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- [00:00]
Bloomberg Tech Host
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Bloomberg Tech Analyst/Reporter
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Bloomberg Tech Host
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Bloomberg Tech Analyst/Reporter
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Bloomberg Tech Host
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Bloomberg Tech Analyst/Reporter
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- [01:25]
Bloomberg Tech Host
This is Bloomberg Tech. Coming up, Matter agrees to a series of electricity deals to power data centers, making it the biggest buyer of nuclear power among the hyperscalers. Plus Minimax, one of China's largest generative AI startups, goes public in Hong Kong. What that means for China's AI ecosystem and Snowflake plans to buy Observe, an AI powered observability platform. We discussed the move with Snowflake's CEO. Let's get right to it and what's happening in the markets later in the program. We're going to go big on Intel Lip Bhutan Intel CEO has spent the last 24 hours in Washington, D.C. in the White House with the President and with Howard Lutnick, the Commerce Secretary. Glowing remarks from President Trump about Bhutan's leadership of intel, but also the progress that the US Government's made in taking a stake in the chip maker. More to come. Then there's the big one. Meta investing in a multi gigawatt deal with some big names in nuclear energy. Oklo up 14% on that deal, of course, backed by some Altman Fist Corp. Up 13%. Matter up 8. 10 of 1%. We said at the top of the program. This puts them among the biggest energy buyers among the hyperscalers. And we remind ourselves Metta is not technically a hyperscaler. Let's get to Bloomberg's Riley Griffin. Details here are really important. Size of the deal, how many gigawatts but also the structure, please.
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Bloomberg Tech Analyst/Reporter
Yeah, so three different agreements and they actually are different in form and function. So this is about supporting up to 6.6.6 gigawatts in nuclear energy. But it is both about ensuring that existing nuclear power plants continue to thrive and investing in future nuclear power matters. Head of Global Energy told me last night that they heard that there's real concern about the amount of energy that's out there. As you know, there's an insatiable demand for energy and this cements their low carbon play.
- [03:21]
Bloomberg Tech Host
I find this fascinating because while Matter is not a hyperscaler, a hyperscaler being a cloud computer company that that basically leases capacity, Matter is doing this on its own behalf. Right. It has been aggressive in securing the supply of energy it needs for its own data centers, which principally are used for training and inference of its own activity. And I what else has it done and where does this bring them to date?
- [03:46]
Bloomberg Tech Analyst/Reporter
Well, I want to note that you made a really important, important point there. Prometheus and Hyperion, these are two of the biggest AI plays. Prometheus actually is in Ohio and these agreements are in Ohio and Pennsylvania. So some of this energy presumably is going to go to the Prometheus data center cluster, which is one of their biggest plays. But we're also seeing better turn with Hyperion to natural gas. At least three natural gas plants are being fired up just for that single facility. So it's not like nuclear is the only lease strategy that Matter is employing here.
- [04:20]
Bloomberg Tech Host
We're going to get to the, to the sort of available energy sources around the world in a little bit. There is an interesting point. You reported this with Will Wade, who's just been really on top of the nuclear side of the story. There does seem to be some anxiety from the technology companies that the existing nuclear infrastructure that does exist in America, Limited as it may be, is also at risk of being shut down. Is this kind of future proofing a little bit?
- [04:45]
Bloomberg Tech Analyst/Reporter
Absolutely. That is what I'm hearing from Metta's head of Global Energy. They, they started back a December two years ago and they were looking into what nuclear needed to keep going and they heard we need investment now into plants that could potentially shutter. So this is a future proofing, as you say.
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Bloomberg Tech Host
Bloomberg's Riley Griffin leading our coverage in Matter with A must read. Thank you very much. Access to power has been top of mind in AI. We spoke about that with Nvidia CEO Jensen Huang earlier this week.
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Bloomberg Tech Analyst/Reporter
In order for a new industry to emerge, you need energy. And so I think it's safe to say that we wish we had more energy. United States, Europe wish it had more energy. I think the world all wish we had more energy. And so we have to invest in all sorts of different forms of energy.
- [05:30]
Bloomberg Tech Host
Let's bring in Paul Meeks for more. He's managing director and head of Technology research at Freedom Capital Markets. And when I was reading your research last night, Paul, a little bit relieved coming up this morning when I saw the Matter headline because you're very focused on the real terms footprint of data centers. That's what we're talking about here. You heard Riley's reporting on the specifics of what Matter has done to secure future capacity. How much of a bottleneck is that to your mind right now? For this sector?
- [06:01]
Bloomberg Tech Analyst/Reporter
It is absolutely critical. Of all the bottlenecks, it is the most most important. I like what Matter is doing here, but folks need to realize that if you ramp up nuclear capacity, we're not going to really see power generation until 2030 earliest, maybe even not until 2032. So what do we do for the next four to six years? So the immediate draw is probably Nat Gas. But when I look at all of these companies and we cover the AI hyperscalers and the NEO clouds and everybody adjacent to them, we are looking for their availability for power, their capacity to find power, because it's not a demand issue, it is a supply issue focused on this particular metric.
- [06:58]
Bloomberg Tech Host
You know, Paul, I played you just, just some of the interview that, that we conducted with Jensen Huang earlier this week. And when I was sitting in front of him, you don't really get any sense of anxiety from him. Right? Think about the mechanics of how this transaction works. Nvidia brings GPUs. Actually, that's probably not fair. Increasingly they bring more of the content of the server. But there is an acknowledgment that something needs to change, principally in America. He did go on to talk about the differences between Europe, Asia and the United States. States and where we're sourcing energy. Do you get a sense from your research that the companies you cover acknowledge the severity of that, that deficit right now?
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Bloomberg Tech Analyst/Reporter
So when they are public facing particularly somebody like Jensen Huang, who is essentially the spokesperson for the entire industry, they have to exude optimism. However, behind the scenes, particularly when I'm talking to companies about my financial models, which of course the revenues and then the follow on cash flow and earnings come from. Do you have the power? Yes, they are anxious and I think they're actually very anxious.
- [08:13]
Bloomberg Tech Host
There will be people watching Bloomberg Tech that work at matter or in the industry. There will be meta investors watching this program and some of these people may never have heard of an oklo. Have you had to change the remit and breadth of your coverage if you say I cover a data center to include future sources of electricity supply?
- [08:35]
Bloomberg Tech Analyst/Reporter
Yeah, it's really interesting that years ago, you know, nobody in my line of work covering the tech sector like I have for decades would be interested in any utility company. It's the antithesis of tech. They are boring, regulated, slow growth businesses. However, now they've come to the forest. And of course these are not just your regular utilities, you know, they're your new era utilities. But yes, if you are a good analyst, you have to cover the entire supply chain, the entire ecosystem. And because demand is so robust, we're focusing on supply. Absolutely critical. And it's not just the power. There are physical constraints here, like simply pouring the cement to build the next data center, which can be a bottleneck, even though it sounds, you know, so old school in a new school business. But yes, these are some factors that are very, very interesting that people didn't even conceive of a couple of years ago.
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Bloomberg Tech Host
Paul, is there an adequate federal level framework regulation to support the energy requirements of the industry in this country?
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Bloomberg Tech Analyst/Reporter
You know, there is not. And here is my problem. We are still suffering from a lack of solid regulation for the Internet because even Today in the U.S. the Internet is operating under 1996 legislation when Bill Clinton was president. And so I'm hoping that we're not too restrictive. Right. We need to embrace our entrepreneurial companies and give them room to roll. But we need to have some guardrails on everything. AI because what happened last time is we end up abdicating the legislation to the EU because we didn't have the will to do it ourselves. So we missed that opportunity in the Internet. Here is the next wave. We need to embrace it and at least come up with some guardrails that are going to guide all this because there's some important decisions on the federal level to be made.
- [10:44]
Bloomberg Tech Host
In your research, Paul, it's very interesting to see you approach datacenter from the perspective of, yes, you know, energy supply, but also real estate, the rates. Right. And what, what I really want to ask you is away from the GPUs where are the frailties in that industry? Is it literally the folks building the tin can around the outside side of the data center? The labor, the concrete?
- [11:09]
Bloomberg Tech Analyst/Reporter
Yeah, we've seen some hit in short term revenues because a couple of the number or a few of the players have subcontractors now. This is not them, this is their subcontractors that are delayed. What we call building a powered shell. So it's more than a quonset hut that you might find the army in. These powered shells are a little bit more sophisticated. But one company I cover had a $150 million revenue deferral from 25 to 26 because at one of their 41 data centers someone couldn't pour concrete because it was raining. And so yes, all these things come into play and it's interesting that they may not necessarily be technical bottlenecks but old school physical including construction bottlenecks in addition to the power.
- [12:02]
Bloomberg Tech Host
I just got back from Vegas. With all the attention on artificial intelligence in the digital world, we have an industry that's getting hit by a rainstorm. Paul makes markets unbelievable. It's great to have you on Bloomberg Tech. A lot more to come. And coming up, an exclusive interview with the co founder and CEO of Minimax after the company just went public in Hong Kong. And that's the debut trade. And this is Bloomberg Tech. Every day millions of customers engage with.
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Bloomberg Tech Analyst/Reporter
AI agents like me. We work round the clock and have the facts at our fingertips.
- [12:47]
Bloomberg Tech Host
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- [13:05]
Bloomberg Tech Analyst/Reporter
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- [14:50]
Bloomberg Tech Host
Minimax, one of China's largest generative AI startups, backed by Alibaba and Abu Dhabi Sovereign Wealth Fund, is now public Shares surged in Hong Kong after an IPO that raised $619 million, closing up 109% in its Friday debut trading. Bloomberg Stephen Engle spoke exclusively with co founder and CEO Ye Yen about growth and expansion plans. As Minimax faces hot air competition both locally and globally, we really focus on.
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Bloomberg Tech Analyst/Reporter
That capital efficiency, cost efficiency. So we had only spent around 500.
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Bloomberg Tech Host
Million USD in total, probably only 1.
- [15:31]
Bloomberg Tech Analyst/Reporter
Or 2% of the gen spending. So we did all the optimization, made creative, made innovations on the outlet. How do you compete though if you're going to go global? How do you compete with an open air or others that are throwing lots of capital at their business? Is it viable and what is the technology gap looking like in the next few years? Actually I don't think it's a competition. It's more about all the top talents across all the word. They bring the technology breakthrough to the society, to the end users. So you will see each models have pros and cons. So we focus more resources on building the models, building the best product experience to get more and more users from all the world to use it. We're hearing as well the Chinese government might approve Nvidia's H200 for China in in this quarter perhaps. Is that something you need to look at? Importing more advanced accelerators for your training and the like? I think in every industry with a really high growth when the new technology comes here, so you will see every startups, all the companies, this resources constraint probably achieve constraint.
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Bloomberg Tech Host
Computing constraint is only one of the challenges.
- [16:46]
Bloomberg Tech Analyst/Reporter
So in the past you will see our model performers and our product performers so our resources is stable, we can get access to all of them. So we focus more on our R and D and foundation model. So we just use whatever chips make sense for us at that specific stage. Is your goal to stay indigenously with your chips locally made chips or would you buy Nvidia chips as well? It doesn't matter what kinds of chips it is. It's more about which chips can give us best ROI which can help us to achieve our mission to make the.
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Bloomberg Tech Host
Best technology to accessible to all of the users across the world.
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Bloomberg Tech Analyst/Reporter
So when does the emphasis turn from efficiency to profitability and also getting that steady revenue growth that will then justify a higher stock price valuation. So we put lots of R and D resources and innovations on the efficiency part. You will see our API, we have the enterprise business. You will see the gross profit margin of our API is more than 65% which is probably already one of the highest globally. So we focus more on make the best technology and the best user experience that people will love to pay for the best performers models for their use cases. You've also come out of a price war, essentially a race to the bottom. Some have called because of you're trying to keep costs down and you want to survive as well. There was a battle of survival and you have been one of the survivors. But at the same time the startups are not the only ones. The big players, Alibaba, ByteDance, Tencent and others, how do you compete with them at a low cost basis? Actually it's not, I don't think that's a press word. It's more about the performers, the competition. So you to need need to make your model best and the people I mean and user or enterprise customers, they don't choose your model because of its cheap or expensive. It's more about its performance. So that's the key. As you said, I think it's not about the competition between all these big gents but it's more about some of them. They are like our cloud providers and some of their products, you see our models. So it's more about the collaboration all this company brings foundation models to all the world.
- [19:11]
Bloomberg Tech Host
Minimax Co founder and CEO yeah, and speaking exclusively with Bloomberg's Stephen Engle, public listings in Hong Kong are hot right now. Chinese industrial robot maker in advance is now also considering a second listing in Hong Kong according to sources. Let's get out to Bloomberg executive tech editor Peter Elstrom to discuss this. But also like this growing trend of more of China's sort of post CBT firms going public. The team that you lead out in Asia busy right now in events. This case what are the details in our reporting that we need to know about?
- [19:45]
Bloomberg Tech Analyst/Reporter
Yeah, there are a lot of these IPOs that we're seeing and we're seeing a much more forward move into the public markets for a bunch of these companies in events has already gone public in the mainland, in Shenzhen. Now it's looking at an IPO in Hong Kong, Kong too. That's partly a reflection of how hot demand is from investors for these kinds of companies. When you're talking about Minimax in particular, they went public, as you mentioned, their shares more than doubled in the debut. The founder of the company is very fascinating. These are, some people call them the Tigers, some people the Dragons, but these are startups that really have very, very different strategies for how they're approaching the market. Compared with some of the US competitors like an opinion in AI, they tend to be much lower cost models. They tend to be much more aggressive about implementing the technology with their customers, with corporate customers and giving them very low cost, very low, very efficient models that they can use and they can actually deploy more quickly than some of the US counterparts.
- [20:40]
Bloomberg Tech Host
Peter, in the world of technology or in financial markets, like a term like an AI Tiger or AI Dragon, you know, it's kind of commonplace. We bandied around. But for those watching Bloomberg Tech that are saying what, what are you talking about? How do we define the tiger? What are we talking about here?
- [20:55]
Bloomberg Tech Analyst/Reporter
Well, we're talking about a whole series of companies coming out of China. In Steven's interview with, with the Mini Max CEO, they talked about the competition there. We've of course heard a lot about Deep Seek and how good their model is, how technically good it is, but also how low cost it is. Behind Deep Seek you have a whole bunch of other companies like Mini Max, like Jeep who just went public on third Thursday. So you had the IPO GPU on Thursday, Mini Max on Friday. Investors showed a lot of demand for those shares. And what these companies have been able to show is that with a very low cost model they're out there in the market competing. It's not clear that they're going to be able to compete directly with Open Air Anthropic, but they have very innovative models. I mean, first of all, the US models are not going to be let into the China market, but these companies are also going out very aggressively and competing in some other parts of the world. World. We've written about how much traction deepsea is getting in Africa in particular because their companies are sensitive to costs, they're sensitive to how much power, how much Computer resources. They need to be able to deploy these models. So they are having some successes. We're going to see a lot of competitive clashes in the months ahead.
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Bloomberg Tech Host
Bloomberg's executive editor for Tech, Peter Elstrom. Great to catch up with you. Thank you so much. Coming up on the program, Elon Musk's Grog image generation tool faces backlash after reports that it's generated thousands of undressed women and children. Go more on that data next. This is Bloomberg Tech. Elon Musk's startup X AI is burning cash quickly. The company spent almost $8 billion in the first nine months of the year. That's according to internal docs that Bloomberg's viewed. Though revenue has nearly doubled quarter over quarter to $107 million, Xi's losses have been mounting on costs to build data centers, recruit talent, develop software and to build AI that is self sufficient. And according to Bloomberg's reporting, the plan is to use that AI to eventually power Tesla's humanoid robots in the Optimus program. Sticking with Xi, the company has limited access to Grox image generation tool for most users following widespread criticism that the the feature was producing thousands of explicit images of women and children. Bloomberg reporter Cecilia Danastasio broke the story, has been tracking the developments. Cecilia, we just summarized the issue right. I think let's start with the methodology, how we went about looking at the data, how we got the data and we'll go from that.
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Bloomberg Tech Analyst/Reporter
Thank you for having me. Bloomberg worked with a researcher who scraped thousands of images produced by Grok and published to the platform X between the period January 5 and January 6. The researcher analyzes images to determine what percent of them were sexualized and nudifying and found that every hour during that 24 hour period X was publishing about 6700 images identified as such. And just for comparison, websites that are dedicated to publishing deep faked images, AI generated images of women who are sexualized, nudified. Those top five websites out there published together 80 images per hour. So Grok is one of the biggest deepfake producers on the Internet today.
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Bloomberg Tech Host
Where are these images showing up, you know, to the uninitiated people may not know the sort of interconnects between X the AI company and X the social media platform, for example, but they are now kind of one entity as they combine last year.
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Bloomberg Tech Analyst/Reporter
Well, that connection is exactly why X has become one of the biggest deepfake websites on the Internet. Anybody can, well, not anybody now, now you have to pay to do this. But over the last couple of days anybody could just at Grok on the X platform and say put this woman in a bikini under an image that a woman had post on the Internet. And a lot of women, women primarily are the victims of this. Took to complaining to Grok directly and arguing with Grok in their comments. Grok would apologize for posting these images, but then continue posting them and not take down many of the images that the women felt were violating Cecilia.
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Bloomberg Tech Host
Did X or Xai respond to our reporting? Engage with us on it.
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Bloomberg Tech Analyst/Reporter
X has not responded to our numerous requests for comment over the last couple of days. Elon Musk himself in a reply to a post on X said anybody using Grok to make illegal content will suffer the same consequences as if they upload illegal content. And Musk there was referring to allegations we believe of child sexual abuse material that's been posted to X using the Croc app.
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Bloomberg Tech Host
Okay, Bloomberg's Celia D. Anastasio important reporting. Read the story on the bloomberg terminal.com thank you. Coming up on the program, we're going to speak with Snowflake CEO Sridhar Ramaswamy as the company enters into an agreement to buy AI powered platform. Observe. We'll get his observations on that piece of M and A. That's coming up next. You're halfway through the program and this is Bloomberg Tech.
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Bloomberg Tech Analyst/Reporter
Foreign.
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Bloomberg Tech Host
Welcome back to Bloomberg Tech. I've been using the power of my Bloomberg Terminal. It's been a long week with CBS in Las Vegas. The power of my brain is dwindling but it tells me that Apple is down for an eight straight session which matches the run of declines that Apple saw in May of 2020 25. Now using more of the power of the Bloomberg terminal. If Apple was full for a ninth day we think that would be the longest run of decline since the early 90s. And obviously we are only nine days into 2026 but so far year to date this is a stock that's down five and a half percent. You saw the letter from Tim Cook to shareholders talking up the company's progress of late and last year year. But right now that stock heading down and will continue to track it. We had some M and A in the last 24 hours but it's actually in the air and software space Snowflake has agreed to buy observe an observability platform. An AI powered observability platform. Observability. Something that's come up a lot recently, particularly in the context of agentic AI when I've been around the table, particularly on the engineering side. Why this piece of M and A, Why now let's talk to Snowflake CEO Sridhar Ramaswamy. Those, those are the reasonable questions, right? Shrida, I do want to get to defining observability and why it's important, but it's an interesting deal. Why'd you do it? Hey, great to see you. Snowflake's acquisition of Observe is a game changer for our customers. As, as you pointed out, observability is basically looking at applications, websites, agents to make sure that they are functioning properly. It's a diverse and messy problem. It's a big data problem. And because Observe is built right on top of Snowflake, they are able to use our very efficient storage as well as compute platform to help customers find problems 10 times faster, often at 3 to 4x less cost. Take a company like Topgolf. It's a, it's a customer of Observed. I go to topgolf all the time with my team. Not much of a golfer, so I'm playing an Angry Birds game or something like that. Topgolf used to struggle when these games went down because they collected everything in a central place but could not identify that a particular booth had problems. They're able to do that with Observe in a matter of a few seconds, send out a tech team to go fix that problem and have happy customers. That's the power of this acquisition. Increasingly, capabilities like observability are going to be a core part of a platform like Snowflake. And we have great customers, folks like Barclays, Capital One, Commonwealth bank of America and we're super excited to bring this to our 10,000 plus customers on Snowflake. Let's, let's get it out the way if we can. The reports are that it's about at $1 billion deal. What was the structure of the deal and the financials on it? Please, we can comment on the structure of the deal. It is, you know, some of it will come out, come out in the, some of it will come out in the filing. Does this signal that there might be some more pieces of M and A? Particularly on that layer that you sit on. Right. You know, as you know very well, you were there on Monday at the Nvidia event, Jensen talks about the five layer cap take and one of the layers you occupy. But as, as, as observability evidences, there might be pieces of competency missing. How are you going to use M and A to, to, to plug those gaps? We've been pretty open that we want to be an end to end data platform for our customers. From the moment Data is born when you interact with an application, for example, to bringing it in for analysis, analyzing it, and then acting on it. Increasingly with agents, we've been systematically going through this process of both acquiring customers and building up functionality from within. Things like observability or data clean rooms or adjacent functionality that sit on top of a data layer. You will continue to be super active about both spinning up new projects internally and acquiring companies. I think the environment is ripe for that. And honestly, our customers want that because they're spending entirely too much time just stitching things together and we make it seamless and easy to use for them. How competitive is that M and A environment right now? Because when I look at Observe and what it's offered you, you know, the analysts looked at that deal and said completely logical that Snowflake would do it, but one would imagine that there would be others in the market for a name like, like Observe as well. Well, there are many things that were going for this particular deal. As I said earlier, Observe is built on top of Snowflake, which means that we didn't have to deal with a long integration cycle. The products are super tight. We've been collaborating closely with the team as partners for a very long time. I've actually gone and visited the Observe team multiple times in their location in San Mateo. And we felt like this is a natural extension of who we were as a platform. And we think that Observe, by using both the technical capabilities and now also being part of Snowflake, can offer an incredibly cost competitive solution. Cost has been a big factor in the world of observability, especially with things like AI agents, which are complicated pieces of software that generate enormous, enormous amounts of essentially telemetry information. We think this is a good combination. That's worth some academic debate, you know, should. I'm not a computer scientist nor an engineer.
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Bloomberg Tech Analyst/Reporter
Right.
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Bloomberg Tech Host
So take that into account. But the thing that we argue about with a truly autonomous agent is that it's exactly that it is supposed to act with autonomy. And observability raises the question of if a human is required at some point in the process to check in, what's the point? You know? Well, it becomes a matter of how many people you need in order to accomplish a problem. So I live and breathe Agent. I mean, I really mean that. I use these products every single day. And the leverage that you get is the game changer used to be that a support ticket would come and a person had to go read the text of what that case was, copy and paste that text into Multiple tools, figure out what is going on and then perhaps send a slack message over to somebody in order to answer a problem. A lot of this, as you know, is low value work. Copying information from one screen or one app to another is just tedious. It's no fun. I think the power here with agent systems is going to be all that boring stuff is going to be automated so that when a problem comes in, you go reach out to the 10 tools that you need to collect information from. You analyze it and then you show that summary to that person who decides what action to take. But furthermore, if they have to go write some custom code to solve a new problem, they'll do it two or three times and turn that into a skill that can be used by everybody else. I think it leverages people enormously. I can tell you again from personal experience that I can get stuff done in a matter of a couple of hours. On top of Snowflake building things that would honestly have taken me two to three weeks just last year to get done. That's the game changer that's here shree. Snowflake rose 42% last year. What are the goals that you're holding you and the team to for 2026 and the things that you want to achieve this year? In AI as you know, it's important to focus on the things that you can control. What we're super excited for 2026 is making agent Ki come alive for all our customers. Snowflake Intelligence is our agent data product and it's been a game changer again for me to do things like do research on customers before I meet with them. This is the fastest product in terms of customer adoption and revenue in Snowflake's history. We want to make sure that we drive adoption of these products and in turn what this does is it enhances and makes the power of data more and more visible to future customers. I expect this support for the show.
- [34:50]
Bloomberg Tech Analyst/Reporter
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- [37:29]
Bloomberg Tech Host
Co. AI to be a strong pool that makes data modernization much, much more relevant for every customer and future customer of Snowflake. It is really that yin and yang that I'm super excited about. Far we started the week together in Las Vegas at the Nvidia Keynote. We end the week together talking about the roadmap and path forward for Snowflake. Snowflake CEO Sridhar Ramaswamy Great to have you back on Bloomberg Tech. Thank you. Now coming up, let's take a look at the state of media mergers as Warner Brothers sticks with its buyout by Netflix and is trying to shake off that Paramount takeover. Have the details next. This is Bloomberg Tech. Shares of Netflix have tumbled nearly 28% since October. But the streaming giant stock still appears to be too expensive to many investors. Here of Moore is Bloomberg stock reporter all things terminal authoring Squawk Felice Morantz this is a really important write up, right? There is so much hype and a lot of headlines around what's happening with Warner Brothers Discovery. And you do what you need to do. You go back to basics, look at the fundamentals, look at the stock to must read on the bloomberg terminal.com but just I guess give us the top line of the.
- [38:44]
Bloomberg Tech Analyst/Reporter
Reporting. The top line is that this stock has really plunged since investors started questioning whether this deal was a good idea or not. You have questions about cost, you have integration risk as Netflix doesn't have much experience swallowing large deals and you also have a big regulatory fight that's looming. So there's not a lot of extreme enthusiasm about the stock right now. In fact, it's down, you can see it's down about 2% today on an update for the S&P.
- [39:17]
Bloomberg Tech Host
500. You are the people you speak to in the piece. You know, one of the anecdotes is like Netflix is not screaming buy right now, right? But you also I guess look at multiples, current multiples and historic multiples and compare them. What would that tell.
- [39:31]
Bloomberg Tech Analyst/Reporter
Us? So there are various different kinds of multiples. But if you look at a basic price to earnings ratio, the stock is not expensive historically, but nor is it very cheap. It's trading a bit below its historic norm but not enough to really grab.
- [39:50]
Bloomberg Tech Host
People. Bloomberg's Felice Morantz is awesome and it's been great to have you back on Bloomberg Tech this Friday. Thank you very much. I want to get. You're welcome. Let's get deeper into that deal part the future of streaming, the Warner Brothers Discovery saga and then the two bids. Matthew Dolgan, Morningstar senior equity analyst covering communication services Police did a good job right going over the stock. But there's a piece of the deal that I asked team to find someone to dig in with us on, which is do we value the cable networks part of Warner Brothers Discovery at zero, which Paramount when it reaffirmed its $30 a share bid came out with your take on.
- [40:33]
Bloomberg Tech Analyst/Reporter
That? No, we don't think it should be valued at zero, however. Well, first of all there is a risk that it could be. We don't think that that's right. But this is going to be very heavily debt laden company and that leads to more risk and so it's possible that zero would be in the future? We don't think that's the most likely thing. But there is question of whether it's worth $2 a share or $3 a share or more. And that matters because that is what's making up the difference between what Netflix offered for the portion of Warner Brothers Discovery that it wants versus what Paramount offered for the entire company. And so there are a few different moves moving parts as you compare the deals which are not apples to apples. But it doesn't have to be zero if it's $1 like Paramount has has said previously. And this week with Versance trading, that adds another potential new data point. But it can be definitely less than what the 30 is.
- [41:28]
Bloomberg Tech Host
Combined. So I'm going to recap for the Bloomberg Tech audience. Here's where we stand. Netflix has offered $20, $27 a share for the streaming and the studios and would plan to spin out the legacy cable networks. And as we've said for five days in a row on Bloomberg Tech, Paramount, Skydance want the whole enchilada, all of it, but at $30 a share, saying that they assume a $0 value for that, that cable network and you're covering the space and you're covering these names and you're covering the deal. It's actually a very reasonable more question of what happens next because Warner Brothers board sent a letter rejecting the Paramount offer and explained why the next day Paramount's guidance reaffirmed that offer. We just continue in that.
- [42:15]
Bloomberg Tech Analyst/Reporter
Cycle. Well, we continue in that cycle for a little bit. Yes, January 21st is a critical date that we should circle on our calendars. That's when the tender offer for the Warner Brothers Discovery shares by Paramount is currently set to expire. So we'll see what happens at that point. It doesn't appear that right now Paramount is likely to to get a sufficient number of shares by that date, but they can extend it, extend the date and they can also. Well, at any time, but that's when we would expect potentially they would look at increasing their offer to beyond $30 a share. And so yes, we do kind of wait and see the next development. I don't really expect anything until close to the 21st as far as new information. But at this point we'll see where Paramount is on the shares that are being tendered and then the ball is kind of, it's kind of in its court as far as whether it wants to do something else in the interim before later this spring or summer when Warner Brothers Discovery shareholders are likely to vote on that Netflix deal that the Warner board has.
- [43:19]
Bloomberg Tech Host
Recommended. We spent a lot of time this week 20 talking about the Warner Brothers discovery rationale for rejecting Paramount Skydance. It included debt. It included a discussion either negative or positive about Larry Ellison being the backstop on the deal. And it talks about the restrictive covenants on Warner Brothers not being able to make major investments in this interim period. But the question actually I have is who would get the most out of those assets? Hbo, hbo, Max, the catalog and then the studios. Like which company would be better at getting them out into the real world, to your.
- [43:55]
Bloomberg Tech Analyst/Reporter
Mind? Well, we think Paramount is the company that I guess needs them more and probably would benefit from them more as far as getting them out into the world that, that, well, arguably would be more on Netflix's side with the, with the business they already have in place in the streaming service and subscribers they already have in place. But, but if you're looking from a business and an operating point of view, we think Netflix has far less to gain as it does that than Paramount would, which really needs the scale and has, I think a better combined type of offering. Whereas Netflix incrementally, sure it adds quite a bit to it, but as far as incrementally on how much more revenue they're bringing in, whether they're cannibalizing some of the profits that Warner takes in with some of the its licensing, the reasons why we think that from a business standpoint, Netflix doesn't benefit quite as much as Paramount would. That's of course maybe different question than what the consuming public and how they benefit from the content and the availability and the pricing for that that's out.
- [44:57]
Bloomberg Tech Host
There. You heard Felice's reporting on the stock. Why very quickly, we just have 30 seconds. Has that sentiment with Netflix soured since the deal first kind of got.
- [45:09]
Bloomberg Tech Analyst/Reporter
Announced? As far as the deal goes, I think there's been some fear that Netflix would even pay more. There's also some fear they've overpaid with what they've agreed to already, so that may not be worth it. I also think it's maybe just brought to light some things that we had been thinking about for some time, even apart from what's going on with Warner, which is the growth is set to slow. It now flicks and therefore the multiples that it had historically aren't necessarily justified today. And so if it is at lower multiples now, which it certainly is where compared to where it's been historically, that's probably justified being the growth outlook now versus in the.
- [45:44]
Bloomberg Tech Host
Past. We've got to leave it there. But that brings us nicely full circle to what Felice was talking about at the start of the block. Matthew Dolgan, a Morning Star thank you very much. Coming up, Intel CEO was at the White House to deliver a progress report on its activities. The US Government is its big shareholder that it's being accounting to be. More on that next is Bloomberg Tech. For Talking Tech. First up, Vodafone Idea is considering raising debt financing to accelerate growth. That's according to sources. This comes after Delhi decided to cap annual payouts for past spectrum fees, firing a lifeline to the country's third place carrier. That's out in India. Plus, compensation for Apple CEO Tim Cook held steady at a cool $74 million last year. Just 3 million of that comes from salary though the rest is in the form of stock awards. You may remember a few years ago Cook was criticized for pay packages close to $100 million apiece, prompting him to request Spe a compensation reduction. And TSMC provided an upbeat sales forecast. The company reported a roughly 20% rise in the December quarter revenues based on calculations off monthly figures. The company reports full quarterly earnings next week. All this coming after chip makers projected optimism for AI demand at CBS this week. Now sticking with chip shares of intel up today in a big way. After the company's CEO delivered delivered a progress report on its company's new line of processes at the White House, Libutan met with President Trump and Commerce Secretary Howard Lutnick. After the meeting, Trump praised Intel and said the government was proud to be a shareholder. For more let's get out to Bloomberg's in King who of course leads our coverage of chips. Actually where I wanted to start in is the president in his post talked about the result of the government's investment in intel yielding I think said tens of billions of dollars for the American people. It's important probably to do the math on what the actual return would be at this stage.
- [47:50]
Bloomberg Tech Analyst/Reporter
Please. Yeah, no, I mean I share as taxpayers. We own currently about $11 billion worth of intel stock and that's a nice return, roughly twice what we owned when we made the investment as a nation last year, but not in the tens of billions. For that to happen obviously Intel's share price would have to go up a lot more and or some exit extra kind of arrangements that exist would have to be.
- [48:20]
Bloomberg Tech Host
Good. All the same there has been some stock performance here since Lipp Bhutan kind of had this improvement in relationship with the president. What do we know about yesterday's meeting. Meeting and kind of where Intel's focus right now in what it's trying to tell the U.S.
- [48:37]
Bloomberg Tech Analyst/Reporter
Government. Yeah, I mean, you know, it's the fact that he's in the White House is important because that is basically drawing attention to the fact that this investment that we saw last year from the US government, from Nvidia, from SoftBank, has really stabilized Intel's kind of balance sheet. And so it's in a much stronger position than it was was. But where we are and where we really need to be is to have much better operations and much better performance from the company. And that is going to take new products. You and I were at CES this week and we saw intel come out and say, hey, here are our new chips. These are the ones we promised. These are the ones that they're going to deliver, obviously, three or four days into that launch. We don't know how well they're going to do yet, but at least in terms of the specs, way better than the position that intel has been.
- [49:25]
Bloomberg Tech Host
In. And again, a large portion of the government's ownership of intel is contingent on performance of those goals. Bloomberg's in. King, happy Friday to you and thank you very much. That does it for this edition of Bloomberg Tech. In what's been a monster week, frankly, just back from Las Vegas and ces and the headlines keep coming, particularly in the world of a great place to recap the show, the week, the interviews and the reporting is on the podcast. You know where to find it online. Apple, Spotify, iHeart, and all the Bloomberg platforms. Happy Friday. This is.
- [49:54]
Bloomberg Tech Analyst/Reporter
Bloomberg. These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures.