Transcripts For BLOOMBERG Best Of Bloomberg Technology 20240713

We take a look at these new devices. There seems to be no end in sight over concerns about the coronavirus. The death tell death toll has jumped after Hubei Province revised its death toll. Thousands have been quarantined in yokohama, japan and the National Energy agency warned Global Demand for oil will drop. Paul allen and i spoke with the chief Market Strategist at trustmark Global Investment on thursday. We are always watching headlines but one thing we tell our clients is we want to look through the headlines when it comes to investments. But daytoday, yes, the virus has caused volatility. We saw that a little bit. Submarkets come back and gain a percent of what they lost earlier. A lot of that is because the increase in cases was do to a case of methodology and so it included a lot of people who already have the virus. Originally, we had a selloff and we saw that come back throughout the day. But yes, coronavirus is driving the headlines now and battling some of the more fundamental things, the earnings and the strong economic reports that we are seeing. Paul we did see small caps bounce today, which reversed a trend. What is your theory on that . Victoria we know that small caps have much more of a domestic feel to them. If a lot of the downside we are seeing in the markets is coming from the coronavirus scare and from uncertainty outside of the u. S. , we can see where maybe small caps are starting to do a little better because they do not have some of those same concerns. We will have to see. One day does not make a trend, as you are well aware, so we will have to see how those things continue over the next couple weeks. Taylor that was victoria fernandez. The coronavirus is starting to reverberate into the global tech space. Some chinese manufacturers are beginning to reopen, but no one knows how deep the disruptions go for tech companies. On monday, we spoke with guests. A lot of confusion and uncertainty. The benchmark people look to is the sars epidemic, but so much has changed since then. China, as a center of consumption, has ramped up considerably. A lot has changed. We do now that the coronavirus has a clips sars eclipsed sars. We talked to foxconns chairman and also obtained an email and they have told workers of the unit that produced the unit to not come and. They are clearly worried about the nightmare scenario of an outbreak. We will see people come back to work much more gradually. Taylor with foxx on creating the majority of the worlds iphones, what is the impact we will see . One spot of good news is that this is a soft time of year. The upgrade cycles for phones is in the fall, the Holiday Shopping season is the big time of year for tech things companies. So there is a good chance they could make up the shortfall later in the year. But we got an email from the chairman of foxconn who said he was lowering estimates for the year. You see a lot of companies are being cautious in terms of what this means, but foxconn is a great bellwether. If theres a hit, no one knows how quite quite how big it will be. We saw a statement from tesla that they were prepared to restart production. At the same time, we are hearing some of these companies are not going to participate in this big, mobile conference. What is the sense here . Can they get back up quickly or will this drag out . I think it will drag out for the foreseeable future. I think all of these companies are looking at it quickly and carefully. The barcelona conference is important for the year. These connections are paramount. I also want to mention a practicality factor. You have workers coming back from their holidays and facing transportation blockades, quarantines, it is simply impossible to get back to work. Taylor that was brad stone. And this week, several Big Companies announced they were pulling out of the mobile world conference over concerns of the virus. Then, organizers scrapped the event entirely. In a statement they said concerns make it impossible to hold the event. We spoke with mark gurman for reaction to the news and implications to the companies involved. It is significant in that it will have a true economic pact on the city of barcelona, which does everything it can to support the conference. Itll put a delay or hold on a lot of business meetings and potential deals. At the end of the day, the overall impact is insignificant we are in the year 2020 and of these things can be rescheduled. Taylor what were we expecting from that conference . We were expecting a lot of hoopla around 5g. From a consumer perspective, i know motorola was set to announce a slew of new phone. None of the major giants, nothing new from apple, samsung, or any of the big players. We are in a time with lots of Companies Like to make these big, splash announcements on their own timelines. It does give an opportunity to get people in the same place talking about development. More broadly, will this have implications for things like 5g rollouts or other deals . Any deals of major importance will be rescheduled. I feel that if there were any critical meetings, there would have they would have happened already. Meetings to get things done happen asap rather than at a unscheduled conference. If verizon and qualcomm had made her meetings scheduled, they could have just met separately. That is more fantasy than reality. Taylor that was mark gurman. Plenty more to come, including breaking up big tech. U. S. Regulators are demanding data on acquisitions big and small. If you like bloomberg news, check us out on the radio. You can listen online and in the u. S. On sirius xm. This is bloomberg. Taylor the ftc wants to know more about big tech and its acquisitions, specifically some that may have eliminated emerging competitors. They have told five Large Companies to provide information about deals that were not reported to antitrust agencies. The deals include apple, amazon, alphabet, facebook, and microsoft. We discussed this with michael levine. It is probably facebook at the top of the list. I am looking at that in conjunction with them seeking an injection trying to stop facebook from tying together different messaging platforms. If we had written about this, there would have been a lot more synergies than people appreciate. Taylor are we talking about whatsapp, instagram . I think thats it. Those are the ones that are needlemoving. Taylor what are the implications . A threat is one thing. Real breakup is another. What are the odds of real action . My guess is that even if they bring a case, it would take years. We have gotten more negative on the stock on the basis of fundamental work we have been doing combined with eight a disappointing outlook for the year. Its been one of the things that is kept on the sidelines and i think will continue to act as an overhang. I think you will see multiples conceivably grind even lower. Is it possible there is simply nothing to see here, and more broadly, does Regulatory Risk just come with the territory nowadays . I think there actually is something to say. There is pretty clear dominance within the social space and one thing that has been so remarkable about facebook is this ability to leverage data across platforms. To your earlier point, taylor, we are obviously positive about google. I dont want to brush under the covers conceivable issues, but we saw chatter a couple of weeks ago suggesting it may be used as a means of appeasing the regulators. Taylor that was michael levine. Tmobile and sprint have been steering their merger through a regulatory maze for nearly two years. The two Companies Say they expect to close as soon april 1. We got reaction with jennifer reed. I think the decision was a surprise, particularly amongst the antitrust analysts and lawyers. Rather than taking a presumptively anticompetitive deal, based on market shares and a commonly used index, no defense met the test set forth in the doj guidelines. Instead, if you take them all and put them all together, they always against this and rebut this presumption the deal is anticompetitive. Also, the judge accepted the remedies to divest assets to dish and set it up as a another competitor in the market. Taylor who needed this deal more . Absolutely sprint. Had it not gone through, tmobile would have continued its profitable path. It may have been difficult, but sprint was definitely in a difficult spot. They have reputational, network problems, they had debt. With the advent of 5g, they were not ever going to get to a place where they could compete with compete. So the biggest winner here is softbank and sprint. To build on taylors question, Masayoshi Son has had an enriching year. Absolutely, and i think this was really needed. They should thank john legere for this. Some of his genius came through. The judge decided that the maverick and Corporate Culture he had built was really going to continue, even when it was a Larger Company combined with sprint. Sprint was really lucky in this decision, given what they have been going through. In terms of Masayoshi Son and the vision fund, softbank is being urged to go ahead with a buyback. Does the completion of this deal make those things likely . I would think so. It is trying out of my area of antitrust analysis, but looks like it will start putting things in place for softbank. Taylor coming up, lyft came out with results that beat expectations. We dive into the numbers next. This is bloomberg. Taylor u. S. Based ridehailing app lyft result this week narrowly beat analyst estimates, it was not enough to impress. Stock fell afterwards as the company admitted it could not promise profits sooner. Uber had the advantage of having its earnings first, surprising investors by moving up profitability targets. To be clear, we are talking about adjusted profitability. But yeah, they are still growing impressively. They got to a billion dollars in revenue but they have the disadvantage of being smaller and uber has just had more time to become a huge business. Uber, in particular, is focused on business customers. It seems like lift lyft just does not want to commit to the same timeline. Taylor i think you hit it spot on and you said the profitability targets are adjusted. Two analysts care that it is supposed to be you bitter ebitda . On some level, it is shocking to be talking about uber getting to profitability. I think it was Something Like 8 billion on a net income basis. Uber is losing a ton of money, but the reason we focus on these adjusted numbers is because they give investors some way to get their head around how the company starts to make money. That is sort of the framework markets are paying attention to what we have been talking about. Its important to remember there have been huge stock and other expenses that are still going to be a problem for these companies. Part of the problem here is that the market is simply saturated. Today need to find new ways to make money . Lyft had the advent of growing into the market. Uber investors have said they are going to follow the law of large numbers. They have gone into food and other industries in a way lyft hasnt come and so far, their message has been focus. They need to show they can run a profitable ridehailing business and make it work as a smaller company. How about on the cost side of things . They have said they will cut jobs. Is this potentially just the start . Jobs matter, but at the end of the day what matters is price competition. How they are digging into prices to gain ground relative to each other. That is why these stocks have been so related. There has been a price war going on and i think they said this would bp klos. The big question is if subsidies come down, what is the total adjustable market and does that limit the number of people who will take a ride . Taylor samsung unveiled its latest device this week. It is a foldable phone that will set you back about 1380. It is also smaller than its predecessor. The new device is a signal that samsung is committed to developing the foldable business. Also out this week is motorolas new device. We got our hands on the new razor razr. This is the new motorola phone. Remember the phone from 15 years ago . It was the standard pretty much everyone had back in the day. Instead of being a normal foe phone, it is a foldable flip phone. It has plenty to like. It is minimalistic and has the hightech features all phones have. But the technology is still super do burly. Superduper early. Theres a noticeable sound when you open and close the phone, just the hinge mechanism. And even though it is 1300, it does not feel reliable. Its to be seen how well this thing goes. The ability to put it in your skinny jeans and make it easily accessible. In nostalgia of having a phone that flips open and close. But the drawback of a normal candy bar phone, the cameras are behind the times because of the thinness of the mechanism. The hinge makes that noise. We will perhaps have to use this longerterm, but at this point, its cool. But i dont think the technology is quite there yet. We will see where this goes. Taylor and an unlikely duo. Masayoshi son makes changes pushed by paul singer. We are livestreaming on twitter. Check us out and follow our global breaking news network on twitter. This is bloomberg. Taylor welcome back to the best of bloomberg technology. Im taylor riggs in for emily chang. We had more tech earnings out this week, including alibaba on thursday. While revenue beat estimates,the cfo set of and growth for the quarter will be negatively impacted by the coronavirus utbreak. The epidemic has already caused significant delivery delays for the chinese tech giant. We spoke with john freeman and a Portfolio Manager at newberger berman. My takeaways were, wow, that was a pretty good quarter. Revenue growth was higher than expected, user growth was particularly impressive. They said they had60 of new users are coming rom the rural areas. Theres a couple 300 billion who could join so there is more headroom to a lot of the growth drivers. The story really is the coronavirus and Overall Economic growth and to what egree that will impact earnings going forward. To that point, i would like to bring you back. Going forward, overall negative impacts. How negative is the uestion. They did say it will be negative in the low to mid single digits. The key reason to revenue being impacted,they are seeing a lot of supplyside dislocations. With the network down, there are confusions around various cities, so moving people is different. Second, they are supporting the infrastructure in terms of remedy effects. They are providing medicines free of cost, providing Logistic Services and food to the doctors in the hospitals. Third, they are actually helping the ecosystem by reducing the platform fees, providing discount fees. I think they are taking a shortterm hit but building goodwill in the ecosystem. More importantly, i think one thing we walked away with is the consumers are now beginning to trust Digital Services more. As you know, movement of goods and people is severely curtailed, and therefore people rely on Digital Services, which i think bodes very well for the longterm growth of alibaba. The last thing i would say is that the data point we have from the sars virus, whenever it got curtailed and we think this epidemic at some point be cured, we would see a spike in growth over the longterm. So, we have to go through a bit of a shortterm pain, but we are positive on the future of alibaba over the longterm. Taylor that was john freeman and a guest from newberger erman. Masayoshi son is opening the door to making at least some of the changes championed by paul singer. This, after a reported Second Quarter of losses. We joined the scarlet fu. I would say he was striking a conciliatory tone. It sounded amicable and he was paying lip service to the things singer wants. Stock buybacks, improved governance at the vision fund and corporate changes on the board. He nodded to the fact we might address some of these things. He is saying the right things he is also saying it in a favorable tone. He describes singer as his important partner. He described himself as the largest shareholder in softbank. They are naturally on the same page. Sonali elliott puts more money to work than anybody else. He is the most feared investor in the world. Masa did not say he would do exactly what he wants. It is that 20 billion buyback. Do you think what he did today was enough to ease some of those tensions . Matt we are in the early stages. These things move at their own cadence. The news broke a week ago. I think he did that because he knew earnings were coming out. It is going to take several weeks for them to continue engaging. Was it enough today . I did not know if we were going to see that on the buyback. He said we are open to the idea of buybacks. The time and size of that is going to depend. In terms of transparency, he said we are open to having some transparency in the vision fund, but he will not disclose the value of the private companies. My take away is that Masayoshi Son is his own guy. He is going to do what he is going to do. Scarlet some strong personalities. Elliott is a feared shareholder here. Has it been able to work out deals with the companies it has targeted in the past or does it always tend to get adversarial . Matt somebody wrote about him the other day and called him the boss who tells bosses what to do. When he puts his weight behind something, he often gets his way. I expect things are amicable. I probably suspect he will get a board seat or two. If things go that way, it is going to be another win for him. Taylor coming up, mike rogers, a former houseintelligence chairman, joins us to discuss how he thinks the u. S. Can win the global race for 5g. Wework brings in a new ceo. In hopes of turning itself around. We discussed the challenges facing the real estate veteran. This is bloomberg. Taylor the Trump Administration wants to develop a cohesive 5g policy, but there is widespread disagreement bout how to get there. Last week attorney general kill yum barr dismissed the white house led effort to build 5g using homegrown equipment. Waur said the government should work withnokia or ericsson to ounter huaweis work. I spoke with former house intelligence chairman mike rogers. Huawei, zte, two chinese companies. China wants data dominance they understand the need for building these networks. The government has invested into the next generation here as well as financing deals. Zero down, zero payment for three years and we cover all the buildout and the engineers. No western company can compete. We should be asking ourselves, why do they want to do that . Its really to control data as it moves through the networks. Taylor should we be investing the way beijing is investing in their 5g network. Attorney general barr had a take on it which is nationalize a Foreign Company to u. S. Interests. Im not sure. Theyre a western Value Company nokia and ericsson. Those are companies we want to compete and win contracts. I would do it a different way instead of assembling the government to buy a company centered in finland. If we can buy in r d to overcome what theyre doing in their government and secondly how about financing deals, low interest loans, payback loans, 0 interest loans from the x. M. Bank to allow them to compete against huawei and z. T. E. And the government is getting their values back and to make sure we have western Telecom Companies working. Taylor how do you feel about them banning huawei . One of the things this lows is huawei and its network, theres a crazy notion they can protect the core. 5g is about edge computing. Thats how your ability to communicate quickly machine to machine and person to person will happen out at the edge. A, i dont know anyone believes that is even possible, number one. What it means is it will change the way the Intelligent Services of the United States shares with our greatest partner, great britain. And we share more with them in real time than any other nation on the face of the earth even the other 5i partners, intelligence countries we share information with. Thats going to change. Not only that, youve given china the ability to turn off things when theres a disagreement. Why would you want any foreign adversary to have that capability, that leverage anywhere in your networks and you cant keep them out. Theres a saying in the intelligence business, its not where you get into a network, its how you move once youre inside a network. That lateral movement, once youre in their network anywhere in the country, they can move around to places you dont want the chinese intelligence services. Taylor that was former house intelligence chairman mike rogers. Now wework named sandy as their new c. E. O. In a bid to salvage the embattled startup. A real estate veteran, she took the Shopping Mall competitor c. G. E. Out of bankruptcy and was c. E. O. Of brook field partners retail group. After failing to go public in september, wework has been remaking its Management Team and added the first woman to the board. I spoke about weworks new strategy with the Senior Research analyst barry oxford. Ive written reports about we with work. I feel this is one of their first really positive moves. They have been through a couple of changes but you hit the nail on the head when you said they have a real estate person at a real estate company. This is real estate first and he is the person to lead this ompany to profitability. Taylor what can you glean from his previous work about turning around bankrupt companies . Can you glean it forward into any future work he can do at wework . Sure. Sandeep, being the ceo of a Public Company and bringing them through hard times in 2o 009 and 2010. I think he is the person to lead this company. I dont think its a 2020 event but i think sandeep is the person to bring the company public. He has the reputation and credibility with investors. I think softbank has funded enough money that they could complete what is needed to be done thats already in the pipeline. As far as leases being signed. Once the lease is signed you have crossed the rube conand have to move forward with the weworks entity. Taylor his first day is february 18. What should be his number one job on day one . Is it getting out of unprofitable businesses or focusing on the i. P. O. . What would you like to see him do day one . I think the ipo has got to be fifth or sixth on his list. Number one is getting out of some of these extraneous businesses that adam got into, kind of unwind those and generate whatever cash you can if those businesses and get back to the crux of what weworks is, it is temporary leased spacing. And thats whats going to make this company successful. Its also what sandeep knows and understands. Taylor that was da davidsons barry oxford. Still, a possible solution to childhood blindness. We take a look at what experts are trying to achieve with gene therapy. Thats next. This is bloomberg. Taylor this sevenyearold has a rare genetic disorder that limits his vision. Scientists have developed a medication that has the potential to substantially improve his sight. Defects in retinal genes cause a devastating form of childhood blindness. Gene therapy is at the forefront of treating retinal degeneration. There are over 20 Clinical Trials addressing diseases in ways we did not think possible before. Having to make a decision on his behalf has been a real struggle. This treatment could change our lives. It could stop a truly terrible disease. As we tackle the problem of childhood blindness, this will be a breakthrough in our ability to change the course of the disease in a way we never hought possible. Maverick is my firstborn child. He has been the most amazing child to raise since the day he as born. I did not have experience with babies before, but i noticed he had a blank stare. I checked his tracking vision and it was nonexistent. We went through all of his genetic testing, looking for specific genetic markers. It came back with rpge65. The tones and rods in the eyes dont allow for light perception. So he is legally blind with specifically lowlight blindness. He also doesnt have peripheral vision or vision below his waist. Its almost tunnel vision. Help me. Up here in my room. These are my toys. This is my eye patch. It has to be the right lighting to see. Once the sun goes down, the world is very dark. We take him inside and turn on all of the lights until it is ime for bed. Mavericks condition is egenerative. There is no timeframe of when the degeneration will take place, but it is a wellknown fact that he will be completely lind in later years. It took some time to descend into fire and sulfur. In december of 2017, the fda approved gene therapy for his specific condition. We went and spoke to a doctor shortly after it was approved. Maverick was six years old when i met him. This family had struggled with getting a diagnosis and were excited to hear there was a treatment. It is a gene replacement therapy whereby were delivering a normal healthy copy of the rpg65 genes to patients who have two detective copies. This medication is a virus which has been modified. Its only job is to deliver genetic material. We deliver this virus with a fine needle underneath the retina. Then, we have a healthy copy of the missing gene. Into the cells that normally make it. Unfortunately, the cells that absorb the light are constantly generating and there gets to be a point when there simply are not enough cells to function, even if we were to deliver the gene back. So it makes a lot of sense to treat patients earlier when they have the cells. And just need the normal copy of the gene to make them function again. Early treatment statistic way to go to achieve the best results. Here at Childrens Hospital los angeles, we have treated 34 eyes. 17 patients. It is stable without any loss in function. Five years ago, there was no treatment for this disease. The bulk of patients, if lucky, got a diagnosis, but beyond that, there was not much else we could do. Aside get the most offensive the vision they have. Since fda approval of this gene therapy, it has opened the door to not just treating this rare degeneration, but essentially ny retinal degeneration. This has been probably the most difficult decision that i have ever had to make in my entire life. It makes me nervous because it is so new, and if it does not go well, it is my fault, because i chose to do this my child. I felt like i hit the jackpot when i had maverick. I dont know any kid who could handle everything he has been through with such appreciation for life. He is willing to do or try anything. After today, our life could hange forever. Love you. Love you, buddy. He might go back home, and for the first time, have fun his friends by the pool at it is getting dark and ride his bike at dusk. O trickortreating. These are the improvements that changes a childs life and the motor confidence that comes with interacting with their nvironment in a way they could have long long consequences. It takes seven days for the corrective dna to be absorbed. At seven days, he could potentially see again. It just comes in very small doses and it could take up to our months, they said. He had his two surgeries and we are home. The first day i really noticed something was different was riding in the car he said, mom, im looking outside and seeing what is outside. Ive never been able to see through the windows. It seems so small, but it was lifechanging for him to be able to look out of the indow. One more game of tag. Ready . One, two, three, four, five im coming out i see yes in the past seven years, we dont even come in the backyard at night. It is a true miracle. You cannot stop me i got maverick. Willow, come here, get him. He has a whole new level of independence, and he is ready to conquer anything that is given to him. Taylor that is part of our series on the future of health and the business of health care. Or more, you can go to bloomberg. Com and use tvgo. That doesnt it for this edition of the best of bloomberg technology. We will bring you all the latest in tech throughout the week. Tune in. We are Live Streaming on twitter. Check us out and follow our global breaking news network on twitter. This is bloomberg. Francine mark carney will soon end his term as governor of the bank of england. Carrying the u. K. Economy through crises and years of brexit related uncertainty. A highstakes, divisive issue that has been impossible to forecast. Good preparation for his next job, tackling climate change. Born in 1965, the young mark carney dreamed of greatness in he world of economics, getting a bachelor at harvard anda