR PREVIOUS GUIDANCE. IN THAT ENVIRONMENT THAT IS PRETTY GOOD. THEY SAY IN THEIR COMMENTARY THE GUIDANCE REFLECTED SOME CAUTION.
EVEN THOUGH THE TRENDS WERE GOOD THEY GAVE A CONSERVATIVE GUIDANCE BECAUSE IT ALLOWED THEM THAT IF THINGS GO WRONG LATER IN THE YEAR THEY WILL NOT HAVE TO CUT AGAIN. IT IS STILL AN OPEN QUESTION. ARE WE HEADED TO A TRUE RECESSION OR IS THERE MORE AGGRESSIVE FEDERAL COST CUTS SERVICENOW WILL NOT BE -- CAROLINE: MORGAN STANLEY SAID THEY ARE DE-RISKING THERE FORWARD GUIDANCE -- ARE WE BACK TO TALKING ABOUT SOME OF THE EFFICIENCY WE HAVE BEEN PROMISED, SOME OF THE PRODUCTIVITY? BRODY: EVERY COMPANY RIGHT NOW IS SINGING THE SONG OF OUR GENERATIVE AI PRODUCT IS DRIVING REVENUE. NOT A TON OF THEM ARE BREAKING
OUT SUPER SPECIFICALLY WHAT THAT MEANS. SERVICE NOW HAS GIVEN SOME GUIDANCE. THE GENERAL AI UPLIFT, MOST ANALYSTS EXPECT THAT THIS YEAR -- NEXT YEAR OR THE YEAR AFTER. THAT IS WHERE THE GROWTH IS FOR
ALL OF THESE COMPANIES. IN SERVICENOW'S CASE IT IS A HIGHER TIERED PRODUCT THAT YOU WOULD UP YOUR LICENSE TO ACCESS THE GENERATIVE AI TOOLS. IF YOU'RE A SALESPERSON THERE THAT IS PRIORITY NUMBER ONE. ED: COMING UP, ALPHABETS CLOUD UNIT IS SUPPOSED TO SHOW GROUP -- IS SUPPOSED TO SHOW GROWTH. WHAT IS EXPECTED FROM THE GOOGLE PARENTS EARNINGS. THIS IS WHAT FINANCIAL MARKETS
LOOK LIKE RIGHT NOW. NASDAQ 100, THE VAST MAJORITY OF NAMES IN THE GREEN. IT IS THE MEGA CAPS PUSHING US HIGHER. IT IS INTERESTING THAT THIS IS BROAD-BASED IN ALL CORNERS OF THE TECH MARKET. SOFTWARE NAMES, HARDWARE NAMES, SOCIAL MEDIA NAMES PUSH HIGHER. THERE IS A REVERBERATION, A FEEL-GOOD FROM THE NAMES WE JUST COVERED EARNINGS. BITCOIN IS OFF THE GAS A LITTLE
BIT. 93,200 U.S. DOLLARS. WE ARE FOUR DAYS INTO A WEEK WHERE WE TALKED ABOUT BITCOIN HAVING MOMENTUM BEHAVING LIKE GOLD. CAROLINE: APPARENT ALPHABET REPORTS ITS EARNINGS AFTER THE BELL TODAY -- AFTER THE CLOSE TODAY. THERE IS A HOST OF ISSUES FOR ALPHABET BUT REVENUE IS EXPECTED TO GROW 12%. MANDEEP: I FEEL THE BAR IS HIGH. I LOOK AT ALL OF THE THINGS THAT HAVE TRANSPIRED, ON THE MARGIN IT WILL GO DOWN. YOU KNOW OVERALL PRINT, NO MATTER HOW STRONG CLOUD IS OR YOUTUBE IS IT WILL NOT MATTER. FROM A PROFITABILITY
PERSPECTIVE IT IS ALL ABOUT SEARCH AND I CANNOT IMAGINE HOW THEY BEAT ON THE SEARCH REVENUE GIVEN ALL THE STUFF WE HAVE HEARD ABOUT TEMU AND ADVERTISERS PULLING BACK. EVEN THOUGH THERE AT PRICING WILL BE BETTER ON THE MARGIN I DO NOT SEE THEM BEATING CONSENSUS. ED: I'VE SPOKEN TO SEVERAL CEOS IN THE SUPPLY CHAIN AND THEY ARE SO CONFIDENT THAT CAPITAL EXPENDITURES WILL CONTINUE TO RISE ON A MULTIYEAR HORIZON. GOOGLE TOLD US A NUMBER. HOW IMPORTANT IS IT OR NOT THAT GOOGLE SPECIFICALLY STICKS WITHOUT SPENDING PLAN FOR THE REST OF THE MAG SEVEN NAMES? MANDEEP: ABSOLUTELY. IT IS TABLE STAKES FOR SOMEONE LIKE GOOGLE. THEY DO NOT HAVE A CHOICE BUT
TO INVEST IN THEIR GEMINI MODEL BECAUSE OF THE THREAT FROM CHATGPT. WHAT IS INSULATING THEM IS NONE OF THESE GUYS HAVE AN AD PLATFORM. THEY ARE MONETIZING SUBSCRIPTION BUT THERE IS NO DOUBT THEY ARE TAKING VOLUME OFF THE SEARCHES AND FROM THAT PERSPECTIVE GOOGLE WILL SEE THE IMPACT IN THEIR VOLUME. IF YOU ARE AN ONLINE BUSINESS YOU HAVE NO WAY OUT BUT DO SPEND YOUR MONEY ON GOOGLE AND EVEN IN A RECESSIONARY ENVIRONMENT WE HAVE SEEN GOOGLE IS THE MOST INSULATED. THAT WILL REMAIN THE CASE AT LEAST FOR NOW. CAROLINE: AT THE MOMENT THERE IS A HOST
OF ANTITRUST ISSUES. I WONDER IF YOU THINK WE WILL HEAR ANALYST CALLS OR REQUESTS AND HOW WE PRESERVE THE BUSINESS MODEL IN THE FACE OF IT? MANDEEP: THE CHROME IS HUGE. I THINK THEY WILL DEPLOY AI INSIDE CHROME. LOSING CHROME WOULD BE CATASTROPHIC FOR GOOGLE. THAT CASE IS HUGE.
THEY MAY HAVE TO DO SOME REMEDIES. THEY HAVE ALREADY TALKED ABOUT KEEPING THE COOKIES. AT THE END OF THE DAY CHROME IS HOW THEY HAVE THE DISTRIBUTION WHEN IT COMES TO THEIR GEMINI MODEL WHICH IS GRADING GREAT REVIEWS. IT COMES DOWN TO HAVING DISTRIBUTION AND GOOGLE HAS THAT WITH CHROME AS WELL AS THE ANDROID ECOSYSTEM BUT CHROME IS IMPORTED TO CUT ACROSS THE IOS AND OTHER DEVICES. CAROLINE:
THE DUCK DUCK GO CEO TESTIFIED IN THAT CASE AND HE PUT A $50 BILLION OR MORE VALUE ON CHROME WHICH I FOUND FASCINATING. SAME QUESTION I'VE ASKED YOU EVERY YEAR SINCE I'VE LIVED IN AMERICA. DOES THE STOCK REFLECT THE ANTITRUST RISK YOU TALK ABOUT? MANDEEP: IT DOES. RIGHT NOW GOOGLE IS AT THE LOWEST VALUATIONS WHEN IT COMES TO THE MAG SEVEN NAMES IN TERMS OF MULTIPLES. FROM THAT PERSPECTIVE THE CHATGPT THREAT, THE REGULATORY RISK ARE REFLECTED IN THE VALUATION.
IF SOMETHING HAPPENS TO THAT SEARCH REVENUE THEN SUDDENLY ALL OF THE EARNINGS OR ESTIMATES WILL GET REVISED LOWER. FROM GOOGLE'S PERSPECTIVE, CLOUD IS NOT HOW THEY MAKE THEIR MONEY. IT IS SEARCH. THAT IS WHY IT IS ALL THE MORE PORTON TO KEEP THAT CONTACT WHEN IT COMES TO THE REGULATORY RISKS.
-- ALL THE MORE IMPORTANT TO KEEP THAT CONTACT WHEN IT COMES TO THE REGULATORY RISKS. ED: COMING UP, TECH EARNING STILL IN FOCUS. IBM BEAT EXPECTATION BUT SOUNDS A CAUTIOUS TONE. WE WILL SPEAK WITH DAVID BAHSEN NEXT. THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: GET A CHECK ON THESE MARKETS.
WE ARE ONCE AGAIN IN REBOUND MODE. UP FOR THE THIRD STRAIGHT DAY ON THE NASDAQ. LET'S CALL THE MACRO PICTURE. A FEW MORE DOVISH TONES FROM THE FED PRESIDENT. COULD WE SEE A MOVE OF THE MACRO FACES HEADWIND AFTER HEADWIND AMID THE TARIFF ANXIETY? COMING UP, 1.8% AS BIG TECH LEADS THE CHARGE. YOU TALKED ABOUT TEXTUS
INSTRUMENTS BUT THE STOCKS HAVING ITS -- YOU TALK ABOUT TEXAS INSTRUMENTS BUT THE SOX HAVING ITS BEST DAY. WE ARE SEEING EVERY SINGLE COMPANY IN THE GREEN. WE ARE LOOKING AHEAD TO EARNINGS FOR INTEL. WILL THERE BE A PULL FORWARD FOR INTEL NUMBERS IN TERMS OF PC? WE ARE LIKELY TO SEE REVENUE ON THE DOWNSIDE. TEXAS INSTRUMENTS SMASHED IT.
ED: LET'S BRING IN RUNEBERG'S IAN KING. THIS IS A MAKER OF THE MORE SIMPLE CHIPS. IAN: THEY SAID ESSENTIALLY EVERYTHING IS AWESOME. DEMAND IS COMING BACK LIKE WE SAID IT WAS ACROSS ALL MARKETS AND ALL GEOGRAPHIES.
EVERYTHING IS REALLY GOOD BUT WITH A GIANT BUT. ED: THE OTHER ONE THAT CROSSED THE I OVERNIGHT WAS -- WHAT IS THE READTHROUGH TO THE BIG PICTURE? IAN: EVERYTHING IS AWESOME, ORDERS COMING IN, DEMAND IS STILL STRONG. TARIFFS. CAROLINE: IAN KING ON ALL THINGS CHIPS. GOING BACK TO BROADER STORIES. THERE IS BREAKING NEWS THAT THE U.S. IS SAID TO DEMAND THAT PUTIN EXCEPT THAT UKRAINE HAS A RIGHT TO CONTINUE ITS MILITARY FORCE. WE GO TO OUR BALANCE OF POWER COHOST KAILEY LEINZ WHO CAN GIVE US SOME OF THE DETAILS. THERE IS AN IMPORTANT MEETING
ABOUT TO OCCUR IN MOSCOW AND THIS IS THE LINE WHEN IT COMES TO WHAT RUSSIA MUST ACCEPT IN ANY CEASE-FIRE. KAILEY: BLOOMBERG IS PROVIDING SOME LIGHT AS TO WHAT IN TERMS OF CONCESSIONS THE U.S. WANTS TO ASK OF RUSSIA AFTER MUCH REPORTING OF THE CONCESSIONS THAT HAVE BEEN ASKED OF UKRAINE AND THAT DOES INCLUDE A DEMAND THAT RUSSIA EXCEPT UKRAINE WILL HAVE ITS OWN MILITARY FORCE AND DEFENSE INDUSTRY AS PART OF ANY DEAL. OUR UNDERSTANDING IS THIS WILL BE PRESENTED AS AN ISSUE WHEN STEVEN WITKOFF MEETS WITH VLADIMIR PUTIN IN MOSCOW WHICH IS EXPECTED TO HAPPEN TOMORROW. THERE IS AN ADDITIONAL DEMAND ACCORDING TO OUR REPORTING IS THAT RUSSIA RETURNS CONTROL OF THE NUCLEAR POWER PLANT IN UKRAINE AND THE U.S. IN THEORY WOULD TAKE OVER THE OPERATIONS OF THAT. IT IS NOT CLEAR WHETHER OR NOT
THESE ARE CONCESSIONS VLADIMIR PUTIN WILL ACCEPT. WHEN IT COMES TO THE UKRAINIAN DEFENSE INDUSTRY THAT WOULD MEAN VLADIMIR PUTIN DOES NOT ACHIEVE ONE OF HIS STATED WAR AIMS. WHEN HE INVADED UKRAINE HE SAID ONE OF HIS OBJECTIVES IS TO ACHIEVE THE DEMILITARIZATION OF UKRAINE. THERE ARE OTHER OBJECTIVES THAT HAVE BEEN PRESENTED TO UKRAINE THAT WOULD MEAN A VLADIMIR PUTIN WOULD ACHIEVE, INCLUDING A COMMITMENT THAT UKRAINE WOULD NEVER JOIN NATO AS WELL AS RECOGNITION OF CRIMEA, WHICH RUSSIA ILLEGALLY ANNEXED IN 2014 AS RUSSIAN. THAT IS SOMETHING UKRAINIAN PRESIDENT VOLODYMYR ZELENSKYY HAS SAID HE CANNOT ACCEPT IN ANY DEAL BECAUSE IT WOULD VIOLATE UKRAINIAN CONSTITUTION.
PRESIDENT TRUMP WAS UPSET WITH THAT STATEMENT AND SAID IT IS AN IMPEDIMENT TO ACHIEVING PEACE, THOUGH HE ALSO HAS EXPECT IRON WITH VLADIMIR PUTIN IN THE AFTERMATH OF DEADLY STRIKES IN KYIV WHICH KILLED A DOZEN PEOPLE AND WOUNDED DOZENS MORE. HE SAYS VLADIMIR PUTIN MUST STOP. HE SAYS THE TIMING IS VERY BAD. IT WAS NOT NECESSARY. HE IS NOT HAPPY WITH RUSSIAN
STRIKES ON KYIV AND IT WILL REMAIN TO BE SEEN WHETHER RUSSIA IS HAPPY WITH HIS ARCHITECTURE OF THE DEAL THE U.S. IS PREPARING TO PRESENT. ED: KAILEY LEINZ. THANK YOU VERY MUCH. LET'S GET BACK TO TECHNOLOGY EARNINGS. IBM UNDERWHELMING INVESTORS. THE CEO EXPECTING AI TO CONTINUE TO DELIVER, SAYING AI BUSINESS IS $6 BILLION, IT IS PRETTY BIG COMPARED TO MOST OTHERS AND WE ARE VERY HAPPY PEOPLE ARE USING IT TO IMPROVE ENTERPRISE, CUSTOMER SERVICE, CUSTOMER EXPERIENCE. FOR MORE DAVID MONSON OF -- DAVID BAHNSEN JOINS US.
YOU MIGHT'VE HEARD BLOOMBERG'S IAN KING TALKING ABOUT THE CHIP NAMES AND IN SUMMARY EVERYTHING IS AWESOME. IBM, THE MARKET IS NOT NECESSARILY SHARING THE SENTIMENT BUT THAT START, IS EVERYTHING AWESOME FOR TECHNOLOGY IN CORPORATE AMERICA? IAN: NOT -- DAVID: NOT EVERYTHING IS AWESOME IN THE SINCE TECHNOLOGY IS NOT IMMUNE FROM THE UNCERTAINTY GENERATED BY THE TARIFFS AND THE QUESTION AS WHAT THAT WILL MEAN FOR THE ECONOMY AND ACTUAL POLICY AND THEREFORE EXPECTATIONS FOR CORPORATE PROFITS. THAT UNCERTAINTY LINGERS BUT I THINK EVERYTHING IS WONDERFUL SO FAR IN TERMS OF OPERATING RESULTS THAT HAVE BEEN REPORTED. WE ARE HOLDERS OF TEXAS INSTRUMENTS WHICH IS UP A LOT AND IBM WHICH IS DOWN BUT IBM HAS BEEN AN UNBELIEVABLE PERFORMER IN THE AI SIDE IS GOOD NEWS. THE STOCK WILL BE DOWN. IF THE SOFTWARE GROWTH IS ONLY
9% QUARTER OVER QUARTER WHEN THEY HAD DONE 11% OF THE QUARTER BEFORE. SOME DECELERATION OF WHAT HAS BEEN VERY SUCCESSFUL GROWTH AND THAT HYBRID CLOUD, THE FORMER REDHEAD BUSINESS THEY ACQUIRED. IBM HAS EXECUTED VERY WELL AND WE ARE BIG BELIEVERS ON THE WHOLE STORY. THERE IS GOOD NEWS IN THE TECHNOLOGY SECTOR BUT YOU CANNOT OVERPAY FOR THE GOOD NEWS. CAROLINE:
MAYBE THERE IS SOME PROFIT TAKEN GIVING THE RUN-UP IN IBM AND ITS RESILIENCY AMIDST TARIFF UNCERTAINTY. DEMAND SIGNALS ARE STILL UNCHANGED. IS THAT GOING TO REMAIN THE CASE? HOW MUCH ARE WE PAYING FOR INVENTORY BROUGHT FORWARD BY TEXAS INSTRUMENTS AND RESILIENCY FOR CONSULTANCY THAT MIGHT NOT WITHSTAND WHAT COULD BE A SLOWDOWN IN THE ECONOMY? DAVID: THERE IS A BIG DIFFERENCE IN THE ANSWER TO THAT FROM TEXAS INSTRUMENTS TO IBM TO OTHER COMPANIES THAT ARE PART OF THIS AI STORY LIKE LET'S SAY NVIDIA. NOBODY WILL BE IMMUNE IF THERE
IS A SYSTEMWIDE DEMAND SLOW DOWN AND A RECESSION THAT LASTS MORE THAN A FEW MINUTES. I EXPECT THERE WILL BE A SLOW DOWN. WE DO NOT OWN ANY COMPANY FOR THE SAKE OF ONE QUARTER OF RESULTS. I THINK YOU COULD SEE A SLOW DOWN IMPACTS FUNDAMENTAL SHORT-TERM. THE QUESTION IS WHO HAS THE RESILIENCE AND THE BALANCE SHEET AND THE BUSINESS MODEL TO MOST EXECUTE THROUGH THAT. I HAVE NO DOUBT TEXAS
INSTRUMENTS AND IBM BELONG AT THE TOP OF THAT LIST. THEY ARE NOT DEPENDENT ON A SOMEWHAT UNSUSTAINABLE AI CYCLE, LET ALONE ARE THEY WERE LYING ON A PE RATIO THAT HAS BEEN TOTALLY UNSUSTAINABLE TO HOLD THE STOCK PRICE UP. ED: WHO IS AT THE TOP OF THAT LIST FOR YOU? DAVID: NVIDIA, I SHOULD GO EASY ON THEM BECAUSE THEY HAVE HAD A TOUGH TIME. WHEN NVIDIA IS 100 $50 TRADING
80 TIMES FORWARD EARNINGS, NOW DOWN AT THE LOWER HUNDREDS IT IS CHEAPER. IT IS VERY MUCH TETHERED TO A BIG STORY AROUND AI CAPEX AND SUFFERS FROM LARGE NUMBERS. WHEN YOU GET TO THAT $3 TRILLION MARKET CAP. IT IS DIFFICULT FOR PEOPLE TO REALIZE THAT A 20% GAIN, WHICH IS NOT WHETHER SHAREHOLDERS WANT, THEY WANT SOMETHING MORE THAN THAT. THE METHOD THAT REQUIRES IT TO ADD ALMOST $1 TRILLION OF MARKET CAPITALIZATION.
IT IS VERY DIFFICULT TO MAKE MONEY OUT OF THOSE VALUATIONS. NVIDIA IS A GOOD EXAMPLE. NVIDIA IS NOT A NAME WE WOULD BE LOOKING AT ANYWAY. I THINK IBM, IF YOU LOOK AT THE DIVIDEND ON COST FOR PEOPLE BUYING IBM A NUMBER OF YEARS AGO , WE ENTERED THE POSITION ABOUT SEVEN YEARS. IT HAS BEEN UNBELIEVABLE. EVERYONE FOCUSES ON HOW WELL THE STOCK PRICE HAS DONE, BUT FOR ME IT IS A CASH ON CASH STORY. DIVIDEND GROWTH HAS BEEN REMARKABLE. CAROLINE: WHAT ABOUT BUYBACKS?
MANY EXPECT COMPANIES OMIT THE MOST OF THAT CAPITAL RIGHT NOW. DAVID: I THINK THE STOCK BUYBACKS ARE BEST SUPPLEMENTAL. MOST TECHNOLOGY COMPANIES DO NOT USE IT AS CAPITAL RETURN. TO THE DEGREE OR AT LEAST
BUYING BACK THE SHARES YOU ISSUED BECAUSE OF STOCK OPTIONS AND EXECUTIVE COMP, I THINK THAT IS A VERY GOOD THING. AS A CAPITAL RETURN STRATEGY WE PREFERRED BE SECOND-TIER, NOT FIRST COME AND IBM IS A GOOD EXAMPLE. ED: DAVID BAHNSEN. THANK YOU VERY MUCH. ELON MUSK'S NERO LINK IS
SPREADING TO RAISE -- THAT IS ACCORDING TO SOURCES THAT THE BRAIN IMPLANT COMPANIES AND CRITICAL TRIALS FOR ITS CHIP THAT ALLOWS PATIENTS TO CONTROL COMPUTERS WITH THEIR BRAINS AT A BIG JUMP IN VALUATION. COMING UP, AN EARLY INVESTOR IN NAMES LIKE FACEBOOK TALKS ABOUT FINDING AND CULTIVATING TECH LEADERS. WHY IA LUNAR ECOSYSTEM COULD BE WORTH BILLIONS.
DON'T MISS IT ON BLOOMBERG TV. ED: ALLEY PART TOBY HAS ANNOUNCED -- ALLEY PART TOBY -- ALI PARTOVI HAS ANNOUNCED A PROGRAM TO BACK NEW TECH TALENT FOR COLLEGE STUDENTS. HE JOINS US NOW. WELCOME TO THE SHOW AND THE STUDIO.
THAT IS THE DEBATE, WHAT YOU DO VENTURE CAPITAL WITH AN ACCELERATED OFFERING OR ARE YOU AN ACCELERATOR? ALI: I'M SO EXCITED TO BE HERE. WE HAVE JUST RAISED $320 MILLION BUT WHAT I MOST EXCITED ABOUT IS WE DISCOVER SUPERSTARS EARLIER THAN ANYBODY ELSE. I STARTED THIS COMPANY EIGHT YEARS AGO WITH A VISION THAT YOU CAN IDENTIFY FUTURE BILLIONAIRES WHEN THEY ARE STILL IN COLLEGE AND MENTOR THEM AND HELP THEM ACCOMPLISH THEIR POTENTIAL. IT IS AMAZING TO SEE WHAT NEO-SCHOLARS HAVE GONE ON TO DO. LAST YEAR ALL OF OPENAI NEW GRAD HIRES WERE NEO SCHOLARS AND SOME GO ON TO FOUND COMPANIES THAT ARE WORTH BILLIONS. CAROLINE: LET'S LOOK AT THE CASE STUDY OF THE COMPANY THAT MAKES CURSOR. SUCH A HOT PRODUCT AND YOU
FOUND MICHAEL BEFORE ANYONE ELSE. THE FACT THAT YOU HAVE SUCH PRIOR EXPERIENCE AND WINS. IS THERE A METHOD? IS THERE SOMETHING YOU SEE IN EACH FOUNDER? ALI: THERE IS AND HONESTLY WHEN I STARTED I HAD INSECURITY. IS IT POSSIBLE TO BUILD AN
INSTITUTION THAT SYSTEMATICALLY IDENTIFIES HER TECH LEADERS WHEN THEY ARE STILL SOPHOMORE IN COLLEGE. DO I HAVE A KNACK OR CAN THEY DO IT SYSTEMATICALLY? I FEEL CONFIDENT YOU CAN DO IT INSTITUTIONALLY. MICHAEL IS A GREAT EXAMPLE. I MET HIM WHEN HE WAS A RISING SOPHOMORE AT M.I.T.. WE HELPED MENTOR HIM, NOT JUST TOWARDS BECOMING A FOUNDER BUT HELPED HIM GET HIS FIRST START UP INTERNSHIP. HIS COFOUNDER, WE HELPED HIM GET HIS FIRST START UP INTERNSHIP.
WHEN THEY WERE STARTING A START UP MENTOR THEM REGULARLY FOR ALMOST A YEAR BEFORE WE RAISE FUNDING. ED: ALL THESE PEOPLE, THEIR STORE IS THE -- THEIR STORY IS THE CORE OF SILICON VALLEY LOWER. WHERE WE ARE NOW YOU DO NOT NEED TO BE A COMPUTER SCIENTIST, WHAT IS THE TALENT YOU NEED TO IDENTIFY? IS IT BUSINESS ACUMEN MORE THAN ANYTHING? ALI: IT IS A REALLY INTERESTING QUESTION. WHEN I WAS STARTING NEO ONE OF THE TOP VC'S IN SILICON VALLEY SAID YOU ARE FOCUSED ON COMPUTER SCIENCE, MAY DOES THAT NOT MAKE SENSE? I SAY I AM FOCUSING ON COMPUTER SCIENCE AND THE NAMES I MENTIONED ARE COMPUTER SCIENCE STUDENTS.
COMPUTER SCIENCE TEACHES YOU HOW TO THINK. YOU MAY NOT NEED TO KNOW HOW TO CODE, BUT WOULD YOU WANT PEOPLE TO KNOW HOW TO WRITE? WRITING CAN ALSO BE DONE BY AI. WRITING TEACHES YOU HOW TO THINK. COMPUTER SCIENCE -- WE FOCUS ON COMPUTER SCIENCE STUDENTS BECAUSE IT DOES GIVE THEM BUSINESS ACUMEN AND GIVES THEM STRATEGIC THINKING ABILITIES. CAROLINE:
IS WHY YOU FOUNDED CODE.ORG WITH YOUR BROTHER ALL OF THOSE YEARS AGO. I WILL GET PERSONAL. YOU ARE AN IMMIGRANT AND YOUR FAMILY FLED THE IRANIAN REGIME YEARS AGO. WE ARE IN A PERIOD WHERE IMMIGRANTS DO NOT FEEL LESS ACCEPTED IN THE UNITED STATES. DOES THAT IMPACT SOME OF THE
FOUNDERS YOU WILL FIND? ALI: I THINK THIS IS AN EMERGING QUESTION AND I'M STILL TRYING TO FIGURE OUT HOW I FEEL AND WHERE WE WILL END UP. I STILL BELIEVE THE UNITED STATES IS THE BEST HAVEN FOR SMART PEOPLE WHO WANT TO BUILD SOMETHING OUT OF THEIR CAREERS. EVEN IMMIGRANTS. I WAS NOT ONLY AN IMMIGRANT, I WAS DEPORTED WHEN I WAS VERY YOUNG AND MANAGED TO COME BACK. I UNDERSTAND THE FEAR AND THERE ARE SOME TERRIBLE THINGS ABOUT THE U.S. IMMIGRATION SYSTEM. I STILL THINK IN TERMS OF THE OPPORTUNITY THE U.S. OFFERS IT IS BETTER THAN ANY OTHER PLACE ON EARTH.
I WOULD LIKE TO THINK OUR IMMIGRATION SYSTEM WILL EVENTUALLY GET TO WHERE IT MAKES MORE SENSE AS WELL. ED: I WANT TO END BY ASKING YOU, WHAT IS THE DISTINCTION OR ADVANTAGE YOU HAVE? ALI: THERE IS A LOT OF INCREDIBLE LEGACY PROGRAMS FROM THE PAST DECADES THAT INSPIRED US AND ON WHOSE SHOULDERS WE HAVE BUILT WHOSE FOCUS HAS BEEN BACKING FIRST TIME FOUNDERS OR IDENTIFYING COLLEGE STUDENTS AND CONVINCING THEM TO START COMPANIES AND WEED TODAY ARE THE BEST. WE DISCOVER SUPERSTARS EARLIER THAN ANYBODY ELSE. IF YOU LOOK AT THE TOP AI COMPANIES, CURSOR IS THE TOP OF THAT LIST. IT WAS STARTED BY SOMEONE WHO IS A NEO SCHOLAR WHEN HE WAS A COLLEGE STUDENT AND WE ARE THE FIRST INVESTOR.
ED: THANK YOU FOR JOINING US. REALLY APPRECIATE YOUR TIME. CHINESE EV MAKER IS PREPARING TO LAUNCH MODELS IN EUROPE. YESTERDAY THE CEO SPOKE WITH BLOOMBERG ABOUT RECENT CHANGES IN THE EXPANSION STRATEGY.
>> IN THE NEXT FEW YEARS OUR FOCUS WILL UNDOUBTEDLY REMAIN ON THE CHINESE MARKETS. CHINA IS THE WORLD'S LARGEST AND FASTEST GROWING MARKET FOR SMARTER ELECTRIC VEHICLES. WHICH IS ALSO THE MOST COMPETITIVE. AS A COMPANY FOUNDED IN CHINA WE MUST SECURE A SUFFICIENT MARKET SHARE IN OUR HOME MARKET AND ACHIEVE SUSTAINABLE OPERATIONS. THIS YEAR WE HAVE LAUNCHED NINE NEW PRODUCTS. OUR CHIPS CAN INCREASE OUR
GROSS MARGIN BY 4% TO 5%. ADDITIONALLY WE ARE MAKING SIGNIFICANT EFFORTS IN MANAGING SALES EXPENSES AND ENHANCING THE EFFICIENCY OF R&D COSTS. THEREFORE WE ARE VERY CONFIDENT IN ACHIEVING PROFITABILITY FOURTH QUARTER OF THIS YEAR.
>> FOR NEW BRAND FIRE FRY -- YOUR NEW BRAND FIREFLY WILL BE CONCENTRATED ON SINGAPORE AND OTHER MARKETS INCLUDING THE U.K. HOW WILL YOU CHANGE THE MODEL? YOU DID GO INTO FIVE FAIRLY EXPENSIVE NORDIC COMPANIES IN EUROPE AND YOU SAID YOU UNDERESTIMATED THE COST STRUCTURE, SO HOW WILL YOU CHANGE THAT COST STRUCTURE AT A TIME WHERE THERE ARE TARIFFS AS WELL? >> THE TARIFFS WILL INDEED IMPACT OUR OVERALL BUSINESS PLAN. HOWEVER, OUR NEW MODEL FIREFLY IS DESIGNED SPECIFICALLY FOR SMALL CAR USERS. FROM A PRODUCT PERSPECTIVE, IT IS VERY SUITABLE FOR MARKETS, INCLUDING EUROPE. THE GLOBAL MARKET FOR SMALL CARS IS APPROXIMATELY 20 MILLION UNITS.
WE WILL CHANGE OUR WAYS OF COOPERATION. IN THE PAST FEW YEARS WE'VE OPERATED DIRECTLY IN FIVE EUROPEAN COUNTRIES. WE WILL NOW COLLABORATE MORE WITH LOCAL PARTNERS. WE WILL HAVE ONE PARTNER IN EACH COUNTRY FOR LONG-TERM COOPERATION, LEVERAGING THEIR CAPABILITIES TO EXPAND OUR PRESENCE. >> HOW WILL YOU STAND OUT IN THE DOMESTIC MARKET? YOU ARE DOING THE BATTERY SWAPPING WITH THE FIREFLY. ARE YOU IN ACTIVE DISCUSSIONS WITH PARTNERS? WHO WILL BE THOSE WHO HELP THE IMMENSE COST OF SPREADING ACROSS ALL THE PROVINCES IN CHINA? >> WE HAVE INVESTED IN 3270 FIVE BATTERY SWAP STATIONS IN CHINA FOR THE PAST FEW YEARS. THIS YEAR WE HAVE AN EVEN MORE
AMBITIOUS PLAN. WE AIM TO BUILD BATTERY SWAP STATIONS IN EVERY COUNTY ACROSS THE 27 PROVINCIAL LEVEL ADMINISTRATIVE REGIONS IN CHINA. THAT MEANS ADDING AT LEAST 1000 MORE BATTERY SWAP STATIONS THIS YEAR. THIS WILL CERTAINLY BE SIGNIFICANT CAPITAL EXPENDITURE. FIRST WE CHANGE OUR APPROACH THIS YEAR BY WORKING WITH LOCAL PARTNERS IN CHINA WHICH WILL HANDLE THE CONSTRUCTION OF THEIR STATIONS. THEN WRENCH THE SWAP STATIONS FROM THEM. ED:
THAT WAS NEO CEO WILLIAM LEE. EUROPEAN CAR SALES REBOUNDED WITH ELECTRIC VEHICLE SURGING 24% IN THE REGION BUT THAT DID NOT EXTEND TO TESLA, WHICH SAW NEW REGISTRATIONS FALL 20% IN EUROPE LAST MONTH. I WANT TO BRING IN THE HEAD OF IMPACT CAPITAL THAT HOLDS SOME TESLA SHARES. YOU SOLD OUT OF CLIENT FUNDS TWO YEARS AGO BUT YOU RETAIN TO TESLA SHARES FOR THE PURPOSE OF VOTING AND VOCALIZING YOUR THOUGHTS. YOUR THESIS ON THE STOCK, YOU ARE NOT BULLISH? >> WE ARE NOT. WE HAVE SEEN SHARES DROPPED 33% THIS YEAR AND YET THERE IS A RALLY NOW EVEN THOUGH I BELIEVE THEY ARE SHORT ON EARNINGS 34%. CAROLINE:
LET'S DISENTANGLE SOME OF THE PUSHES AND PULLS. MANY WOULD SAY IT HAS BEEN PRODUCTION HALTS OR IT HAS BEEN A STALE LINEUP. HOW MUCH ARE YOU MEASURING WHAT SEEMS TO BE A BRAND DAMAGE STORY THAT HAS HAPPENED IN EUROPE? >> THANK YOU, CAROLINE. WE HAVE TO LOOK AT EVERYTHING WITH THIS COMPANY BECAUSE IT IS EXCEPTIONAL. THERE IS A DREAM OF AUTOMOBILES AND YET WE ARE SEEING 20% DROP IN SALES ON THE AUTOMOBILES AT TESLA AND WHAT IS NOT COMING UP IN THE EARNINGS REPORT THAT IS IMPORTANT TO INVESTORS IS WHAT IS HAPPENING TO THE BRAND, THE DAMAGE, WE HAVE SEEN SALES DROPPING IN MAJOR MARKETS IN EUROPE.
WITH THE CURRENT ADMINISTRATION THAT DOES NOT BODE WELL FOR THE BRAND MOVING FORWARD. ED: TO BE HONEST WITH THE AUDIENCE I DO NOT HOLD ANY TESLA SHARES NOR ANY SHARES OF ANY COMPANY THAT I DO DRIVE A TESLA. THE TECHNOLOGY IS FANTASTIC. MANY WOULD SAY WE WELCOME ELON MUSK BEING A PARTICIPANT IN DO GE. WHAT IS A REACTION TO HIM PLEDGING TO COME BACK TO TESLA AND DIAL BACK ON THE TIME AT DOGE? DOES THAT GIVE YOU MORE CONFIDENCE? KRISTIN: NO. HE IS THERE TALKING ABOUT DOGE IS ABOUT EFFICIENCY AND WE ARE NOT SEEING HIM PRACTICE THAT IN HIS OWN COMPANY.
WHAT WE ARE TALKING ABOUT IS HUMAN CAPITAL MANAGEMENT. WE SEE SO MANY LEAVE THE COMPANY AND THEY ARE ALSO DOING SIGNIFICANT LAYOFFS. WE WANT TO SEE STRONG HUMAN CAPITAL MANAGEMENT TO BE ABLE TO MOVE THIS COMPANY FORWARD.
CAROLINE: EXACTLY WHAT? YOU HAVE BEEN TALKING ABOUT HUMAN CAPITAL MANAGEMENT NEEDS TO CHANGE. MANY INVESTORS HAVE NOT CARED AND THE STOCK HAS CONTINUED TO OUTPERFORM, GIVE OR TAKE THE LAST SIX MONTHS. KRISTIN: THAT'S RIGHT. WE HAVE BEEN TALKING TO TESLA AND ENGAGING SINCE 2019 ABOUT SIGNIFICANT ISSUES FOR RACIAL DISCRIMINATION AND WE HAVE BEEN TALKING ABOUT TOP INNOVATION BEING ABLE TO ATTRACT AND RETAIN TOP TALENT AND THAT IS AN ISSUE MOVING FORWARD AT TESLA AND I THINK WE ARE SEEING THAT IN THE ABILITY TO INNOVATE -- THEY DO NOT HAVE THEIR NEXT LOWER PRICE AUTOMOBILE OUT YET DESPITE PROMISES FOR YEARS AT THIS POINT. WE ARE QUITE CONCERNED. WE ARE PLEASED TO SAY THAT NIO HAS HAD A SIGNIFICANT WIN AND THE BOARD HAS COMMITTED TO WHAT WE ASKED FOR AS FAR AS OVERSIGHT FOR HUMAN CAPITAL MANAGEMENT AND D.E.I. PROGRAMS AT TESLA. ED: THEY DO REMAIN -- CAROLINE:
THEY DO REMAIN COMMITTED TO THAT ROLLOUT OF A MORE AFFORDABLE VEHICLE BY THE FIRST HALF OF THIS YEAR AND WE HAVE NOT REPORTED ANY MORE RECENT HEADCOUNT LOSSES FOR THE BUSINESS. KRISTIN HULL, ALWAYS GREAT TO HAVE YOU ON THE SHOW. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. IT HAS BEEN BUSY AND THERE IS
MORE TO GO. ED: LET'S GO BACK TO SOME OF THE TOP NAMES. THE NASDAQ 100 IS PUSHING HIGHER END IT IS ALL CORNERS OF TECH. OTHER THAN IBM, IBM HAD STRONG PROFIT, INVESTORS THINK IT WAS NOT ENOUGH FOR US. THE BIG ONE IS ALPHABET, THE PARENT OF GOOGLE. SONALI: DON'T FORGET -- CAROLINE: DON'T FORGET TO CHECK OUT OUR PODCAST. FIND IT ON THE
TERMINAL AS WELL AS APPLE, SPOTIFY, AND I HEART. THIS IS "BLOOMBERG TECHNOLOGY."
2025-04-26 21:38
