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Netflix reaches an amended all cash agreement to buy Warner Brothers Discovery studio and streaming business, aiming to expedite the sale.
Plus, we bring you some of our top tech conversations from the World Economic Forum, CEOs from G forty two, Athropic, DeepMind, and many more.
And VC firms continue piling into defense tech. This is geopolitical tensions escalate between the US and Greenland.
And that takes us to the market.
Said, because the tussle over Greenland, the concerns around further tariffs on Europe and what Europe's reaction to the United States might be has got volatility higher and risk assets lower. We're selling America again. Now's that off by one point two percent, having its worst day in in over a month. The S and p F I've found and wipes out it's gains for the year, and you're seeing money move into the havens such as gold, and what are you looking at underneath the hood?
I'm looking at Netflix reaching an a mended agreement with Warner Brothers Discovery for an all cash offer to buy the studios and streaming businesses. And remember the plan is for them to then spin off the legacy networks, and this was the overhang. Paramount's argument was that its bid was superior because of the stock component that had been in Netflix's initial offer. Bloomberg reported last week that this was going to happen, So it's confirmation that's where the
names involved are trading. There's still a lot more to come. Of course, let's get the reaction and analysis to the new offer with Getha Rangonaprom from Bloomberg Intelligence, and you write two things in your research. The first that this ramps up the pressure on Paramount, Getha, but also it raises the stakes for Netflix with why you think this ramps up the pressure on Paramount.
Yeah, this really ramps up the pressure on Paramount because really the ball is now in their court. They've been arguing for the longest time that the Netflix offer obviously is not that great because it had that stock component. Now obviously Netflix making it an all cash deal, and now really what this hinges on is the value of the cable networks business. So remember Netflix is only buying
the studio and streaming assets. There is still that cable networks business from Warner which they expect to spin out. And if you read a filing that was put out by Warner today, they have those cable networks valued anywhere from about one and a half dollars depending on how you value it per share, going up to as high ed as about seven dollars a share. So again I think they believe that they can actually extract more value if they go ahead and they complete that spin out.
So now really all of the anti this is really kind of up the anti for paramount. They have to raise their bid significantly, I would think in order to sway Warner's board.
He's a using thirty two dollars as the magic number.
Why I actually think so thirty two we think is you know, a starting point to get Warner back to the board, just kind of looking at the value of the networks, looking at possible you know, termination fees, financing costs. But really again we think that you know, Warner really looks at its cable networks business. Yes, there is no doubt that this is a declining business. It faces a lot of secular pressure from cord cutting. But at the same time, I mean, they do have some great assets.
They have international exposure. You know, they can spend, they can possibly selsion, and so they think they can extract a lot of value, which is why we think that paramount might need to go up to about thirty four dollars to fully kind of get on on board.
Keith Again, Netflix adjusting to an all cash offer in part because its own stock that was part of its initial offer has been under pressure since this all started. We get earnings after the bell. What are you expecting to hear from Netflix and what to invest need to hear to give them confidence that this is the right path forward.
Yeah, what really investors need to hear is, first of all, I think everybody's looking for really good four Q numbers and that should I think that you should. Absolutely. Netflix would absolutely deliver on that. But I think the major thing that investors are going to focus on ed is going to be guidance for twenty twenty six. The magic number that consensus is looking at as thirteen percent revenue growth. Should Netflix guide to anything lower than that, I think they are going to.
Be in trouble.
Keathan Rank and Athan is always great to get your take and your analysis, which is so instant when we have these breaking news. We appreciate it from Blueberg Intelligence. Let's stay with the context of earnings, with where MAGS seven names are. Whether they're set of course to begin reporting next week. Is the big ones like Microsoft, Tesla, Meta kicking things off on Wednesday, but of course Netflix is tonight. Tiffany Way, Columbi, a thread Needle senior portfolio manager.
Joins us.
As we are on the cusp of earnings and as geopolitical headwinds seem to just shift the narrative entirely. When you see down days like today, should people making the most of it, buying into weakness.
I think that's the case. The backdrop for stocks still looks very good. Obviously, the headlines over the weekend are creating some volatility, and I'm not surprised to see some selling just given stocks have been very resilient. But the backdrop for the economy and I think the market is still very strong, So yeah, I think this should be an opportunity and then you know, earnings coming up will bring the focus back to fundamentals.
Of the fundamentals good.
I think they should be pretty good, you know, demand especially you mentioned the MAG seven and the hyperskillers. I think we're going to see great numbers out of those companies. Importantly, I think we'll probably continue to see very strong capex numbers, which is important for a lot of the tech sector. So I think those should be good indicators for rest of the market.
The reality right now, Tiffany, is that that texts a big underperformer in the session. Right it's a moment in time, but the S and B five hundreds wiped out its gains from twenty twenty six. This is escalating, not de escalating. Where do you expect markets go from here? Based on the headlines that have come out from President Trump and what's happening with Greenland.
Yeah, I think we could see some more consolidation, maybe a few points lower in the market. You know, certainly volatility might lead to additional selling, but again I think this is a good opportunity, and as we get further into earnings, I think things will stabilize.
The biggest declines are in the biggest name, some of the MAG seven names. Is that just general sort of anxiety, geopolitical anxiety as opposed to some direct read through where if this tariff threat is enacted, it is those names that are hardest hit.
I think that's I think that's fair for today. I think it's just a general selling of the market. We're not seeing additional selling in names and might be hardest hit by the tariffs. We don't have a ton of additional details and what these tariffs might look like, so I think this is just a reflection of broader selling in the market that's hitting the largest names the most today.
Some are getting love.
Intel is actually getting loved at the start of the year. More broadly, we seem to be betting once again, not just on the GP but also CPU for everything around AI and they still going to be a winners. And how nuanced you need to get on name.
By name, Yeah, I think we're definitely seeing people try to pick spots outside of the main winners so far, so outside of the net the videos and the broad cooms, trying to look for other ways to play the AI trade. Intel has been a case of that. We've seen the semiconductor equipment stocks have done well so far to start the year, and the memory stocks are also ways that people have tried to play this sort of broadening AI exposure. Intel, I think is a trickier one because they do still
have trouble with their foundry business. But I think there's definitely some some other opportunities where investors are looking for other ways to play the AI the AI trade.
Are you looking in other ways to play the AI trade?
In video is such an important part of some of the portfolios you run. Should people be expanding or is still previous winner is going to keep on giving in twenty two to six.
Yeah, I think the fundamentals for video are still very good. But I think it makes sense that people are looking for what the next leg of the value trade may be for AI. So we're certainly looking at other parts of tech like the semi caap equipment company, but also companies that are involved in the infrastructure build out for AI, so things like electrical reatment.
Tying that all together please, Tiffany, then you know next week is huge. What are the data points that you look for when those biggest technology names have earnings? Of course, we've studied capital expenditure closely, but we're trying to gage this time, like when does it transition to you guys saying we need to see really big top or bottom line growth to feel confident that this AI thing is real.
Yeah.
I think especially for the largest hyperscalar names, we need to see continued acceleration and growth of the cloud businesses. And then we also need to see the CAPEX numbers remain stable or higher for the year. And I think those are kind of the two large indicators that we'll be looking at from those companies.
In particular, which of the world's technology companies are you going to be paying most attention to, Tiffany?
I think in the near term it's you know, the mag seven and especially Amazon, Microsoft, Google and then Meta also which had a big capex announcement last quarter or so, all of coursing.
To see what they have to say.
Yeah, I mean we had nice tea leaves already. If you're looking at earning some TSMC and that's something that you've been looking at. Semi conductor equipment manufacturing, how much resilience did you hear from that company and how much do you just put AI bubble warries.
To one side.
Yeah, I mean they commented that they don't think that there's a bubble and AI that they're seeing a ton of good demand from their customers, and I think that's reflective of the entire ecosystem for AI right now, and that's a great indicator for again, like you mentioned the semiicap equipment names, and also a good indicator of demand we're seeing from memory companies which are part of the value chain as well, Tiffany.
One of the things that's come back out of Davos is the idea of whether America should or should not allow technology to be exported to China. You know, when you're coming up through the ranks of Bloemberg Television, you kind of learn about China as the engine room of
the world economy. And I've always been curious to ask you how much you worry about that, the balance between to accessing that market and the competitive risks in exporting technology and national security risks to a market like China.
Yeah, I think this is a very tricky one, right because we want to keep our dominance in AI and technology and development of new technology, but we also don't want to force China's hand to sort of replicate some of our technologies or develop their own technologies. So keeping them, you know, to some extent, dependent on our companies is also an interesting balance to strike. So honestly, this is a very tricky one to figure out.
Tiffany Wade of Columbia, Fred need or great to have you on Bloomberg Tech.
Thank you very much.
Now.
Bloomberg is in Davos.
This week speaking to leaders across finance and tech at the World Economic Forum. Coinbased CEO Brian Armstrong is speaking with Bloomberg's Emily Chan.
Listen to this the flight risk concern.
Yeah, so that's certainly one of the core parts of the debate. I think that some of the bank CEOs I've spoken with have kind of said, hey, we have this really high regulatory burden for being a bank, and what you're doing kind of looks like a bank, and so we think it's super unfair you should have to have a bank license too. And what I tell them is, well,
we're not doing something very important that you do. We do not do fractional reserve lending, which means, for those who don't know, you know, at a bank you deposit your funds, they're not keeping your money there, they're actually lending it out and earning interest on that, and then they pay you a very small percentage of that. Like the average savings account makes like fourteen basis points or something, and that's called net interest margin.
And that's the whole bank business model.
And so that's why they have such high regulatory burden, because there can be a run on the bank, Like your money is not all there in a crypto world, there's a one hundred percent reserve, so all your money is there.
It eliminates this entire category of risk around a bank run.
No such thing as possible if there's one hundred percent of the money there. And so we don't need a bank license. We're regulated by the SEC, the CFTC. We you know, we have a National Trust Charter, like there's different entities and stable cooin issuers can operate under these models as well. And so we've kind of said, you know, we don't need a bank license. That's what currently already exists in the law. The Genius Act even enshrined that further.
And so there has to be some other solution here. How do we flip the banks from thinking of this as a threat to an opportunity where we can all go win.
Let's talk about the opportunity. You know, we started off talking about how crypto has had a lot of momentum lately. A lot of that was when crypto was on a tear. The markets have definitely pulled back over the last couple of months. So here, I know this is always your favorite question, but is winter coming?
Well, there's always short term fluctuations in crypto, but I think you know, if you look over the last two years, Bitcoin's up like one hundred percent, pretty great outcome for anybody who invested. You know, I've said publicly I think that bitcoin could hit a million dollars by twenty thirty.
I still think that's true.
So whatever happens in any given week or month, you know, we try it to track it too much.
It's the longer term trend that I think is interesting.
So bitcoin hit an all time high last year one twenty five, one hundred twenty five thous What about twenty twenty six. Let's do a shorter term for horizon.
Where is it going in twenty twenty six?
Well, you know, I don't like to make short term predictions because who knows it's it's the market, you know, short term voting machine, long term wing machine, or whatever. So I think if I don't think people should be like day trading, you know, unless you really want to do that. I'm more of a buy and hold kind of guy for the long term, and I think that the cool thing about bitcoin is that it doesn't unlike fiat currency, there's no money printer, right, so the supply of it is fixed.
It's fine.
Coinbay CEO Brown arms from there, along with Bloomberg Semoni Chang.
You can watch the full fast Side chat. Just go to life, go on your Bloomberg terminal.
Meanwhile, coming up willing you are Exclusive Conversation and Peng Shao, he's the CEO of G forty two.
We've got to discuss the UAE's role in global AI development. That's next. It's a bloombag tech.
Back to Davos now where Blue most jamano Be said she sat down with pengshaw Is the CEO G forty two. They discussed building AI infrastructure and the UAE's role in the global AI development. They spoke on the sidelines in the World Economic Forum, of course, starting with the chip imports, and made existing restrictions.
To take a listener.
In this complex world of AI, nothing is straightforward. But I must say that through the past half year since the May Summit in Aberdabi. We've made a tremendous progress. I'm happy to share with you that the first batch of the most advanced AI chips will be shipped the UE probably in the next couple of months.
And those are mostly in video chips.
They are mostly in video. But we also received the expert license for Cerebus Chip, which is a company way back to start up in California, and also a MD.
Yeah, did you have to give security assurances to the US?
Absolutely?
In fact, was not just a theore the call pledge. It's something we had to practice for the past three years now to physically demonstrate we have the ability to ensure the safety and security of the spense technologies from the US.
I e.
That there's no possibility for that technology to be passed on elsewhere.
Cannot be a trands shipt. Yeah, there's no backwork for remote access by unapproved parties, so and so forth.
Yes, let me ask you a big picture question, which is the fact that obviously twenty twenty six was twenty twenty five was a big year for AI just in terms of the mainstream discussion around it. And I think there are pockets of the market where people started to speak up and say, there's so much money going into this space, especially on CAPEX investment, it's going to be really difficult to generate a return on investment.
Where do you stand on that debate?
I think there are three proper major factors to cause concern, for doubt or even fear in this below. A movement one is that it's clear now as we discussed earlier, AI has entered our societies. AI is demonstrating it potentially can do many things humans are doing today. So job security is one concern. That's number one. Number two, as we have seen, AI does require so much electricity, especially
in the US, there are such debates already. Can the city centers eventually take power away from people who need it to be left in the code and have AI consume all the power?
This is power.
Concern number number two. Number three really is a concern about a global race. Can we be actually left behind? And what this means for government for national security. I think all these are factors to cause certain pockets in the US and elsewhere people are confused, concerned and asking for a pot. But I think it's a mystic because if we pulse, say in a US or a US ecosystem or US allies many other nations.
That was Pengshao, CEO of G forty two, along with Bloomberg's Jamana Bassecchi, staying at Davos. Santhropic CEO Dario ama day Is warning the Trump administration against exporting advanced chips to China, calling it a mistake with serious national security risks. He sat down with Bloomberg editor in chief John Mickelfwaite at Bloomberg House where the discussion started on the state of China's AI models.
Listen to this. I think they never really caught up that much.
So you know, of course there was this huge excitement around deep Seek, right, but you know, the truth was a couple of things.
One, you know, those models were very optimized for the benchmarks.
It's actually very easy to optimize the model for a finite list of benchmark. When we go out into the world, right when we're when we're, when we're uh, you know, competing against other companies for enterprise contracts. We see just honestly and Kennedy, we see Google, and we see open Ai. Every once in a while we see a couple other US players. I have almost never lost a deal, lost a contract to to a Chinese model.
But now you have the Trump administration, and I think you've already protested about this giving high speed chips and video chips to the Chinese. That's right, that's right, the thing that is holding them back.
And they've said it themselves, the CEOs of these companies say it's the embargo on chips that's holding us back.
They explicitly say this.
And and now indeed, you know, there are some policies and I hope they change their mind to uh, you know, to explicitly send not quite our latest generation of chips, although it was reported that even that was being considered. But you know, the generation of chips that's that's just one back. That's still dreamly powerful. And we are many years ahead of China in terms of our in terms of our.
Ability to make chips.
So I think it would be a big mistake to ship these chips. You know, the the the analogy I thought of if you think about the incredible national security implications of building model building models that are essentially cognition, that are essentially intelligence. Right, I've called where we're going
with this a country of geniuses in the data center. Right, So imagine one hundred thousand, one hundred million people smarter than any Nobel Prize winner, and it's going to be under the control of one one country or another.
So so I think this is crazy.
I think it's you know, it's a bit like you know, I don't know, like selling selling you know, nuclear weapons to North Korea.
Athrobic CEO Daria Amada. They're speaking with Bloomberg editor in chief John Mickelthwaite coming up. Just check out this list of investors backing the new startup Humans and We'll find out o striving the excitement and the huge punting ground for a company fresh off the blocks is a Bloomberg.
Tech Humans and and You start up building a frontier AI Lab has raised a four hundred and eighty million dollar seed funding ground at a four point four to eight billion dollar valuation and unusually large hall for a young startup.
Bloomberg's VC reporter.
Natasha Mascarinus joins us, Now, what is the news here?
I mean, is it the seed ground of the evaluation? What do we need to know?
Yeah, I mean this is the one of the largest seed rounds in private market history. I also like to say this is the new normal. For a Frontier Labs. This is five top researchers and technologists leaving Anthropic XAI, Google coming together and launching honestly a competitive to their
previous employers in a new way. So to me, the news is that the AI bubble talk is at least, you know, a step back for now, because we are seeing investors back these early companies at very high valuation, and strategic investors.
I can video for example, what new do we need in a frontier lab right now?
Yeah, So the real question that we have is what does Humans and really going to launch with. We don't have a really strong idea of what their first product is going to look like. But to me, it's really being set up as the opposite of the set it and forget it agents. It's going to be more collaborative. When I spoke to the company, they said that it's going to be more focused on long term outcomes for
communities and individuals. And to me, that says, you know, maybe there will be a chat interface down the road, but it won't be instant. It might be more focused on memory or collaboration. So what I'm watching is really to see if that's going to be the follow on.
That they've promised.
We just have twenty seconds, but I guess it is the clue in the investors themselves.
I would say in video coming out as an early investor is all you need to know about how serious they're taking the compute needs of what they're going to do.
So that's what I would watch.
Bloomegs, Natasha and Mascarenas. It's a great write up. Thanks for coming and explaining it today. You are coming up report investor. What we known about their funding round of late Georgian is the key investor in now. Margaret Wu joins us now to talk about her new portfolio company that's the Minion Dynamics and why she's getting into defense tech.
This is bluegg Tech. Welcome back to bluemeg Tech.
Checking on these markets that are under pressure, worst day that we've seen in well at least a month, and then as that one hundred are off by a percentage point s and P five hundred raises all of its annual gains. We are selling off risk assets, whether it's bonds, whether it's the dollar, whether it's bitcoin as well or off by more than two point six percent. Your flight
to safety is in gold and metals. Why because of geopolitics, worries about Greenland, worries about a dial up in tariff threats going towards Europe, and what their response might be. You keep your eyes peeled what's happening from the focus of geopolitics and President Trump. But move on to some
of the individual names that are underneath the hood. Look, it doesn't help the nasat one hundred if you're wiping out one hundred and fifty million dollars in market capitalization of Nvidia having its worst day again in more than a month. But I'm also looking at some companies that still see love Intel. Webersh says, we think that and
overall we're going to see earnings better than expected. We're seeing HSBC Seaport both saying the CPU side of the equation, the ideas of PCs also the ramp up and foundry are looking good. We are up on the thirty percent here to date for Intel. But I'm looking also at strategy that sells off the worst in a month because Bitcoin's down, cryptos lower, and we're worried about the Banking Senate Committee looking at that market structured deal at the moment, ed, what do you keep an eye.
On Well, there's a lot of action in private markets as well.
Toronto based venture firm Georgian has led a fifteen million US dollar funding round in Dominion Dynamics, the firm's first defense tech investment. It comes, as you just said, as interest in Arctic security picks up, joining us to discuss. Margaret wo, lead investor at Georgian, Dominion Dynamics is about for both military and civilian use case, but it's about a sensing network in the Arctic. You have focused as an investor largely on AI.
This happens to be.
Your first defense play timely, But what's your thesis here in making the play?
Well, you're right, Dominion Dynamics is a company with a vision to become Canada's first defense neo prime and they're starting by building an Arctic sensing and intelligence network for
dual use purposes. Now, our investment in this company really began with a first meeting with the CEO and founder, Elliot Pence, And what really struck me in that meeting was not only the scale and the strategic importance of this market, but the uniquely relevant background that Elliott has to lead in this space, having been an early and roll employee that helps lead the company's go to market expansion into multiple geography.
We see that alumni effect, that network effect, SpaceX alumni and ro alumni new companies. But in the here and now, when you see the news headlines such that they are about Greenland, I guess that must give you more confidence that this is the right strategy right now.
Oh absolutely, At Jordan, we see several very strong tailwinds for a company like Dominion. First is that the Canadian government has made it very clear that they have a commitment to increased defense spending from two percent of GDP to five percent over the next ten years. The Arctic, as you just mentioned, has become an increasingly strategic and
critical geography in the geopolitical landscape. And what's interesting is that there are very few technology options for operating in the extreme conditions of the Arctic environment, and Dominion is developing ruggedized devices and equipment to solve this non trivial problem. And the last thing I'll say is that with the rise of companies like Andral and Helsing, we're really watching a battle between legacy defense primes and neoprimes play out
in the US and Europe. But it's a little bit different in Canada and that we don't have any real legacy defense primes, so there's a white space and at Georgia we believe that Dominion is poised to go capture that Margaret.
There aren't many investors that also have an AI lab.
So where would you help a Dominion in that case?
Where are you helping your put photio companies with your own talent that you have.
Right.
What makes Georgian different, and we've been investing in AI since twenty sixteen, is that we actually have our own internal AI lab of about twenty plus data scientists, mL engineers, DevOps engineers and cybersecurity professionals that work with our portfolio companies after we invest to accelerate their own product roadmaps.
So, as AI.
Investors, when we're looking at defense tech and a company like Dominion Dynamics, we really see an industry that is
undergoing digital transformation and disruption from AI. Like many other hardware and labor intensive industries, defense is essentially becoming software defined and there's an increasing emphasis on the concept of connected mass, meaning how do you quickly produce a lot of things, but how do you make sure those things can speak to each other, and that really intersects with what we do at Georgian every day looking at areas
of technology like multimodal AI, physical AI, cybersecurity, and edge computing. So our companies are working on these types of companies, tracking where we believe there are headed and going and we believe in that sense we're going to be a great partner for a platform like Dominion, along with our Canadian presence and connectivity.
If you're thinking of you really inherently an AI investor, but now it's focused on defense.
Look, defense is a hot space and we know valuations have been high. Another big bet.
Of yours has been Replet and boys that paying off with its scale of its valuation. In the latest as we understand, they're trippling its valuation to nine billion dollars. We understand you and Georgian are helping lead that funding round.
When is it the right stage to invest? How are you getting comfortable with these valuations?
Well, I can't really comment on a potential transaction, but you're right, we are an existing investor in Replet, and I believe this is a category defining company at the app generation layer of vibe coding. When you think about some of the lofty valuations that you're seeing. It's really the potential of the market size behind something like Replet and app generation. If software is eating the world, then you should know that vibe coding is eating software and
that process is only accelerating. So we believe this has the potential to be one of the law just markets we've ever seen. And what I find particularly notable about a company like Replet is that its product, with the exceptional growth and millions of users, is still the worst
version of itself every single day. Because the company is moving with such velocity that new incremental features are coming out almost on a weekly basis, and with every new coding agent launch, the company is making leaps forward towards creating a one shot full stack engineering team and infrastructure.
To boot Margaret, our next guest is a pure play software name in the defense space.
But I want to go back to what you just said.
You know the software being of value here and also Dominion wanted to be a neo prime. Now we know that also software is capital intensive. I just wondered if you could reflect on that the need to fund growth for these companies would be it talent access to compute and software competence.
It's still an expensive gig absolutely.
I think historically there has been defense tech has been a harder sector to invest into because of the startup value of death and the amount of capital required. But with the speed and the productivity that we are seeing with things like Vibe coding, we believe companies can move a lot faster in a much more cost effective way, and that's how you've seen the rise of the New York Primes.
Margarel Woo, what a joy to have you on the show. Thank you very much, Adeve for joining today. Need Investor at Georgian. Let's stick as Ed says, with the topic of defense military software startup defense Unicorns has become a unicorn itself, following says, one hundred and thirty six million dollar funding around defense.
Unicorn CEO Rob Slaughter joins us.
To talk about the company's plans and how you're able to get the cap table. I mean, you've got Bains Capital Tech Opportunities Fund there, but you've also got ads, a capital staffare ventures. I'm looking at Valor Equity Partners. What is it that you tell them you're doing differently?
Well, really, it.
Just starts with the problem. I think obviously people know and follow the news. Everybody I think in this country believes and understands how lethal and effective the US military is. But a lot of that lethality, a lot of that capability was developed over the series of many decades. Meanwhile, the software world has completely reinvented itself over the last couple of years. So really, I think what investors or company realize is not only is there a massive need,
but there's a massive market. In addition to that, there's this massive change around how the Department of War is open to contracting. So specifically, the Department of warf really focuses on cost plus fees. I think the entire Department of War has reinvented itself allowed for more fixed price contracting.
You called yourself the air Gap software company, So does that get rid of Microsoft entirely? Do you come on and help sure that the Department of War or any of these other military focused areas of government are able to still use the software providers they do, but you're able to put this layer on top that makes it safe.
Where are you solving for?
Yeah, you absolutely nailed it. Most the entire world is cloud based.
It's all centralized compute the Department of War, and we believe many companies, many individuals, over the next decade or two will actually find the value of these air gapped systems. And let me define air gap for you. Air gap is fully disconnected. That means it really doesn't touch anything.
It's semi disconnected, which means it might touch a few things or even extremely high firewalls to where you know, you might have access to the Internet to certain domains, but you certainly can't go out and reach out.
You reach out to Docker.
You currently can't reach out to things like it hub.
Rob.
You had a career in the Air Force focused on technology. Ten years ago, you tried to work with the DoD to change how they approach software. Fast forward to present day, clearly you see an opportunity. Has that changed how the military apparatus views its procurement of software and how fast you able to grow your contracts with the Defense Industrial Base?
Yeah, I think it goes back to the need. I think ten years ago I didn't think.
I don't think people really understood what our adversaries were capable of. I think there was a certain level of you know, we have this superior tech advantage and I think objectively speaking, that that's changed and with that need comes a real desire to move quickly.
You know.
Previously, you know, there was some talk about the value of death. One way to look at it is there's several values of death. You have the value of death of that first contract. But for a startup like us, you have this value of death around software integration and specifically as a company. That's the problem that we solve.
Rob sort A, CEO of Defense Unicorns reaching Unicorn status as funning around.
Thank you very much.
Now, coming up, we're going to go live to Davos for a conversation with UBS CEO Sergio A.
Mossi. That's next. This is being by Tech. Let's get out to Davos.
Where Bloomberg Surveillance anchor John Ferrer is standing by.
John take it away, Hey, guys, live from Davos, Switzerland at the World Economic Forum, standing by the King of Swiss Banking. He might not like that introduction. It's Sergio al Malti, the ubsc EO. Surge I, good to see you, hey, thanks for braving the code. I appreciate it. Before we get into the bank, we're going to ease into this and start with financial markets.
What a start to the training week.
State side equities, open up, gap lower bonyard Hire dollar week. We've seen this movie before. Last April got over it pretty quickly. We've thrown a lot of this market in the last twelve months. It hasn't stuck. Is there something different about the way we're set up for twenty twenty six?
Well, I would say that it's probably the accumulation of issues that are now out there and not resolved that is becoming a little bit troubling in my point of view. So I think that this is the only major change, But we have to stay tuned for more relativity going forwar and predictability and rapid changes. So I think that staying diversified in financial markets nowadays is pretty important.
Let's get to what that word means, diversify. It feels like that's a diplomatic way of saying South America sometimes, and I'm not going to put words in your mouth.
I'll tell you what others are saying.
Pinco is talking about a multi year period of diversification away from US assets. We've seen from others moving out of US treasuries. There was a headline earlier on this morning about a very small Danish pension fund, and they've got their own issues in Denmark right now. Given their relationship with America, what are you seeing development?
Well, Diversifying away from America is impossible. I think that in any major asset allocation, one could probably think about having an overweight or underweight, But diversifying away from the US and also from the dollar is a quite dangerous beat. You know, things can change rapidly, and US this is the strongest economy in the world. The one was the highest level of nail right now is a little bit bumpy, but I would say that I wouldn't really bet against the US.
There seems to be a difference between how the politicians and the policymakers talk about America right now the backdrop for international relations, and how a business person thinks of America the economy and the opportunity. I've mentioned this nowt a number of times already today about the survey the PwC put out. They surveyed four and a half thousand CEOs and the top destination for capital for investment America
and it was up on last year. As a bank boss right now, a CEO who's thinking about expanding around the world.
Why is US still top of mind for you?
Well, because from our center pint of view, we see two big levers. First of all, wealth creation GDP growth innovations, and also more indiosyncratic to UBS is that we see potential for us to become more present increase our market share. So that's one place. On the other end, we are also very big in Asia. I mean we manage one trillion of assets there. We are growing very fast, the economy is growing. Half of the population in the world
is living there and is creating new wealth. But you know in the America, in the US, by the way, last year the US created twenty five millions of new millionaires, so basically one thousand millionaires a day.
So it's a place.
For a financial institution, a wealth manager like UBS is a place to be.
Let's talk about that. Is that something you want to do organically or through an acquisition?
I think that we have enough to do.
Organically. By doing better what we can do, we are enhancing our product capabilities. We just got a national charter application being approved by the OCC. We are expanding our interaction between the investment bank and our wealth management people so I think that more things we can do to get better and stronger.
It sounds like you're on the front foot at the same time as the bousering behind me. I'm reminded of where we are Switzerland and the issues on the horizon potentially for the bank, and that's capital requirements. That feels like a cloud that's hanging over this bank right now. How quickly do you think we can resolve it?
Not quickly. I think it's a political process. Most likely we're going to find out the direction of travel that you know, in the middle of the second quarter, and then it's still a political process. But you're right that this is something that has been quite distracting for us. Although we have been quite successful in managing the integration of Predy. Swiss is almost completed. We are almost you know, three months ago, and then the vast majority of the
job is done. So but we look forward for our resolution also, I'm.
Sure you do.
From the strategic standpoint, How is it holding you back? How is it distracting you? What are you prevented from doing that you would like to do right now.
At this point in time, To be sure, nothing, because you know, executing the integration is the top priority. We cannot be complacent. Although ninety eighty five percent is done, the last fifteen percent is as important. We still need to take out three billion of costs and finalize the restructuring and then we can we are prepared for growth, and that's the reason why we are investing top line but also in efficiencies AI and how we can become better and stronger.
Where did the cost come out? You satisfied with the size of the workforce. There's money to be done on that side of.
Well, there is still unfortunately that's the more. You know, a big chunk of the savings are going to come by disconnecting all the A systems, data centers, and but also there is a you know also a painful still part on the account. But it's within what we always announced. So you know, I think the direction of travel is said.
This is the top of the to do list for you, and then someone else is going to step in.
Eventually.
You've offered your thought about where that someone might come from, that you'd like to see them come from internally, from within the bank, you open to someone coming from the outside.
Well, we always need to be open. I think that the board is not you know, my job is to is to prepare and to present to the board as many candidate possible for internally, and the role of the board is to also evaluate external candidates and find the best solution for the future. But I would say the bank is very strong, My team is very strong, and I do believe that you know, an evolution is what we need. Is probably not a revolution, but you know, it all depends.
What's the timeline for that process.
Now, can you give us an idea or what point do you present your ideas about who might succeed you?
Well, we always every year I present ideas, and you know a succession. Succession is not a process that you do, you know, only a few months or years before somebody leaves. A succession is somebody that we manage every year. And from my Iceland point of view, we need to be just prepared to have the best person for that moment.
When that person is selected, there is another seat that might open.
And it's the chairperson's seat.
And I just wonder when you step aside a CEO, as the chapter truly closed for you and the bank.
Well, look, you know, right now I am very focused on finishing my job honestly, I think this is still very intense activity and then it's going to be you know, I need to reflect.
You realize people watching this won't really believe that, well, you are a human being. You were thinking about the future and what comes next.
But people watching there are not expecting me to respond.
That is true as well, particularly this gentleman right here who wants that response from you. Just a final question from me. I believe you first took the job a CEO back in twenty eleven. As you look back on things, and I think this is the appropriate time to begin to think about this. Your legacy at the bank. I'm not sure you ever really thought that we'd end up here integrating Credit Suite in the circumstances we did. But how would you like your legacy to remembered as a leader of UBS?
I was very proud. I mean, in a tragic moment for Switzerland and for the banking industry, I was very proud in twenty twenty three when I have two years after I left that UBS was asked to step in and stabilize and help stabilizing credit Swiss and being part of the solution that was for me the you know, almost reaching what I always thought I wanted to show
with our transformations in the first period. Right now, I think that we have a solid bank, a stronger bank than before, and I believe we are set for growth. So the legacy is always to see that when you leave after a couple of years, things are going even better.
So Jah, it's got to see it. Thanks for making time for us. Thank you, We'll get you into the world. That was the UBS CEO Sergio Ramoti speaking with Bloomberg Surveillance right here at the World Economic Forum.
I throw it back to you.
Extraordinary conversation.
As always, we thank you John Farrow there with Sergio al.
Marti of UBS.
Now sticking with Davos and Switzerland, we have Bloomberg's Emily Chang. She sat down earlier with Demis hasarvis, A CEO of Deep Mind.
Take listen.
It's been hard work, really hard work, getting our technology and the models sort of to back to state of the art. I think we did that with Gemini three especially and Nana Banana our imaging software, and then I think we've also sort of adapted really to this new world of shipping very fast, kind of bringing a kind of startup energy to what we do.
Do you think people underestimated Google or got something wrong?
Yes, maybe, I'm not sure. I mean I think we always had the ingredients, you know, to be at the forefront of this. Obviously, we've got the long history in it. I think, you know, over the last decade, Google and deep Mind, between us, we've invented most of the breakthroughs
that the modern AI industry relies on now. Obviously Transformers, most Familee, but Alpha go deep reinforcement learning these things, and we have these incredible product surfaces, billions of users services that are natural fits for AI actually, from search to email to.
Chrome.
But it's just getting all of that together and organized in the right way. And I think we've done that in the last couple of years, and there's still a lot more work to do, but I think we're starting to see the fruits of that.
A year ago, Deep Sea seemed cataclysmic for the worst. Now a year later it's quite China seems you have been quieter. Yes, has your opinion on competition from China changed?
Not really.
I mean I didn't think it was cataclysmic in the first place. I think it was a massive overreaction in the West it was impressive, and I think it shows that the Chinese are very capable that the deleting companies. I think companies like Buy Dance actually, I would say are the most capable, and there may be only six months behind, not one or two years behind the front
So I think that's what Deepseak showed. Some of the claims were over exaggerated about you know, the amount of compute they used and being so minimal and so on, because they relied on some Western models and also fine tuning on the outputs of some of the leading Western models. So it wasn't sort of Denovo. And the other thing I think so far as not you know, yet to be seen, is can China actually the Chinese companies innovate beyond the frontier themselves.
That was Deep Mind CEO Demis Hasavis there along with Bloomberg's Emily Chang, and that does it for this edition of Bloomberg Tech Netflix Reporting After the Bell.
That's kind of the big one we're looking.
For both because of what we're waiting on more information about this amended offer Caro for Warner Brothers Discovery to an all cash deal. But as Geta Rang and Nathan of Bloomberg Intelligence put it to us, we want to know what's going to happen in twenty twenty six.
Yeah, we want to know if.
It can deliver on thirteen percent growth in revenue, where they can still hit the levels of fifty to fifty one billion dollars in revenue per year.
Quiz.
Look, with this all cash bid doesn't drive up their leverage much, but does sure put the pressure on paramounts guidance as well. So all eyes on that deal, on those earnings, and don't forget to check out our podcast of course, find it on the terminal as well as online on Apples, Spotify, and iHeart to just reimagine all the conversations I've been having at Davos ed.
There's a lot going on this week.
There is an earning start in Earnest Netflix today, and then we brace for what's to come over the next couple of weeks.
This is Bloomberg Tech