From Marhart where Innovation, money and power Collie in Silicon Vallet, Nbon. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Heide and Bloomberg's Wilter Quarters in New York at Amed Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up full earnings coverage ahead of course, as Palatine plunges after issuing pretty disappointing forecast, will.
Break down the numbers.
Plus we push ahead to earnings out after the bell from chip giant Nvidia. Does the AI rally have staying power?
And speaking of semiconductors, look, we're looking at the communications giant Huawei, maybe building a secret network of chip fabrications center across China. We'll bring you the y from our Bloomberg's c said, but first there, let's check in on these markets. Because well, even though we've got anxiety, it feels as though a short squeeze in the bond market is helping lift the tech stocks high. We're looking at more than one point six, we said, let's call it
on the Nasdaq. On the upside, there is still much hope on the earning still to come, even though some of those earnings are about to dive into We're looking pretty ugly. I'm looking at a two year yeeld being squeezed higher. Therefore the boring costs come down nine basis points almost ten. We're seeing it across the entire curve, and you're seeing it across the entire world. You're seeing
really bonbuying across in the UK and Europe. Here in the US as well, many feeling that basically we've been some technical elements at play here. We've been soling off so hard, so fast, and some ugly data when you're looking at the PMI data certainly slowing in Europe. Seeing weakness here in the US means maybe that bad news is good news at least on the day we're seeing the Golden Dragon China Index. Of course, this is a Naska Golden Dragon.
Just shining like that.
Actually, there has been buying in the Chinese names as well, even after we've seen such a selloff on the CSI three hundred, for example, at the training at the lowest. Since November, we've been on a look at what's happening in terms of the world a bitcoin look. We're mid this macro picture of bad news being good news. The dollar is selling off as many feel that perhaps the
Fed can't tighten into that sort of moon music. Dollar goes lower, Bitcoin goes up five percentage point end, but go into the micro The earnings.
Yeah, the big story and video expectations incredibly high. What we're forecasting is top line growth sixty five percent to eleven billion dollars in the fiscal second quarter. Institution investors want even more. They're looking for twelve billion dollars of sales data center the majority of that. Does the AI story have staying power? Is there still demand for the H one hundreds? What about the GH two hundred, the
next gen GPU with greater memory capacity? How does that drive the story for in video for the rest of the year. Options market pricing a ten percent swing. This is almost four percent of the s and P five hundred. It is more than thirty percent of the nazdette one hundreds rally year to date. We care and we cannot wait for these earnings after the bell. The others end of the scale, opposite story is Peloton. The sock at
a record low after it's fiscal fourth quarter earnings. It's guiding for the fiscal first quarter revenue of six hundred million, way below expectations even at the high end of its given range. The story in the quarter gone well, the seat Post issue a recall seven hundred and fifty thousand. People say, yeah, I do want a new seat post that was way above what Peloton expected. Subscribers hit past
subscribers lost in the quarter twenty nine thousand. The story of Peloton going from a hardware maker to a subscription and software based provider is unraveling a little bit. Let's get more on these Peloton earnings. I'm ringing in Schwetter Cojuria everquaisi Alyss. Schweeder has an inline rating on the stock and a ten dollars price target Sweda. What worried you most about what you heard from Peloton?
Well, thanks for having me ed. It's always great to be on. There are a few things. One is a Peloton.
It's clear.
It is clear that they are having some potentially structural issues in terms of being their.
Ability to sell more hardware.
The fundamental question for Peloton remains whether there are already enough number of households and.
Owners for fitness equipment already.
And the reason why I say that is because yes, it was a seasonally soft quarter, but they also changed pricing.
On their hardware.
They've also been marketing against it and Peloton is a very well known brand, and yet they came in below expectations. Understood that the seat recall did not help their brand, Imagine did not help in terms of the pausing of the subscription, So that fundamental question is in play in terms of the sustainability of top line growth. The second
thing is profitability, even on Ibida. The Ibida for the coorting quarter came in low expectations and their guidance also is below where the street was for first fiscal quarter. That said, they guide it to positive free cashule in the back half of the next criscal year, and partly it is because they are going to be leaning into the holiday quarter. What this tells us is it is very difficult to drive top line growth.
As well as show meaningful.
Expansion in the bottom line, and for this company, this balance is going to be the biggest challenge. How are they going to show sustainable positive free cash flow and at the same time drive top line growth And we're seeing that they're having challenges already.
So what's the answer?
I mean, pm A comital market saying I like the ton of phrase. They should bear hug their loyalists. Basically, be smaller, be healthier, be more niche should we remind ourselves that this isn't a mass market player.
I would agree with that.
I mean, we had a tactical underperform into the print for that reason, because we thought that profitability for the quarter is going to be in question and that that came true. And I think that at this point that I would somewhat agree with that. Now the question is can Peloton be a standalone company for the foreseeable future? Is this something that can last as a standalone company?
And I would argue that it may not. I mean, the pot as soon as they get to positive free cash on a sustainable basis with some sort of modestly higher top line growth, people the company may be looking for acquisition targets.
Schweter, your ten dollar price target, your inline rating on the stock is in review. After the numbers, do you assess this company as a technology company or does it just make fitness equipment?
With vary As the CEO, I would have to say, they're they're pivoting to a technology company.
And the reason why you say.
That is because they are managing the company. The leadership team is managing the company as a technology company with a great focus on the subscription piece.
It is clear that that's what the intrinsic value of the company is.
The retention of the subscribers is high, intrinsically high still even though the term was sequentially higher in the quarter.
But that's where that's where the value of the company is.
And the companies is actually focusing on the subscription piece.
And some of the examples are.
That they are allowing the three tiers of the subscription there they have several hundreds of thousands of monthly active users for the free subscription tier. They are also expanding those tiers into different price points. They're focusing more and their ability to enter these households at a lower price point. I think that that's their focus. The question is whether it's going to work or not.
That's the question. Shwerda Kasharia, we want to thank you shout up because understand you're on vacation and you've come on to discuss all of this, diggest the numbers and.
Give it to our audience.
We really appreciate it.
Great to stick with you. I mean, let's get on though, because we've got other earnings that are all important for the direction of the entire market at this stage. And VideA the chip company of course front and center when it comes to this AI frenzy and it's our ending tonight. We've been talking about it all week me Meg Intelligence senior semiconductor analyst Kanjunzman who's here with us, and so much baked in people raising their price targets into these numbers.
Do you think we're going to see the sort of sixty five percent increase in revenue the market's anticipating.
I do think there's a high confidence we see that number, and the primary driver of that is going to be their data center segment and driven by the A one hundreds and h one hundred hardware systems. Remember, data center is estimated to almost double on a year over a year basis and add about not of fifteen billion dollars to a company that did twenty seven billion last year. There could be some addition from the gaming, but it's primarily going to come from the data center segment.
You know you're coming at this from the Bloomberg Intelligence analysis perspective, right. The story is, does the AI momentum have staying power. So what do you need to hear from Nvidia to believe that, you know, the hyperscalers and the LLLM developers and everyone else continues to buy into AI for the rest of the year and beyond.
I mean, look, since the last running call, we have seen a lot of demand strength signals that the demand is there and rising. The two key things we want to hear is can they ship to the demand and are they able to get successfully their additional supply here? And also a validation on visibility and backlog orders going into the next year.
You know, I think for me, Caroline, the big question as well is technology leadership. You know we've covered on the show. AMD has its own offering in the GPOs GPUCPU hybrid space. Intel wants a piece of the pie. I wonder how they maintain their leadership.
It does come down to market dynamics here Conngenta and really it's felt like in videos the only game in town. Just look at it's trillion dollar market valuation when it comes on bets and AI, is it or are other players playing catch up here?
When look at the most fastest growing market right now in semiconductors, so definitely other players are trying to get a piece of it and are playing catch up. We don't expect Nvidia to lose its leadership anytime soon, but I think there's definitely room for other players to grab a piece of pie, which is again a huge pie, and a small percentage could add in the order of billions of dollars to their revenues.
When the bar is high, and when the stakes are high, there's always room for disappointment. How worried are you about the supply issue at TSMC being able to hand over enough chips.
I think, look, the supply is definitely going to be, like I said, a key factor going into today's call, in the near term. I'm not as worried because the company seems confident that they've garnered enough supply to meet at least the guided numbers, which are driven by them. I would definitely like to see if they can meet the long term, especially the twenty twenty four numbers, and gather supply for that.
You remind us of something very important that the guided numbers did come from the company, and that's why that note from City about institutional investors seeing even greater upline growth is worth bearing in mind. Conjent Siavani the Bloomberg Intelligence thank you time for talking tech first Up. India is now the first country to land a spacecraft near the Moon's south pole. The Chandrayan three launched last month and is carrying a rover now tasks of analyzing the
chemical makeup of the Moon's surface. Russia recently tried to land in the same area but crashed into the Moon following an engine malfunction. And foreign investors are selling off China's blue chip stocks, extending the streak of outflows over the course of thirteen days, the longest on record. Data track by Bloomberg found that investors have offloaded the equivalent of ten point seven billion dollars between August seventh and eighteen.
Some of the stocks most sold include solar company lang Gee Ev, maker byd and medical supply maker Mindre And. Speaking of which, telecommunications giant Huawei may be building a secret network of chip fabrication centers across China. That's according to the Semiconductor Industry Association, the leading global trade group
for chips. Huawei has been blacklisted by the US Department of Commerce amid tensions with China and a shadow chips manufacturing network will allow the company to skirt those US sanctions.
Caroline.
We're going to be digging into that story so much a little bit later in the show, but for here and now, let's just talk about a meeting that's going on. It's the SEC perhaps imposing new requirements on hedge funds, on private equity firms to disclose fees, which is aimed at impacting, of course, investors helping them. We'll see what the market makes of it, but we mention Ali basych
Is here. And ultimately, why are venture capital companies that we talk about a lot from this show, like Andresen Horowitz worried about these new rules?
Andresen Horowitz and remember, you have to think about these other funds like Tiger Global and d One that had been traditional headfunds moving more into the private equity structure, venture capital structures.
What they're initially concerned.
About is straightforward, very much new rules for a seventeen trillion dollar industry that had not based this much disclosure or scrutiny before. But the industry has ballooned quite meaningfully. I will also say, even though they're concerned about these new rules, one of which involves sidecar vehicles, and these are preferential treatment which often apply to large investors that tend to co invest and do all sorts of other deals with them. The SEC is trying to level the
playing field in terms of fee structures. Now, importantly, there have already been large wins for the investment industry when it comes to the rules as they have been put out today. When you look at the open meeting, they are still very much discussing these rules.
But the Commission is.
Made out of five members, in which three of them are democratic expected to vote in favor of these rules. Where the industry has already won is this idea of a grandfathering provision, so existing agreements with investors.
Will continue to live on.
So this will be for.
New investors and new agreements that are being made. There's also an idea here of indemnification. There is a worry that the standard of negligence would also be made more strict, which would, in theory, according to industry participants, restrict certain forms of risk taking because it would be easier to sue your investment advisor. There's another thing I want to pull up here, let's pull up a screen here from pangaeas Terry Haynes, who's already weigh in with a lot
of doubt. Remember, the MFA has already said it could potentially sue within two weeks. But then Terry Haynes also believes that the SEC gets stopped in its tracks and will ultimately get shut down in its venture here because the courts may put this plan on hold and the court lower courts won't be convinced that the SEC would be likely to prevail on appeal.
So there's a lot of.
Doubt on how much these rules see.
The light of day.
But certainly it is.
A moment of tension between these private funds and their main regulators.
Who lies on how much transparency ultimately investors get Shanani Us, we thank you so much for the breakdown. Meanwhile, coming up, we're going to be talking to the CEO of Financial Platform Ramp. This is the company securing some three hundred million dollars an additional funding and time is going to do with us from New York, from San Francisco.
This is booting bag technology.
Time now for work shifting is where we look at the changing landscape of the labor market amid some advances in technology, and today we're focused on how corporate legal departments, well, they're tentatively embracing artificial intelligence by harnessing AI to do the grunt work on tasks like reviewing simple contracts in house counsel that can reduce the time and the money of course needed.
To perform those tasks to a fraction of what would be needed by humans.
But since generator of AI is new, the industry is navigating critical questions around the security and the quality of the data.
So slowly, slowly we go.
Meanwhile, let's look at another way in which work has shifted and maybe got a little bit cheaper for you, because financial services platform RAMPS just raised three hundred million dollars for a total valuation of five point eight billion. We spoke with one of the investors, Keith Roboy of Founder's Fund, who had some thoughts on well AI more broadly in the space stick listen, and.
Some of these technologies are disruptive, and they disrupt incumbents and their powers, and some actually enabling cumbents to get stronger. AI is most likely going to generate more power for large tech, large market tech companies not really be a substitute, and if there is a substitute, it's probably going to be open AI, which we've investigated.
Unfortunately, he's also invested in RAMP, and RAMP CEO Eric Lyman is here on the back of his fundraise, and we're not going to start on AI, even though that's where Keith was going at that point. But we're going to go on this environment for fundraising. You've got it, you've got the money, but you have significantly cut your valuation.
Why do that?
Why was it just you.
Needed the money in the here and the now.
This was an opportunistic raise really for us. We were approached by our investors who were excited by the extraordinary growth we announced that we were. The fact we reach over three hundred million dollars in annualized revenue less than three and a half years from the launch for products where the fastest ever. And really it's just about investing customers. Most of our competitors and most of the industry are
spending less on their customer experience. Ramp's purpose is to help our customers' businesses be more profitably, more efficient with every dollar spent, and we view this as an extraordinary opportunity to increase not only our balance sheet, but also increase the pace at which we can invest in innovations for our customers. So we're super excited to do this.
Eric on the three hundred million in annualized revenue. There will be lots of founders watching this show who may be able to raise opportunistically as you put it, or face you know, unfavorable terms. How much emphasis did investors put on that metric and what other metrics did they want to see from you before they signed off on the round.
Of course, I mean, I think for most investors it's a simple proposition. Is this a large market? Are you building a product that can serve an extraordinary number of customers? Is to structurally great business? And last, is this a product that customers love? For us, what made the raise simple was first the growth of the business. Since the last raised, transaction volume on RAMS platform is increased by a factor of over six into the tens of billions
of dollars per year. We are the number one rated spend management platform in the United States, and we believe there's no better deal in business. We help the average business save three and a half percent per year on their expenses from corporate cards, expense management to accounting automation, and I think investors were really excited for the prospects of RAMP taking on what has been a pretty sleepy industry classically.
How do you take it on with this three hundred million? Is it more about marketing spend? Is it organic growth? Is it inorganic and purchasing.
Yeah, it's two sets of things. First, it's that customer experience. So at the time of the last raise, we had saved all time for customers one hundred million dollars. Now that figures over six hundred million dollars in over eight and a half million hours of work. And we've done that by launching into new verticals. When we last launched, we were only a corporate card with expense management. We're now the fastest growing accounts payable platform in the US
recently spend in a procurement, travel and the like. So some of this is making the experience better for the average customer, and some of this is reaching more businesses. The number of businesses that use RAMP today number over fifteen thousand, whether that's small businesses to leading publicly traded companies, and so a lot of this really is expanding and taking market share.
Eric, your pitch is that incentives are aligned, right, what's good for your customers is good for you and what's good for the advice versa. Does that sound too good to be true?
You know, we think aligned businesses and customer obsessed businesses win. I think for too long, this was an industry where if you were a bank you could move money and if you weren't you couldn't. And as the world went from no phones the flip phones, iPhones, your credit card never got better. And I think ramps growth really is a reflection of our end alignment really is with the
winning recipe. Helping customers spend less we think, in the long run will allow us to grow faster as we have, will allow our businesses to be more more profitable and long term enduring, which we also think makes for a better bottom line, not just for customers but for RAMP as well.
It's interesting Keith was sort of saying, look, this is a moment where companies have to get more realistic about what they're worth about valuations. You've clearly done that and taken it on in this opportunistic fashion. What are the other headaches for you? Though in this macro environment, is it talent?
Is it?
You know, just continuing to get more clarity on why this economy goes. How do you ensure that you can grow the business in a mindful manner right now?
Yeah, it's a really great question, and in part this is exactly why we're so excited. You know, I think that this is an uncertain rate environment. You know, this is one of the fastest rise in interest rates really in forty years. And to have additional capital to almost double the balance sheet and be able to invest deeply no matter the nature of the market, was super excited. I think to your point, so many other firms are
hiring less many or doing reductions in force. So many other firms are making the customer experience worse in order to shore at margins. And for us, as much as we've grown, we truly believe we have ninety nine percent plus of the market to go. Fifteen thousand businesses a lot of businesses, but there's millions of businesses that could be using ramp.
Eric one word answer, Do you need more sales reps or more engineers?
Well?
Both?
Both? All right? Right, conditioning one word, no, it was you met my condition three hundred million dollars round a down round, but it still sounds like you guys are in growth mode. Thank you very much. Okay, welcome back to bloombog Technology. Ed Ludlow here in San Francisco.
I'm Caroline Hein in New York, and let's check in on these markets because actually we're growing higher. We're managing to shake off some of the anxiety because today bad news is good news. Today we saw the economic data coming from the US and notably from Europe, those pmis
just looking. But does that mean that central banks have to pull back on their focus on inflation we're seeing and that's that one hundred and one point four percent the two year yields sinking dramatically, and in fact, we're seeing bon yields pulled down across the curve and across the globe. We're downline basis points. This is many A talking about a short squeeze. How far, how fast we've
already run up in terms of boring costs. Bitcoin up one point nine percent, almost two percent higher on the day, twenty six thousand, three hundred. As we see the dollar week and moving on and look at some individual names that were so important to this market. Today Peloton twenty four, I mean a quarter of its market capitalization wiped out because they are losing sales, they're losing subscriptions, and they're
not turning around this business quickly enough. Doesn't we need to become once again more niche.
We're down.
We're seeing Netflix so on the higher side, Netflix tiving a great day as we see some particular data coming from Antenna, saying it looks as though we're still seeing subscriptions added in the United States as we see that cracked down on passwords, and in Vidia it's up two point three percent. This has been of a rollercoaster over
the last few days. Ed as we look towards the all important earnings after this bill, bell can we draw I've hire in terms of revenue by some sixty five percent, but they're some of the public new traded companies.
We're talking about it though.
Now mega day in public markets. That's so many headlines in private markets and money being raised. Cell therapy contract manufacturer Solaris has raised two hundred and fifty five million from investors to build a high tech plant over in New Jersey, which is an important US hub for pharmaceutical industry production and research. Joining us here in San Francisco is Fabian girling House, co founder and CEO of Solaris.
So this business is South San Francisco based. But you've raised a ton of cash to build a very high tech, robotic, software driven plant in New Jersey.
Why New Jersey, that's correct.
New Jersey is a hub for biopharmaceutical manufacturing in the US, so it's natural next up before expanding to Europe and ultimately to Asia. So delighted to announce that today we raised a two hundred and fifty five million dollar blockbuster. Is seriously to accelerate access to life saving cell therapies.
That's where we're up to at Solaris.
By deploying our fully automated self a manufacturing platform, the cell Shuttle, in smart factories around the globe to meet total patient demands.
The idea is that if you are, for example, Bristol, one of the people or companies in your round developing a cell therapy, you can scale up, help them take it from a research driven project to a commercial project. How does it work?
That's exactly right. Let's take a look at the problem.
First, cell therapies are a breakthrough in modern medicine that have proven their potential to cure very aggressive diseases that were previously untreatable. We've actually seen children with very aggressive types of blood cancers get cured the cancer free ten years later. But right now, self aber manufacturing with manual conventional methods is expensive, failure prone, and impossible to scale. So that limits access and as a result, patients are
dying on the weightlist. Let me make this really real and imagine. Imagine that your child has cancer and there is an FDA approved cell therapy on the market that could most likely would cure your child. Yet your kids still dies because the patients are unable to access these cell therapies because of the manufacturing bottleneck.
That's the problem that we're solving.
It's a lot, Caroline. That is a reality that no one wants to imagine that if Fabian makes a good point FDA approval, there's regulatory risk in this.
Yeah, emotive Fabian is what you're sparking there, But to reality, regulatory approval is necessary.
What are the risks around that?
Because that could deeply hold back the way in which your business grows.
Absolutely so, the Celciattle platform that we've developed is actually not a medical device, so doesn't need to go through its own clinical trials before it can be used. What does need FDA approval are the clinical trials by the sponsors. That is to say, the buyer to companies. The farmer company is our clients, and our IDMO business actually supports them through this process with regulatory support.
Okay, so I'm sure that to grease the wheels and people wanting to come back and use your technology, they're going to have to see some regulatory approval. So still some lines of things that you can't control. What you can control, though, is how you market yourself, not just as you say in the US and New Jersey, but also worldwide. You just mentioned Europe and Asia. We're exactly looking there.
Yeah, so locations aren't finalized in Europe and Asia, but as we mentioned, we just announced that we're opening up the world's first IDMO smart factory in Bridgewater, New Jersey. That's a site with one hundred and eighteen thousand square feet that's about the size of two football fields, filled with robots, all manufacturing cures for cancer and fully automated fashion. We're actually deploying up to fifty cell shuttles in there.
That'll get us up to about a forty thousand cell therapy doses produced per year.
And just to put.
That into perspective for you, that's about ten times as many cell therapy doses produced out of a facility of the size compared with manual conventional cell dimnufacturing methods by conventional CDMOS, so tenx in productivity. How are we achieving this Well, We've designed, built tested a fully automated robotic cell manufacturing solution called the cell Shuttle. The cell Shuttle
is about the size of an Amazon truck. Inside you've got about two robots and then it combines the functionality of about one hundred different bench top instruments in one machine. Net effect, it brings down the cost of manufacturing and the labor. We're actually bringing down labor and facility size by about ninety percent.
So what that means, I.
Said, with a facility of the same size and the same workforce, we can actually produce ten times as many cell therapy doses per year compared with conventional manufacturing approaches.
So you've not selected a site for a third US plan or a European site, but you're looking.
We've got two sites in the US at this point. We've got the site in South San Francisco where based for pre clin caproscity development clinical manufacturing, and then the New Jersey side for clinical and commercial scale manufacturing. And as the next step, we're going to open up a site in Europe in twenty twenty four and then thereafter.
To go to Asia as well well.
When you do announce that site, you can come back on Bloomberg Technology and tell Caroline and I take you up on a baby and you mentioned a lot of big numbers. One you didn't mention was your company's valuation. Two hundred and fifty five million for a Series C is a lot of money a unicorn, at least at this stage.
It's a fair question.
Respectfully, we're still a private company, so we're not disclosing the precise valuation. What I can tell you is that this is a massive round with a massive step up in valuation.
So while everybody else in this market.
Seems to be raising either flat rounds or down rounds, we raised at a massive step up in valuation, so we're very happy with the result. On top of that, it's a blockbuster round. Two hundred and fifty five million dollars. That's more money than other companies have raised in their IPO.
So we're very proud of this result and I think it certainly reflects the excitement and the confidence in the investor community for what we've built already, the speed with what with which we've built the cell Shuttle platform, and the future strategy, the plans for what's to come, as well as the data that we've produced and published on our website.
Today.
To be fair, RAMP had raised three hundred millions, so slightly pipping you to the post, but it is still a phenomenal amount of money, Fabian, and clearly your optimism is there. Let's look at who invested in new co disruptive technology. He's the vcarm of Coke Industries. Of course, we've also got some individuals and most notably you've got
some sort of strategic investors. Can you talk to us a little bit about the likes of Bristol mask Wi like, are they customers future customers as well as being backers?
Absolutely so.
As you mentioned, our round was led by Coco Shoptive Technologies, with new investors participating, specifically DFJ growth in Bloomberg's family Office, Willett Advisors and Bristol Myers Squip, and then we had really strong participation from our insiders as well, notably Eclipse, ABC and Dasheng.
I'm very grateful for all of their support. On Bristol Mayo squib.
As you mentioned Global Pharmaceutical Company, a self therapy leader, We're very proud to have them as an investor in this round, and we're certainly also working with them on the corporate partnership. So more news to come in the near future.
Here just to point out in my called Bloomberg, the founder majority owner at Bloomberg LP is of course the parent company of Bloomberg Media and Bloomberg Television. Final question from me, and I want to go back to what Caroline was asking you. If your research stage customers don't get those FDA approvals, you can't ramp up the commercial stage of output. You know, how how do you make sure that that process does happen.
That's it's a really good point. So in most cases there's a clinical trial required. There's one exception when when a drug is already FDA approved on the market, it already has FDA approval.
So then if you if.
We stick exactly to the process that does farming company is running internally today and we just switch out the underlying manufacturing platform to the cell shuttle. In principle that does not necessitate a new clinical trial, but we can move into manufacturing directly.
So there are there are shortcuts.
I mean, great to have some time with you. Thanks for bringing the enthusiasm the drive. Fabian gelling House course, co founder and CEO Ofcillaris. There wean while coming up look in an effort to skirt us restriction, Huawei maybe secretly building a network of semiconductive production. We'll have more on the warning against the blacklisted company and how the Biden administration may take action.
Well, let's go.
More global as well and focus on India for a moment. Snap As we head Spray, we're just seeing it not barely moving, but the parent company of Snapchat is appointing a former Google executive to lead its India operations, and of course it's striving to become a more major social media force there and a key growth market. The company also announced a new localized organizational structure for the region and the teams and those are going to be charge
of content. They're going to be in charge of the creator ecosystems, and they're all going to be reporting to the new exec who's Pulvit Trevedi from New York as Ruber Technology.
We want to return to a story that we mentioned earlier about Huawei. A trade group is warning that the telecommunications company might be secretly building a network for chips production in an effort to skirt US curbs and more. Let's bring in the reporter who broke that story, Blue Besi, inking with me on set in San Francisco. This is not straightforward explained the basics of what you found last year.
As we know, sorry not last year.
Huawei has essentially been blacklisted by the US government. It's very difficult for US based companies to supply them with technology, and.
Most important among that is.
Basically cutting Huawei off from its supply of chips. And what this report says, and the backs up some reporting that we've done earlier, is that really Huawei is trying to go to do a DIY effort to build a local network that can replace that overseas supply of these crucial components which will keep it in business, keep it able to make these telecommunications systems its primary business.
Okay, So basically it uses other companies other names to try and get equipment that otherwise it wouldn't be able to get hold of. Ian who's been shining a light on all of this. How have you managed to realize this is occurring?
Yeah, I mean, we originally broke the news that one of these Chinese companies was in fact connected to Uahwei. That was a fact, took effectively a shell company using government money buying US and other equipment to continue Huawei's ability to get these components, and the US Department of
Commerce went on to blacklist that company. And now what we've found is more industry information and got a reaction out of the US government that's said it wasn't just that particular company, it was other companies as well that are indeed.
Already on the blacklist.
They've continued or they've stockpiled US equipment other foreign equipment to stay in production. And they are, in fact, even though the name doesn't say so, supplying Huawei with some of the components, or attempting to supply Huawei with some of the components that it needs.
KYC.
You know your customer, boy, it must be hard for a lot of these companies right now.
Yeah, I mean there's where does the burden of proof lie? Where does the investigation lie? And it's a complicated process. Tracing individual chip shipments and things like that is next to impossible. Where is a tighter area of focus is that some of these chip making pieces of equipment are worth tens of millions of dollars, even hundreds of million dollars, So obviously there aren't as.
Many of those.
They're an easier thing to track where they're going, who's using them, and what they're using them for. Nonetheless, because regulations are evolving and are being effectively tightened, this is a kind of a moving process.
I just want to point out that Huawei p XW for Gen, Ginhoa, the other companies identified by the SIA and reported by Bloomberg did not respond to requests for comment. You notice that you noted that in your prior reporting. The BIS then acted based on that prior reporting. What have they said in response to this latest article.
I when we put that in our story and they said, look, we're not surprised that Chinese government money is going into efforts to try to keep for this enterprise underway.
If we perceived this to be a threat to national security.
We will take the action required to firophrase what they said, and obviously that implies that we might say more restrictions Ian.
It's an amazing piece of reporting. Thank you very much. With your colleague w Wu from in Taiwan, Bloomberg's inking pacts of breaking it down. Meanwhile, we are some more breaking news for you. We work now Courses understand a lot of stress on the business. It's running up advisors again for help on a restructuring struggling with a really
heavy debt load. Of course some poor financial performances that have come to light of late, and of course earlier this month they told investors there's substantial doubt about its ability to stay in business. It wants to avoid Chapter eleven bankruptcy filing AIRD, it wants to restructure its debts outside of court. So understanding that they've hired real estate advisor Hilco Global once again, it's tapping the consultant Alvarez
and Marcel, and they've re engaged law firm Kirkland and Ellis. Basically, they need to kind of reduce and get out of some of some very expensive leases in their more expensive markets. The company is saying to us at the moment, they're investing their product offerings and taking it necessary steps to reduce rent and tendancy costs. We're off by sixteen percent, but it's a penny stock air yep company.
We continue to track and its future.
Now for today's going viral, we're watching what's trending online, and today it is the release of the latest Star Wars series on Disney Plus. I guess the first and the second episode of been dropped for ahsoka in debuted on the streaming platform last night. Ed I know you're a bit of a Star Wars ma'am. Did you watch it? Did you like it?
I absolutely watched episode one. I for went episode two. I saved it for later in the week. But it's just incredible to see on everything from x to Instagram to Google trends people talking about ah Soca. You know, it's a really highly anticipated next spin off from the Star Wars universe.
And kind of some emotion around it, right one of the lead characters. No spoilers about any of what's happening inside the episodes, but on externally, they actually lost a key character died suddenly in Italy over the or an Ithaca.
I believe it was.
Yes, so never any spoilers in bluembog technology. But Ray Stevenson, who played one of the villains or plays one of the villains in the Ahsoca series, did pass away in May of this year after production had rapped, and there was a tribute to him, which loads of people have talked about on social media. And when I posted X that I was going to be watching it, actually quite a few people replied and said, you know, it's a nice moment for Ray Stevenson, who has a lot of fans out there.
Yes, certainly does. Meanwhile, I mean we're going to dive into what's happening more broadly in Hollywood right now.
Yeah, all of this because the focus of Hollywood right now is Studios released the details of their contract proposal to the film's industry screenwriters. It's the latest and their bid to end a month long strike that stalled production and delayed new releases across the entertainment industry. That is why we are so focused right now on the content slate. We're going to bring in Bloomberg's Lucas Shaw, who leads our screen time coverage Lucas, you've tracked this day by day.
What is the latest on these negotiations, and the latest is not good.
I would say, you know, there have been a resumption in conversations. Between the resumption conversations between the Hollywood studios and screenwriters and the you know, they had gone quiet during that period that was seen.
As as a positive.
The fact that the studios chose to voice their proposal and then kind of bring on counterfire from the w GA is a sign that they're really struggling to find common ground on a couple of big issues.
Yeah, what was it the writers gilber America was really faring back.
I think there was being told, there being.
Lectured, and ultimately it feels as though there's no meeting in the minds here ultimately about the profitability the take home money from a lot of these studios and what's ultimately getting into the hands of the writers here.
Yeah.
I mean it's tricky because the studios did come to the writers with a fairly substantial proposal.
You know, they changed their offer on a number of fronts.
But there are a couple of key sticking points, one of which is sort of this share in upside and another of which is this idea of having a minimum number of writers in a room. The studios are saying, why can't that be up to the showrunner, the person in charge of the show, But the writers want the studios to promise that, and honestly.
It reflects a little bit of a lack of trust.
Between some of the writer's members and right, I should say, among different members of the guild.
You know, we'd reported that Ted Sarandos, the Netflix co CEO, and Bob Iger, the Disney CEO, had come in to play a role, but it sounds like it's not helped very much. Bloombols luc Is sure, thank you for the latest on that.
Carro, I mean fascinating as that continues to unfold and the technology angle that is at play here as well with AI and what that means for the future of work within the industry. I'm sad to say that that does it for this edition of Bluebog Technology though.
Yeah, the big one after market in Vidia fiscal second quarter earnings twenty four hours from now, you and I will go big on it once again. But we have had a lot in the show so you can recap. Don't forget to check out the podcast wherever you get your podcasts on the Bloomberg platforms, but also on Apple, Spotify, and iHeart My goodness, what a week has been so far from San Francisco and over in New York. This is Bloomberg Technology.