Transcripts For CNBC TechCheck 20220811

Inflation data coming in the nasdaq up 0. 8 you. Julia, how can we not start with disney weve thought about streaming for so long as a technology play growth at any cost feels more like a media play. Youve got to have your eye on profitability. Thats certainly what we saw with the price hikes from disney and a lot of the commentary there. Thats right. Disney on the top line adding more subscribers than expected they did loose more than anticipated when it came to the direct to consumer business. The way theyre addressing that, theyre raising prices and this all fits in to the new profitability. Morgan stanley said this is phase two, bringing the streaming into the profitable era, and i think were hearing this from a number of different ceos we also heard this echoed by david zazoff as well now its being valued more like a media company. It seems like all of these Companies Including disney are thinking more practically about their streaming businesses and wanting to make sure its not just about chasing growth but profitability. I completely agree. I think the combination of the growth we saw with the price hikes speaks to disneys underlying content season three of bluie came ot yesterday. Theyve got that catalog theyre adding those shows that product is incredibly sticky for families. Ive not watched it, but im considering a trip down to where julia is the prices are insane. Im going to test it out and how much Pricing Power theme parks have i wonder julia, its ironic that disney is now focusing on profitability when the tech trade is now coming back around look it got disney to where it is right now, total numbers surprising that of netflix in terms of subscribers is it too early when you give up those prices, does that set up disney on a different path, you know, longer term. I think were seeing a sort of readjustment about how disney cease al sees all of this disney is building up its product. It started out intentionally they said its not always go to be this expensive. Were going to be raising the prices as we add more content, and weve seen them do that. When it comes to the sports rights, the expensive cricket rights, bob said they gave up the price because it wasnt worth it in terms of the value, to be able to use it to draw and retain more of the customer hotstars thats something well talk about with him in the interview coming up, because we want to understand his perspective on how much hes going to be willing to pay as he focuses on profitability in a way we havent heard disney or any of these streamers be that focused on profitability for the direct to consumer business theres so much to get to obviously a lot of focus there people are spending and the disney brand feels so powerful, especially when you look at what happened at six flags. People are going to pay for a disney where theyre not going to to pay for other theme parks, as much as id like to because its a lot cheaper. Theres rumble over the parks experience. Thats whats going on thats what disney has to manage they have supply chain issues. Theyve got to make sure consumers are getting what they pay for for those higher prices. I think thats the big danger on the horizon for the sparts the other thing about sports real quick, theres a massive reaplienlt all over the place. Theyve been all over it i think theyre in a much better place. Eli, back to the parks, its notable they have rolled out so many price increases over the past several years and now you see continue supers spending more yes, the overall attendance may not be back to the 2019 levels, but there was a hint or two dropped that they think they have pricing flexibility for the parks. Do they think they can raise prices even more thats an interesting question. Were going to take a deeper dive into disney and todays overall inflation data lets bring in Wilmington Trust megan shoe megan, what did you make of disney what is it thats a big name in the business the parks business, pre and post pandemic, what did you make of it i think what disney showed during earnings is that companies that have that brand power, the Pricing Power, can continue to pass along price increases, and this really kind of epitomizes one of the concerns we have, you know, no withstanding the improvement in the inflation Data Companies like disney, like starbucks, chipotle, the number of companies we heard who we think still have Pricing Power could be willing to pass it through. Some of that core inflation could be stickier as we move into the balance of the year they still have a good Balance Sheet relatively speaking. We have seen consumers taking on more credit, but disney has that brand power. Maybe because of the brand power disney is an anomaly we look at some of the other earnings demand pullback is being seat with some of these results i wonder how much you could actually read into the broader markets. Megan, where do you think we are right now. Nasdaq is in a new bull market. What we saw was a sharp move in rates then we started to move into questioning demand and earnings. Second quarter earnings showed the demand is still there. Earnings are still solid but were a little cautious. Were not sort of fighting the rally in the market. The technical a strong were not buying, were not selling. Were fully invested gong forward we need to be sensitive to how rapidly the environment is changing. We heard from micron and walmart and target earlier in the year, and were going to be getting retail next week from an earnings some weeks i saw the consumer side bear. I would say dont chase this rally. Be patient megan, as we look at the Bigger Picture with so much economic uncertainty, im curious what you saw sonos is so disappointed people have already invested in devices for their home theres only so much theyre going to spend and that was pulled forward toward the pandemic if you look at netflix, what we heard from them, and the fact that their disney plus subscribers you do think they have seen a pull forward and that means as inflation increases or persists, well continue to see things grow . Definitenyly weve seen things pulling forward in terms of electronics, pcs. The chip guidance and some of the earnings from the Semiconductor Companies Going Forward i would be focused on as it relates to tech those companies that are more aligned toward cloud growth, data centers, construction trends, auto is another example, and being more cautious as it relates to consumer electronics. We had a big pull forward. Its helping disney and their earnings, but, you know, we should expect goods to remain a little bit softer except maybe if youre geared toward that enterprise type of business. Yeah. Its interesting were seeing this divergence between the consumer and enterprise we heard that from iec and then convergence within the consumer and the ability to hold up better as you look to the fall, are there any issues around supply chain constraints . You mentioned auto the infrastructure issues. Whats your outlook on that now . The Semiconductor Supply Chain has been a slow go in terms of improvement weve certainly seen pretty dramatic improvingments in other parts of the supply chachblt i would expect well dont to be a bit of a constraint even with a tight market and strong payroll numbers. Were hearing companies are having trouble hiring. So there could be stickiness to the supply chain issues and then theres covid. So were cautiously optimistic that the supply chains will resolve for tech and semiconductors. It might take a little longer, but we think thats going to continue to improve. I want to talk about cars theyre not shipping for ever and consumers are having to wait, wait, way. The 100,000 car is getting to be the normal reality. Do you think those cars are going to be able to deal with the supply shock. When it comes to all toes, we definitely have a lot of pent up demand still and whats being gone on with the sales members for autos has been more on a supply chain whats driving up the cost is a lot of the tech intensity that goes into the autos. So, again, structure that goes into the experience than ten years ago. Certainly weve seen price relief after really, really strong price increases in the past few months. But Going Forward, i think if youre at the top end as julia mentioned, theres a bifurcation in the consumer. High end Consumer Products are likely to remain strong, and yet theyre going to take on more. Thank you so much well talk to you again soon. Thank you. Well have more on the other tech results you may have died this is his first broad street interview. Stay with us ttechcheck is just getting started. Announcer took czech is sponsored by comcast business, powering possibilities millions have made the switch from the big three to Xfinity Mobile. That means millions are saving hundreds a year on their wireless bill. And all of those millions are on the nations most reliable 5g network, with the carrier rated 1 in customer satisfaction. Thats a whole lot of happy campers out there. And its never too late to join them. Get unlimited data with 5g included for just 30 a line per month when you get 4 lines. Switch to Xfinity Mobile today. Lets get a gut check on vacasa they raised their full year guidance thanking to increasing estimates. Those shares up nearly 26 , this after strong concerns from competitors. Airbnb, booking holdings, and expedia as well. It seems like consumers are nowhere in sight when it comes to travel. The performance from some of these travel names especially last month have been incredible. Airbnb up nearly 30 its valued much higher than some of the others Like Booking Holdings and expedia vacasa, huge move up it feels like the market is saying what the fed will be able to do is jengineer a soft landing. It seems like the cash is going toward experiences instead of products, which we saw for the last two years i also think a lot of people moved out of the city during the pandemic and are now moving back. Thats a good point you want to move to the country for a week the earnings movers is sonos shares after missing on the top and bottom leerngs blaming those results on, you guessed it, macro headwinds. Guys, what a completely different picture here we talked about the Consumer Tech angle sew know has held up remarkably well now theyre having a hard time where you really need your cfo if your challenge is macro headwinds. Let me cry for a minute i love sonos ceo patrick spence, chief legal officer, now acting cfo eddie lazarus, great executives, theyre fighting a big lawsuit against google it keeps raising this is the on sit of the vacasa story. You buy a new tv, you almost always buy a sound bar now theyre going to other peoples houses. Thats the big problem for s sonos. They probably benefits. You have the fact that vacasa introduced people to a new way to go on vacation during the pandemic, and now people do it instead of going to hotels, plus all of that pent up demachbld i think were creating a transition from being objects into experiences thats what we saw with disney parks. Sonos is like, you can only buy so many of those devices weve had hints of this this, that the stuff people are buying are more oriented to services. The company has launched a search for a new one wells taking it to neutral, quote, decreased visibility goes fafrmtd this as marqeta is weighing it. Joining us now to discuss it all. Jason gardner. Jason, lets start with the change at the very top what you announced hand over the reins to someone you havent driven yet. Im an entrepreneur, Gold Medalist entrepreneur. I took this seriously. I feel theres a best person out there to be ceo. Ive got the things that i can contribute the most of, people, product, and customers im not going anywhere the chairman, ceo, and the largest founder of the company im here forever and im absolutely committed to the company and im excited. We look forward to hearing about it ads well, jason when you look for a ceo, what are you looking for . Were in the current market with a great eest emphasis on profitability and operate. Would you be looking for like a seasonal executive or somebody in the area . Theres a lot of great executives out there we decided we wanted to be completely transparent theres a lot of investments in banking, technology, software. We really thought this was the best way to do it versus operating in secret. We wanted to get ahead of it, attract people so were being very open about the search it can take time as ceo, it could be six months, could be a year. Very much looking forward to talking to a lot of folks out in the world and see who would be the best person for the next stage. Jason, your disrupt ur market, a lot of your customers are also disrupters, are you looking for someone who can bring you a more traditional one, maybe stabilize some of the company. Our strategies work very well youre right we focus on common disrupters, din tall banks, tech giants, and Financial Institutions we built an amazing culture here have a Strong Executive Team we want to attract someone who can take it to even Greater Heights and well be thoughtful about that surge as we think about it, its who can take the company its equal, products, commerce along with me in partnership with me and taking the customer to even Greater Heights. It just allows us to have open and wide conversations to attract the best person for the next phase. Jason, when you thank you about your partners and you think about the next chapter of growth for the company, how important and how important is it so much of your revenue comes through block, and im wondering if 69 of the revenue is from block and you need to focus on diversification . We do weve talked about this a lot of weve seen it go back down since last year. Were very proud of the first half results, cautious for the second half. Were like a zipper. Both companies are tied together theyre very successful. We look tosupport them while w focus on the large tech giants, Financial Institutions to not only diversify the revenue base but allow us to look at the vert verticals whether its large tech giants or Financial Institutions were excited about the relationship and whats next for us. No small job, jason were looking forward to seeing how that progresses. We appreciate it thanks so much. Take it easy and live here at disney headquarters we will be joined by Ceo Bob Chapek. Thats next. Dont go away. Welcome back to techcheck. Im deirdre bosa with Julia Boorstin and nilay patel its still in the green. We have more on disney and bob chapek but first lets get an update with bertha coombs. Thank you very much more evidence inflation is cooling. The index thats measuring wholesale fell half a percent in july compared to june. Its the first month over monthdrop since april of 2020 and while still high, the annual increase is the smatest weve seen since october Lower Energy Prices have played a big role and today thaaa says gas is back below 4 for the first time in five months. Warby parker cut its Sales Forecast for the year as it face as what the Top Executive calls an uncertain macroeconomic environmental. Back over to you julia, deirdre thanks. Drivenen in large part by resurgence in the companys parks business in an overall beat on disney plus. Subscribers joining us now on a cnbc exclusive interview is disneys Ceo Bob Chapek. Thanks for vug us on your beautiful campus. Nice to see you glad to have you here. I want to start with streaming and the decision the raise prices and also introduce the new adsupported disney plus at the same prices youre already talking. Talk about it. We had a great quarter overall, not only streaming but the parking business as well we had a tremendous experience our parks business was extremely strong with a 40 increase people are coming and spending more and theyre very happy guests but youre right our streaming business has been really phenomenal. Again, amongst many fears, weve added 50 million households, 14. 4 of those on disney plus i think we alleviated fears our growth was slowing down. Theres a big focus on profitability and we reaffirmed our guidance were really proud about that. It speaks to the difference of walt disney company. It plays out specifically to your question about the ad tier and pricing. We want to be more accurate, reflecting the value that our consumer and viewer gets with disney plus by taking up the price. And you did add many more subscribers than expected in the quarter, but when it came to disney plus that growth is slowing are you concerned with the fact that theres so much macroeconomic uncertainty that subscribers will not want to pay more if they dont want to watch adds so as we said yesterday in the call, we suspect that we believe were going to see growth accelerate for domestic subs for disney plus in the next quarter. Whether its international growth, with ads, without ads, were pretty bullish. Are you concerned i know it seems like in the streaming landscape this is a relatively new thing to focus on profitability over growth. Im wondering if youre concerning where growth is coming from now . They define them as of yesterday to try to distinguish them from the lower value hot stuff starts whether its toe mess tick or international, its almost from an overall standpoint sort of indifferent. But we do see growth in domestic, and i think youll see that next quarter. You said you thought growth would accelerate next quarter. It was very interesting that you separated out hot start. You also said hotstar was not going to be growing as fast as you anticipated and you talked about that was because you werent willing to make the investment in certain cricket right. What is the value there and investment and content versus the number of subscribers youre going to be time add few the last several years, we used the hurdle we take it down to that level. Whether its nba, mlb, nfl, or crick, it always comes down to we do a lot of analysis and look at where it helps our shareholders if it doesnt, we do not do the deal that was one case we did not do the deal. The cricket righting but what does the strategy mean Going Forward . What can we expect from you now that you have this new focus on streaming . We have great partnerships with all the leagues, and if we can get deal done, well do it go not, we wont do it. Are you certained about the rights actually im not. The reason is i believe we have a unique proposition we can offer the leagues and it plays it weve got new mlb rights College Games are coming up. Weve done good lately im not worried. In light of all this, what youre building in the streaming space, how concerned are you about cord cutting weve seen consistent, persistent cord cutting. What is this going to do to your business, and how does that impact when youre going bring some of that over from linear to the direct consumer . Thats win of the key factors. As weve said in the past, take your foot off the dock and put it in the boat we have dancing with the stars. Were moving some of it. As the market changing, we evolve with it we do watch it very carefully. We know where its headed. Weve got streaming and linear businesses which are kicking off so much cash direct to our consumer investment. I know you dont want to lose the consumer businesses which are the bread and butter of your profitability and im wondering how concerned you are with the bundle we have such great assets, propositions, and bundles to some extent that the main factor in terms of how fast that bundle goes where it goes, when youve got espn, which as you know is the 500pound guerrilla. We feel like we have some degree of control of that. Thats going to be very interesting to watch one thing we havent talked much about is your ad supported business how profitable will that ad support be compared to your adfree disney plus and how valuable will they be . We heard them say the ads are going to be very valuable. No one has the experience we do because we have the hulu experience one only has to look at the average per sub advertising that we get on hulu and think about what that could meet from a disney plus standpoint so we believe it will be no worse than neutral and it has possibilities. Were really the only folks that i think across the globe have a lot of history i think were going to apply this now to disney plus and youll see Great Results coming out of it. How concerned are you about annade recession you know, we have a unique proposition. When the content is strong, Everything Else follows. Were bullish. The adsupported streaming base is going to get more complicated. Are you concerned about competition from netflix and others in the space. We always watch, but we dont dwell on it. We have a unique proposition and we think were unique in the marketplace. Were ooh unique proposition. Shifting gears to the parks business, better than expected results both in terms of spending and also in terms of attendance give us some insight into what youve seen with the consumer and whether or not that will hold up into the fall. Were not seeing any softening of our demand. Were really, really pleased with i know theres been a lot. We see no softening of our demand and we think this bodes well remember, our lead time for internation. So the numbers that were posting are largely on our domestic audience. Once that comes back, it will put more into our pipeline. About what the fact there are a lot of families going to your parks that didnt go through the last two years do you think next year youll see a drop off we do not weve got enough data and research to suggest this is going to be a resilient trend were seeing right now and is not going to be something thats going to be. You said on the Earnings Call you think you have flexibility in price does that mean youre going to raise price at the it again . We read demand. If the demand goes up, we have the opportunity to do that we have no plans again, we operate with a surgical knife and were at a level sophistication with our pricing so that not only does it maximize the shareholder value but enables us to provide things no matter what time people want to come. You get another pricing that could be in the works. We act accordingly. If we dont see that, we can act chl were very flexible. Speak of flexibility, youve had flexibility with putting things on disney plus and in theaters whau now is it changing how youre thing about your that it condition we have, you nknow, a tremendous legacy of doing big numbers in theaters were going put our big blockbusters through the theatrical system so we get the benefits and then quickly go to plus there will be a lot of means that direct throw disney plus. Le we talked about our ability to toggle and that has been the case for the last 2 1 2 years and that will be the case in the future. This is a complicated art, how much time they should be in theaters is there any concern with having them with ads is going to devalue the move going to experience were all about the consumer, giving them more choice as to how they consume disney movies when the consumer is happy, everyone in the value. Do you think it will hold up as it has, or because theres all of this, it mears problematic. As you know, i spent my first 20 years on the studio side. Thats a really tin. I think the movie business is going to be stable its going to be resill yes, maam and optimistic. The final question. When do you plan to return it . Thats important to us. We want to go ahead and deleverage as quickly as possible and were working toward that. With our Great Results, its gives us the results were optimistic at some point returning to a dividend and looking to that, when its upon. Well, thank you so much for joig joining us. Youve covered so much. In the meantime take a plooc am. Now trading almost higher than the streets average price target nooefrl 33 bus more after the break dont go away. Time for a segment were going to call due diligence. Ether dipped below a thousand bucks. Since then its up 92 you might have blinked and missed it. More than 75 in the last month alone including double digits. Why the surge and why is it outpassing its counterparts because of a giant merge scheduled to take place next month it has either and crypto bulls talking for at least a year this moment have a listen. Right now its eithee ether m it takes the manning ma utime t sell you look at the prices set on the margin and so i think that was the enthusiasm with this merge finally happening is going to continue to draw money into ee theorem. What is going to change here . Its a combination of the work model and work product heres why it matters to you it will will lead ether to be me Energy Efficient and cause a sharp producing. Thats why youre seeing ether surge this week. I know you spent a lot of time thinking about it too. Sit too late to buy . This is going to be different. A momentous event. Im in the ill believe it when i see it if it happens, theyll get a lot more Energy Efficient. The big thing is if it happens, this is a cataclysm for nvidia and a. All of that happens. Its abomb waiting to go off. And they have been seeing that effect, right yeah, absolutely. So youre saying with the ripple effects of that and ether shares up not shares, ether up 4 . Jpmorgan out, heading into the fall calling amazon its best idea followed by uber and booker holdings all three of those names in past months were back in two. Announcer cnbc crypto world is sponsored by crypto. Com, the worlds Fastest Growing platform is a journey for the curious traveler, one that many have yet to discover. Exploring with viking brings you closer to the world, to the history, the culture, the flavors, a serene river voyage on an elegant viking longship. Learn more at viking. Com quick check on bumble. The nasdaq slips into negative territory. Stay with us 3w4r57 do you have a Life Insurance policy you no longer need . Now you can sell your policy even a term policy for an immediate cash payment. We thought we had planned carefully for our retirement. But we quickly realized we needed a way to supplement our income. If you have 100,000 or more of Life Insurance, you may qualify to sell your policy. Dont cancel or let your policy lapse without finding out what its worth. Visit coventrydirect. Com to find out if your policy qualifies. Or call the number on your screen. Coventry direct, redefining insurance. As a business owner, your bottom line is always top of mind. So start saving by switching to the mobile service designed for Small Business comcast business mobile. Flexible data plans mean you can get unlimited data or pay by the gig. All on the most reliable 5g network with no line activation fees or term contracts. Saving you up to 500 a year. And its only available to comcast Business Internet customers. So boost your bottom line by switching today. Comcast business. Powering possibilities. The s p on pace for its worst yoear after a tough quarte for semis. Some warning were only seeing the beginning of more pain Kristina Partsinevelos is live from one of their facilities with more on the slowdown. Reporter chip sectors are facing a crossroad you have a slowdown in demand but at the same time Chip Companies across the board are making promises to spend billions of dollars on u. S. Soil to build factories thats why i came to onsemi here in New Hampshire they have a ribboncutting ceremony later this afternoon. Across the board chip makers are warning and giving weaker outlooks Companies Like Western Digital as well as qualcomm, their stock is dropping at least 4 since those weaker outlooks. You mentioned the smh which is on pace for its worst year since 2008 no doubt companies are facing tough times. The slowdown is sharper than expected they have to build up capacity here in the united states. You have Companies Across the board that are promising to spend billions of dollars here in the u. S. , and unfortunately the subsidies, the c. H. I. P. S. Act subsidies are only supposed to cover 30 of the founding recosts which are between 10 and 20 billion. Where is the rest of the money coming from . You may think they ought to 50 and focus on auto and industrials and cloud, but even those segments are showing cracks we heard from microns cfo saying within those three segments, there is an inventory correction you also had from cloud Companies Like snowflake saying theres weaker cloud spending and himax saying they are reducing orders because of a sudden halt in demand. Nonetheless, there is the disconnect between the short term and the long term prospect. Ill take it, kristina. Thanks so much. As we head to our last break, keep an eye on apple today. Its 7 away from thatllim ate high can tech check is back in a moment so for a limited time, comcast business is introducing Small Business savings. Call now to get powerful internet for just 39 dollars a month. With no contract. And a money back guarantee. All on the largest, fastest reliable network. From the company that powers more businesses than anyone else. Call and start saving today. Comcast business. Powering possibilities. In three seconds, pam will decide. Im moving closer to the grandkids wait. I got to sell the house dont wait, just sell directly to opendoor. Easy as pie. Piece of cake. Whichever. When lifes doors open, well handle the house. We are really the only folks that i think across the globe have the opportunity to weigh on a lot of history and research and data that weve got because of our work on hulu and i think well apply that now to disney plus and i think youll see Great Results coming out of it. That was disneys Ceo Bob Chapek who joined us earlier this hour. Disney plans to win the streaming wars as advertising tiers expand eli, curious for what this all means for the pressure on netflix as it gets ready to launch its adsupported tier also how much do you think it will charge . Netflix has to cut their price substantially if theyre going to add ads to User Experience they have to find a reason to get people to watch ads. Disney has an easier lift because theyre still focused on growth they can initiate new audiences into a product theyre not familiar with. Im sticking with the gluey elasticity hypothesis. I dont even know what that is. Its a kids show. When your content is strong, Everything Else will t follow. Well see if profits are the same the nasdaq hovering around the flat line. Eli, thanks for your help today. The Halftime Report starts right now. Thank you. Im frank holland. Welcome to the Halftime Report. Im in for scott wapner. Stocks pushing higher again. The nasdaq up 20 from its june lows the s p up 15 from its lows, even the small caps are posting big gains. The question today, is the rally for real or is it one big head fake well debate that and much more along with your next money move. Shannon sacoccia, degas wright, josh brown stocks are higher after more data eases those fears