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Investing, Gaming, And Cybersecurity · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Matt, I got a
• 0:22
  Speaker 1: problem with our next guest. I'm just gonna lay it
• 0:24
  Speaker 1: out there. He is a big time University of North
• 0:27
  Speaker 1: Carolina Chapel Hill guy. But we we beat up on
• 0:30
  Speaker 1: them last weekend in Chapel Hill, so I guess we
• 0:33
  Speaker 1: can deal with it. Jake Brice and Managing Director Chief
• 0:35
  Speaker 1: Economists at Wells Fargo. Don't put up with him, Jake.
• 0:39
  Speaker 1: You know it's gonna be so sweet when we beat
• 0:41
  Speaker 1: you guys in Carolin. All right, we'll see about that.
• 0:43
  Speaker 1: That'll be fun, all right, Jay, Um, you know, we
• 0:45
  Speaker 1: got a lot of inflation out there, whether you see
• 0:48
  Speaker 1: it at the gas pump, you see it at the supermarket.
• 0:51
  Speaker 1: Is this something that could really be a problem for
• 0:54
  Speaker 1: this economy? You know? So you know, I think inflation
• 1:01
  Speaker 1: is going to be stickier than many people, I think
• 1:04
  Speaker 1: appreciate uh, this year, you know, by the end So
• 1:07
  Speaker 1: right now, if you look at the overall rate of
• 1:09
  Speaker 1: CPI inflation, it's running about seven percent or so, we
• 1:12
  Speaker 1: get a print tomorrow, we think by the end of
• 1:15
  Speaker 1: the year it will still be running close before per
• 1:17
  Speaker 1: cent or so. I mean, that's just that's a high
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  Speaker 1: number for most people. So I don't think that this
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  Speaker 1: is we're on the cusp of the seventy seven in
• 1:26
  Speaker 1: terms of you're looking at double digit growth rates and inflation.
• 1:29
  Speaker 1: But I do believe it's going to be higher and
• 1:32
  Speaker 1: that then the problem comes in is how does the
• 1:35
  Speaker 1: Federal Reserve react to that? Right, if they really start
• 1:38
  Speaker 1: to clamp down on the brakes, you potentially could have
• 1:40
  Speaker 1: a big slowdown later this year going into next year.
• 1:44
  Speaker 1: So how hard do you think they will step on
• 1:47
  Speaker 1: the brakes? Because this Fed seemed very dovish before UM J.
• 1:53
  Speaker 1: Powell's reconfirmation a renomination, and all of a sudden, they
• 1:59
  Speaker 1: seem pretty hawkish, even the doves, even the candidates that
• 2:02
  Speaker 1: the left wanted to replace Powell, seem pretty hawk ish
• 2:06
  Speaker 1: on this inflation. Now, that's that's right, They're all singing
• 2:10
  Speaker 1: from the same hypno right now, although I would point
• 2:12
  Speaker 1: out that the hawkish members in recent weeks have kind of,
• 2:17
  Speaker 1: you know, dialed it back a little bit. I mean,
• 2:19
  Speaker 1: I think they're even recognizing that we don't need to
• 2:21
  Speaker 1: really step on or want to step on the breaks here.
• 2:24
  Speaker 1: That said, I mean, we're looking for the markets more
• 2:26
  Speaker 1: or less priced for five rate hikes over the course
• 2:29
  Speaker 1: of this year. We also think the FED will take
• 2:31
  Speaker 1: steps to start to unwind its balance sheet probably in
• 2:36
  Speaker 1: the middle of the year. That's a form of tightening
• 2:39
  Speaker 1: as well. And so I mean there is you know,
• 2:42
  Speaker 1: there there's tightening coming up. That said, the underlying fundamentals
• 2:46
  Speaker 1: of the economy, and you look at balance sheets of households,
• 2:49
  Speaker 1: you look at balance sheets of individuals, uh or or businesses.
• 2:53
  Speaker 1: They're all pretty solid right now. So the underlying fundamentals
• 2:56
  Speaker 1: of the economy remade pretty good it should, you know,
• 2:59
  Speaker 1: and pretty inducive to I'll call it solid growth this year,
• 3:04
  Speaker 1: you know, nothing like we saw last year. But we
• 3:06
  Speaker 1: also don't think we're looking at a you know, a
• 3:08
  Speaker 1: recession in the foreseeable future. By the way, ju Um,
• 3:13
  Speaker 1: expect inflation to continue through not at seven percent levels
• 3:17
  Speaker 1: you just said, but maybe four percent, that's still twice UM.
• 3:21
  Speaker 1: The FED target black Rock a couple of days ago
• 3:25
  Speaker 1: put out a research report saying the problem is that
• 3:29
  Speaker 1: people are buying more stuff. I love dope stuff. My
• 3:33
  Speaker 1: wife loves experiences and services. She would rather go on
• 3:37
  Speaker 1: a trip and get a massage. I would rather buy
• 3:40
  Speaker 1: a motorcycle or a car. UM is the issue that
• 3:43
  Speaker 1: more and more people, through the pandemic UH put away
• 3:47
  Speaker 1: their UM services needs and replaced it with stuff. Yeah,
• 3:54
  Speaker 1: so with you know, so what has been really strong
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  Speaker 1: has been good spending and so and look at the
• 4:01
  Speaker 1: CPI again. It's euryear rate of seven percent right now.
• 4:06
  Speaker 1: Roughly five percentage points of that seven is coming from
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  Speaker 1: good so two thirds is coming from goods. And we
• 4:14
  Speaker 1: only spend a sermat of our money on goods, So
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  Speaker 1: goods are punching well above their fighting way right now. Now.
• 4:21
  Speaker 1: You know, there's also been a probably a fair amount
• 4:24
  Speaker 1: of good spending that has been pulled forward, right I mean,
• 4:28
  Speaker 1: you know, during the pandemic, everyone went out and they
• 4:30
  Speaker 1: bought a trampoline or a basketball groups for the kids.
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  Speaker 1: We don't have to replace that every year. You know,
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  Speaker 1: the same thing for cars and things of that nature.
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  Speaker 1: So as you go forward, which we're you know, what
• 4:40
  Speaker 1: we expect to see and we're kind of actually seeing
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  Speaker 1: it is a pivot from good spending that should slow down.
• 4:46
  Speaker 1: The supply chains will become unclogged, and so you know
• 4:50
  Speaker 1: that the impulse to inflation coming from goods should start
• 4:53
  Speaker 1: to cool off a little bit. But we still do
• 4:55
  Speaker 1: have some pipeline inflationary pressures in terms of services coming through,
• 5:00
  Speaker 1: and so that's one of the reasons why we think
• 5:02
  Speaker 1: inflation is going to remain elevated. You know, again, I
• 5:05
  Speaker 1: don't think it's going to go up significantly from here.
• 5:08
  Speaker 1: We're not. I don't think we're going from seven percent
• 5:10
  Speaker 1: to ten percent. But you know, at the end of
• 5:13
  Speaker 1: the year, if you're still running four percent, that's still
• 5:15
  Speaker 1: kind of hot for many folks. Jay, what's the risk
• 5:18
  Speaker 1: that our federal Reserve makes a mistake here and make
• 5:21
  Speaker 1: it just goes too fast, too far, whether it's a
• 5:23
  Speaker 1: fifty rate hike in March, or whether the the tightening
• 5:26
  Speaker 1: is more aggressive than the market thinks. It seems like
• 5:28
  Speaker 1: they've been telegraphing things pretty well. But what's the chance
• 5:31
  Speaker 1: of a mistake. You know, it's not insignificant. Um. You
• 5:35
  Speaker 1: know the problem. The problem is when you start to move,
• 5:37
  Speaker 1: and when the Fed moves. Historically, when it moves, it
• 5:40
  Speaker 1: continues to move in the same direction for a while. Okay, Um,
• 5:45
  Speaker 1: you know, so we don't think we're going to see
• 5:47
  Speaker 1: a fifty basis on rate hike in March, but we
• 5:49
  Speaker 1: think we'll see twenty five in March, twenty five and
• 5:51
  Speaker 1: twenty five in June, and then start to wind down
• 5:54
  Speaker 1: the balance she July. You know. The issue is that
• 5:57
  Speaker 1: it takes a while for that policy heightening to actually
• 6:01
  Speaker 1: start to show up in the economic data. And so
• 6:04
  Speaker 1: whenever they start to move, you know, in a in
• 6:07
  Speaker 1: a tightening sort of direction, there's always going to be
• 6:09
  Speaker 1: the rest that they potentially could move um too fast
• 6:12
  Speaker 1: now you know, you know, forceline, the market does tend
• 6:15
  Speaker 1: to send signals, um. You know, if you know, if
• 6:18
  Speaker 1: they do start to move a little too fast with
• 6:19
  Speaker 1: the stock market, probably is gonna wabble bond yields. Uh,
• 6:23
  Speaker 1: you know, you could get a potentially inverted yield could
• 6:26
  Speaker 1: in that And you know, so the Center Reserve does
• 6:29
  Speaker 1: pay attention to the signals that the market is sending
• 6:32
  Speaker 1: out and so all right, we'll keep it saying that,
• 6:35
  Speaker 1: all right, Jay, thank you so much for joining us.
• 6:37
  Speaker 1: Jay Bryson, Managing Director, Chief Economists for Wells Fargo, and
• 6:41
  Speaker 1: Jay knows that I root for Duke and for whoever
• 6:44
  Speaker 1: is playing Carolina, but he's been pretty well there for
• 6:47
  Speaker 1: Carolina and grad J Brison Walls Fargo. Let's continue our
• 6:54
  Speaker 1: discussion and the gaming space, this time on the hardware side.
• 6:58
  Speaker 1: We're joined by Andy Paul CEO and founder. Of course,
• 7:00
  Speaker 1: They're Gaming That is a publicly treated company on nastack
• 7:04
  Speaker 1: c R. S R is the ticker. It's about a
• 7:08
  Speaker 1: two billion dollar market cap. Stock is pretty flat for
• 7:10
  Speaker 1: the year, down about over the trailing twelve months. They
• 7:12
  Speaker 1: reported some numbers last night, a little bit better and
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  Speaker 1: expected on the EPs line. Let's get the latest. Andy,
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  Speaker 1: thanks so much for joining us here. What's the key
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  Speaker 1: takeaway from the quarter that you reported last night? Well,
• 7:24
  Speaker 1: as you mentioned, uh, it was a great quarter. We're
• 7:27
  Speaker 1: pretty happy with the results. And um, I think what
• 7:30
  Speaker 1: everyone's starting to understand now is that because of the
• 7:34
  Speaker 1: surgeon activity from gamers during the shelter at home period,
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  Speaker 1: But now we have to compare a post pandemic quarter
• 7:43
  Speaker 1: which was Q four it's just just finished. Compared that
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  Speaker 1: with Q four and that represented about fifty growth, So
• 7:53
  Speaker 1: we're pretty pleased with that. Yeah, listen, I mean, you
• 7:56
  Speaker 1: can't do anything about the fact that your business got
• 7:58
  Speaker 1: a huge boost during lockdown. We were just talking about
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  Speaker 1: other companies that in a way faced the same curse,
• 8:06
  Speaker 1: because when that lockdown lifts, UM, you don't have the
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  Speaker 1: same kind of tailwind behind you that you that you
• 8:13
  Speaker 1: all of a sudden did what what can you do
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  Speaker 1: or what did you do during that period that you
• 8:18
  Speaker 1: think is really important? Well, firstly, UM, let me just
• 8:22
  Speaker 1: correct one thing, because the nice thing about people that
• 8:26
  Speaker 1: buy UM gear for any kind of sport, including gaming,
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  Speaker 1: is as a pretty short refresh cycle, and so all
• 8:33
  Speaker 1: the new gamers that started to buy a gear in
• 8:37
  Speaker 1: the first one UM, you know, we'll look at about
• 8:41
  Speaker 1: a two to four year refresh cycle. So we'll see
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  Speaker 1: a repeat of this in uh, you know late So
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  Speaker 1: that's what we're pretty excited about. Now. What we did
• 8:52
  Speaker 1: during that surge of activity was obviously scramble against massive
• 8:58
  Speaker 1: supply chaining issues and so you know, most of the
• 9:02
  Speaker 1: effort was around the operations of just getting stuff onto
• 9:05
  Speaker 1: the water and into the country, as you know, massive
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  Speaker 1: increases in lead times of costs from containershipments from as
• 9:13
  Speaker 1: I want to get back to the supply chain. But
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  Speaker 1: with all due respect, I have to say, even as
• 9:19
  Speaker 1: someone who spends thousands of dollars playing video games and
• 9:23
  Speaker 1: waste countless hours, I don't understand how can you call
• 9:26
  Speaker 1: it a sport. I mean I will sit there with
• 9:30
  Speaker 1: the full bag of Doritos in a six pack playing
• 9:33
  Speaker 1: Call of Duty and I don't feel like I worked
• 9:35
  Speaker 1: out much. You know, well yeah, maybe maybe not in
• 9:39
  Speaker 1: your in your physical body. But here's the interesting thing
• 9:41
  Speaker 1: that is making it more like sports. You know, everyone
• 9:44
  Speaker 1: started to talk now about metaverse and what the options are,
• 9:47
  Speaker 1: what the opportunities are in there. And what's clear to
• 9:50
  Speaker 1: me is that most sports involve social interaction. So if
• 9:55
  Speaker 1: you think about any sport you do, whether you get
• 9:57
  Speaker 1: mountain biking or skiing with friends, there's a lot of
• 9:59
  Speaker 1: social action, probably more time than they actually spent on
• 10:02
  Speaker 1: the sport. And that's what we're starting to see gaming
• 10:05
  Speaker 1: turn into. And so you see these platforms like Roadblocks
• 10:08
  Speaker 1: like Fortnite, what people are spending as much time socializing
• 10:12
  Speaker 1: with each other as they are. You know, playing the
• 10:15
  Speaker 1: playing the game. So I think that's what we've got
• 10:17
  Speaker 1: to look forward to. So, you know, Mark Zuckerberg has
• 10:21
  Speaker 1: really kind of raised the bar in terms of awareness
• 10:23
  Speaker 1: on the metaverse, and I think I'm just starting to
• 10:26
  Speaker 1: kind of come to grips of what that could be,
• 10:29
  Speaker 1: what that could look like. Um, but but I do
• 10:32
  Speaker 1: get the gaming aspect. How do you guys think about
• 10:35
  Speaker 1: the metaverse as a you know, a's a growth driver
• 10:37
  Speaker 1: for just gaming in general. Yeah, so I think I
• 10:40
  Speaker 1: think it's a trend that's already happening. I mean, I
• 10:42
  Speaker 1: know Mark's coined the latest label, but but there's a
• 10:45
  Speaker 1: growth trend that's been going on for a while. Um,
• 10:47
  Speaker 1: and this was you know, now we've got the hindsight
• 10:49
  Speaker 1: it should have been expected that, um, you know, people
• 10:52
  Speaker 1: would want to spend a lot of time, you know,
• 10:54
  Speaker 1: with each other in a social environment. Now, the good
• 10:56
  Speaker 1: thing for us is that any time spent in recorded
• 10:59
  Speaker 1: the metaverse, this conversation, But anytime you spend interactive entertainment
• 11:03
  Speaker 1: through the Internet, you need to buy gear to do that.
• 11:07
  Speaker 1: So you need a platform, whether it's a constantal game PC,
• 11:11
  Speaker 1: and you need keyboards, mice, headsets, controllers. Um, so it's
• 11:15
  Speaker 1: more people spend more time, then we would expect to
• 11:19
  Speaker 1: continue to send more, sell more gear. Well, what's your
• 11:22
  Speaker 1: expectation for how we uh live in the metaverse and
• 11:28
  Speaker 1: in the future. I mean, typically people think UM VR
• 11:33
  Speaker 1: headset and I just can't buy into that. I would
• 11:37
  Speaker 1: much prefer to be in a room with you know,
• 11:40
  Speaker 1: our all four walls or monitors or something different than
• 11:44
  Speaker 1: a VR headset. But how does it look to you? Yeah,
• 11:47
  Speaker 1: well that's true. I can't imagine people are gonna spend
• 11:49
  Speaker 1: a lot of time walking around with big, heavy goggles
• 11:51
  Speaker 1: on them, So I think that that part of it, um,
• 11:55
  Speaker 1: you know, in terms of the virtual UM aspect, I
• 12:00
  Speaker 1: think he's more like everyone I know is talking about.
• 12:02
  Speaker 1: They are augmented reality rather than virtual reality, which you
• 12:05
  Speaker 1: can do with just some some fairly lightweight glasses. But
• 12:09
  Speaker 1: I think the important thing is not so much of
• 12:10
  Speaker 1: that aspect, but the fact that, you know, people are
• 12:13
  Speaker 1: gonna live spend a lot of time in a virtual world,
• 12:16
  Speaker 1: and they're gonna want to have a digital personal, digital personality,
• 12:20
  Speaker 1: but in many ways it's a little different from their
• 12:22
  Speaker 1: physical personality. And that's why I think a lot of
• 12:25
  Speaker 1: the opportunities are in terms of um, you know, how
• 12:29
  Speaker 1: people acquire those digital personalities. You should see my character
• 12:32
  Speaker 1: and red dead redemption. I have no idea where he's awesome,
• 12:36
  Speaker 1: he's better than me? Um, does you have a name?
• 12:41
  Speaker 1: And Andy? Let's get back to the day to day
• 12:45
  Speaker 1: boring business of UM running your company. Uh, not that
• 12:50
  Speaker 1: it's boring, but you know, the supply chain issues have
• 12:52
  Speaker 1: been probably frustrating, let's put it that way. Do you
• 12:55
  Speaker 1: see them alleviating now? I mean, um in you know,
• 12:59
  Speaker 1: post endemic cours their are you able to get your
• 13:03
  Speaker 1: hands on materials and chips faster better? Yeah? Yeah? So, UM,
• 13:09
  Speaker 1: I think that there's the several parts of this right.
• 13:12
  Speaker 1: One is the semiic nup to shortage, and that's certainly
• 13:14
  Speaker 1: affected a lot of our higher end, more complex products
• 13:18
  Speaker 1: that we've largely taken care of by just adjusting inventory. Um.
• 13:23
  Speaker 1: And so that that you know, in finding alternate supplieres
• 13:25
  Speaker 1: and massive thing UM. So that's not really an issue anymore.
• 13:29
  Speaker 1: The bigger issue is that container costs, which used to
• 13:33
  Speaker 1: be sort of a few years ago three thousand dollars
• 13:36
  Speaker 1: to bring a container from Astion to the US, is
• 13:38
  Speaker 1: now two dollars, so when you've got some and quite honestly,
• 13:44
  Speaker 1: there's no reason for that. Um. I mean I look
• 13:47
  Speaker 1: at this and I think, okay, either those prices are
• 13:49
  Speaker 1: going to go down or every private equery company is
• 13:52
  Speaker 1: going to start investing in container companies. So we know
• 13:56
  Speaker 1: that's going to normalize. We hope we're going to see
• 13:59
  Speaker 1: more of that this year. Uh, there's other issues that
• 14:02
  Speaker 1: are related to not just cost, but you know, the
• 14:06
  Speaker 1: COVID situation, especially recently with Omicron, has caused a massive
• 14:11
  Speaker 1: shortage of labor, and so the big hold up now
• 14:15
  Speaker 1: in terms of time, you know, it doesn't take any
• 14:18
  Speaker 1: longer for ships to go across the ocean, but getting unloaded,
• 14:21
  Speaker 1: getting onto trucks, getting them drivers to take them too,
• 14:25
  Speaker 1: hubs and stores, that's the biggest issue we have at
• 14:27
  Speaker 1: the moment. All right, Andy, thank you so much for
• 14:29
  Speaker 1: joining us. I really appreciate your time and you Paul
• 14:31
  Speaker 1: CEO and founder. Of course they're gaming all right. You know,
• 14:37
  Speaker 1: before we got the SMP up one point three, it
• 14:39
  Speaker 1: looks like it's just another those buy on the dips.
• 14:41
  Speaker 1: We had the SMP down around you know, and here
• 14:45
  Speaker 1: we are making moves higher for you know the last
• 14:47
  Speaker 1: several days. Let's bring in somebody who does this stuff
• 14:50
  Speaker 1: for a living, Guy Davis, Managing director and portfolio manager
• 14:54
  Speaker 1: for g c I Investors. Guy, you know, maybe maybe
• 14:59
  Speaker 1: I'm just getting lazy. I just buy the dips and
• 15:01
  Speaker 1: I don't think much more than that. What are you
• 15:03
  Speaker 1: seeing in these markets? I had been morning everyone, Thanks
• 15:07
  Speaker 1: for having me. Um. Certainly, yeah, I would say we've
• 15:09
  Speaker 1: been in a situation for quite some period of time
• 15:11
  Speaker 1: where the buy the dip mantra continues to hold. I
• 15:16
  Speaker 1: know there are some people saying that, you know, the
• 15:17
  Speaker 1: FED puts about to disappear as interesting trade starts going up.
• 15:21
  Speaker 1: But honestly, I think, you know, we've seen such volatile
• 15:24
  Speaker 1: markets just in the first few weeks at the beginning
• 15:27
  Speaker 1: of two U One of the things I always think
• 15:31
  Speaker 1: back to is that I think, basically there's not real
• 15:35
  Speaker 1: anybody who really knows where where markets are going in
• 15:37
  Speaker 1: the short time, and certainly our approach is always the
• 15:40
  Speaker 1: peerage like this typically provide a huge amount of opportunity,
• 15:45
  Speaker 1: and where you're con clined is some very attractive companies
• 15:48
  Speaker 1: get end up getting settled off quite aggressively, even even
• 15:52
  Speaker 1: when they don't necessarily need to. And certainly as we
• 15:54
  Speaker 1: go through this earning season, there's a couple of stocks
• 15:57
  Speaker 1: that I'd love to pick out and talk about in
• 15:58
  Speaker 1: a little more detail. But you're seeing very significant punishment
• 16:03
  Speaker 1: of individual names on specific ending days if there's the
• 16:07
  Speaker 1: slightest whiff of increased capex or lower guidance to the
• 16:12
  Speaker 1: next couple of quarters. That's a real theme that we've
• 16:14
  Speaker 1: been seeing a certain season. Is Facebook one of those.
• 16:17
  Speaker 1: I've just been looking at the DS page and notice
• 16:20
  Speaker 1: the market cap is just six hundred billion dollars, which
• 16:23
  Speaker 1: in the age of these mega caps feels minuscule, right, Yeah, Yeah,
• 16:29
  Speaker 1: I mean Facebook has been a fascinating company over the
• 16:33
  Speaker 1: last you know, I'd say ten years, but certainly in
• 16:35
  Speaker 1: the last twelve eighteen months. I mean, do you think
• 16:38
  Speaker 1: fundamentally Facebook owns the largest and deepest network. They're trading
• 16:43
  Speaker 1: it like three dollars per user exactly, and there is
• 16:48
  Speaker 1: a Yeah, I think Facebook is a great example of
• 16:53
  Speaker 1: you know, I mentioned the difference between kind of individual
• 16:57
  Speaker 1: stock price moves and business value. To thirty billion was
• 17:00
  Speaker 1: wiped off Facebook on earnings day recently. Now, in terms
• 17:04
  Speaker 1: of kind of efficient market hypothesis, It's kind of hard
• 17:07
  Speaker 1: to justify the fact that the value of Facebook as
• 17:09
  Speaker 1: an entity changed to in a single day. Now, realistically,
• 17:13
  Speaker 1: what was happening in the earnings was, you know, there's
• 17:16
  Speaker 1: a there was a It was to me it was
• 17:18
  Speaker 1: a very kind of politically and regulatory for focused earling.
• 17:21
  Speaker 1: This call you could hear from from Mark and from Cheryl.
• 17:25
  Speaker 1: There was a real focus on, Hey, we're being being
• 17:28
  Speaker 1: we're being beaten down here. TikTok's beating us in reels.
• 17:32
  Speaker 1: Apple and Google have colluded against us. When it comes
• 17:34
  Speaker 1: to the iOS changes, we saw a big jump in
• 17:38
  Speaker 1: kind of cap ex spending for the likes of Facebook
• 17:40
  Speaker 1: from this having to spend a huge amount of money
• 17:42
  Speaker 1: to try and replicate the same sort of analytics that
• 17:45
  Speaker 1: they used to get from iOS and they now don't
• 17:47
  Speaker 1: get anymore. That's a big costo them and it's going
• 17:49
  Speaker 1: to roll through for the next few years. You're also
• 17:51
  Speaker 1: seeing a massive amount of capex going through from the metaverse. Honestly,
• 17:55
  Speaker 1: I think Facebook as an entity, I think is arguably
• 17:59
  Speaker 1: presenting fantastic value today in a sense that it's trading
• 18:03
  Speaker 1: and are cheaper multiple than IBM. It's trading in one
• 18:06
  Speaker 1: of the cheapest multiples we've seen for a considerable period
• 18:09
  Speaker 1: of time, and it's still a company that's growing on
• 18:12
  Speaker 1: plus a year, and it's still a company that's generating
• 18:15
  Speaker 1: plus incremental margins. The real question mark comes with all
• 18:19
  Speaker 1: of this additional capect is going spend into the metaverse
• 18:22
  Speaker 1: is a significant kind of question mark as to how
• 18:24
  Speaker 1: easy is that going to monetize and how is that
• 18:26
  Speaker 1: going to play out? That to me is the big
• 18:28
  Speaker 1: risk factor. Even accounting for that, you've got core Facebook,
• 18:31
  Speaker 1: which to me is cheap as we stand today. Interesting. Yeah,
• 18:36
  Speaker 1: interesting potential entry point for some folks that feel like
• 18:39
  Speaker 1: maybe they missed as some of the upside for Facebook
• 18:42
  Speaker 1: slash Metta Guy Davis, Managing director and portfolio manager for
• 18:47
  Speaker 1: g c I Investors, giving us his thoughts on these markets,
• 18:50
  Speaker 1: which we appreciate. All right, Let's talk cyberge security ransomwhere
• 18:57
  Speaker 1: it is everywhere and it pops up everyone in a
• 19:00
  Speaker 1: while with a high profile story, but we know it's
• 19:02
  Speaker 1: out there every single day. Christy Wyatt's CEO and president
• 19:07
  Speaker 1: of Absolute Software that's a NASAC listed security stock a
• 19:11
  Speaker 1: b s T is this ticker symbol um Christie, thanks
• 19:14
  Speaker 1: so much, for joining us here. I'd love to just
• 19:16
  Speaker 1: get a thirty thousand foot view of how you guys
• 19:19
  Speaker 1: view cybersecurity, the size of it, the growth rate, what
• 19:23
  Speaker 1: are some of the big issues that you guys are
• 19:25
  Speaker 1: looking at. Well, good morning, um, So, I think you've
• 19:30
  Speaker 1: entered into a whole new era of cyber security, especially
• 19:33
  Speaker 1: for enterprise rights as everybody's employees that are now working
• 19:36
  Speaker 1: from home. It's it's had a rethink almost everything we
• 19:40
  Speaker 1: knew about how to protect the employee, and that just
• 19:42
  Speaker 1: makes employees incredibly vulnerable to things like ransomware. And that's
• 19:46
  Speaker 1: why you're seeing this acceleration of attacks around these topics.
• 19:50
  Speaker 1: It's because these organizations are more vulnerable right now. Yeah, so, um,
• 19:55
  Speaker 1: are we able to defend ourselves as well as our
• 20:00
  Speaker 1: creating defenses UM that keep up with the attacks, or
• 20:05
  Speaker 1: or are the criminals kind of um, you know, out
• 20:08
  Speaker 1: maneuvering the the police in this. I think it's more
• 20:12
  Speaker 1: of the shift, right, I think I think we definitely
• 20:15
  Speaker 1: organizations are doing their very best to keep up and
• 20:17
  Speaker 1: there's no lack of spending. We've seen the investment in
• 20:20
  Speaker 1: cybersecurity accelerate over a year. I think we we talked
• 20:23
  Speaker 1: about a is the investment Christie, is the investment growth
• 20:28
  Speaker 1: consistent with because it strikes me and this is your point,
• 20:32
  Speaker 1: and I think it's a great one. We had everybody
• 20:35
  Speaker 1: kind of moving out of the prison and into the wild.
• 20:38
  Speaker 1: You know, everyone has taken her or his company laptop
• 20:43
  Speaker 1: out of the out of the building and home, and
• 20:46
  Speaker 1: now they're on their own WiFi networks which aren't protected.
• 20:50
  Speaker 1: And now they're you know, at Starbucks and you can
• 20:52
  Speaker 1: look over their shoulder like every every security measure is
• 20:56
  Speaker 1: gone all of a sudden. So yeah, and so and
• 21:00
  Speaker 1: so a lot of the things that we used to
• 21:02
  Speaker 1: rely on to protect users, like protecting the network. I
• 21:05
  Speaker 1: know people use the castle and the moat analogy. When
• 21:08
  Speaker 1: the previous regime, we all seem you were in the
• 21:11
  Speaker 1: building and we could protect you by watching you, and
• 21:13
  Speaker 1: now you're at home. And so you hear people talk
• 21:15
  Speaker 1: a lot about things like zero trust and moving a
• 21:18
  Speaker 1: lot more of the intelligence out to the device so
• 21:20
  Speaker 1: that your security is at home with you. And so
• 21:23
  Speaker 1: I think this is a massive shift and it's driving
• 21:25
  Speaker 1: a tremendous amount of change and investment. I think across
• 21:29
  Speaker 1: organizations that need to revamp their security strategy based on
• 21:33
  Speaker 1: the risk profile changing and the landscape of what they
• 21:36
  Speaker 1: need to protect is changed dramatically, and so there's a
• 21:39
  Speaker 1: lot of you know, this is one of those pivotal
• 21:40
  Speaker 1: moments in the cyber landscape where everybody's making this massive
• 21:44
  Speaker 1: shift all at the same time. How can small uh
• 21:48
  Speaker 1: and mid sized businesses afford to do this? I wonder.
• 21:52
  Speaker 1: I mean, I I can see a company like, you know,
• 21:54
  Speaker 1: a Bloomberg going out and buying the best security, but
• 21:58
  Speaker 1: I'm just not sure about somebody small the midsize. But
• 22:01
  Speaker 1: it's a great point because the big, the big ransomware,
• 22:04
  Speaker 1: the big cyber breaches you read about, You read about
• 22:07
  Speaker 1: large security firms coming in and giving you know, sort
• 22:10
  Speaker 1: of the details of how they are compromised, and the
• 22:12
  Speaker 1: attacks don't look incredibly different. It's just the stakes are higher,
• 22:16
  Speaker 1: and so if you are a small business and or
• 22:18
  Speaker 1: small enterprise, you don't have access to those same resources.
• 22:21
  Speaker 1: The two most important things I think that folks need
• 22:23
  Speaker 1: to be investing in. Number one. You know, we talk
• 22:26
  Speaker 1: a lot about detection and prevention. There's a lot of
• 22:28
  Speaker 1: tools available to help you try to screen for and
• 22:31
  Speaker 1: identify bad things coming into your organization. And you can
• 22:35
  Speaker 1: you know, you can select one of those tools. I
• 22:37
  Speaker 1: think the second piece and in my mind, you know
• 22:39
  Speaker 1: almost the more critical pieces. You should assume that even
• 22:42
  Speaker 1: if the largest organizations with all of their investment are
• 22:45
  Speaker 1: getting compromised, you are ultimately going to be the recipient
• 22:49
  Speaker 1: of a ransomware or some sort of cyber breach. It's
• 22:51
  Speaker 1: going to happen. So you have to think about remediation.
• 22:54
  Speaker 1: Like an example would be, you know, if you click
• 22:57
  Speaker 1: on that email in your device phrases and asks you
• 22:59
  Speaker 1: to pay rants in order to get your data back. Well,
• 23:01
  Speaker 1: when that system freezes, you know, whatever organization you're running,
• 23:05
  Speaker 1: it can no longer connect to that device. And so
• 23:07
  Speaker 1: what we do uniquely is we can maintain a connection
• 23:09
  Speaker 1: to that device because we're embedded in the hardware. And
• 23:12
  Speaker 1: so when you think about your investment, you have to
• 23:14
  Speaker 1: think about both sides. How do I know something bad
• 23:16
  Speaker 1: is going on? And when something bad is going on,
• 23:18
  Speaker 1: what am I going to do? How am I going
• 23:20
  Speaker 1: to get my stuff back without get shutting my school
• 23:23
  Speaker 1: down or my business down? And is this the I mean,
• 23:27
  Speaker 1: I know nothing about I T but you have the
• 23:29
  Speaker 1: first self healing zero trust platform can you explain that
• 23:33
  Speaker 1: to us. Yeah, The unique thing about Absolute is that
• 23:37
  Speaker 1: we're embedded in the hardware of almost every PC and
• 23:39
  Speaker 1: laptop that's been manufactured for the last fifteen years. So
• 23:43
  Speaker 1: over a half a billion devices have this capability in them.
• 23:46
  Speaker 1: It's just to the customer to to sort of turn
• 23:49
  Speaker 1: it on by working with with Absolute. And so what
• 23:51
  Speaker 1: that means is we can monitor the health of your
• 23:54
  Speaker 1: security applications or of the things you care about, and
• 23:57
  Speaker 1: if they become compromised, we can heal the By heal them,
• 24:00
  Speaker 1: we mean we can fix them, repair them, reinstall them,
• 24:04
  Speaker 1: so we can automate the recovery. And so if your
• 24:06
  Speaker 1: employee is at home, I can't just tell you, know,
• 24:09
  Speaker 1: I t to swing by your desktop and fix whatever
• 24:12
  Speaker 1: has happened on your system. I have to be able
• 24:14
  Speaker 1: to do that remotely. And because we're in the hardware,
• 24:16
  Speaker 1: we have the ability to do that even when your
• 24:19
  Speaker 1: security applications, your operating system may be in a state
• 24:22
  Speaker 1: where it's not communicating with you anymore. And so so
• 24:25
  Speaker 1: this is a bit of that shift I'm talking about
• 24:28
  Speaker 1: in in in sort of the approach, which is if
• 24:30
  Speaker 1: you assume everybody's not in the office, and you assume
• 24:33
  Speaker 1: bad things are going to happen. You have to assume
• 24:35
  Speaker 1: you have this lifeline. Um, Christie, I hope you get
• 24:38
  Speaker 1: a different way of looking at it. I hope we
• 24:40
  Speaker 1: get to get you back. Not enough time and fascinating stuff.
• 24:43
  Speaker 1: Christy Wyatt is the CEO and president of Absolute Software.
• 24:47
  Speaker 1: She also was named one of the top fifty women
• 24:50
  Speaker 1: in Softwares of Service by The Software Report and uh
• 24:53
  Speaker 1: CEO of the Year by The Globe and Mail. Thanks
• 24:58
  Speaker 1: for listening to the Bloomberg Mark Kids podcasts. You can
• 25:01
  Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
• 25:05
  Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 25:09
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• 25:12
  Speaker 1: Twitter at pt Sweeney Before the podcast. You can always
• 25:15
  Speaker 1: catch us worldwide at Bloomberg Radio.