Transcripts For BLOOMBERG Bloomberg Technology 20240713 : vi

BLOOMBERG Bloomberg Technology July 13, 2024

Workers are not celebrating. To infinity and beyond. Richard bransons Virgin Galactic could be the first Space Tourism business to go public. We will analyze demand. But first, top stories. Alphabet earnings. The report was impacted by heavy investment in googles Cloud Computing business. Google has been Building Data centers and hiring sales people for its cloud unit that runs services over the internet. Joining me, our correspondent from bloomberg intelligence. Cloud is all the rage, potential for future growth. What did you make of it . Like you said, they are spending. They are showing results. What we are seeing for the next year, they will take the center focus and you will get success here and they have the capacity to compete. Microsoft. And you will see this being a bigger deal for google but at a cost. Taylor what is your take on keeping up in the Cloud Business . It will take continued investment as we just said, but there is a huge potential for payoff. Taylor i want to talk about the statement it looks like Topline Revenue in the bottom line revenues is this a revenue problem or an expense problem . Its not a revenue problem. We see search becoming more and more valuable on mobile. This is offsetting the 18 . The wall, the volume of ads youre seeing. I think the business will keep humming, but the Cloud Businesses where this could be a bigger deal for them next year. At scale, they are a very profitable business. Google has the scale. If they can come out and show the exposure look, this is how fast we are growing, it could spur the company. Taylor i just got off the phone with the cfo who said it was the messy quarter. But there are changes in accounting and mark to market. Some of those losses are on the income statement. She would not specify that uber and slot for the companies. Is there a real impact to the Venture Capital arm of the companys that lead to the bottomline relative to where you think they should be . I think thats possible. My biggest take away for google, we do focus on the ad side and the expectations for their at revenues and although cpcs are declining a bit, the individual clicks are way up. I think its a really good sign for the bottom line. Taylor last week we sat here and said the same thing about amazon. But that ad business is so strong. How mature are their ad businesses . Mobile search still has room to grow. As the results show, its a very valuable franchise for the company. So we expect that moment to continue their. Google will show more results on that front. Youll see this dynamic playing out which really plays well for both companies. Theres enough room for the three of them to enjoy good growth, but disclosure for both companies on amazon and potentially google could make the difference. Taylor you had a good note on this that ad revenue accelerated into 2018, have a little slow down in 2019. Did this order give you enough . Give youis quarter enough . Are there still pockets of worries, lets say . I think ad pricing improving in general would continue because they are market share leaders and this is a mature business, but this is enough room on the mobile side to keep this moving at a healthy clip. I asked specifically about youtube. Theres arguably outside the cloud, it could be a big future growth area and she reiterated that saying we are excited about the upside potential. Are you getting enough off and outlook going into the next few quarters to be confident that could be a driver. I do think that youtube will be a driver. Advertisers are very keen to spend on video placements. Youtube is the number one place to do that. But there is been controversy a lot of times by you to. About youtube. Theres a broader concern about data privacy and misinformation. Whats the Downside Risk . The Downside Risk is more on the profitability side. The momentum and advertising will continue to be strong. But because of the shared infrastructure, if you look at the cost profile individually, sir would bes search would be significantly more profitable. I think we will keep on the topline but as far as disclosure is concerns, we do not think the numbers would be disclosed anytime soon. Cloud is a real potential. Taylor nicole, finally, we know that google is enmeshed, as all bid big tech is, with china. They are looking for growth, not commenting on the trade fights or operations in china. What do you make of anything headwind as far as it comes to the macro environments in china and the trade fights . Nicole googles biggest headwinds have to do with currency fluctuations. As far as china they are not super invested. Any issues with china may affect them much less than in the u. S. Like manufacturing. Taylor thank you both for joining. Now investor the fake meat maker beat analyst expectations coming in at 92 million on net revenue and raised their outlook. Distribution channels are also key to grow. Beyond meats first earnings after going public. If you like Bloomberg News, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com and in the u. S. On sirius xm. This is bloomberg. Taylor microsoft shares rose to a record on monday after a major bit three securing a milestone. Securitng victory in a milestone. The contract unthinkable for microsoft even a year ago will likely come and it cost, legal and internal. Bloomberg is learning that there will be a challenge, citing president Donald Trumps interference in the bed project. Amazon had widely been considered the front runner. To discuss, were joined by bloombergs naomi nicks was been covering this and dana bash, who covers microsoft. How did microsoft do this . We are all trying to figure out to what extent it was the involvement of President Donald Trump and to what extent it was microsofts own bid. The last couple years, microsoft has been improving its cloud offerings. They built data centers that were appropriate and overall, they have been expanding globally. They also have a long history of government contracts. Microsoft worked with the federal government for a long time. They generally been successful. Taylor now me, from the pentagon, the d. C. Angle, was the advantage of amazon over of microsoft over amazn . On . Microsoft has been a longtime contractor with the dod. The dod uses amazon products currently in its office suite. There was some synergy in terms of microsoft ability microsoft disability to say, hey, we know how the government works. And we have the technical capabilities to meet the demand youre looking for. Taylor naomi, you bring up an interesting point. Is it healthy to have competition, amazon with the cia, microsoft with the dod, or is it better to have synergy with the same company echo the same company . Whats the perspective from d. C. . Naomi Security Officials have been quite divided. It has been quite controversial. People in industry of said, with think the dod another publicsector agencies should be not putting all of their eggs in one basket and they should be using multiple cloud providers in the dod has tried to allay concerns, only relying on the jedi for their Cloud Services and saying we have smaller contracts that could go to other companies and then you have others within the dod you say its really complicated. Taylor what does an amazon challenge look like . The gao has 100 days to respond to it. They could also file a lawsuit. Will that be successful . Or there could be a possibility like know me mentioned that they will naomi mentioned that they will generally corporate customers have one cloud that they rely on. They are increasingly moving away from just the one. There are people in congress who would prefer to see more than one here as well. Taylor naomi, to be fair, the Government Accountability office, i believe, came out and said this deal and the approval process withdrawal the appropriate controls. If amazon more to challenge, they are confident they raised the bar high enough. But what else are they saying about what the challenge could look like and if all the controls were met echo met . Naomi the gao previously ruled on a protest from oracle and oracle alleged there were conflicts of interest that give amazon the edge. The gao has not said anything about any claims amazon might make in regard to the fairness of the jedi cloud contract. Within the dod, there has been an Inspector General looking into the contract and they recently came out with a statement that said, hey, we have not seen anything thus far, but we are awaiting the final results. Taylor not only was microsoft facing the pressure, but internal pressure . What are the employees internally protesting . Dina an Employee Group posted an anonymous letter asking the company not to bid. That same the contract. They are upset that microsoft is just betting abetting. It. S participating in they think this amounts to microsoft helping the government improve the lethality of its Weapons Systems and they dont want to be part of that. Whether they will take it further than tweets, whether there is anything internally, a walkout, Something Like this, so far the company as responded saying, look, we believe we should be supporting and supplying the u. S. Government and u. S. Military. The company says they respect that some employees may feel differently and told the employees that they should seek to work on other projects, but were talking about microsofts weakest cloud system. Its biggest clouds business. The pentagon has another contract for which the Microsoft Office cloud will be considered. It is becoming harder and harder for microsoft to find jobs that are not tied into these contracts. Taylor thank you for joining. Spotifys debut on profits. We have the story next. And Bloomberg Technology is Live Streaming on twitter. Be sure to follow our global breaking news network on tictoc on twitter. This is bloomberg. Taylor apple has announced Noise Cancellation air pods. They will be released october 30. Each earbud will ship with three different sizes of your tips that conform to different ear shapes. They cost 249. And google has reportedly made a takeover offer for the maker of wearable and wireless fitness devices. Theres no certainty a deal will happen. Neither google nor fitbit is commenting. And in northern california, wildfires are pleasing out of are blazing out of control. Almost 200,000 people have been forced to leave their home spirit of the same time, pg e is slowly restoring power after the biggest deliver it blackout deliberateest blackout ever. 2. 7 Million People have had their electricity shut off. The blackout has been aimed at keeping power lights from starting more fires. In shares of at t are rising. The company won praise from the activist investor Elliott Management for its new threeyour plan. The telecom promise to do much of what elliott had pressed for. And then spotify shares moving toward the ipo in april. The company Beat Estimates on subscriber growth this quarter. Spotify has 113 premium subscribers. They are keeping rivals apple and amazon in check. Joining me on air, i want to talk about apple earnings. What did we learn . Intense focus on the cloud. This has been an obsession. Google has seen 20 revenue increase. And this has been about the cloud. That business really significantly increased. They have been broadening the Customer Base and whats interesting, if you look at the breakdown, that little bar refers to other, which includes cloud, includes hardware. They are looking to the future when it comes to revenue. Taylor all things out of that and google. That was ed ludlow. We will hear from Richard Branson next. This is bloomberg. Taylor this is Bloomberg Technology. Im taylor riggs in San Francisco. Lets focus back on the thing. Alphabet shares fell in late trading after reporting thirdquarter earnings. Results largely impacted by the heavy investment in googles Cloud Computing business which is trying to catch up with rivals like amazon and microsoft. Later this week, we get numbers from apple and facebook. They report Quarterly Earnings on wednesday. Joining me to discuss it all is ed ludlow. Walk me through alphabet and google. Ed cloud is the future and they are making that clear. Back in q2, sundar said we expect this to be an 8 billion annual business that can compete with amazons aws and microsoft. 8 billion is about a quarter of what aws makes for amazon, but there is still growth potential. They are moving away from this core advertising business. Today, that has been an incredible engine for growth. 20 growth on revenue. Taylor a chart we are showing to the audience really highlighting the strengths that is the revenue relative to everything else. They are so dependent on ad revenue. Ed they have been. Quarters of 20 plus annual growth, that may be slowing down a bit. In the first quarter, there was a miss on revenue that had concern about the future of the advertising business. Now in the third quarter, there is so much talk about the cloud, how much they are investing. They put a lot of money into this business unit. They are hiring like crazy. For them, they feel like they can be competitive against amazon and microsoft. There are other areas as well. The pixel 3, this cheaper handset, compared to the rest of the market. Taylor on Bloomberg Technology, we like to push it forward. Wednesday, apple and all eyes on how the first early numbers from the iphone 11 sales are going. Ed this quarter will include the first shipments. The estimate is around 42 million units, a decrease from the same quarter last year. This is the quarter before holiday season. Fiscal fourthquarter for apple, but the course of the holiday season. Apples reliance on the iphone and handsets, moving away from that towards the services business. There has been 10 calls on the stock this month alone. Part of that is optimism about traffic through apples u. S. Stores. There could be a surprise even though the estimates are low. Definitely keep an eye on services. They bundled in apple tv plus with the purchase of a handset. It is about as much getting existing users to get more products and services than it is about getting handsets to new customers. That is where we will be looking. Taylor ed will be following all of those earnings for us. Cant thank you enough. Billionaire Richard Bransons Virgin Galactic holdings became the first publiclytraded Space Tourism business on monday. The listing was carried out through a merger with a shell Investment Company that was already trading. Virgin galactic has been running for the 15 years without yet achieving a first commercial launch. Yet, Richard Branson and ceo George Whitesides shared their enthusiasm of the public trading debut on Bloomberg News earlier monday. George we have been flight testing these vehicles for now nearly 10 years. We believe we have an architecture that is extremely reliable and also has aspect that are very suited to the customer experience. For example, taking off from a runway, landing on a runway. Those are things that will have a smooth start and ending to the customer experience. On rocket motors, the simplest, thus safest rocket motor for our class of rocketry. For all these reasons, we feel good about the systems. Richard the rocket can turn off in a seconds notice which is key to the safety. Ed coming back to the issue i understand why celestial travel gets all the buzz, but surely, there are good commercial applications on earth. How much will the company be focused on that, like hypersonic travel between cities . George the exciting thing is the commercial stake is a massive business now. Over 375 billion annually, now growing to an expected total of 1. 5 trillion. This is really the first time people can invest in a peer play commercial flight company. We will be focusing on building out this terrific highmargin business with human space like offering from north america and mexico. We can have even bigger markets, which is a 200 billion per year. We have a very exciting near term future. Ed richard, you have been in this race for a long time, obviously competing against big names. Jeff bezos and elon musk among them. What is the first mover advantage here . Richard i think we have the advantage of having already put these into space. We have made five new astronauts. There have not been any others made on u. S. Soil since 2009. We have a tested and tried system that is performing well. We are building, using the money we raised today, we can build a lot more spaceships and other ships, a lot more rockets. We can build the numbers of people able to go into space. Ed what does a typical customer look like . George we have a wide range. There are some folks that are really inspired by the Apollo Program or space in general. A lot of people want to do the next big adventure. There are some people interested in the perspective change they will get into space. Some people just like the virgin brand and richard. We welcome them all. People do it for different kinds of reasons. We think there is a tremendously big market. You go to talk to people, three quarters, eight out of 10 people actually want to go to space if they can afford it. Ed talk to me about that. The price point george for sure, the price point initially is a fair amount of money. The only other way to go to space right now is to buy a ticket with the russians and they are charging about 85 million. It is a dramatic price decrease. Long term, our hope is to go down.

© 2025 Vimarsana