Latest / Bloomberg Intelligence / Super Micro Auditor Resigns, Eli Lilly Cuts Outlook

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Super Micro Auditor Resigns, Eli Lilly Cuts Outlook · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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• 0:23
  Speaker 3: One of the names really in the news today for
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  Speaker 3: not the good reasons is super Micro Computer.
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  Speaker 4: It's order to resign. That's not good.
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  Speaker 3: The stock's all thirty percent on that news. Let's break
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  Speaker 3: down what's going over there, because this was a high
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  Speaker 3: flying AI type stock that peaked about one hundred and
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  Speaker 3: eighty dollars a share back in March.
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  Speaker 5: Yeah, it added to the s and P five hundred
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  Speaker 5: back in March, right, so.
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  Speaker 3: Right at the all time Hi, but boy down at
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  Speaker 3: thirty four dollars I share it now. Wu Jinhoge joins us.
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  Speaker 3: He's a senior technology analyst for Bloomberg Intelligence. He's sat
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  Speaker 3: in our Princeton, New Jersey office. Which what happened today
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  Speaker 3: over at super micro Computer?
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  Speaker 1: Yeah, so thanks Paul. Look, there's been some filing delays
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  Speaker 1: at super Micro, some differences of opinion in terms of
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  Speaker 1: the auditor and the management team and Essentially, the uh,
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  Speaker 1: the uditor resigned due to quote unquote integrity issues with
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  Speaker 1: the management team there.
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  Speaker 4: And and this isn't like Joe's CPAs. This is this
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  Speaker 4: is a big deal resigning and.
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  Speaker 3: This does not happen often at all. So what's Ernst
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  Speaker 3: and Young saying about why they resigned, Well, you know,
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  Speaker 3: in the.
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  Speaker 1: AK filing, essentially Ernest and Young is saying that there
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  Speaker 1: were some differences of opinion and they didn't think that
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  Speaker 1: there was enough transparency from the auditor committee as well
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  Speaker 1: as integrity issues from the auditor committee. So look, quite
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  Speaker 1: quite frankly, it's the first time I've ever seen language
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  Speaker 1: like that. And the other thing that I can state
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  Speaker 1: is that, you know, Ersten Young is the second auditor
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  Speaker 1: that super Micro had in the span of eighteen months,
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  Speaker 1: so they were supposed to clean up the issues from
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  Speaker 1: the prior orditor, and it sounds like they found issues
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  Speaker 1: that just couldn't be resolved.
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  Speaker 5: And of course the resignation comes after news broke last
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  Speaker 5: month that the DOJ had launched a probe into an
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  Speaker 5: ex employee's claims that super Micro actually valulated accounting rules.
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  Speaker 5: What do we know so far about how many different
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  Speaker 5: issues there are kind of more broadly when it comes
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  Speaker 5: to this company.
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  Speaker 6: Yeah, so.
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  Speaker 1: Not much news has come out of the DOJ probe,
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  Speaker 1: but it is bringing up some older issues that caused
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  Speaker 1: their delisting roughly three or four years back. Essentially, they
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  Speaker 1: were very aggressive on their accounting side, and it seems
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  Speaker 1: as if, based on a short report that came out
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  Speaker 1: in July, it seems as if they went back to
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  Speaker 1: their old ways in the recent months, in recent quarters.
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  Speaker 3: Well, which just as an outside observer here, I see
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  Speaker 3: a story like this and I say, we need change
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  Speaker 3: at the board level, and I need change in the
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  Speaker 3: c suite level. Are you hearing calls from some of
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  Speaker 3: their shareholders for some types of moves like that.
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  Speaker 1: Well, that's how we tidled. Are we react report? It's like, look,
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  Speaker 1: super Micro needs more than an orditor to change to
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  Speaker 1: fix this, and we were concerned about their corporate governance.
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  Speaker 1: If you keep in mind that there aren't many independent
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  Speaker 1: board members, one of whom includes the wife of the CEO,
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  Speaker 1: there really needs to be a lot more independence on
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  Speaker 1: the board. And quite frankly, given the now growing concerns
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  Speaker 1: of financial mofeasings, I think the CFO has to go
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  Speaker 1: and you know, if they can't clean this up, there
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  Speaker 1: might be a need for a change at the top.
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  Speaker 5: Paul mentioned the stocks being that we've been seeing in
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  Speaker 5: it so far today down over thirty percent on Paceports,
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  Speaker 5: worst day since October of twenty eighteen. From a technical perspective,
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  Speaker 5: how much more pain do you think there is to
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  Speaker 5: run here?
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  Speaker 1: Well, the question is is, you know, are the revenues real?
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  Speaker 1: I do think that the revenues are real. I don't
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  Speaker 1: know how real the profitability may be, right because there
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  Speaker 1: are multiple ways to probably manipulate the numbers. The one
• 4:18
  Speaker 1: thing that we wrote is that you know, the near
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  Speaker 1: term deals are probably intact because it's really tough to
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  Speaker 1: change switch vendors for an AI deal. But longer term
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  Speaker 1: there are going to be downs in terms of water activity.
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  Speaker 1: I'm working with super micro, so it's going to be
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  Speaker 1: the future outlook going forward that that could be at
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  Speaker 1: risk and could drive the stock going forward.
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  Speaker 4: All right, well, just thanks so much for joining us.
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  Speaker 3: Woujin Hoo, he's a senior technology channels for Bloomberg Intelligence.
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  Speaker 3: He's based on there in our Princeton office. Again, the
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  Speaker 3: stock off thirty percent today. S MCI is the ticker.
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  Speaker 3: Despite that, it's still up about twenty percent on the year. Yeah,
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  Speaker 3: it's got a market cap right now, just about twenty
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  Speaker 3: billion dollars. But again, this thing back in March of
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  Speaker 3: this year was one hundred and eighty.
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  Speaker 6: Dollars, right.
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  Speaker 5: It had been the best performing stock in the S
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  Speaker 5: and P five hundred at one point for the year,
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  Speaker 5: even outpacing in videos earnings. But then once you see
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  Speaker 5: these big declines, obviously not anymore.
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  Speaker 3: And Wujin saying that this is the second auditor they
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  Speaker 3: had in eighteen months, I think tells you all you
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  Speaker 3: need to know here. It's just it kind of goes
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  Speaker 3: to a credibility of their reported financial results. And if
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  Speaker 3: as an investor, if you don't feel comfortable with, you know,
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  Speaker 3: the financial results, Yeah, it's tough to put evaluation on that.
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  Speaker 3: I think that's kind of what we're seeing today. We're
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  Speaker 3: seeing that move again, a seventy percent, seven zero percent
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  Speaker 3: move off of that March high. So again the market
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  Speaker 3: kind of voting with its feet.
• 5:38
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 2: Say Alexa playing Bloomberg eleven thirty.
• 5:56
  Speaker 4: We had some of the big European banks started reporting.
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  Speaker 4: UBS came out with.
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  Speaker 3: Some better than expected numbers, but management, I think, you know,
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  Speaker 3: they're saying, hey, there's some risks out there, so kind
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  Speaker 3: of tempering the outlook a little bit. So let's break
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  Speaker 3: it down with Alison Williams. She is the senior bank
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  Speaker 3: sannels for Bloomberg Intelligence. So Allison, I mean, you know,
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  Speaker 3: of the big European banks, UBS is the one I
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  Speaker 3: think a lot of people focus on because they have
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  Speaker 3: such a big presence here in the US. What did
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  Speaker 3: you see coming out of UBS and kind of what's
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  Speaker 3: their outlook?
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  Speaker 7: So a really strong quarter. Fundamentals look good. I think
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  Speaker 7: there are some concerns about capital and that might be
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  Speaker 7: weighing on the shriffes today. But you know, to your point,
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  Speaker 7: people look at their business. Sixty percent growth in their
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  Speaker 7: America's trading business, so so wow is the word. It
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  Speaker 7: was a record trading, record third quarter trading for them.
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  Speaker 7: Keep in mind that third quarter tends to be weak,
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  Speaker 7: so but it was that it was the strongest third
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  Speaker 7: quarter they've ever had, and that was really due to
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  Speaker 7: cash equities and derivatives strengths of the bank. So twenty
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  Speaker 7: seven percent growth really looking good and a lot of
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  Speaker 7: momentum coming into the fourth quarter. The other positive for UBS,
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  Speaker 7: you know, that core wealth franchise is really what sets
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  Speaker 7: them apart, and they did have very strong flows inflows
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  Speaker 7: across all the regions, especially Asia, so that's also very good.
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  Speaker 7: And then on the deal execution side, we also like
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  Speaker 7: what we're seeing there in terms of their cost progress.
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  Speaker 7: You know, the grossed cost saves are over fifty percent
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  Speaker 7: the way there, so that's a positive the non core unit,
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  Speaker 7: so that's you know, stuff they want to get rid of.
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  Speaker 7: They're making cuts there faster than expected. But capital, as
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  Speaker 7: I said, that was the one thing I think, you know,
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  Speaker 7: investors are still a little bit skittish on. They did
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  Speaker 7: actually take a cut to their capital ratio in the
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  Speaker 7: quarter basically because they voluntarily are kind of giving up
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  Speaker 7: some accounting relief. So you know, I think that that's
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  Speaker 7: you know, that's accounting is sort of just noise in
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  Speaker 7: my view. But they did say that, you know, they're
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  Speaker 7: not sure if when they report the fourth quarter of
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  Speaker 7: February if they're going to be able to give guidance
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  Speaker 7: on buybacks. And that's because you know, while they're executing
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  Speaker 7: on this deal, fundamentally regulators, you know, are concerned about
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  Speaker 7: the size and they may force them to hold more capital.
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  Speaker 5: Looking over at UBS's stock right now, down about three
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  Speaker 5: point six percent on pace, sports worst day since August. Second,
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  Speaker 5: of course, you were talking about obviously capital, but there
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  Speaker 5: was also a lack of any further guidance from executives
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  Speaker 5: on that analyst cause, well, so how much does that
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  Speaker 5: also wing on the stock at this point?
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  Speaker 8: Allison, Well, I think it really is the lack of
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  Speaker 8: guidance on capital to your point that that is weighing,
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  Speaker 8: because you know, if they basically they restarted their buyback.
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  Speaker 7: You know, in the first half, but people are very
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  Speaker 7: focused on the prospects for capital return and I think
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  Speaker 7: the fact that you know, not only did they not
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  Speaker 7: give guidance, but they said they might not be able
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  Speaker 7: to give guidance in February is the concern.
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  Speaker 3: So hel representatives you b s UBS of kind of
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  Speaker 3: some of the other European banks, Allison.
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  Speaker 7: So it's interesting that you know, Ubans versus the other bank.
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  Speaker 7: They are more skewed to the equities business. They do
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  Speaker 7: have a very strong US presence, as you said, they
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  Speaker 7: also tend to be strong in Asia, and we really
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  Speaker 7: saw a lot of strength their late quarter that benefited,
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  Speaker 7: you know, the companies such as JP Morgan and Morgan Stanley.
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  Speaker 8: So Deutsche Bank does.
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  Speaker 7: Not have the equities business, but they were very strong
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  Speaker 7: in stick and we'll see what happens with you know,
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  Speaker 7: BNP and zctin are the next ones to come, so
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  Speaker 7: they might not get that same lift that UBS saw
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  Speaker 7: from their kind of unique footprint. But generally we did
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  Speaker 7: hear about strength across regions of cross cash and derivatives,
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  Speaker 7: and derivatives is a strength for those two French bands,
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  Speaker 7: and so we think that we could see some strength
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  Speaker 7: there tomorrow.
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  Speaker 4: All right, Alison, thank you so much for joining us.
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  Speaker 3: As always, Alison Williams, she's a senior banks analyst for
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  Speaker 3: Bloomberg Intelligence globally. Full disclosure, I am a client of UBS.
• 10:17
  Speaker 3: Or shout out to Tonyo C and the boys.
• 10:25
  Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 2: weekdays at ten am Eastern on Apple Card playing Android
• 10:32
  Speaker 2: Otto with the Bloomberg Business app listen on demand wherever
• 10:36
  Speaker 2: you get your podcasts, or watch us live on YouTube.
• 10:40
  Speaker 3: Again, look at that Eli Lilly story. It stops down
• 10:42
  Speaker 3: five percent, so it's well off. It's in traud de
• 10:44
  Speaker 3: Loso's off about eleven or twelve percent earlier. But guess what,
• 10:47
  Speaker 3: it's up forty seven percent year to date. So this
• 10:49
  Speaker 3: one's had a nice run. It's got an eight hundred
• 10:51
  Speaker 3: billion dollar market cap. Clearly a little bit of a
• 10:53
  Speaker 3: miss here today. Let's break it down with somebody who
• 10:55
  Speaker 3: knows Eli Lillly belderan anybody out there at Sam Fazeli,
• 10:58
  Speaker 3: director of research for Global indust and a senior pharmaceuticals analyst.
• 11:01
  Speaker 3: They go to Voice in the City of London if
• 11:04
  Speaker 3: you want to talk about this healthcare stuff, and if
• 11:05
  Speaker 3: you want to talk wine. He's also probably better adapted that. So,
• 11:09
  Speaker 3: Sam Eli Lilly, I know you're you know this company
• 11:12
  Speaker 3: really well? What did they disclose today and the results
• 11:15
  Speaker 3: and why is the stock selling off?
• 11:17
  Speaker 6: Yeah?
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  Speaker 9: So hi Paul, nice to see you all again. I'm
• 11:21
  Speaker 9: looking at the screen. You know, as as you guys
• 11:23
  Speaker 9: said earlier, it had been down like thirteen and a half, fourteen,
• 11:26
  Speaker 9: fifteen percent and now it's kind of coming back. The
• 11:29
  Speaker 9: call has just finished, the Q three call, and I'll
• 11:33
  Speaker 9: just break it down quickly for you. When they reported
• 11:36
  Speaker 9: we got a miss, right, and I'm looking at it
• 11:38
  Speaker 9: right now, they missed by six percent on revenue.
• 11:41
  Speaker 6: That is not what you do when you're a.
• 11:43
  Speaker 9: Sixty pe company, right, It just it doesn't ide is
• 11:47
  Speaker 9: the world's not forgiving enough of that. And by the way,
• 11:49
  Speaker 9: those burritas, you're talking about seven hundred and eighty five
• 11:52
  Speaker 9: calories for an average burreto. Wow, So if you want
• 11:55
  Speaker 9: to help you like Lily, you have three of those
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  Speaker 9: a day.
• 11:57
  Speaker 6: Yeah.
• 11:58
  Speaker 9: No, So so just breaking that down further that this
• 12:03
  Speaker 9: was two drugs on jar O and zep bound and
• 12:05
  Speaker 9: those are the drugs that everybody talks about. This is
• 12:08
  Speaker 9: the the obesity drugs that are.
• 12:12
  Speaker 6: On the market. They missed.
• 12:13
  Speaker 9: Why did they miss The company said that it's because
• 12:16
  Speaker 9: there was an inventory d stocking going on at some wholesalers.
• 12:20
  Speaker 9: So people go, wait a minute, you saying to me
• 12:23
  Speaker 9: that demand cannot be satisfied, supply were supply limited, So
• 12:29
  Speaker 9: why is there an inventory issue in the middle here?
• 12:32
  Speaker 9: And of course that's what led to the question of
• 12:35
  Speaker 9: oh my god, are we overestimating demand?
• 12:37
  Speaker 6: Here?
• 12:38
  Speaker 9: Is the company overestimated it? Why it's the world over
• 12:40
  Speaker 9: estimating demand? So why have we come back from five percent?
• 12:44
  Speaker 9: Simple answer. It sounds like with the twelve different forms
• 12:50
  Speaker 9: of the drugs that they have that no one in
• 12:53
  Speaker 9: this early launch phase we can call it early launch, right,
• 12:57
  Speaker 9: given that it's been a couple of years, is really
• 12:59
  Speaker 9: a to manage and work out what they need to
• 13:03
  Speaker 9: have as inventory, because in such a massive product, you're
• 13:07
  Speaker 9: going to have an impact on working capital, even for
• 13:10
  Speaker 9: the wholesalers. It sounds like that that's the issue that
• 13:14
  Speaker 9: even Lily themselves can't necessarily forecast here, right, I mean
• 13:18
  Speaker 9: the actual details of how much of each product has made.
• 13:21
  Speaker 9: If that's true then and I think you get a
• 13:24
  Speaker 9: little with of that in the fact that Folier guidance
• 13:27
  Speaker 9: wasn't dropped by as much as the miss that at
• 13:30
  Speaker 9: least currently they are optimistic about picking a whole bunch
• 13:33
  Speaker 9: of that back up in the Q four that you
• 13:36
  Speaker 9: should not worry about demand you talk to any doctor
• 13:38
  Speaker 9: you want, do they say, oh, I have no patience
• 13:41
  Speaker 9: left to asking before he set bound or we go
• 13:43
  Speaker 9: viaor whatever.
• 13:44
  Speaker 6: So I think that's what's.
• 13:45
  Speaker 9: Happening here the difficulty in managing and thinking about how
• 13:50
  Speaker 9: to manage your inventory.
• 13:52
  Speaker 5: Something I wanted to pick your brain about was when
• 13:54
  Speaker 5: it comes to knockoffs, because we saw a huge drop
• 13:56
  Speaker 5: in hymns and hers earlier this month. So they were
• 14:00
  Speaker 5: so they previously were allowed to manufacture copycap drugs when
• 14:03
  Speaker 5: they're deemed in short supplied by the FDA, But the
• 14:06
  Speaker 5: FDA at that time said when it came to zetbound
• 14:08
  Speaker 5: and Manjarro, specifically for Eli Lily, they weren't shortage anymore.
• 14:11
  Speaker 5: So that's why you saw that drop there. But they
• 14:13
  Speaker 5: still when it came to a zempic and Wegovi. When
• 14:16
  Speaker 5: you think about Novo Nordisk, they were still able to
• 14:18
  Speaker 5: offer compounded version actually versions of those. So I'm wondering,
• 14:22
  Speaker 5: when you think about Eli Lily versus what's happening with
• 14:25
  Speaker 5: Novo Nordists, how does that kind of come into play
• 14:27
  Speaker 5: when you're thinking about when it comes to sort of
• 14:29
  Speaker 5: the knockoffs and the copycat type drugs.
• 14:33
  Speaker 6: Yeah.
• 14:33
  Speaker 9: Sure, I mean I'm not even sure that people have
• 14:36
  Speaker 9: stopped making compounded versions of zep bound and Manjara because
• 14:41
  Speaker 9: the FDA kind of reeled back a little bit and said, oh,
• 14:44
  Speaker 9: we're going to actually look at this again.
• 14:45
  Speaker 6: So I don't think that story is finished.
• 14:47
  Speaker 9: I think that these folks are some folks are still
• 14:50
  Speaker 9: able to supply those from a compounded pharmacy perspective. So
• 14:54
  Speaker 9: you know that is that's that's a lot, that's a
• 14:58
  Speaker 9: root that the FDA does to people. If there's a
• 15:01
  Speaker 9: shortage of a drug and someone else can make it,
• 15:03
  Speaker 9: well let them do it.
• 15:05
  Speaker 6: The interesting angle, of course, is that a whole bunch.
• 15:07
  Speaker 9: Of people who are taking off the compounded pharmacists are
• 15:10
  Speaker 9: probably paying less, and therefore if they're forced to go
• 15:14
  Speaker 9: and take it from a prescription, they may have to
• 15:16
  Speaker 9: pay more out of pocket. So that's not going to
• 15:18
  Speaker 9: be a leaving a particularly good taste in folks mouths
• 15:22
  Speaker 9: once that this.
• 15:24
  Speaker 6: Actually happens. But it hasn't happened yet.
• 15:26
  Speaker 9: So and they did say on the call that this
• 15:28
  Speaker 9: is not because there's enormous demand being fulfilled by compounded pharmacies.
• 15:33
  Speaker 9: It's literally to do with that inventory management issue, where
• 15:39
  Speaker 9: what are.
• 15:39
  Speaker 3: The companies saying sam about getting this in an oral format.
• 15:42
  Speaker 3: I think that might be one of the next big
• 15:44
  Speaker 3: I guess mileposts for this type of treatment.
• 15:48
  Speaker 9: Yeah, I remember, Paul, there's already an oral form of this.
• 15:51
  Speaker 9: It's called Robelsus. It's from over NOTICEK. It's just a
• 15:54
  Speaker 9: tough drug to use because you have to have it
• 15:56
  Speaker 9: within about half an hour of eating. You can't take
• 15:58
  Speaker 9: it too close or too far from any team because
• 16:01
  Speaker 9: you need an empty stomach.
• 16:03
  Speaker 6: Before you take the drug.
• 16:04
  Speaker 9: And it's a big dose, and maybe the side effect
• 16:06
  Speaker 9: profile isn't as great and the weight loss isn't as great.
• 16:08
  Speaker 9: So people are trying to develop oral versions of these drugs,
• 16:13
  Speaker 9: but also oral drugs that are like normal drugs, small
• 16:17
  Speaker 9: molecules that they can swallow as a pill once today.
• 16:19
  Speaker 6: So that's coming.
• 16:21
  Speaker 5: So what do you think shareholders need to watch for
• 16:23
  Speaker 5: next when it comes to especially after its outlook disappointed.
• 16:28
  Speaker 6: I think we need to see how Q four does.
• 16:31
  Speaker 9: So let's hope that that they're current guidance. At least
• 16:35
  Speaker 9: they meet it, maybe beat it, that would be nice.
• 16:39
  Speaker 9: The issue is then we move into a Q four.
• 16:42
  Speaker 9: There's an interesting result from a click or child that's
• 16:44
  Speaker 9: coming up. They've done this before. They're comparing zep bound
• 16:47
  Speaker 9: with big go V, and I suspect that they're hoping
• 16:52
  Speaker 9: and that that data suggests that they might. They will
• 16:54
  Speaker 9: show that it has better weight loss. Whether the side
• 16:58
  Speaker 9: effect profile will be better or different, time will tell.
• 17:00
  Speaker 9: But that's there are not many farmer companies do these
• 17:03
  Speaker 9: type of excuse me, head to head trials because that
• 17:07
  Speaker 9: takes some Uh yeah.
• 17:08
  Speaker 4: Yeah, no, I just want to get real quick.
• 17:10
  Speaker 3: What's the latest thinking on the size of this market?
• 17:13
  Speaker 4: And you guys have done a lot of work on this.
• 17:15
  Speaker 9: Yeah, I think I think my Key's latest numbers that
• 17:17
  Speaker 9: are ninety three billion.
• 17:19
  Speaker 6: I don't remember exactly. It's big, well out of nothing
• 17:23
  Speaker 6: exactly so, but five we have a whole load of data. Company.
• 17:27
  Speaker 4: Yes, is there any significant evidence that red wine is
• 17:30
  Speaker 4: healthy for you?
• 17:33
  Speaker 9: I'm not going to go there because I'm at a
• 17:36
  Speaker 9: health drug analyst, not a red wine analyst.
• 17:38
  Speaker 6: I just know that I enjoy a glass of two.
• 17:40
  Speaker 6: You gotta you gotta have to remember it's also bad
• 17:43
  Speaker 6: for you because it's cancer.
• 17:45
  Speaker 4: All sorts of yes, loves important.
• 17:49
  Speaker 9: We have to be fed a whole bunch of people
• 17:51
  Speaker 9: listen to this. This is this is not this is
• 17:53
  Speaker 9: not about a bottle of wine a day. Maybe a glass,
• 17:55
  Speaker 9: but even then, I think the medical professional says be careful,
• 17:58
  Speaker 9: but I choose to take that risk and I do
• 18:01
  Speaker 9: love it.
• 18:02
  Speaker 4: We separate. Sam Fazali, thank you so much for that.
• 18:04
  Speaker 4: Sam Fazeli's a director of research.
• 18:06
  Speaker 3: He also covers the pharmaceutical industry for Bloomberg. In Intelligence
• 18:10
  Speaker 3: over in London.
• 18:12
  Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 18:16
  Speaker 2: weekdays at ten am Eastern on Apple card Play and
• 18:19
  Speaker 2: Android Auto with the Bloomberg Business app. You can also
• 18:22
  Speaker 2: listen live on Amazon Alexa from our flagship New York station,
• 18:26
  Speaker 2: Just Say Alexa, playing Bloomberg eleven.
• 18:29
  Speaker 4: Thirty rights back in the middle of earning season.
• 18:32
  Speaker 3: This is the busiest week of the quarter in terms
• 18:36
  Speaker 3: of companies market cap reporting big on last night friends.
• 18:39
  Speaker 5: Google, it's right of the market cap for the S
• 18:43
  Speaker 5: and P five supporting this week right Actually busy.
• 18:45
  Speaker 3: Seek good quarter. I guess across the board. Ben Deep
• 18:49
  Speaker 3: Singh joins us. He's a senior technology analyst for Bloomberg Intelligence.
• 18:53
  Speaker 4: Mandy.
• 18:54
  Speaker 3: Everybody knows Google, they know the shirt story. What did
• 18:56
  Speaker 3: you learn last night from Google? And their results?
• 18:59
  Speaker 2: That you know?
• 19:00
  Speaker 10: Search Cloud YouTube. These are three separate businesses doing extremely
• 19:06
  Speaker 10: well at scale, I mean double digit growth for search
• 19:10
  Speaker 10: business is really stellar when you think of all the
• 19:14
  Speaker 10: pressure they've been facing, you know, when it comes to
• 19:17
  Speaker 10: new entrants like CHATGPT and Perplexity and whatnot. And everyone
• 19:23
  Speaker 10: is of the belief that they would take at least
• 19:25
  Speaker 10: some share from Google, at least in terms of ad revenue.
• 19:30
  Speaker 10: Google hasn't lost any share. In fact, it's a very
• 19:33
  Speaker 10: healthy growth at their scale.
• 19:35
  Speaker 4: And YouTube.
• 19:36
  Speaker 10: Look fifty billion plus revenue rundrate seventy thirty split between
• 19:40
  Speaker 10: subscriptions ads is seventy and thirty percent of subscriptions, and
• 19:45
  Speaker 10: subscriptions grew, you know, twenty eight percent. I mean, just
• 19:49
  Speaker 10: think about fifteen billion dollar subscriptions business growing twenty eight percent.
• 19:53
  Speaker 10: That's very impressive. And we're not even talking about Wevemo here.
• 19:57
  Speaker 10: So when you look at you know, all the business
• 20:00
  Speaker 10: says they clearly have a lot going on, and Vemo
• 20:03
  Speaker 10: is a future bet, but something that could be huge
• 20:07
  Speaker 10: in terms of you know, top line.
• 20:08
  Speaker 3: You know, it's interesting you just mentioned fifty billion of
• 20:10
  Speaker 3: runwright revenue for YouTube and advertising subscription. That sounds a
• 20:14
  Speaker 3: lot like the cable television business, the cable network business.
• 20:18
  Speaker 3: I look at Paramount, Paramount Global, you know, all those
• 20:22
  Speaker 3: cable networks.
• 20:23
  Speaker 4: They have thirty billion of revenue.
• 20:25
  Speaker 3: So YouTube is significantly bigger than some of the largest
• 20:29
  Speaker 3: advertising and subscription.
• 20:31
  Speaker 4: German media companies out there. Yeah, and in a dozen years,
• 20:34
  Speaker 4: it's just extraordinary.
• 20:35
  Speaker 5: And Meandy, you were talking about these massive investments that
• 20:37
  Speaker 5: Google in Alphabet, obviously the parent company has been trying
• 20:40
  Speaker 5: to catch up to the likes of Obviously Microsoft will
• 20:42
  Speaker 5: get another update from their earnings after the bell and
• 20:45
  Speaker 5: of course open ai walk us through some of those
• 20:47
  Speaker 5: investments and how they're starting to pay off.
• 20:50
  Speaker 10: I mean, look, in the case of Alphabet, they have
• 20:54
  Speaker 10: huge data center investments simply because they have a giant
• 20:58
  Speaker 10: infrastructure that's power you know, these big businesses. So there's
• 21:03
  Speaker 10: a lot of internal consumption of these chips, but also
• 21:06
  Speaker 10: the cloud business, which saw a nice acceleration, you know,
• 21:09
  Speaker 10: sequential acceleration from twenty nine percent growth to thirty five
• 21:13
  Speaker 10: percent growth. I would say a lot of that is
• 21:17
  Speaker 10: driven by the availability of GPUs in their cloud. So
• 21:21
  Speaker 10: I'll be interested in seeing how much of Microsoft GPUs
• 21:25
  Speaker 10: are being used for internal consumption versus what is being
• 21:28
  Speaker 10: exposed on their Azure cloud. Because in my mind, Google
• 21:32
  Speaker 10: having their own chips is making a difference in terms
• 21:36
  Speaker 10: of their cloud growth, and that's why you saw that acceleration.
• 21:39
  Speaker 10: But I'll have to validate that tonight.
• 21:42
  Speaker 3: How is AI impacting John Tuckerman's search results?
• 21:47
  Speaker 10: Right? I mean, just the nature of search is changing
• 21:51
  Speaker 10: in the sense you can ask you know, a lot
• 21:54
  Speaker 10: longer queries. The prompts can be infinite and length. You
• 21:59
  Speaker 10: can you know, have a video or an image prompt.
• 22:03
  Speaker 10: It just doesn't have to be text. So that's what
• 22:06
  Speaker 10: Google called out, that the queries are getting a lot
• 22:09
  Speaker 10: more complex in nature, and users are actually engaging with it,
• 22:12
  Speaker 10: so it's not as if, you know, that's driving them
• 22:15
  Speaker 10: to some of the platform users want to use what
• 22:17
  Speaker 10: they call multimodel search, which is a combination of texts, videos,
• 22:23
  Speaker 10: and images and audios. So that's why these llms are
• 22:27
  Speaker 10: so powerful because they give you that innate capability to
• 22:31
  Speaker 10: search in whatever format you want and you can just
• 22:33
  Speaker 10: throw it in that search box. So that search box
• 22:37
  Speaker 10: is getting a lot bigger and a lot more complex
• 22:40
  Speaker 10: on that Google page.
• 22:41
  Speaker 5: So what do we need to watch for with Microsoft today?
• 22:44
  Speaker 10: I mean azure growth. I said, you know, the availability
• 22:47
  Speaker 10: of GPUs is what is powering Google clouds acceleration. I
• 22:52
  Speaker 10: want to see that acceleration in Microsoft's Azure growth to
• 22:56
  Speaker 10: confirm that Microsoft is not losing share to Google or
• 23:00
  Speaker 10: for that matter, Amazon. Lich reports on Thursday.
• 23:03
  Speaker 4: And tomorrow on surveillance.
• 23:04
  Speaker 3: Tomorrow morning, you're going to have Dan ives in studio
• 23:06
  Speaker 3: from Red Bush Security, so he'll be doing presumably at
• 23:09
  Speaker 3: the victory left for what.
• 23:11
  Speaker 4: Can't man deep dress like Dan?
• 23:13
  Speaker 5: I was about to bring up the what kind of
• 23:15
  Speaker 5: bright colors?
• 23:15
  Speaker 3: Dan might be aware tomorrow and deep because it takes
• 23:18
  Speaker 3: an effort here. He matches his turbine and deeps to
• 23:22
  Speaker 3: sink for those on radio can't see.
• 23:24
  Speaker 4: It matches his turban with the suit every day every
• 23:28
  Speaker 4: so that is solid. I give him for that, walking
• 23:32
  Speaker 4: here with like a pink tie and everything.
• 23:34
  Speaker 5: We all know how Paul Sweety is the fashion police here.
• 23:37
  Speaker 5: Paul fashe Sweeney.
• 23:39
  Speaker 6: Of Bloomberg News.
• 23:40
  Speaker 4: There is a dress cook the summer Fridays.
• 23:44
  Speaker 5: I remember, I think came in with flip flops and
• 23:46
  Speaker 5: they had a stern warning from Paul.
• 23:48
  Speaker 4: We all agreed no flip flops in nor place. John,
• 23:52
  Speaker 4: although I do have like you know, it's got the cas.
• 23:57
  Speaker 3: That's how his casual Tucker gets Man Deep, thank you
• 24:00
  Speaker 3: so much. We appreciated Man Deep seeing he covers all
• 24:01
  Speaker 3: the technology. He manages all of our technology coverage, great
• 24:05
  Speaker 3: stuff for Bloomberg Intelligence, and obviously technology is a global business.
• 24:10
  Speaker 3: Asia is such an important part of the technology stories
• 24:12
  Speaker 3: in terms of not only an end market, but a
• 24:14
  Speaker 3: source for a lot of.
• 24:15
  Speaker 4: That technology and manufacturing.
• 24:17
  Speaker 3: And we've got a big team out in Asia for
• 24:20
  Speaker 3: Bloomberg Intelligence, and Man Deep manages all that for us.
• 24:22
  Speaker 4: So he's our go to person.
• 24:29
  Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 24:33
  Speaker 2: weekdays at ten am Eastern on applecar Play and androyd
• 24:36
  Speaker 2: Outo with the Bloomberg Business App. You can also listen
• 24:39
  Speaker 2: live on Amazon Alexa from our flagship New York station
• 24:43
  Speaker 2: Just Say Alexa playing Bloomberg eleven thirty.
• 24:47
  Speaker 3: Let's stick with the topic of politics. Why not because
• 24:51
  Speaker 3: we got the election coming up on Tuesday. Here's an
• 24:54
  Speaker 3: interesting headline in the Bloomberg terminal, how Puerto Rico became
• 24:57
  Speaker 3: an issue in the US election. Lord davids and joins us.
• 25:00
  Speaker 3: She's a political editor for Bloomberg News.
• 25:03
  Speaker 4: She's done in DC.
• 25:04
  Speaker 3: So, Laura, we've heard a lot about Puerto Rico in
• 25:07
  Speaker 3: this election, just in the last week or so, can
• 25:09
  Speaker 3: you explain to us kind of what's going on why
• 25:12
  Speaker 3: it may be important.
• 25:15
  Speaker 11: Yeah, So this really kicked off over the weekend at
• 25:17
  Speaker 11: Trump's rally at Madison Square Garden, where a comedian who
• 25:20
  Speaker 11: was one of the kind of preview speakers before Trump
• 25:24
  Speaker 11: came out of the stage made a joke about Puerto
• 25:26
  Speaker 11: Rico where he called it a floating island of garbage,
• 25:29
  Speaker 11: and that has really picked up a lot of traction.
• 25:32
  Speaker 11: You know, it was sort of in the mix of
• 25:34
  Speaker 11: all a bunch of other incendiary and racist comments at
• 25:36
  Speaker 11: this rally, but also because Puerto Ricans are a particularly
• 25:40
  Speaker 11: important voting block, especially in Pennsylvania, and sort of you know,
• 25:45
  Speaker 11: not directly connected to this, but it also has been
• 25:47
  Speaker 11: a group that both Trump and Harris have had outreach
• 25:50
  Speaker 11: too in recent days. The day that that remark was made,
• 25:52
  Speaker 11: Harris was at a Puerto Rican restaurant in Pennsylvania. Trump
• 25:55
  Speaker 11: just last night was an Allentown, Pennsylvania, which has a
• 25:57
  Speaker 11: large Latino population and in Sylvania, yet the whole has
• 26:01
  Speaker 11: one of the largest Puerto Rican populations in the country.
• 26:03
  Speaker 11: So this was quickly denounced by several people, you know,
• 26:08
  Speaker 11: Puerto Ricans, but also you know Republicans that represent Florida
• 26:12
  Speaker 11: Senator Rick Scott for example. Even the Trump campaign came
• 26:15
  Speaker 11: out and said, look, you know, we didn't approve this,
• 26:18
  Speaker 11: We don't you know, support this doesn't represent our views,
• 26:20
  Speaker 11: which is not something you see a lot from the
• 26:22
  Speaker 11: Trump campaign.
• 26:23
  Speaker 5: I wanted to get your thoughts on the latest headlines
• 26:25
  Speaker 5: that we had in the past hour about the Supreme
• 26:27
  Speaker 5: Court allowing Virginia to purge voters before the election. Walk
• 26:31
  Speaker 5: us through what we know so far on this and
• 26:34
  Speaker 5: what's the precedence for something like this.
• 26:37
  Speaker 11: Yeah, So, at issue are about sixteen hundred voters on
• 26:40
  Speaker 11: the Virginia roles which the state has asked to purge.
• 26:45
  Speaker 11: They say, look, we think that these are not citizens
• 26:47
  Speaker 11: on here, and we want to remove them. There are
• 26:50
  Speaker 11: laws in place about you know, how close to an
• 26:52
  Speaker 11: election you can get rid of some of these. You know,
• 26:55
  Speaker 11: you can change the voter roles. So they petitioned the
• 26:58
  Speaker 11: Supreme Court. The Supreme Court today's said yes, you can
• 27:01
  Speaker 11: go ahead and remove these people from the voter rules.
• 27:03
  Speaker 11: You know, this is not you know, Virginia is not
• 27:06
  Speaker 11: expected to be a swing state. Here or be decisive
• 27:07
  Speaker 11: in the elections. Sixteen hundred is a relatively small number,
• 27:10
  Speaker 11: but this has a lot of election security people worried
• 27:13
  Speaker 11: that this could foretell some larger purge in a state
• 27:17
  Speaker 11: that could potentially be decisive in either the presidential race
• 27:20
  Speaker 11: or you know, any of the contested Senate races.
• 27:23
  Speaker 4: Yeah, I have to admit I haven't.
• 27:25
  Speaker 3: I can't recall seeing a story like this where this
• 27:27
  Speaker 3: has actually occurred. Does this happen with any regularity across
• 27:31
  Speaker 3: the country or is this case in Virginia particularly unique.
• 27:35
  Speaker 11: This is a sort of a unique thing we're seeing.
• 27:37
  Speaker 11: You know, this is something that you know has come
• 27:39
  Speaker 11: up in several states, you know, both you know, we've
• 27:42
  Speaker 11: seen in Nebraska, for example, they wanted to change their
• 27:44
  Speaker 11: rules about how they apportioned their Electoral College votes. You've
• 27:47
  Speaker 11: seen some other states them having some some issues about this,
• 27:50
  Speaker 11: but generally, you know, either for political reasons or for
• 27:53
  Speaker 11: legal reasons, that they states that said, no, we can't
• 27:55
  Speaker 11: change things of close to elections. So this is a
• 27:57
  Speaker 11: little bit of a surprise this morning from the Supreme Court.
• 28:00
  Speaker 5: So when you look at the kind of latest headlines
• 28:02
  Speaker 5: coming through the Turnamonal Virginia canceled registrations of estimated sixteen
• 28:07
  Speaker 5: hundred residents here. Of course, Donald Trump and Kamala Harris
• 28:10
  Speaker 5: will criss cross several string states today, passing each other.
• 28:14
  Speaker 5: Of course in Wisconsin when we have less than a
• 28:17
  Speaker 5: week to go ahead of election day, what do you
• 28:19
  Speaker 5: think is most crucial here when they're pushing through what
• 28:21
  Speaker 5: their potential policy proposals are.
• 28:24
  Speaker 11: Yeah, so what they're doing now is they have generally
• 28:27
  Speaker 11: put out all the policy proposals they have that you
• 28:29
  Speaker 11: still have seen Trump start to outline some additional ones
• 28:32
  Speaker 11: that he's been sort of grasping for additional votes. But
• 28:35
  Speaker 11: they're really framing and honing in on their argument, you know,
• 28:38
  Speaker 11: why voters should.
• 28:39
  Speaker 10: Vote for them.
• 28:39
  Speaker 11: So we saw last night with Harris on the Ellipse,
• 28:42
  Speaker 11: she was making an argument about Trump being a danger,
• 28:45
  Speaker 11: but you also saw her quickly pivot to talk about,
• 28:47
  Speaker 11: you know, sort of her prescriptive view, particularly for the economy.
• 28:51
  Speaker 11: We know that that has been one of the key
• 28:53
  Speaker 11: issues for voters, really the top issue in this election.
• 28:56
  Speaker 11: You've seen Trump really double down on immigration. You know,
• 28:58
  Speaker 11: poll show that this is you know, perhaps probably the
• 29:00
  Speaker 11: number two issue in this race. But you know, even
• 29:04
  Speaker 11: more so than talking about the economy, he's really been
• 29:06
  Speaker 11: doubling down on immigration, the threat of migrants, and that's
• 29:09
  Speaker 11: sort of why this Puerto Rican comment from over the
• 29:12
  Speaker 11: weekend has.
• 29:12
  Speaker 4: Really caught fire down in Washington, d C.
• 29:15
  Speaker 3: Laura, what's the feeling about some of the down ballot
• 29:19
  Speaker 3: races that are key to the control of both the
• 29:21
  Speaker 3: House and the Senate.
• 29:23
  Speaker 11: Yeah, so there really is a key overlap between some
• 29:27
  Speaker 11: of these key Senate races as well as the as
• 29:29
  Speaker 11: sort of the battleground state. So you know, we're looking
• 29:31
  Speaker 11: at places like Pennsylvania and Michigan and Arizona. Democrats are
• 29:36
  Speaker 11: at a disadvantage when it comes to the Senate. They
• 29:38
  Speaker 11: are defending a bunch of seats, you know, in places
• 29:41
  Speaker 11: like Ohio and Montana that Trump has won and are
• 29:44
  Speaker 11: expected to win in a couple in in next week.
• 29:48
  Speaker 11: The House is a little bit more of a wild card,
• 29:50
  Speaker 11: and because those races aren't really overlapping with the electoral
• 29:54
  Speaker 11: college map, it's really New York areas, particularly the New
• 29:56
  Speaker 11: York City suburbs, as well as California, sort of the
• 29:59
  Speaker 11: southern californi Ornia suburbs around San Diego and Los Angeles
• 30:02
  Speaker 11: that will be decisive there. So that's a really close race.
• 30:05
  Speaker 11: It really anyone's guess is to you know which way
• 30:06
  Speaker 11: the House flips the Senate, your Republicans have an advantage,
• 30:10
  Speaker 11: but you know, things could all break in Democrats way
• 30:13
  Speaker 11: if they hit every race just right.
• 30:15
  Speaker 5: Of course, there's a lot of discussion that we potentially
• 30:17
  Speaker 5: might not even know the results of the election that evening,
• 30:20
  Speaker 5: kind of similar to what we would have seen in
• 30:22
  Speaker 5: twenty twenty. We can get the final results till that
• 30:24
  Speaker 5: following weekend on that Saturday. What's kind of when your
• 30:27
  Speaker 5: conversations with your sources, are they saying as far as
• 30:29
  Speaker 5: what the timetable could be potentially when we would know
• 30:32
  Speaker 5: the eventral results.
• 30:33
  Speaker 11: Here, Yeah, it's looking like this. We will not have
• 30:37
  Speaker 11: results on election night.
• 30:38
  Speaker 6: It is possible, but.
• 30:39
  Speaker 11: A relatively remote possibility. There are several states, including Pennsylvania,
• 30:43
  Speaker 11: that will likely end up being decisive that take a
• 30:46
  Speaker 11: little bit longer than average to vote. You know this,
• 30:48
  Speaker 11: Each state has different rules about when they can start voting,
• 30:51
  Speaker 11: particularly when they can start mail in ballots, when they
• 30:53
  Speaker 11: can start tabulating early votes, and sort of all the
• 30:55
  Speaker 11: different things they need to do to come to an
• 30:58
  Speaker 11: official total, so that really very state by state, And
• 31:01
  Speaker 11: of course we also anticipate that there might be legal
• 31:03
  Speaker 11: challenges that could either pause the counting or stop the counting,
• 31:06
  Speaker 11: or you know, take time for things to work through
• 31:08
  Speaker 11: the courts. So it's it's very likely that this will
• 31:12
  Speaker 11: be days, potentially weeks if there are you know, several
• 31:15
  Speaker 11: hurdles in the states, and it looks to be you know,
• 31:17
  Speaker 11: really tight Margins.
• 31:19
  Speaker 4: All right, laur thank you so much for joining us.
• 31:20
  Speaker 4: Lard Davison. She's a polittle bel editor for Bloomberg News,
• 31:24
  Speaker 4: joining us from Washington, DC.
• 31:25
  Speaker 3: So again, I think that's going to be really interesting, Jessica,
• 31:28
  Speaker 3: and probably very frustrating for a lot of people who
• 31:31
  Speaker 3: you know, want to go to bed on election night
• 31:32
  Speaker 3: like we used to, knowing kind of who the president
• 31:35
  Speaker 3: is going to be.
• 31:36
  Speaker 5: But it could be right, it could take days again.
• 31:38
  Speaker 3: Yeah, and maybe perhaps even longer, and I don't know,
• 31:40
  Speaker 3: you know, I guess that simply just reflects the fact
• 31:42
  Speaker 3: that the electorate is so evenly divided.
• 31:45
  Speaker 4: Literally our college counts.
• 31:47
  Speaker 3: You can't be there at eight o'clock PM and call
• 31:50
  Speaker 3: the race, right, I guess at Network news anchor, those
• 31:53
  Speaker 3: days are over.
• 31:54
  Speaker 5: No, definitely, so it'll be interesting to see how things
• 31:56
  Speaker 5: play out over.
• 31:57
  Speaker 6: The next week.
• 31:58
  Speaker 2: This is the bloomber Surge Intelligence podcast, available on apples, Spotify,
• 32:03
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• 32:06
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