Latest / Bloomberg Intelligence / Roger McNamee: Tech is the Oasis In a Boring Market (Audio)

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Roger McNamee: Tech is the Oasis In a Boring Market (Audio) · Bloomberg Intelligence

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  Speaker 1: I'm Katherine Cowdery. Your listenates are taking start with Kathleen
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  Speaker 1: Hayes and Kim Fox on Bloomberg Radio. Alphabet, owner of
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  Speaker 1: Google reports after the bell. Facebook reported yesterday, boy, they
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  Speaker 1: had quite a quarter. We want to talk tech, We
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  Speaker 1: want to talk to stock market, and we want to
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  Speaker 1: talk music now with Roger McNamee, co founder of Elevation
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  Speaker 1: Partners at in Menlo Park, California. In fact, he was
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  Speaker 1: one of the very early investors in Facebook years ago.
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  Speaker 1: He's also on the road again, as he is every
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  Speaker 1: summer with the Doobie Despel System. It's a band that
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  Speaker 1: is part of his larger band Moon Alice, and he's
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  Speaker 1: taking some time out in Buffalo where he's performing tonight
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  Speaker 1: to talk to us about the market. Roger, welcome, It's
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  Speaker 1: a pleasure, Kathleen. I'm actually Sarahtoga Springs. Okay, well, well
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  Speaker 1: the other night. We're just moving our way east right now.
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  Speaker 1: But it's uh, it's a beautiful day here and it's
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  Speaker 1: lovely to be chatting with you. It's to chat with
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  Speaker 1: you two. We're gonna talk to about for a minute
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  Speaker 1: about your show in Brooklyn tomorrow night if we have
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  Speaker 1: a minute. But I want to dive right into Google
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  Speaker 1: slash Alphabet. You like this business model, You've always like
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  Speaker 1: Google and and this whole structure now with alf alpha
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  Speaker 1: that you said works very well. I think it's it's
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  Speaker 1: really important as an adhastor that the Google has made
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  Speaker 1: the conscious effort to break out its business into the mature, uh,
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  Speaker 1: traditional search businesses and then all the new ventures. And
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  Speaker 1: you know, to me, the perfect outcome will come when
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  Speaker 1: they have a tracking stock for the new business that
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  Speaker 1: is separate from the more mature ones. But the fact
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  Speaker 1: that they have chosen to break it out for reporting
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  Speaker 1: purposes is really helpful to investors. And I think it's
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  Speaker 1: brought a discipline inside Google that has helped everyone. And
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  Speaker 1: so I'm I'm super impressed by what the management team
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  Speaker 1: at Google has been doing. And you know, I don't
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  Speaker 1: have any more visibility to the numbers than anybody else,
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  Speaker 1: but I do know that the trends that have been
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  Speaker 1: benefiting Facebook also benefit Google to a slightly lesser degree,
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  Speaker 1: but nonetheless the one that will be dramatically, I think,
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  Speaker 1: better than what we're seeing in terms of earning for
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  Speaker 1: the markets all. Are you super impressed with the results
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  Speaker 1: from Apple and the performance of Tim Cook? Well, I am,
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  Speaker 1: And you know, I think the last time we spoke,
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  Speaker 1: I was sharing with you my view that the products
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  Speaker 1: cycle around smart phones in me, I felt, in particular,
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  Speaker 1: was it, without exaggeration, the mother of all technology product cycles.
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  Speaker 1: There's never been anything like that. And Apple's announcement is
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  Speaker 1: now shift a billion iPhones will last whatever it is.
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  Speaker 1: So here's eight years is uh just truly amazing. And
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  Speaker 1: I look at the situation now and though we're going
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  Speaker 1: to have quarters like this everyone so while where you
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  Speaker 1: get a really nice subside surprise, and the stock had
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  Speaker 1: been trading as though it was never going to have
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  Speaker 1: another up quarter, and so people are totally stunned. And
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  Speaker 1: you know, Apple is a great company, and I think
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  Speaker 1: him Cook has played the hand very very well. I
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  Speaker 1: wish they were better at the software. I think almost
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  Speaker 1: all the software Apple makes is less good today that
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  Speaker 1: it was a few years ago. And I'm hopeful that
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  Speaker 1: at some point, uh, they will be able to do
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  Speaker 1: something about that. But I think as a value stock.
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  Speaker 1: Apple simply cannot be there's I can't think of a
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  Speaker 1: scenario where the sp moves up where Apple doesn't do better.
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  Speaker 1: And I can't imagine a scenario where the sp gets
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  Speaker 1: hurt where Apple at least does, or Apple fails to
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  Speaker 1: provide at least relative performance. So I think you're kind
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  Speaker 1: of leading us now into a big picture question. We
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  Speaker 1: can dig some more into the details of these tech
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  Speaker 1: companies in a minute, Roger. But you told me earlier
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  Speaker 1: today we were talking on the phone ahead of this interview,
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  Speaker 1: that the tech companies are running against the tide. It
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  Speaker 1: is a larger concern about the spire. But I I
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  Speaker 1: look out at at the broad global economy, and the
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  Speaker 1: thing that is incredibly clear is that China, the blips
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  Speaker 1: downward that we saw in China last year's appears to
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  Speaker 1: actually to be more significant than it initially look to me,
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  Speaker 1: and that we we can't view China as the engine
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  Speaker 1: of global growth on a consistent basis the way we
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  Speaker 1: could for the past decade. It's also clear that Europe
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  Speaker 1: will remain punk and the Brexit UH at least creates
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  Speaker 1: uncertainty that's not good for earnings from Europe. So the
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  Speaker 1: while the US economy is actually pretty decent shape. It's
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  Speaker 1: not great, it's not barnburner anything, but it's it looks
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  Speaker 1: good round to the rest of the world. Unfortunately, most
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  Speaker 1: of the SMP five dred is getting more of its
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  Speaker 1: earnings outside of the US, so the slowdown elsewhere is
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  Speaker 1: going to be a drag. I think we also because
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  Speaker 1: of the very small upticking interest rates and a few
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  Speaker 1: other factors, uh, we're going to make it harder for
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  Speaker 1: companies to buy stock back. So I think a lot
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  Speaker 1: of the things that have been driving the S and
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  Speaker 1: P five hundred look less good today than they did.
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  Speaker 1: Which just not to say we're gonna have a bear market,
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  Speaker 1: because I don't see that either, but I think it's
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  Speaker 1: going to be slow going on the earnings for most
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  Speaker 1: of the S and P five d and in that context,
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  Speaker 1: the leaders of the tech market looks fantastic. You know
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  Speaker 1: Facebook's numbers, those are great growth numbers in any market environed,
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  Speaker 1: particularly for a company at that scale, and you know,
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  Speaker 1: with that market liquidity, it's obviously for growth. Innfessors must
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  Speaker 1: have security and Google is not growing anything like that fast,
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  Speaker 1: but it's growing a lot faster than the SMP five hundred,
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  Speaker 1: and it's priced very attractively. Interpress the SMP and Apple,
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  Speaker 1: which sells for a big, big discount. The SP five
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  Speaker 1: dred is and growing much but at least it's growing
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  Speaker 1: and it's so cheap that you know, those three stocks
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  Speaker 1: really uh offer growth investors, I think an opportunity. I
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  Speaker 1: think there are other fixed tech like Amazon, where the
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  Speaker 1: growth numbers are going to be much better than the
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  Speaker 1: market as a whole. And so in that context, I
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  Speaker 1: think tech is is an oasis in an otherwise you know,
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  Speaker 1: boring market farm. We're speaking with Roger McNamee. He is
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  Speaker 1: the co founder of Elevation Partners. They're based in Menlo Park, California.
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  Speaker 1: Rogers speaking of broad trends, Oracle paying nine point three
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  Speaker 1: billion dollars for net Suite to expand their cloud computing business.
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  Speaker 1: What if you could talk about cloud computing but in
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  Speaker 1: the context perhaps of your own investment in a company
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  Speaker 1: called up there, you bet so, what I would tell
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  Speaker 1: you is that cloud computing is now deeply entrenched the accompany.
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  Speaker 1: When we when we think about what's happened at smartphones,
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  Speaker 1: we had this massive adoption phase and now we're about
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  Speaker 1: to begin the adaptation phase with the economy adjust to
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  Speaker 1: the fact that every consumer has got a smartphone. Now.
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  Speaker 1: In order for all these things to work, you have
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  Speaker 1: to have some way to manage the information that people
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  Speaker 1: are accessing on the smartphones and putting all the information
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  Speaker 1: on servers in the cloud, which is to say, making
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  Speaker 1: them accessible from anywhere as opposed to having them sit
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  Speaker 1: next to your computer. That notion has been building for
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  Speaker 1: the last decade, and we saw with Salesforce and a
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  Speaker 1: few other companies like net Suite early leaders with Amazon's
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  Speaker 1: web services business, we now see the mature version of it.
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  Speaker 1: And for net Suite and for Salesforce, their original architectures
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  Speaker 1: were a big leap forward from or all the things
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  Speaker 1: that came before, but they are not actually the most
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  Speaker 1: uh cost effective systems for cloud computing that are out there.
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  Speaker 1: So it's a very smart sale by net Suite, and
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  Speaker 1: from Oracle's point of view, all they want to do
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  Speaker 1: is consolidate the things to customers own, so it may
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  Speaker 1: actually be a pretty good deal both ways. The one
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  Speaker 1: observation with with up there, we've got a company, really
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  Speaker 1: extraordinary team out of Apple building next generation cloud services
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  Speaker 1: and The whole principle here is that we all have
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  Speaker 1: data that we need to have access to, and we're
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  Speaker 1: spending less and less time at a desktop with a computer,
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  Speaker 1: or more time accessing things off of smartphones and tablets.
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  Speaker 1: You really wanted your information in the cloud where you
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  Speaker 1: can find it, and maybe you have Dropbox. Maybe you
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  Speaker 1: want to use products like up there to do that.
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  Speaker 1: What we can say without their correction is that enterprises
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  Speaker 1: are making that move aggrogressively. It's such a cost status
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  Speaker 1: for corporations that this will be a strategy that investors
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  Speaker 1: need to understand. We've got to leave it there. Roger mcamee,
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  Speaker 1: co founder Elevation Partners, has banned a Doby decibel system
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  Speaker 1: at the Brooklyn Bowl tomorrow night. We take you through
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  Speaker 1: to the close. This is Bloomberg