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The Federal Reserve held rates steady in a range of 5.25%-5.50% at the conclusion of its two-day policy meeting on Wednesday. The central bank has maintained this range since July after it hiked rates to their highest level in 22 years.
Fed Chair Jerome Powell will hold a press conference at 2:30 p.m. ET as investors will closely listen for any hints at when the central bank may begin cutting interest rates.
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>>> THIS IS “MORNING BRIEF,” THE ULTIMATE GUIDE TO HELP INVESTORS MAKE SMARTER DECISIONS. WE’LL BRING YOU TODAY’S TOP MARKET THEMES. >>> BIG TECH DRAGGING DOWN FUTURES. IS THIS THE START OF A STEEPER SEL SELL-OFF? >>> INVESTORS AWAITING COMMENTS FOR CHAIR JAY POWELL FOR THE LATEST READINGS.
AS IT STANDS RIGHT NOW, TRADERS ARE STILL SPLIT ON THE TIMING OF THAT CUT. RIGHT NOW STANDING AROUND 50PORT. HERE ARE THE THREE THINGS YOU NEED TO KNOW. JOSH LIPTON, INES FERRE AND JENNIFER SHONE BERG ARE HAVE MORE. >> THE NORTH SO MAGNIFICENT 7
TODAY FALLING, AND MICROSOFT SHARES FLAT IN PREMARKET TRADING, AND THE TECH GIANT STRUGGLED. INVESTORS HOPES FOR STRONGER RESULTS. APPLE, AMAZON AND META ALL SET TO REPORT AFTER THE BELL ON THURSDAY. >>> AND SHARES OF BOEING TICKING HIGHER THIS MORNING AFTER THE COMPANY BEAT THE STREET’S FOURTH
QUARTER EXPECTATION. IT’S SUSPENDING THE 2024 GUIDANCE AMID FALLOUT OVER THE INCIDENTS WITH ONE OF ITS ALASKA AIRLINES JETS EARLIER THIS MONTH. >>> ALL THE EYES ON THE FEDERAL RESERVE FOR ITS INTEREST RATES DECISION. I EXPECTED TO WIDELY HOLD IN 5.2505.5% FOR THE FOURTH MEETING
IN A ROW, BUT INVESTORS WILL BE LISTENING CLOSELY FOR ANY CLUES ON WHEN THE FED COULD BEGIN CUTTING. >> BIG TECH FEELING THE WEIGHT OF LOFTY EXPECTATIONS. ALPHABET CAME UP SHORT AND AMD’S FORECAST PUTTING PRESSURE ON SHARES. TO SUM IT UP, EXPECTATIONS WERE TOO HIGH HERE.
AS WE LOOK AT THE GOOGLE AD REVENUE, AND ADDITIONALLY ON THE RIGHT SIDE OF YOUR SCREEN, THESE ARE THE TWO BIG AREAS THAT INVESTORS SAW SOME OF THE EXPECTATIONS MISSED ON AT LEAST THE SHARE REACTION HAS TO DO WITH THE A.I. NUMBERS AND EXACTLY WHAT WE HEARD.
IT WASN’T A BAD QUARTER REALLY FOR ANY OF THE COMPANIES WHEN IT COMES TO A.I. INVESTMENTS. SOME SOFTNESS, THAT HAS THE STREET CONCERN. THE AZURE GROWTH WAS AN 30%, BUT IT MIGHT BE SOME OF THE WEAKNESS THAT I GUESS IS STILL VERY MUCH THERE IN THE AZURE BASE, THE
CORE BASE THERE. WE KNOW THE STRENGTH IS DRAGGING 6% OF AZURE’S GROWTH HERE IN THE QUARTER, SO OUTSIDE OF THAT, THAT IS CAUSING A BIT OF CONCERN HERE FOR INVESTORS. REMEMBER, THESE ARE STOCKS WITH MASSIVE RUN-UPS OVER THE LAST YEAR. IF WE DIDN’T SEE A MASSIVE BEAT
HERE ACROSS THE BOARD, EVEN THOUGH WE IT SIMPLY WAS NOT ENOUGH FOR THE STREET. >> ESSENTIALLY THEY KICKED OFF THE CALL FROM GOOGLE, TALKING ABOUT THE FOUR AREAS THEY WANTED TO FOCUS IN ON. ONE WAS SEARCH SUBSCRIPTION, AND THEN ANNUAL REVENUE FOR YOUTUBE
AS WELL HERE, HERE’S A BIT MORE COLOR PROVIDING SOME INSIGHTS. TAKE A LISTEN. >> A STEP UP IN CAP EX IN Q 4 REFLECTS OUR OUTLOOK FOR THE USE OF A.I. THE LONG-TERM GROWTH OPPORTUNITIES THAT THAT OFFERS. >> SO ALL OF THIS CONSIDERED HERE, THE LONG-TERM GROWTH
OPPORTUNITY MEANS UP-FRONT SPENDING. THAT’S HOW SIN DAR TALKED, ABOUT WHERE THE CORE USERS COULD EXPECT THIS TO SHOW UP IN THEIR EXPERIENCE, IF THEY’RE USING A GOOGLE TYPE OF FUTURE, OR WHERE WE’RE GOING TO SEE THAT HAVE A ROLE IN SOME OF THE WORKSPACE FEATURES.
THAT’S MORE OF THE CLOUD FOCUS THEY’RE THINKING ABOUT GOING FORWARD. >> WHEN YOU LOOK AT THESE NUMBERS, IT’S SAFE TO SAY THEY ADOPT SEE ENOUGH PROGRESS ON GENERATIVE A.I., ON WHAT IT’S DOING TO SUPPORT THE CORE BUSINESS AND WHAT IT LOOKS GOING FORWARD.
THEY’RE ALSO STILL LARGELY SEEN AS PLAYING CATCH-UP TO MICROSOFT. IT VIEWED AS A LEADER WHEN IT COMES TO A.I., GIVEN THE INVESTMENT THEY HAD EARLY ON, AND WHAT THEY HAVE DONE IN ORDER TO INTEGRATE A.I. INTO THEIR PRODUCTS. WE’RE SEEING THAT IN MICROSOFT RESULTS.
IT SHOWS THE PRESSURE ON SO MANY OTHER COMPANIES TO PROVE THEIR INVESTMENTS ARE — >> WE’VE SUMMONED MICROSOFT INTO THE CHAT. LET’S STAY THERE. AS WE’RE TALK IT, SHARES ARE FLAGS, BUT BARELY DOWN TO THE DOWN SIDE. IT’S SOFTER THAN ANTICIPATED GUIDANCE FOR REVENUE GROWTH
SEEMS TO BE GIVING INVESTORS PAUSE. BRENT, ALWAYS A PLEASURE TO GET YOUR INSIGHTS HERE. THE SHOW-ME STORY SHOWING UP STRONG HERE FOR BOTH COMPANIES THAT ARE TRACKING THIS MORNING, AS INVESTORS ARE CERTAINLY EXPECTING MORE HERE. >> WE’RE ONE YEAR INTO THIS NEW CYCLE.
MICROSOFT DISCLOSED THAT DIVISION DOUBLED SEQUENTIALLY IN YEARS AGO ONE. AZURE, IF WE’RE TALKING ABOUT THAT, IT TOOK A DECADE FOR AZURE TO GET TO 10 BILLION. AT MICROSOFT A.I., UP OVER 4 BILLION IN THE FIRST WE’RE. I CAN’T WAIT TO SEE WHAT YEARS
2, 3 AND 4 BRING FOR MICROSOFT A.I., BUT IT’S ALSO IMPORTANT TO PUT IN PERSPECTIVE 10% MOVE AND 60% MOVE IN MICROSOFT OVER THE LAST YEAR, SO YES, EXPECTATIONS ARE HIGH. MAYBE PEOPLE ALWAYS WANT MORE, BECAUSE IT’S EXCITELING AND NEW, BUT I’LL REMIND YOU, TO PUT
THINGS IN PERSPECTIVE — IT’S A BIG NUMBER IN ESSENTIALLY THE FIRST YEAR OF ROLL-OUT. PUT THAT FURTHER INTO CONTEXT FOR US. THERE’S A LOT OF QUESTIONS ABOUT WHAT YEAR 2 WILL LOOK LIKE. ALSO TAGGING ON TO THAT, THERE’S AT LEAST BEEN SOME CHATTER THAT
MAYBE SOME OF THE STRENGTH DRIVEN BY A.I., MAYBE THAT IS CLOUDING OR MASKING THE AZURE BASE. IS THERE ANY TRUTH ON THAT? >> ABSOLUTELY. I THINK WE’RE IN A CLASSIC CASE HERE WHERE WE SAW EARNINGS REPORTS OUT OF THE VAST MAJORITY OF THE CLOUD 100 CHALLENGE
SUGGEST DURING Q3 THINGS STARTED TO STABSTABILIZE. THEY’RE SHOWING MAYBE MORE SOFTNESS ON THE OPTIMIZATION SIDE MORE THAN OFFSET BY A.I. MICROSOFT IS UNIQUE IN THAT THEY HAVE UNECK TAILWINDS. A CLASSIC CASE WHERE INVESTORS CAN THINK THEY’LL GET BETTER. FUNDAMENTALS ARE NOT NECESSARILY — SO I THINK IT’S
EARLY TO CALL FUNDAMENTAL CALLS. THEY WILL IMPROVE AT SOME POINT, JUST NO EVIDENCE THAT IT’S HAPPENING IN AND OUT. MICROSOFT HAD THE BENEFIT OF A.I., HELPING TO INSULATE THEIR BUSINESS, FOR SURE. >> WE’VE BEEN WATCHING A WAVE OF TECH LAYOFFS, AND REALLOCATION
OF HUMAN RESOURCES AT A LOT OF THESE COMPANIES. HOW DOES THIS POSITION THE COMPANIES FOR THE NEST ITERATION OF GROWTH, AND ULTIMATELY, WHAT IS THE IMPACT ON THE BUSINESS AS WELL? >> THE REAL EVEN FOR MICROSOFT IS INVESTMENTS IN A.I., AND YOU HAVE TO OFFSET THOSE DOLLARS
WITH EFFICIENCY. IT’S NOT JUST MOVIE THAT’S GOING TO BE INVESTING. EVERY COMPANY WILL BE INVESTING IN A.I. IT’S NOT JUST ABOUT ACCELERATING GROWTH. YOU KNEE TO ACCELERATE GROWTH AND IMPROVE MARMENS. AS WELL AS EMPLOYEES. YOU HAVE TO HAVE BOTH, AND NOT DRIVE PROFITABILITY AS WELL.
>> HOW SHOULD WE BE LOOKING AT THIS AS A WAY TO LOOK AT OTHER SOFTWARE PLAYERS. I KNOW YOU DON’T COVER GOOGLE, BUT THE FACT THAT INVEST OFFERS FROM PRICED IN, WHAT DO YOU THINK THE RESULTS WE’VE GOTTEN IN THE LAST 12 TO 24 HOURS TELL
WAS WE COULD EXPECT FROM THE BIG PLAYERS IN A.I.? >> DIGESTION. I THINK IT’S A CLASSIC CASE WHERE WE SEE MARKET TOPS, MARKET BOTTOMS, WE’RE ENTERING A NEW CYCLE ACROSS THE VAST MAJORITY OF THESE CLOUD SOFTWARE NAMES. WE NEED TO HAVE FUNDAMENTALS CATCH UP. MATERIALLY ALMOST — AND
VALUATIONS HAVE RUN IT JUST HASN’T HAPPENED YET, AND IT’S PARTIALLY REFLECTED IN THESE STOCKS. I THINK WE’RE IN A PERIOD OF DIGESTION. >> THANKS SO MUCH FOR HOPPING ON WITH US THIS MORNING. >> THANK YOU. >>> ALL RIGHT. LET’S GET TO ANOTHER BIG NAME. STARBUCKS A DISAPPOINTING
QUARTER REPORT, BUT INVESTORS DON’T SEEM FAZED. FOR MORE ON THAT, WE WANT TO BRING IN REGINALD REGERI. RACHEL, LET’S TALK ABOUT THE QUARTER. THEY SEEMED TO BE — I’M CURIOUS HOW YOU’RE NAVIGATING THE CLEAR SLOWDOWN, AND HOW THAT’S NOW FACTORS INTO MAYBE THE PRICING
STRATEGY GOING FORWARD. >> SURE. THANKS FOR HAVING ME. IT WAS DRIVEN BY THE MOST LOYAL CUSTOMERS STAYING ENGAGED. >> WE’RE ENPURGING BABE FREQUENCY OF VISITS. WE HAVE A LOT OF POWER IN THE PROPRIETARY DIGITAL CAPABILITY. WE’RE ALSO RAMPING UP ON SOCIAL MEDIA AS IT RELATES TO AWARENESS
OF PRODUCT AND INNOVATION. WE HAVE INCORRECT PRODUCTION, WE SAW A RECORD TICKET, HIGHEST IN OVER 50 YEARS, SPECIFICALLY IN AROUND COFFEE AND TEA. SO WE HAVE AN ABILITY TO CONTINUE TO DRIVE THAT THROUGH OUR INNOVATION. IT’S IMPORTANT THAT OUR CUSTOMERS BROADLY NEED TO KNOW
ABOUT THAT, SO WE’RE LEVERAGES SOCIAL MEDIA. WE’VE BEEN ABLE TO UNLOCK EFFICIENCIES IN OUR VISIT THROUGH THE TRIPLE SHOT STRATEGY, WHICH GIVES US A LOT OF OPPORTUNITY TO DRIVE THE 15% TO 20% EARNINGS GROWTH. WE HAD GREAT SUCCESS IN Q1 WITH
THAT, AND THAT’S WHAT’S GIVING US THE CONFIDENCE TO MEET OUR FULL-YEAR EXPECTATIONS. >> DO YOU THINK A.I. TECHNOLOGY ALONE CAN HELP BOOST OF TRAFFIC BACK TO PREVIOUS LEVELS IN THE U.S. APPEARED ABROAD? >> WE HAVE ALWAYS USED A FORM OF A.I.
WE HAVE A DEEP ROOT TECHNOLOGY THAT BACKS OUR PERSONALIZATION. SO YES, I WOULD SAY THE ABILITY TO LEVERAGE TO GO INTO COHORTS WERE OUR REWARDS NEXT BASE HELPS US UNDERSTAND HOW TO TARGET OCCASIONS, WE’RE BEING MORE TARGETED IN TERMS OF FAVORITES, IN TERMS OF A LITTLE.
WE HAD A RECORD 59% OF TENDER, SO VERY ENGAGED CUSTOMER BASE, BUT THERE’S A LOT OF OPPORTUNITY THERE, BOTH IN TERMS OF TRAFFIC, BUT AS WELL AS IN TERMS OF TICKET. >> THE CHANGE IN TICKET, DECLINE WHEN YOU COMPARE THE QUARTERS, WHAT TYPE OF PRICING MA NINES
YOU HAVE TO TO IMPLEMENT IN ORDER TO MAKE SURE YOU STILL HAVE DEMAND GENERATION TO HAVE THAT FOOT TRAFFIC, BUT ALSO SPENDING AT A LEVEL THAT IS CONSISTENT WITH PREVIOUS QUARTERS? >> LET ME ADDRESS THE TICKET IN INTERNATIONAL FIRST, LARGELY
DRIVEN BY OUR BUSINESS THAT’S LARGELY DRIVEN BY — BECAUSE WE HAVE A MORE CAUTIOUS CONSUMER ENVIRONMENT, WE SAW LOWER SPENDING. WE ALSO PROMOTED, BUT WHAT WE WANT TO GOT WE BELIEVE IS IN THE PREMIUM MARKET, SO WE HAVE TO BE TARGETED. WE EXPECT TO BE VERY START
TARGETED IN HOW WE BRING OUR CUSTOMERS INTO THE PROGRAM. MORE BROADLY HOW WE THINK ABOUT THAT TICKET, THE OPPORTUNITY CONTINUES TO CREATE VALUE. OUR CUSTOMERS, IF WE CONTINUE TO INNOVATE AND PROVIDE THAT VALUE, THEY WILL COME IN FOR THAT EXPERIENCE. THAT’S WHAT WE SEE IN TERMS OF
HOW WE DRIVE THAT TICKET AND THAT OPPORTUNITY. IT’S INTENDED TO BE VERY TARGETED WHEN WE CAN CONNECT WITH OUR CUSTOMERS IN WAY THAT IS RESONATE, THAT GIVES THEM OPTIONALITY THAT CAN DRIVE TRAFFIC AS WELL AS TICKET. >> DO YOU PLAN TO PULL BACK ON
ANY OF THE PRICES YOU HAVE TAKEN? >> WE DO. WE LEARNED A LOT. WE WERE ABLE TO SUCCESSFULLY DRIVE AFTERNOON WITH THE OFFERS AS WELL AS INCREASE THE MEMBERSHIP IN OUR REWARDS PROGRAM. WE LEARNED A LOT THROUGH THAT. WE’LL BE GOING MUCH MORE TARGETED AND SURGE CAL.
THERE’S A GREATER EFFICIENCY. SO YOU WILL SEE A SHIFT IN TERMS OF HOW WE PROMOTE. >> THE LARGER THE CRITICISM IS THE FACT YOU’RE UP AGAINST COMPETITORS OFFERING PRODUCTS MUCH CHEAPER, SO HOW DO YOU BRIDGE THAT GAP? IT’S A DIFFERENT STRATEGY. >> YEAH. WE LOOK AT THAT.
THAT STRATEGY IS REALLY AROUND CREATING CONSUMPTION, SO GETTING TRIAL AND CONSUMPTION. WE DO BELIEVE THAT — WE CONTINUE TO FOCUS ON PREMIUM. THAT MEANS A PREMIUM EXPERIENCE, AND WE HAVE DISTINCT AND COMPETITIVE ADVANTAGES, INCLUDING A RELEVANT COFFEE-FORWARD — WE SAW SOME
GOOD SUCCESS WITH THAT IN THIS QUARTER, BUT WE EXPECT THAT OVER TIME, THE PER CAPITA — AND WILL BENEFIT FROM THAT, BUT THE MARKET WILL START TO MATURE. AND WE BELIEVE THEY’RE WELL POSITIONED TO LEAD. THAT’S HOW WE’RE GOING TO CONTINUE IN THE ENVIRONMENT WE’RE IN TODAY.
>> RACHEL MADE IT CLEAR ON THE CALL, THERE’S NO UNION-BUSTING PLAYBOOK FOR STARBUCKS. SHOULD YOU THINK — >> WE STILL BELIEVE A DIRECT RELATIONSHIP WITH OUR PARTNERS IS BEST, BUT WE RECOGNIZE THERE ARE PARTNERS WHO CHOOSE TO HAVE REPRESENTATION FROM THE UNION.
WE’RE COMMITTED TO HAVE A CONSTRUCTIVE DIALOGUE AND PATH FORWARD TO WORK WITH THE UNIONS AND WITH ALL PARTNERS. WHERE WE CONTINUE TO BE FOCUSED IS THROUGH OUR TRIPLE SHOT STRATEGY. IT’S ALL AROUND ELEVATING THE EXPERIENCE TO OUR PARTNERS. THAT’S DRIVEN LOWER TURNOVER AND MORE STABILITY.
WE WERE VERY SUCCESSFUL THIS QUARTER AS IT RELATES TO THE INVESTMENTS. BUT ALSO, THEY’RE A DIFFERENTIATOR FOR US. OUR PARTNERS WILL ALWAYS BE A DIFFERENTIATORS. >> RACHEL REGERI AND OUR OWN BROOKE DIPALM A JOINING US TODAY. p>> THANK YOU. >>> BOEING REPORTED FOURTH
QUARTER EARNINGS AID MID AN ONGOING INVESTIGATION. BOEING NARROWED ITS LOSSES LAST YEAR, BUT POSTPONES GIVEN AN OUTLOOK SAY NOW IS NOT THE TIME FOR THAT. GENTLEMEN, THANKS FOR TAKING THE TIME HERE ON THE MORNING. THERE’S A LOT TO UNPACK HERE. ROBERT, PERHAPS, WHEN WE THINK
ABOUT A COMPANY PULLING GUIDANCE AND NOT ACTUALLY GIVING GUIDANCE, WHAT DOES THAT SIGNAL ABOUT THE ACTUAL REALITY THIS COMPANY IS NAVIGATING THROUGH? >> IF YOU NO BACK TO NOVEMBER ’22 INVESTOR TODAY, AND LONGER-TERM GUIDE FOR ’25 AND ’26, THAT’S 10 MILLION IN FREE CASH FLOW.
SO THE FACT THERE’S NO GUIDE HERE ISN’T REALLY A SUSPENSION, SO FAR AS I CAN TELL, BUT IT’S JUST A DEFERRAL, IF YOU WILL, BECAUSE OF THE UNCERTAINTY. I WOULD ATTACH THAT TO NOT WANTING TO GET AHEAD OF THE FAA. THEY HAVE ASKED FOR A FREEZE ON
THE 737, ARGUABLY THE MOST IMPORTANT PRODUCT, AND I THINK THEY’RE SMART TRYING TO NOT GO AHEAD AHEAD OF THE REGULATOR. >> HOW WOULD YOU RATE THE HAMMING OF THIS BOEING SITUATION SO FAR? >> YOU HAVE TO REMEMBER HOW I MAKE MY LIVING. IT’S CRISIS MANAGEMENT.
SO THERE’S A DIFFERENCE BETWEEN DAMAGE CONTROL AND DAMAGE NEVER HAPPENED. I THINK HE’S DOING A PRETTY SOLID JOB. WE SHOULDN’T CONFUSE HOW HE’S DOING WITH THE FACT THERE’S A CRISIS. I THINK THEY HAVE TWO THINGS AHEAD OF THEM. ONE IS THE TACTICAL ISSUES, WHAT
DO YOU DO WHEN YOU PULL THE PLANES FROM THE AIR, WHICH THE GOVERNMENT AND COMPANY HAS DONE, YOU CAUGHT RISE THE SAFETY PROBLEM. ULTIMATELY IT’S AN ENGINEERING PROBLEM. SECOND, YOU HAVE A BROADER STRATEGY ISSUE, WHICH IS WHY ARE THESE THINGS HAPPENING EVERY FEW YEARS AT THIS COMPANY.
THE POPULAR THEORY, WHICH I CAN’T CONFIRM, THERE’S A CULTURAL ISSUE, A FOCUS ON MONEY THAN MANY GOOD PLANES. WHATEVER THEY DO, THEY’RE GOING TO HAVE TO TALK ABOUT THE SHORT-TERM TACTICAL ISSUES AND LONGER-TERM STRATEGIC ISSUE. >> WITH THAT IN MIND, IT’S CLEAR
THEY’RE GOING TO HAVE TO COMMUNICATE THIS WILL IMPACT DELIVERY TIMELINES. WHAT IS THE SUCCESSFUL WAY YOU WOULD LIKE TO SEE MANAGEMENT BEING PROACTIVE ABOUT THE REALITY FOR THOSE TIMELINES, HOW THAT NEEDS TO BE ADJUSTED, AND THE EXPECTATIONS SOME OF THEIR BIGGEST CUSTOMERS HAVE?
>> WELL, I THINK IN SITUATIONS LIKE THIS, PEOPLE WANT TO KNOW TWO THINGS. ARE WE GOING TO BE OKAY. WHAT PEOPLE CANNOT STAND IS UNCERTAINTY, THE IDEA WE HAVE NO IDEA WHAT’S GOING ON. SO, WHAT I THINK IS GOING TO HAVE TO HAPPEN, THEY ARE GOING
TO HAVE TO GRAB AHOLD OF AS MANY THINGS AS THEY CAN REASONABLY PROMISE WITHOUT GETTING AHEAD OF WHAT THEY KNOW AND GET AHEAD OF REGULATORS. THIS IS NOT ALL UNDER CALHOUN’S CONTROL, ONE OF THE REASONS I GET SO — I REALLY DON’T BELIEVE THIS SOLVES EVERYTHING.
>> LET’S TALK ABOUT WHAT THIS MEANS FOR SHARE PRICE GOING FORWARD. WE KNOW SHARES HAVE BEEN YOU SAID A TREMENDOUS AMOUNT OF PRESSURE. THE WORST PERFORMER WE HAVE SEEN SO FAR THISSEE. WHAT IS THE CATALYST, THEN? >> TODAY, YOU KNOW, DEPENDING ON WHAT THEY SAY ABOUT THIS
2025-2026 TARGET, THAT MAY BE POTENTIALLY SUSPENDED AS WELL. THAT’S WHERE INVESTORS ARE FOCUSED SO PEOPLE WANT TO KNOW IF THE 737 FREEZE CAN ROLL INTO, LET’S SAY 2026. I DON’T THINK ANYBODY WAS REALISTICALLY EXPECTING THEM TO HIT THE TARGET IN 2025. THEY DID SAY THIS MORNING THE
EXIT RATE ON PRODUCTION IS 38 PER MONTH. THAT GETS YOU PRETTY — EVEN WITHOUT THE GUIDANCE, YOU CAN DO THE MAL. 38 — IT GETS YOU ROUGHLY WHERE CONSENSUS IS FOR 2024. IF YOU DO THE MATH YOURSELF, IT’S NOT THAT FAR OFF, WHICH IS
WHY I THINK THE STOCK IS POSITIVE TODAY. >>> THANK YOU BOTH FOR BREAKING DOWN BOEING BEFORE THE OPEN. >>> COMING UP, WE HAVE THE OPENING BELL ON WEIGHT. PRESSURE ON THE NASDAQ FOLLOWING THE DISAPPOINTING REPORTS, AT LEAST IN INVESTORS’ EYES. MORE ON THAT WHEN WE COME BACK.
>>> AMD IS OUR STOCK TO WATCH. FOR THE FIRST QUARTER IT FELL SHORT OF WHAT THE STREET ANTICIPATED. >> THEY UPDATED TO A — THE STREET WAS LOOKING FOR $6 BILLION, SO A FORECASTED REVENUE, BUT THAT’S NOT A CRAZY ANTICIPATION, FROM OTHER CHIP
PLAYERS IN THE SPACE, THINKING ABOUT A HUGE COMPETENT TO HAVE TO AN AMD. EVEN INTEL COMING OUT WITH THE RECORD BREAKING EARNINGS PRINT LAST WEEK. THAT WILL ADD SOME PRESSURE TO A NAME LIKE AMD. THE UP SIDE TO THIS NAME WAS ALREADY PRICED IN.
WE’VE SEEN A DOUBLING IN THIS STOCK, UP 26% YEAR TO DATE, SO LOOKING FOR A BIT MORE GOOD NEWS IN THAT EARNINGS PICTURE THAN THEY GOT YESTERDAY. HAVING SAID THAT, THEY HAVE THIS NEW PRODUCT, THE MI-300-X CHIP, IS THE BIG CUSTOMER FOSS THIS
CHIP ARE MICROSOFT, ORACLE AND META. WE WON’T SEE THE REVENUE FOR THAT PRODUCT UNDER THE SECOND HALF OF THIS YEAR. THAT WOULD BE A GOOD INDICATOR FOR THIS NAME HEADING TO THE LATTER HALF, THAT THEY’LL HAVE MORE UP SIDE. NOT A LOT OF UP SIDE THERE
TODAY, SEEING A LOT OF RED. >> MADY, THANKS SO MUCH. WE’VE GOT TALKING ABOUT THAT THIS MORNING, BRAD, TALKING ABOUT THE LOFTY EXPECTATIONS, SO MANY HYPE GOING INTO THESE ALREADY PRICED IN. IF THEY FAIL TO SIGNIFICANTLY SURFACE THOSE EXPECTATIONS, WE’RE SEEING THAT REFLECTED.
>> AND WE’RE TRACKING, WHERE ANNUAL PAY WAS UP BY ABOUT 5.2%. HERE ‘THE OPENING BELL THIS MORNING. >>> WE KICK OFF WHAT COULD BE A VERY BUSY TRADING DAY. CARRYING OVER INTO TODAY, AND THEN, OF COURSE, LOOKING AHEAD TO THIS AFTERNOON WITH FED CHAIR
POWELL, THE DECISION FROM THE FED AND HIS CONFERENCE KICKING OFF LATER ON IN THE AFTERNOON. NOT EXPECTING ANYTHING TOO SIGNIFICANT. IF WE DO THAT COULD POTENTIAL MOVE MARKETS HERE. WE HAVE TEAM COVERAGE HERE. MADISON MILLS IS STILL STANDING BY ON THE FLOOR OF THE NEW YORK
IS STANDING BY AT THE BIG BOARD. MADY, WHAT IS THE SENTIMENT ON ON THE FLOOR THIS MORNING FOLLOWING THE RESULTS FROM LAST NIGHT? >> IT WAS A BIG SIGH, HERE WE ARE WITH ANOTHER DOWN DAY IF I LOOK AT HOW — WE’RE SEE THE S&P
500 DOWN ALMOST 0.5%, THE NASDAQ GETTING A BIGGER DING BECAUSE OF THE MISSES WE SAW LAST NIGHT. NOT SO MUCH TODAY, THE TEN-YEAR YIELD DOWN AS WELL. THAT WOULD BE AN INDICATION THAT TRADERS ARE KNOLL FOCUSING, AND EVEN THOUGH IT’S WIDELY CONSENSUS AT THIS POINT WE’RE
OBVIOUSLY NOT GOING TO GET A CUT TODAY, WE’RE CLINGING TO THE HOPE WE HAD GET MORE INDICATION FROM FED CHAIR JAY POWELL ABOUT WHAT THE FED’S NEXT MOVES WILL BE. >> AS TO WHETHER OR NOT WE’RE GOING TO BE A FED CUT COMING AS SOON AS MARCH.
THAT’S WHY WE’RE SEEING A BIT OF MOVEMENT MORE ON THE MISSES FROM BIG TECH EARNINGS, AS OPPOSED TO ANY FORWARD-LOOKING ANTICIPATION LATER THIS WEEK WITH APPLE AND AMAZON. HAVING SAID THAT, MICROSOFT WAS TIPPING INTO THE GREEN JUST AT THE START OF MY HIT HERE, SO WE
COULD SEE THE STREET FORWARD GUIDANCE LOOKING LOOKING GOOD. DAN IVES REITERATING — THAT THEY COULD BE PUT IN THE LOOP. SO WE’RE CONTINUING TO LOOK FOR POSITIVE SIGNS AMID A SEA OF RED THIS MORNING IN THE BIG TECH NAMES. >> DANA, THANK YOU SO MUCH.
>>> WE ALSO HAVE JARED BLIKRE AT THE HOME BASE WITH THE WI-FI INTERACTIVE. 1.8% TO THE DOWN SIDE. RUSSELL 200 ON 0, HEALTH CARE WAS LEADING BEFORE — THERE IT IS. HEALTHCARE UP 0.7%, THEN FINANCES, THEN MATERIALS, REAL ESTATE, ALL OF THOSE OUTPERFORMING. COMMUNICATION SERVICES, GUESS
WHAT THAT HOUSE IS? ALPHA BIT. MICROSOFT. THOSE ARE THE ONLY TWO UNDERPERFORMER. LET’S SKIP TO THE NASDAQ 100, WHERE YOU CAN SEE ALPHABET MICROSOFT IN THE GREEN FOR 0.6%. NVIDIA DOWN. THAT’S DOWN 3.8%. JUST WANT TO TAKE A BIT OF A LOOK AT THE SECTOR ACTION.
I SHOWED YOU WHAT’S HAPPENING TODAY. MONTHS OR 63 TRADING DAYS SINCE THAT LOW, AND WE DO SEE TECH IN THE POLE POSITION THERE, BUT GUESS WHAT? FINANCIALS ON ITS HEELS. AND YOU TAKE A LOOK AT THE TWO-YEAR CHART, WE JUST HAD A BIG BREAKOUT FROM BELIEVE
LEVELS. THERE YOU GO. WE HAD THIS RESISTANCE LEVEL AND WE’RE NOW OFF TO THE OFFSIDE. ANOTHER SECTOR WE’LL BE TRACKING AND THAT’S REALLY WHAT WE’RE TALKING ABOUT. >> LET’S GET MORE ON SOME OF THE TRENDING TICKERS HERE AT THE OPEN. NOVO NORDISK WITH OPTIMISM. FUELED BY THE SUCCESS OF THE
WEIGHT LOSS DRUG. THE CFO TELLING YAHOO FINANCE EARLIER THIS MORNING THE PLANS ARE TO CONTINUE THE AMAZING GROWTH WE SAW IN 2023. IT’S THE SAME GROWTH DRIVERS AND MORE OR LESS THE MAGNITUDE OF GROWTH WE’RE LOOKING INTO FOR 2024. OZEMPIC AND WE GOVY BEINGLE KEEP
GROWTH DRIVERS, AND THAT POINTS TO WHY IT WAS NAMED YAHOO FINANCE’S 2023 COMPANY OF THE YEAR. IT’S PUSHING BEYOND THAT, JUST THE SECOND EUROPEAN COMPANY TO REACH THAT MILESTONE, BUT THE DEMAND, THE FRENZY FOR WEGOVY AND NOVO NORDISK STRUGGLING TO
KEEP UP WITH THE DEMAND. >> AND ORGANIC GROWTH WE’VE BEEN TRACKING HAS CERTAINLY MADE ITS WAY ALL THE WAY THROUGH ITS BUSINESS, WHERE THEY ACTUALLY NOTED IN THIS MOST RE QUARTER THAT INCREASED BY GLP-1 DRUGS. THE GROWTH OF THAT DIVISION ABOUT 48%, THAT SUBSEGMENT, AND
GET THIS GOING BY 147%. >> PRETTY ASTONISHING WHEN YOU LOOK AT THEY NUMBERS. THE COMPANY HAS FURTHER INVESTED SO THEY CAN MEET DEMANDS. YOU THINK THE SKY IS THE LIMIT HERE, OR AT LEAST SHARES IN THE NEXT 12 MONTHS. AND IT’S ALSO A THEME WE HAVE
HEARD ON A NUMBER OF EARNINGS CALLS GOING TO — AGAINST, AND STAY TUNED RIGHT HERE ON YAHOO FINANCE. OUR OWN ANJALEE KHEMLANI SPOKE WITH THE CFO. WE’LL HAVE THAT INTERVIEW IN THE NEXT HOUR. >>> TO ANOTHER TRENDING TICKER THIS MORNING. THAT’S PARAMOUNT GLOBAL,
SKYROCKETING ON A BLOOMBERG REPORT THAT BYRON ALLEN HAS MADE AN OFFER TO BUY THE COMPANY. ALEXANDRA CANAL HAS BEEN TRACKING THIS FOR US. >> WE FINALLY ACTUALLY HAVE AN OFFER ON THE TABLE. ALL OF PARAMOUNT’S OUTSTANDING SHARES. ACCORDING TO THIS BLOOMBERG
REPORT, IT MARKS ABOUT A 15% — AND $21.53. THIS DEAL AMOUNTS TO ABOUT 30 BILLION. ALLEN REPORTEDLY HAS LINED OTHER INVESTORS TO LINE UP HERE, THEY WERE HESITANT TO THINK THEY COULD GET THE BACKING TO GET THIS DEAL DONE. THE FACT THAT HE SEEMS MORE
INTERESTED IN SELLING OFF THE STUDIOS AND FILM SIDE OF THE BUSINESS, THAT MAKES THINGS PRETTY INTERESTING. WE KNOW THE LINEAR SIDE, WHO WANTS TO BUY A DYING LINEAR BUSINESS. WE’VE SEEN CORD CUTTING, BYRON ALLEN SAID, YOU KNOW WHAT? I’M READY FOR THE CHALLENGE.
ON THE STUDIO SIDE, WE NOW THAT PARAMOUNT IS AN ATTRACTIVE OFFICER. WE’VE SEEN SEVERAL FILMS, SO THERE WILL BE A LOT OF INTEREST THERE. BYRON ALLEN REPORTEDLY WANTS TO KEEP THE STREAMING SIDE OF THE BUSINESS. WE KNOW THAT SIDE OF THE BUSINESS HAS BEEN BLEEDING MONEY
AS OF LATE. PARAMOUNT, WE’RE STILL SEEING THAT COMPANY NOT TURN A PROFIT. ON THE HEELS OF THAT, WE WANT TO DO LAYOFFS, SO THERE’S BEEN A LOT OF INTERESTS. OUR PARENT COMPANY HAS — REPORTEDLY BEEN INTERESTED, EVEN A BIG CONGLOMERATE. NOW BYRON ALLEN IS IN THE MIX.
COULD WE GET A BIDDING WAR, PERHAPS? WE’RE SEEING SHOULDERS REALLY LIKING THIS, UP MORE THAN 10%. >> YOU MENTIONED “MISSION IMPOSSIBLE” FRIEND OR FOE TO TOM CRUISE THEN? I DON’T KNOW WHICH “MISSION IMPOSSIBLE” WE’RE AT ANYMORE. >> HE’LL BE MAKING THE MOVIES FOREVER.
>> THERE ARE PEOPLE WHO WOULD WANT TO OWN THAT STUDIO. >> VERY, VERY VALUABLE. AMOUNT L L AMOUNT. >>> STAY TUNED. WE’LL BE RIGHT BACK. >>> AS IT STANDS, TRADERS ARE SPLIT. JUST OVER 50% PRIZING IN A CUT IN MARCH. WHAT DOES THIS MEAN FOR THIS AFTERNOON?
WE WANT TO BRING IF MARK ZANDI. LET’S START WITH THE JOBS DATA, ADP BETTER THAN EXPECTED, AND WE HAVE TO SQUARE THAT WITH JOLTS YESTERDAY, WHICH WAS HOTTER THAN EXPECTED. >> WHAT THEY SHOULD DO AHEAD OF MARCH? >> THIS MEETING, THEE LAID A FOUNDATION FOR THAT.
>> MY SENSE, THOUGH, IS THAT THEY’LL PROBABLY BE ON THE CAUTIOUS SIDE AND JUST WAIT ANOTHER FEW MORE WEEKS AND PROBABLY THE FIRST RATE CUT WOULD BE IN MAY. AT THIS MEETING, THEY’LL LAY THE FOUNDATION FOR THOSE CUTS. >> BLACKROCK OUT WITH A NOTE
THIS MORNING SAYING THEY’RE ANTICIPATING FOUR RATE CUTS. >> FOUR SOUNDS ABOUT RIGHT TO ME, MAYBE MAY, JUNE, JULY, MAYBE AFTER THE ELECTION. THERE’S A NOVEMBER MEETING RIGHT AFTER THE ELECTION. THAT FEELS RIGHT, BUT YOU KNOW YOU KNOW. THEY’RE CLOSE TO THEIR MANDATE. IT’S VERY CONSISTENT. INFLATION IS COMING IN.
IF IT’S NOT AT TARGET, IT’S WIN SPITTING DISTANCE. SO, YOU KNOW, WHEN YOU HAVE ACHIEVED YOUR GOALS, THE FULL EMPLOYMENT, THE FUNDS RATE SHOULD BE PRETTY CONSISTENT WITH THE STARTS, THE LONG EEK LIPPIUM, WITH POLICY NEITHER SUPPORTING OR RESTRAINING GROWTH.
SO I THINK THEY NEED TO START CUTTING RATES THIS YEAR IN A SIGNIFICANT WAY. >> THERE’S BEEN MORE AND MORE TALKS ABOUT THE DISRUPTION WE ARE SEEING IN GLOBAL SUPPLY STREAMS BECAUSE OF THE CONFLICT IN THE RED SEA. >> SEANA, CERTAINLY NOT GREAT,
AND THERE’S A LOT OF SCENARIOS. IT CAN GO IN LOTS OF DIFFERENT DIRECTIONS, BUT I THINK THE MOST LIKELY SCENARIO, THAT THE DISRUPTIONS WON’T BE ENOUGH TO REALLY CHANGE THE INFLATION PICTURE HERE IN ANY MEANINGFUL WAY. ADDING TO TRANSPORTATION COSTS, FOR SURE, FOR DIFFERENT TYPES OF
GOODS, BUT GOODS ARE A SMALL PIECE OF THE CONSUMER PIE AND THE IMPACT ON OVERALL INFLATION SHOULD BE VERY MODEST. HAVING SAID THAT, OBVIOUSLY THIS CAN GO IN DIFFERENT DIRECTIONS, AND SOME VERY DART DIRECTIONS. IF THE RED SEA IS COMPLETELY SHUT DOWN AND THE DISRUPTIONS IN
THE MIDDLE EAST BROADEN OUT AND AFFECT THE OIL SUPPLIES FROM, LET’S SAY, IRAN, THAT’S A DIFFERENT STORY ALTOGETHER, BUT THAT DOESN’T SEEM LIKE THE MOST LIKELY SCENARIO AT THIS POINT. >> MARK, ONE ORDER AREA THAT THE FED IS TRACKING TO SEE HOW IT
PLAYS INTO THE BROADER PICTURE IS HOUSING, AND TO PUT TWO DATA POINTS TOGETHER, ADP AND THE PRIVATE PAYROLLS THAT CAME OUT THIS MORNING, YOU HAVE A LOT OF EMPLOYERS TELLING EMPLOYEES THAT THEY HAVE TO COME BACK TO THE OFFICE. IS THAT THE NEXT BIG FACTOR
PERHAPS THAT CAN SHIFT THE HOUSING SITUATION WHEN YOU HAVE PEOPLE THAT HAVE AKNOCK DOTALLY TOLD US THEY NEVER THOUGHT THEY WOULD HAVE TO MOVE BACK TO SOME OF THE CITIES THEIR OFFICES USED TO BE IN. >> THERE’S NO GOING BACK, BRAD. I’VE ENCOURAGED MY PEOPLE TO
COME BACK, AND THEY’RE GOING TO TRY HARD, BUT THERE’S NO GOING BACK. I THINK THE REMOTE WORK IS HERE TO STAY. AS TECHNOLOGY IMPROVES AND MAKE IT EASIER TO COMMUNICATE. AS NEW BUSINESSES FORM, THEY WON’T OPTIMIZE AROUND AN OFFICE BUILDING, BUT AROUND REMOTE WORK DYNAMIC.
NO, I DON’T THINK THAT WILL CHANGE THE DIAL HERE. HOUSING IS REALLY IMPORTANT, BUT IT’S AFFORDABLE, SUPPLY AND ALL THOSE THINGS THAT AFFECT THE COST OF HOUSING AND RENTS AND ULTIMATELY INFLATION, BUT IN TERMS OF REMOTE WORK AND HOUSING, I DON’T SEE THAT CHANGING.
>> WHAT ARE YOUR EXPECTATIONS WHEN IT COMES TO HOMES AND HOUSING PRICES OVER THE NEXT, SAY, 12 TO 18 MONTHS? WE HAVE SEEN A RUN-UP IN PRICES. DEMAND IS STILL THERE. THEY’RE FURTHER PUSHING UP THE PRICE OF HOMES. ARE WE GOING TO SEE ANY RELIEF?
>> WELL, YOU KNOW, I FORECAST LOTS OF THINGS, SEANA. SOME THINGS I FELT PRETTY GOOD ABOUT, LIKE NO RECESSION IN 2023. I GOT HOUSE PRICES DEAD WRONG. I THOUGHT WE WOULD SEE DECLINES. WE SAW THEM IN 2022, BUT THAT DIDN’T HAPPEN IN 2023. BECAUSE OF INTEREST RATE LOCK,
PEOPLE AREN’T GOING TO SELL THEM. IT DOESN’T MAKE ANY ECONOMIC SENSE TO MOVE. SO, YEAH, YOU HAVE TO CONSIDER THAT WHEN I GIVE YOU MY OUTLOOK FOR HOUSE PRICES. YOU KNOW, MY SENSE IT AT THIS POINT, OVER TIME, LIFE CHANGES, PEOPLE WILL HAVE TO MAKE CHANGES
IN THEIR HOUSING SITUATION — CHILDREN, DEATH, DIVORCE, JOB CHANGE — AND WHEN THEY HAVE TO MOVE, AND ULTIMATELY THEY WILL, THEY’LL HAVE TO BECOME MORE AGGRESSIVE ON PRICING. NOT BIG PRICE DECLINES. THERE JUST ISN’T ENOUGH DECLINE, BUT MAYBE PRICES GO FLAT FOR A
COUPLE, THREE, FOUR MORE YEARS. >> SO CAN HOUSING STILL RUN HOT AND THE FED REACH ITS TARGET IT SET FOR ITSELF? >> ABSOLUTELY. THE KEY IS RENTS. THEY’RE FLAT TO DOWN OVER THE LAST YEAR, BECAUSE THERE’S A LOT OF SUPPLY COMING ONLINE. PARTICULARLY THE HIGH END OF THE
RESIDENTIAL MARKET, YOU KNOW, THE LARGE APARTMENT TOWERS GOING ON IN BIG URBAN CENTERING AROUND THE COUNTRY. VACANCY RATES ARE UNDER PRESSURE, AND THAT’S WHAT DRIVES THE COST IN THE INFLATION STATISTICS WE LOOK AT. SO I FEEL CONFIDENT THAT THAT’S GOING TO COME IN.
>>> BEFORE WE LET YOU GO, LET’S TALK ABOUT THE CONSUMER. YOU WERE KIND ENOUGH TO SUBMIT A CHART FOR OUR CHART BOOK SERIES, AND IT WAS ALL ABOUT WAGE GROWTH, THE FACT WE HAVE SEEN THIS RISE ACROSS INCOME LEVELS. WHEN YOU PROJECT THAT OUT, WHAT
ARE SOME OF THE TRENDS, DO YOU EXPECT THAT TREND TO CONTINUE, IN TERMS OF CONSUMERS MAINTAINING THAT PURCHASES POWER? >> IT’S A PRETTY COOL CHART, ISN’T IT? >> I LIKE IT. >> IT’S VERY COOL. YOU SEE INFLATION BACK A YEAR OR TWO AGO, OUTPACING ACROSS THE
WAGE DISTRIBUTION. OF COURSE, THAT’S WHAT PEOPLE — GOT REALLY UPSET ABOUT, RIGHTLY SO. THEY’RE STILL UPSET ABOUT IT. THEY FEEL THE STING OF THAT PERIOD BACK A COUPLE, THREE YEARS AGO, BUT THE GOOD NEWS, THAT YOU CAN SEE IN THE CHART, INFLATION IS CONSISENTLY —
AND, YOU KNOW, PEOPLE’S PURCHASING POWER IS IMPROVING. THAT HAD THE FODDER FOR CONTINUED SPENDING AND ECONOMIC GROWTH, AND REALLY CRITICAL TO CHANGING MINDS, YOU KNOW, PEOPLE STARTING TO FAMILY LIKE, YEAH, THINGS ARE DOING A BIT BETTER. YOU DID SEE THAT IN SOME OF THE SENTIMENT.
SO I THINK PEOPLE ARE STARTING TO FEEL THAT GRAPH IS STARTING TO WORK ITS MAGIC. >> COOT CHARTS, AND THE CONNECTION HERE. MARK, THANKS SO MUCH. >> TAKE CARE. >>> ALL YOUR MARKETS ACTION STRAIGHT AHEAD. TUNED. YOU’RE WATCHING YAHOO FINANCE.
>>> WALMART ANNOUNCING A 3 FOR 1 STOCK SPLIT. BROOK DIPiPALMA IS BACK WITH YO. >> IT WILL BE PAYABLE AFTER A MARKET CLOSE ON FRIDAY, BUT IT’S IMPORTANT TO KNOW YOU HAVE TO OWN SHARES AT THE END OF CLOSE, FEBRUARY 22nd, AND IT WILL BEGIN TRADING ON FEBRUARY 26th.
THE CEO DOUG McMILLEN THOUGHT IT WAS A GOOD TIME TO ENCOURAGE THEIR ASSOCIATES TO PARTICIPATE IN THE YEARS TO COME. AND THIS DOES INCREASE THE NUMBER OF WALMART’S OUTSTANDING COMMON STOCK FROM 2.7 BILLION SHARES TO 8.1 BILLION SHARES. IT’S IMPORTANT TO NOTE THIS IS
THE — RATHER, THERE WAS 11 2 FOR 1 SPLIT. THE LAST ONE OCCURRED IN — AND THIS COMES ON THE HEELS OF WALMART ANNOUNCING EARLIER THIS WEEK STARTING IN APRIL, THEY WILL HAVE ALL MANAGERS ELIGIBLE TO RECEIVE UP TO $20,000 IN
STOCK GRANTS, BUT IT DEPENDS ON WHAT STORE THEY RUNS. >> BROOKE, THANKS FOR BREAKING IT DOWN. >>> MUSK IN THE HOT SEAT, AGAIN, THIS TIME AFTER A DELAWARE JUDGE REJECTS THE PAY PACKAGE. WHAT IT MEANS FOR HIS COMPANY, RIGHT AFTER THIS. .. >>> ELON MUSK BACK IN THE
SPOTLIGHT. A DELAWARE JUDGE RULING THE TESLA FOUNDER IS NOT ENTITLED TO THE $55.8 BILLION PAYBACK FROM 2018, CALLING IT NOT ENTIRELY FAIR. >> THIS IS A SPECIAL STANDARD THAT THE DELAWARE CHANCERY COURT IS ABLE TO APPLY. IT’S A HEIGHTENED STANDARD THAT
SHIFTS THE BURDEN, PUTS IT ON THE BOARD OF DIRECTORS AT TESLA TO SHOW THEY WENT THROUGH A FAIR PROCESS WITH REGARD TO THE PRICE OF MUSK’S COMPENSATION AS WELL AS THE PROCESS FOR HOW THEY GOT THERE. THIS WAS A DERIVATIVE SUIT BROUGHT BY TESLA SHAREHOLDERS.
THEY ALLEGED THAT THE BOARD OF DIRECTORS BREACHED THEIR FIDUCIARY DUTY BY OPENING WHAT THEY SAID WAS EXCESSIVE PERFORMANCE-BASED COMPENSATION, IN THE FORM OF EQUITY, STILL UNEXERCISED, UNDISTRIBUTED TO ELON MUSK. THE JUDGE SET THE BOARD DID NOT MEET THE BURDEN AND RULE THAT
THE MEMBERS OF THE COMPENSATION COMMITTEE THAT THEY TESTIFIED TO A LACK OF NEGOTIATION OVER ARRIVING AT THESE FIGURES. THE JUDGE ALSO APPLIED A HEIGHTENED STANDARD FOR TRANSACTIONS. THESE ARE WHEN THE TRANSACTIONS BETWEEN THE BOARD AND AN EXECUTIVE THAT THEY ARE TALKING
WITH AN EXECUTIVE WITH THE CONTROLLING STAKE IN THE COMPANY. THAT’S WHAT BRINGS THIS HEIGHTENED STANDARD INTO PLAY HERE. THE JUDGE ALSO NOTED HERE THAT MUSK’S PERSONAL RELATIONSHIPS WITH BOARD MEMBERS AND THE GENERAL COUNSEL WERE NOT FULLY DISCLOSED TO SHAREHOLDERS, AND
IT’S IMPORTANT HERE TO NOTE THAT THE CHANCERY COURT IS A SPECIAL COURT, A COURT OF EQUITY. IT HAS REALLY BROAD DISCRETION IN ORDER TO REMEDY WHAT THEY SEE AS BREACH OF FIDUCIARY DUTIES. SO IT’S GOING TO GET A LOT OF ATTENTION IN CORPORATE CIRCLES.
THIS IS ONE OF THE FIRST TIME THE DELAWARE COURT IS ESTABLISHING SUCH A THING AS EXCESSIVE COMPENSATION, AND PUTTING GUARDRAILS AROUND WHAT IT MEANS. MUSK TWEETING OUT HE RECOMMENDS NOT EVEN INCORPORATING IN DELAWARE, BUT GOING TO NEVADA OR TEXAS, WHERE HE’S ALREADY
ESTABLISHED RELATIONSHIPS WITH HIS VARIOUS COMPANY. >> ALEXIS KEENAN, THANK YOU FOR BREAKING THAT DOWN FOR US. >>> WE HAVE MUCH MORE OF YOUR MARKET ACTION AHEAD. STAY TUNED. YOU’RE WATCHING YAHOO FINANCE. ♪ >>> WELCOME BACK TO “YAHOO FINANCE LIVE,” I’M BRAD SMITH ALONGSIDE SEANA SMITH.
WE ARE ABOUT 30 MINUTES INTO THE TRADING DAY, 33 TO BE EXACT. LET’S TAKE A LOOK AT HOW THINGS ARE SHAPING UP. STOCKS RIGHT NOW, YOU’RE SEEING THE U.S. MAJOR AVERAGES MIXED AS THE DOW HAS JUST BARELY, WELL, IT’S FLIRTING WITH POSITIVE TERRITORY AS BEST IT CAN,
OSCILLATE, HYPER-OSCILLATING BETWEEN GAINS AND LOSSES. FLAT FOR THE DOW. S&P 500, DOWN, AND TECH-HEAVY NASDAQ, CERTAINLY GETTING HIT BY SOME OF THOSE EARNINGS REPORTS THAT HAVE COME OUT HERE FROM THE MAGNIFICENT SEVEN COMPANIES, PUSHING IT LOWER BY ABOUT 1.2% RIGHT NOW.
>>> LET’S TAKE A LOOK AT SOME OF THOSE INDIVIDUAL MOVERS. FIRST UP, THE RESILIENT CONSUMER REALLY HELPING MASTERCARD THIS QUARTER. SHARES UP JUST ABOUT 2% ON BETTER-THAN-EXPECTED FOURTH QUARTER RESULTS. REVENUE WAS UP 13%. THAT MARKED THE SECOND QUARTER IN A ROW THAT WE SAW GROWTH THERE IN SALES.
>>> THE COMPANY OF THE VENN DIAGRAM. AND PHILLIPS 66 ALSO REPORTING STRONG RESULTS. THE COMPANY SAYING IT EXPECTS A 5% BOOST IN REFINING MARKET CAP SHARE BY NEXT YEAR AS IT HAS 10 TO 15 PROJECTS ANNUALLY. THIS COMES AS THE PHILLIPS 66 IS FACING PRESSURE FROM ACTIVIST
INVE INVESTOR ELLIOTT MANAGEMENT OVER HIGHER OPERATING EXPENSES. >>> SOFI OFF JUST ABOUT 1%. MORGAN STANLEY WARNING OF REVENUE HEADWINDS, THE ANALYST DOWNGRADING SOFI TO UNDERWEIGHT, TALKING ABOUT RISKS THEY SEE AHEAD FOR THE COMPANY’S NEW PROFITABILITY TARGETS. >>> THE BIG STORY OF THE DAY,
ONE OF THE BIG STORIES OF THE DAY, WALL STREET COUNTING DOWN TO THE FEDERAL RESERVE’S FIRST INTEREST RATE DECISION OF THE YEAR. INVESTORS ARE EAGER TO HEAR FROM FED CHAIR JAY POWELL, HOPING TO GET SOME INSIGHT ON THE TIMING OF A POTENTIAL RATE CUT.
YAHOO! FINANCE’S JENNIFER SCHONBERGER HAS THE LATEST ON THAT FOR US. >> HEY THERE, SEANA. THE FEDERAL RESERVE MEETING UNDER WAY FOR ABOUT AN HOUR HERE IN WASHINGTON WHERE FED OFFICIALS ARE WIDELY EXPECTED TO HOLD RATES STEADY BUT TRY TO TEMPER WALL STREET’S EXPECTATIONS FOR JUST HOW
QUICKLY THE CENTRAL BANK COULD BEGIN CUTTING RATES. HERE ARE THREE THINGS TO WATCH AT THIS AFTERNOO’S POLICY DECISION. NUMBER ONE, WILL THE FED SET THE TABLE TO SIGNAL THAT RATES ARE MORE LIKELY TO FALL THAN TO RISE IN THE COMING MONTHS? SOME ARE HOPING TO SEE A TWEAK
IN THE LANGUAGE OF THE OFFICIAL STATEMENT INDICATING THAT IT NO LONGER HAS A TIGHTENING BIAS TO SET THE STAGE FOR EVENTUAL CUTS. NUMBER TWO, WILL FED CHAIR POWELL TRY TO WALK BACK WALL STREET ON HOW SOON THE FED WILL CUT AND HOW MANY TIMES THEY’LL CUT?
INVESTORS ARE BETTING FIVE CUTS IN 2024, AND THAT THEY WILL BEGIN IN EITHER MARCH OR MAY. FED OFFICIALS HAVE CAUTIONED THEY’RE NOT IN A RUSH TO CUT RATES WITH CLEVELAND FED IF THE LORETTA MESTER SAYING OUTRIGHT THAT MARCH WAS TOO EARLY, THAT
CHAIR POWELL WAS EXPECTED TO TRY TO PEEL WALL STREET BACK FROM THE FIVE RATE CUTS THAT THE INVESTORS HAVE PRICED IN VERSUS THE THREE PENCILLED IN BY THE FED. NUMBER THREE, HOW WILL THE FED NAVIGATE HIGHER ECONOMIC GROWTH AND COULD IT CAUSE THEM TO
REMAIN ON PAUSE FOR LONGER? THE CHALLENGE FOR THE FED IS THAT ECONOMIC GROWTH CONTINUES TO SURPRISE TO THE UPSIDE, CLOCKING IN AT 3.3% IN THE FOURTH QUARTER, EVEN AS INFLATION HAS CONTINUED TO DROP. THAT HAS SOME QUESTIONING WHETHER INFLATION COULD REACCELERATE AND CAUSE THE FED
TO HOLD RATES AT CURRENT LEVELS FOR LONGER, THIS DECISION COMING DOWN AT 2:00 P.M. EASTERN, FOLLOWED BY FED CHAIR POWELL’S PRESS CONFERENCE AT 2:30. I WILL HAVE IT FOR YOU LIVE HERE IN WASHINGTON. >> JENNIFER, APPRECIATE IT SO MUCH. WE’RE GOING TO BE TRACKING THE
MARKET MOVEMENTS LEADING UP TO AND THROUGH THAT DECISION. THANKS. >>> THE MAJOR INDEXES MIXED THIS MORNING AS INVESTORS DIGEST WEAK TECH OUTLOOKS. HISTORICALLY, THE JANUARY BAROMETER HAS BEEN USED AS AN INDICATOR FOR INVESTORS, IMPLYING THAT THE RETURNS SEEN IN JANUARY CAN BE USED TO
PREDICT THE OUTCOME FOR THE REST OF THE YEAR. WILL THAT BE THE CASE THIS YEAR? LET’S BRING IN SAM STOVALL TO DISCUSS MORE. ALWAYS A PLEASURE TO GET SOME OF YOUR INSIGHT. WILL THE JANUARY BAROMETER HOLD TRUE? WHAT IS THE PROBABILITY THAT WHAT WE’VE SEEN OVER THE COURSE
OF THIS MONTH CAN PERHAPS BE SOME TYPE OF INDICATOR FOR THE REST OF 2024? >> HEY, BRAD, GOOD TO TALK TO YOU AGAIN. YEAH, ACTUALLY, THE JANUARY BAROMETER, WHICH POPULARIZED BY THE STOCK TRADER’S ALMANAC, IS A GOOD EARLY WARNING INDICATOR AS
TO WHERE STOCKS ARE GOING TO BE GOING FOR THE REST OF THE YEAR. GOING BACK TO WORLD WAR II, IF WE HAVE HAD A POSITIVE JANUARY IN AN ELECTION YEAR, THE MARKET WAS UP BY MORE THAN 15.5% AND ROSE IN PRICE EVERY SINGLE TIME.
OBVIOUSLY, THAT’S NOT A GUARANTEE THAT THAT WILL HAPPEN THIS YEAR, BUT IT’S AN ENCOURAGING STATISTIC. IN ADDITION, IT BASICALLY SAYS THAT YOU LET YOUR WINNERS RIDE, MEANING THE THREE BEST-PERFORMING SECTORS IN JANUARY TEND TO OUTPERFORM THE MARKET IN THE ENTIRE YEAR WHEN
ALL IS SAID AND DONE. >> WELL, SAM, WHAT DO THESE RESULTS, AT LEAST THE REACTION WE’RE GETTING FROM MICROSOFT AND ALPHABET ON THE HEELS OF THEIR RESULTS, COULD THAT MAYBE POUR A LITTLE BIT OF COLD WATER ON AT LEAST THE MOMENTUM THAT WE HAVE
SEEN OVER THE LAST COUPLE WEEKS? >> SURE, SEANA. I MEAN, IT COULD INDICATE THAT THIS YEAR IS POSITIVE BUT NOT BY AS MUCH AS THE AVERAGE FOR ALL GOING BACK TO WORLD WAR II. BUT AT THE SAME TIME, WHEN WE READ THE RESEARCH NOTES ON OUR
MARKET SCOPE ADVISOR PLATFORM FROM ANGELO ZINO, WHO COVERS MICROSOFT AND KBGOOGLE, ESSENTIALLY, YOU’LL SEE WE RAISED OUR TARGET TO 455 FROM 420, INCREASED OUR EARNINGS ESTIMATES FOR FISCAL YEAR ’24 AND ’25, VERY IMPRESSED WITH AZURE CLOUD GROWTH AND SO THE
THOUGHT ON MICROSOFT IS THAT WE KEEP IT AS A STRONG BUY RECOMMENDATION, MAINTAINING OUR BUY RECOMMENDATION ON GOOGLE ALSO RAISING TARGET PRICE, EARNINGS ESTIMATES, ET CETERA, SO I THINK INVESTORS WERE LOOKING FOR SOME REASON TO TRY TO LOCK IN SOME PROFITS, MAYBE
BECAUSE THEY’RE WORRIED THAT THIS ADVANCE HAS GONE ON A LITTLE TOO FAR AND A LITTLE TOO LONG. >> SO, SAM, THEN, SHOULD INVESTORS BE LOOKING AT THIS OR MOVEMENTS LIKE TODAY WHEN WE SEE THOSE TYPES OF LOSSES IN THESE BIG TECH GIANTS, SHOULD THEY BE
USING THAT AS AN OPPORTUNITY TO BUY? >> I THINK SO. I MEAN, WE’RE STILL ANTICIPATING 15% EARNINGS GROWTH FOR THE TECHNOLOGY SECTOR IN 2024 AS COMPARED WITH 9.6% FOR THE S&P 500. ONE THING I DO HAVE TO WARN INVESTORS ABOUT IS THE PE ON
FORWARD 12-MONTH EARNINGS FOR THE TECH SECTOR KEEPS BUMPING UP AGAINST THAT 30 THRESHOLD, WHICH REALLY HAS BEEN THE HIGH WATER MARK OVER THE LAST 20 YEARS, SO WE’LL PROBABLY NEED TO SEE AN INCREASE IN EARNINGS ESTIMATES FOR 2024 TO ALLOW THIS GROUP TO
CONTINUE TO WORK ITS WAY HIGHER. DON’T EXPECT PE MULTIPLE EXPANSION. >> WHAT ARE MARGINS TELLING US ABOUT THE STRENGTH OF BUSINESSES NAVIGATING THROUGH THIS ENVIRONMENT RIGHT NOW, SAM? >> WELL, MARGINS ARE HOLDING UP RELATIVELY WELL, AND ACTUALLY, ONE OF THE COMMENTS MADE ABOUT
MICROSOFT IS THAT DESPITE THE ELEVATED SPEND ON ARTIFICIAL INTELLIGENCE, WE SEE A CLEAR PATH TO ONGOING OPERATING MARGIN EXPANSION, SO FOR A LOT OF THESE TECH STOCKS, THEY ARE ABLE TO MAINTAIN OR GROW THEIR MARGINS. >> SAM, WHEN IT COMES TO SOME OF THOSE OPPORTUNITIES OUTSIDE OF
BIG TECH, IN TERMS OF THE CHECKLIST, WHAT INVESTORS SHOULD BE KEEPING IN MIND IF THEY’RE TRYING TO CAPITALIZE ON SOME OF THE GAINS THAT YOU’RE EXPECTING BEFORE YEAR-END, WHAT’S TOP OF MIND? >> I WOULD SAY, AGAIN, THAT HISTORY TELLS US TO LET YOUR
WINNERS RIDE AS IT RELATES TO PRIOR YEAR PERFORMANCES, ESPECIALLY AFTER AN UP YEAR. SO, DON’T GIVE UP JUST YET ON COMMUNICATION SERVICES, AND START TO CONSIDER INTEREST IN THE FINANCIAL SECTOR. THIS IS A GROUP THAT’S BEEN BEATEN UP FOR QUITE SOME TIME,
BUT WE’RE ACTUALLY STARTING TO SEE AN IMPROVEMENT IN EARNINGS EXPECTATIONS, ALSO AN IMPROVEMENT IN UNDERLYING MOMENTUM. SO, AT THIS POINT IN TIME, EVEN THOUGH WHILE WE MIGHT SEE A DIGESTION OF GAINS, MY EXPECTATION IS IT WILL BE NO MORE THAN A 10% CORRECTION IN
THE MARKETPLACE. SHORT-TERM, WE COULD PROBABLY SEE A POP FROM THE DEFENSIVES AS THE MARKET DOES DIGEST RECENT GAINS, BUT I THINK FOR THE FULL YEAR, STICK WITH GROUPS LIKE TECH, COMMUNICATION SERVICES, AND FINANCIALS. >> IS THERE ONE KEYWORD THAT THIS MARKET SHOULD CONTINUE TO
MONITOR FROM THE FED AND ITS TENOR ABOUT THE FUTURE AND PACING OF RATE CUTS? >> I’LL GIVE YOU THREE. LATER AND FEWER. LATER, MEANING THAT THE FED WILL LIKELY START TO CUT RATES LATER THAN THE WALL STREET IS ANTICIPATING RIGHT NOW. IT WON’T BE IN MARCH, IN OUR
OPINION. IT WILL BE IN THE SECOND QUARTER, POSSIBLY AT THE JUNE FOMC MEETING, AND FEWER, MEANING THAT WE THINK WE’LL HAVE THREE 25-BASIS-POINT RATE CUTS THIS YEAR, NOT THE FIVE THAT IS CURRENTLY ANTICIPATED BY WALL STREET, MAINLY BECAUSE THE FED
DOES NOT WANT TO MAKE THE MISTAKES THAT IT MADE BACK IN THE 1970s. SO, JUST AS IT TOOK ITS TIME STARTING THE RATE-TIGHTENING PROGRAM, I THINK IT WILL BE FAIRLY CAUTIOUS AS TO THE TIMING AND MAGNITUDE OF THE RATE CUTS AHEAD.
>> SAM STOVALL, ALWAYS GREAT TO GET YOUR PERSPECTIVE HERE, ESPECIALLY ON A BIG DAY LIKE TODAY. CFRA RESEARCH’S CHIEF INVESTMENT STRATEGIST. >>> KEEP IT RIGHT HERE ON YAHOO! FINANCE. MUCH MORE OF YOUR MARKET ACTION AHEAD. WE’LL BE RIGHT BACK. >>> DATING APP STOCKS IN FOCUS
TODAY AS MATCH GROUP REPORTS A DROP IN PAYING TINDER USERS. IT’S IT FIFTH QUARTER IN A ROW OF THAT, A POTENTIAL WORRISOME SIGN FOR THE SECTOR. IN TWO WEEKS, WE’RE GOING TO HEAR FROM GRINDR, SET TO REPORT ITS RESULTS ON FEBRUARY 12th.
SHARES HAVE BEEN ON A TEAR, UP NEARLY 60%. LET’S TALK ABOUT THE RECENT MOMENTUM, THOUGH, THAT WE HAVE SEEN IN THE NAME FOR THAT. HERE WITH US AT THE DESK, WE WANT TO BRING IN GEORGE, THE CEO OF GRINDR, ALONGSIDE YAHOO! FINANCE’S EXECUTIVE EDITOR, BRIAN SOZZI.
GREAT TO HAVE YOU AT THE DESK WITH US, GEORGE. LET’S TALK ABOUT THE MOMENTUM THAT YOU HAVE SEEN IN YOUR BUSINESS. GOING BACK TO THE PREVIOUS RESULTS, YOU CERTAINLY HAVE SEEN TREMENDOUS AMOUNT OF GROWTH, REVENUE UP 39%. WHAT HAVE YOU SEEN IN TERMS OF
THOSE TRENDS CARRYING OVER INTO THE NEW YEAR? >> WE GAVE GUIDANCE IN NOVEMBER THAT THE YEAR WAS GOING TO BE REALLY POSITIVE. WE RAISED OUR GUIDANCE IN NOVEMBER AND IN AUGUST, SO IT’S BEEN A REALLY GOOD YEAR FOR US, AND WE ALSO SAID THAT WE EXPECT
2024 TO GO REALLY WELL. SO FAR, EVERYTHING’S GOING AS WELL AS WE EXPECTED. OBVIOUSLY, WE’VE NOT DONE EARNINGS YET, SO I WANT TO BE A LITTLE CAREFUL WHEN I SAY, BUT GRINDR IS A REALLY GREAT BUSINESS AND WE HAVE USERS THAT ARE DEDICATED TO THE PLATFORM,
SPENDING ABOUT AN HOUR A DAY IN IT, AND THE REALLY BIG THING FOR US COMING IN, ABOUT SIX MONTHS AGO NOW, HAS BEEN TO THINK ABOUT MODERNIZATION. HOW DO WE BUILD FEATURES THAT USERS WANT TO PAY FOR? THAT’S NOT BEEN THE FOCUS HISTORICALLY, BUT THAT’S WHAT
WE’RE FOCUSED ON NOW, AND I THINK RESULTS SO FAR ARE VERY POSITIVE. >> THE LARGE MOVE IN THE STOCK PRICE, GEORGE, IN PART BECAUSE INVESTORS ARE THINKING ABOUT A.I. AND HOW IT MIGHT UNLOCK GROWTH OR THAT MONETIZATION YOU’RE TALKING ABOUT?
>> I HOPE THE MOVEMENT IS THE SHARE QUARTERS WE HAVE HAD OF FIVE QUARTERS AND RESULTS. I THINK WE HAVE BEEN DELIVERING AND WE’VE BEEN REALLY CAREFUL IN SHOWING OUR INVESTORS THAT WE I THINK THAT’S REALLY IMPORTANT AS A COMPANY WHEN YOU COME OUT
AND WE’RE BEING CAREFUL NOT TO RAISE EXPECTATIONS TOO HIGH. FROM THE A.I. PERSPECTIVE, I THINK A.I. IS REALLY GOING TO CHANGE DATING IN GENERAL, BOTH IN TERMS OF HOW PEOPLE CONVERSE WITH EACH OTHER AND ALSO WHO IS MATCHED WITH WHO, BECAUSE A LOT
OF REALLY IMPORTANT INFORMATION IS SITTING INSIDE PEOPLE’S CHATS AND THEY’RE MUCH MORE REAL IN WHO THEY ARE VERSUS THE PROFILE THAT YOU TRY TO BUILD BASED ON, THIS IS WHAT I THINK PEOPLE WANT TO SEE. IF YOU HAVE BETTER INFORMATION, OBVIOUSLY, WITH THEIR
PERMISSION, YOU CAN MATCH THEM BETTER. GRINDR DOESN’T DO MATCHING YET, BUT THAT’S THE DIRECTION WE WANT TO GO INTO FOR DATING IN PARTICULAR. I THINK DATING WILL BE CHANGED BY AIC.I., AND I THINK THAT’S A ON THE COME, AND PEOPLE ARE IN
SOME OF OUR APPS FRUSTRATED WITH IN REAL WORLD VERSUS WHAT HAPPENS ONLINE. WE DON’T HAVE THAT WITH OUR USERS, BUT I THINK A.I. CAN MAKE MEETING PEOPLE BETTER. >> THAT’S A SIGNIFICANT VALUE PROPOSITION YOU’RE ADDING INTO THE SERVICE AS WELL. HOW DOES THAT HAVE AN IMPACT ON
PRICING WHEN YOU’RE THINKING ABOUT HOW YOU’RE EXTRAKTCTING T MOST VALUE OUT OF YOUR USERS TOO? >> IF YOU PROVIDE REALLY AWESOME PRODUCT TO USERS AND THEY GAIN VALUE, THEY SHOULD BE WILLING TO PAY FOR IT. THAT’S THE CAPITAIST SYSTEM. SO FAR, WE HAVE HAD TWO PRICING
TIERS, A $19.99 TIER AND A $3 $39.9 $39.99 TIER WE CALL YOU KNOW LIMITED. WE ADDED A WEEKLY PRODUCT IN THE U.S., AND THAT’S WHY THE PAYING USERS HAVE GONE UP. I THINK THERE’S A POTENTIAL FOR A MUCH HIGHER PRICE TIER, I
DON’T KNOW IF IT’S $60 OR $80, BUT AN EXPERIMENT WITH MORE DATING FEATURES AND THERE’S PROBABLY AN OPPORTUNITY FOR A LOWER PRICE TIER AS WELL FOR THE YOUNGER USER SET. TINDER DOES THAT. OTHERS DO IT AS WELL. WE HAVE NOT DONE THAT BUT I THINK THERE’S OPPORTUNITY THERE.
AND THEN TINDER’S BEEN EXPERIMENTING WITH THIS 500 A MONTH TIER. THAT’S SOMETHING MUCH MORE CONCIERGE STYLE AND SPECIAL. I THINK THERE’S AN OPPORTUNITY THERE AS WELL. I THINK PRICING CAN BE A LOT BROADER THAN WE’RE DOING TODAY, BUT FIRST, WE NEED TO BUILD A
WALL A LOT MORE FEATURES TO JUSTIFY A HIGH PRICE, AND THAT’S WHAT WE’RE GOING TO SPEND 2024 AND 2025 FOCUSED ON. >> WHAT’S THE BIG FEATURES THAT YOU CAN SPEAK TO FOR THIS YEAR? >> ONE OF THE THINGS WE’VE TALKED ABOUT IN THE PAST IS TELEPORT.
OUR USERS TRAVEL A TON. THEY ARE ON THE ROAD A LOT BECAUSE THEY HAVE TIME AND DISPOSABLE INCOME TO DO IT. BUT YOU CAN’T, TODAY, SHOW YOUR PROFILE IN A DIFFERENT MARKET FROM THE ONE YOU’RE IN. ENABLING USERS TO DO THAT IS
SOMETHING A LOT OF USERS HAVE BEEN ASKING FOR. OTHER PEOPLE WALK UP TO ME AND SAY, I WILL PAY A THOUSAND DOLLARS A YEAR FOR THIS. IT’S ONE OF THE ONES WE’RE REALLY EXCITED ABOUT. BEING ABLE TO EXPRESS AN INTEREST IN A USER A LOT MORE
THAN JUST SENDING A MESSAGE. OUR PEERS HAVE DONE THAT FOR A LONG TIME. WE THINK THAT’S A HUGE OPPORTUNITY. AND THEN ULTIMATELY, ANALYTICS ABOUT A USER, SO, LIKE, THIS IS WHAT WE KNOW ABOUT THIS USER. DO YOU WANT TO KNOW THAT INFORMATION AS WELL?
I THINK THAT’S SOMETHING USERS WILL APPRECIATE AS WELL. HOW FREQUENTLY THEY RESPOND TO MESSAGES, WHAT KIND OF INDIVIDUALS THEY WANT TO TALK TO. >> GEORGE, THERE HAS BEEN SOME TALK ABOUT USING GRINDR AS A JOB NETWORKING TOOL OAS WELL. WHAT DO YOU SEE AS THE POTENTIAL
AND WHO YOU SEE AS A RIVAL WITHIN THAT SPACE? >> WE GET COMPARED TO MATCH AND BUMBLE, BUT OUR USERS ARE THERE FOR A LOT OF OTHER REASONS. CASUAL DATING, HUGE PERCENTAGE, DATING, BUT THEN SOCIAL CONNECTIONS AND FRPZIENDSHIPS A NETWORKING ARE HIGH ON THERE AS WELL.
AND THAT KIND OF SPEAKS TO THE FACT THAT OUR USERS VIEW GRINDR AS A SOCIAL NETWORKING COMMUNITY IN ADDITION TO A DATING PRODUCT. THERE’S REALLY NOTHING ANALOGOUS TO THAT OUT THERE, AND OUR USERS DON’T LEAVE THE APP. ONCE YOU COUPLE UP, THEY STAY ON THE APP FOR OTHER REASONS
BECAUSE THEY HAVE THESE RELATIONSHIPS WITH PEOPLE ON THERE. USERS ALSO USE IT FOR TRAVEL. A LOT OF GAVE MEN WHO MIGHT BE SAYING, I’M GOING TO A DIFFERENT CITY, START TALKING TO PEOPLE IN THAT CITY TO UNDERSTAND, WHAT CAN I DO? WHERE SHOULD I STAY?
GRINDR IS A GAYBORHOOD ON YOUR MOBILE PHONE. >> WHAT’S YOUR PHILOSOPHY IN TERMS OF END GAME FOR GRINDR? WHY NOT JOIN FORCES WITH BUMBLE AND BECOME THAT ONE-STOP SHOPPING FOR DATING? >> I’M FOCUSED ON BUILDING A REALLY GREAT PRODUCT FOR OUR
USERS TODAY AND WHERE IT CAN GO INTO THE FUTURE. WHAT HAPPENS ON THAT FRONT WILL TAKE CARE OF ITSELF. AS LONG AS YOU DELIVER REALLY GREAT VALUE TO USERS, YOU’RE CREATING GREAT SHAREHOLDER VALUE, AND THAT’S IMPORTANT. >> YOU HAD ONE OF THE TRICKIER
EVENTS IN RETURN TO OFFICE. AND A LOT OF CEOs ARE TRYING TO FIGURE OUT HOW TO GO ABOUT THAT THE RIGHT WAY IF THEY EVEN DO. WHAT WOULD YOU — ANY ADVICE THAT YOU WOULD GIVE TOWARDS THOSE LEADERS AND MANAGERS? >> MY VIEW IS YOU HAVE TO HAVE A
REALLY AWESOME PERFORMANCE CULTURE FOR A COMPANY TO BE SUCCESSFUL, AND IN GRINDR’S CASE, WE ARE GOING AFTER SOME REALLY AUDACIOUS GOALS. WE ARE SERVING A USER BASE THAT HAS BEEN UNDERSERVED AND IS UNDER THREAT AROUND THE WORLD. 60 COUNTRIES IN THE WORLD, IT’S
ILLEGAL TO BE GAY. WE OPERATE IN ALMOST ALL THOSE COUNTRIES. WHEN WE DO THINGS, IT’S FOR USERS WHO NEED A LOT OF SUPPORT, SO I WANT US TO BE WORKING REALLY HARD. I WANT US TO BE DELIVERING REALLY STRONG RESULTS, AND TO DO
THAT, ONE OF THE THINGS YOU NEED IS TO HAVE GOOD RELATIONS WITH EACH OTHER, AND SO HAVING PEOPLE NEVER SEE EACH OTHER FOR THE COURSE OF THE YEAR, I DON’T THINK, WORKS, SO WE WENT PRETTY MILD. TWO DAYS A WEEK, TUESDAYS AND THURSDAYS IN THE OFFICE.
WE SERVE YOU BREAKFAST, LUNCH, AND GIVE YOU A STIPEND TO PAY FOR TRANSPORTATION TO COME TO THE OFFICE. SO, IT’S ACTUALLY A PRETTY, LIKE, MINIMAL SET OF REQUIREMENTS. WE WANT TO DO THAT BECAUSE WE WANT TO ATTRACT REALLY AMAZING TALENT TO WORK AT GRINDR.
WE ARE A LEADING COMPANY. OUR NUMBERS IN TERMS OF EMPLOYEES ARE VERY LOW AND REVENUE FOR EMPLOYEES IS ALSO LOW, SO WE ARE FORTUNATE WE CAN DO THOSE TYPES OF THINGS. MY VIEW IS — WE’VE ONLY BEEN AT IT FOR THREE MONTH MONTHS — THE RESULTS ARE REALLY POSITIVE.
ESPECIALLY AMONG ENGINEERS. I’M TALKING TO CANDIDATES WHO SAID, I WOULDN’T HAVE CONSIDERED THIS JOB IF YOU WEREN’T BACK IN THE OFFICE. A LOT OF DISCUSSIONS AROUND PEOPLE WHO ARE UPSET ABOUT COMING BACK, BUT NO ONE’S TALKING ABOUT A COHORT OF PEOPLE
WHO WANT TO BE BACK IN THE OFFICE BECAUSE THEY WANT THE MENTORSHIP AND THE COACHING FROM SENIOR PEOPLE THAT THEY WERE NOT GETTING ONLINE, AS WELL AS SENIOR PEOPLE WHO WANT TO BE DOING THE THINGS THEY USED TO DO BUT CAN’T WHEN THEY’RE NOT IN THE OFFICE.
THAT’S KIND OF BEEN MISSING FROM THE CONVERSATION, AND ALL THE FOCUS HAS BEEN ON PEOPLE WHO DON’T WANT TO COME BACK, WHICH IS A LEGITIMATE ARGUMENT, BUT A SMALLER PERCENTAGE THAN PEOPLE WHO WANT TO BE IN THE OFFICE. >> GRINDR CEO, THANK YOU SO MUCH
FOR TAKING THE TIME. APPRECIATE IT. >>> WE’VE GOT ALL YOUR MARKETS ACTION AHEAD. STAY TUNED. YOU’RE WATCHING YAHOO! FINANCE. >>> INVESTORS LOOKING FOR BULLISH STRATEGIES HAVE SEVERAL AVENUES TO REACH THEIR END GOALS. WE’RE DIGGING INTO THOSE STRATEGIES VIA THE OPTIONS TRADE IN THE LATEST INSTALLMENT OF
YAHOO! FINANCE’S OPTIONS 101 THEME WEEK, SPONSORED BY TASTY TRADE, AND JOINING US TO DISCUSS IS THE OPTIONS PLAY DIRECTOR AND EDUCATION PRODUCT LIAISON AND LET’S JUST JUMP INTO THIS. WE’RE GOING TO TAKE LONG A STOCK, AND WE’RE TALKING ABOUT RISK-REWARD BECAUSE YOU WANT TO
HAVE A STOP OR MANAGEMENT TOOL THERE. LONG STOCK VIEW, LONG CALL OPTION, THEN LONG COVERED CALL OPTION AND COMPARE THEM. I’LL LET YOU SET THIS UP. >> ESPECIALLY FOR MY BEGINNER OPTIONS TRADERS OUT THERE WHO HAVE NEVER TRADED BEFORE OR ANY
TYPE OF TRADER, WE HAVE TO FOCUS ON RISK VERSUS REWARD. SO, WHENEVER WE’RE BUYING A STOCK, THE MOST THAT WE CAN LOSE IS THE MOST THAT WE SPEND, RIGHT? BUT WHEN WE’RE TRADING, WE ALWAYS HAVE A PRICE TARGET IN MIND, AND THESE ARE VERY
ESSENTIAL COMPONENTS WHEN WE TALK ABOUT OPTIONS. WE ADD THAT LAYER OF COMPLEXITY BECAUSE IT’S A DERIVATIVE OF MORE THAN JUST THE UNDERLYING SECURITY. WE’VE GOT TIME AND VOLATILITY AS WELL. IN THIS SCENARIO, WE’RE ASSUMING THIS HYPOTHETICAL LONG STOCK IS MARKET PRICE OF $100.URRENT –
WE HAVE A PRICE TARGET OF $110, SCH MEANS OUR BREAK EVEN OR THE MOST THAT WE CAN LOSE IS THE AMOUNT OF CAPITAL THAT WE SPENT. >> WHICH IS ALL OF IT. >> SIMPLE. >> LET’S GET TO ANOTHER SCENARIO HERE. HERE WE GO. LONG CALL OPTION.
SIMILAR BUT BREAK THIS DOWN, HOW THE CALL DIFFERENTIATES THE RISK-REWARD. >> ABSOLUTELY. SAME THING. IT’S IMPORTANT TO KNOW THAT WE HAVE A PRICE TARGET IN MIND. SO, ASSUMING THAT WE STILL HAVE THAT SAME $110 PRICE TARGET BUT NOW WE’RE BUYING THE CALL CONTRACT FOR 5, THAT MEANS WE’VE
GOT, ACTUALLY, A — I BELIEVE THIS WAS MOVED AROUND, I APOLOGIZE. THIS WOULD BE A $105 BREAK EVEN RATE BECAUSE WE WOULD HAVE A HIGHER BREAK EVEN PRICE BECAUSE THERE’S A COST. >> GOT YOU. >> SO, WE — AT THE CURRENT
PRICE IS 100, WE’LL CORRECT IT RIGHT HERE. THIS IS 105. NOW, WE’RE SPENDING — THIS IS A RISK TO REWARD OF REALLY WE CAN ONLY MAKE 50%. THAT’S NOT VERY GOOD. THIS IS ACTUALLY A POOR SCENARIO, AND I THINK ONE OF THE BIGGEST RISKS OF PEOPLE GOING
INTO OPTIONS IS THEY’RE GOING TO START BY BUYING CALLS, AND IF WE’RE BUYING THIS CALL FOR $5, WHAT YOU DON’T REALIZE IS THAT THIS IS $5 FROM THAT $100 PRICE IS SOMETHING YOU HAVE TO OVERCOME BEFORE YOU ACTUALLY BECOME PROFITABLE. AND THAT’S ASSUMING EXPIRATION,
BUT THAT’S WHY THOSE OTHER FACTORS ARE IMPORTANT AND THE RISK OF STARTING OUT WITH OPTIONS THIS WAY, IT’S IMPORTANT TO KNOW HOW PRICING IS COMPROMISED. >> ALL YOUR PREMIUM CAN GO OUT THE WINDOW. THAT’S TIME DECAY RIGHT THERE. INSTEAD OF BUYING THIS OPTION,
LET’S LOOK AT ANOTHER SCENARIO HERE, AND HERE WE HAVE A COVERED CALL, AND FIRST, WE’RE GOING TO GIVE YOUR THE DEFINITION. INVESTOR SELLS A CALL OPTION AT A SET PRICE, AN EXPIRATION DATE ON A STOCK THAT THE SELLER OWNS. THAT’S VERY IMPORTANT. IN AN EQUIVALENT AMOUNT.
I HAVE TO OWN THE STOCK, AND THEN I CAN SELL A CALL ABOVE THE CURRENT PRICE AND HERE’S WHAT THAT LOOKS LIKE. >> YEAH. AND I SEE WHERE THE ISSUE CAME UP. IT’S ON THE PREVIOUS SLIDE. THIS ONE’S $97. >> GOT YOU. WE’RE GOING TO FIX THAT.
>> I APOLOGIZE FOR THAT. WE’LL SAY THIS IS — THIS ONE IS $97. HERE’S THE DIFFERENCE, THOUGH. AND I’M GLAD WE CAN WRITE IT DOWN. NOW WE’RE RECEIVING THAT $3 PREMIUM, SO IN COMPARISON TO THAT $100, WE’VE NOW REDUCED OUR RISK EXPOSURE BECAUSE WE’RE
RECEIVING UP FRONT, EXACTLY, SO IF THIS LINE HERE REPRESENTS OWNING THE UNDERLYING SECURITY, OR HAVE THE SAME SUBSTANTIAL LOSS POTENTIAL BECAUSE THE MOST THAT I CAN LOSE IS WHAT I CAN SPEND. I OWN A STOCK AT THIS POINT. I’M SELLING THE COVERED CALL, SO I’M BULLISH.
I’M UTILIZING THE STOCK AS COLLATERAL BECAUSE I’M OBLIGATED TO SELL MY SHARES AT THE STRIKE PRICE, AND IN THIS CASE, OUR PRICE TARGET OF $110, BUT I’M REDUCING MY RISK RIGHT HERE BY $3. >> SHIFTING IT LEFT THERE. >> YES. EVER SO SLIGHTLY.
NOW, WITH OPTIONS, THERE’S A GIVE-AND-TAKE. THE GIVE, OF COURSE, IS THIS PREMIUM REDUCTION OF $3. THE TAKE IS CAPPED UP TO ITS POTENTIAL. IF I OWN THE STOCK, I THEORETICALLY CAN HOLD IT INDEFINITELY. HERE, I’M CAPPING MY GAIN POTENTIAL AT $110. >> SO, LIMITED UPSIDE, AND
AGAIN, WE GOT THE POTENTIAL OF 100% LOSS, BUT YOU PUT SOME MONEY IN YOUR POCKET. WE GOT ABOUT A MINUTE TO GO HERE. WE GOT LOTS OF RISKS AND ALSO SOME REWARDS. RISKS ARE LEVERAGED, COMPLEXITY, TIME DECAY AND OPTION, AND I’M GOING TO GIVE YOU THE FLOOR HERE
IN A SECOND. IN TERMS OF BENEFITS, WE GOT HEDGING, DEFINED RISK. WHAT’S THE MESSAGE YOU COULD GIVE TRADERS STARTING OUT? >> NEVER HOLD AN OPTION UNTIL EXPIRATION. >> I’VE DONE THIS, BY THE WAY. >> IT’S RISK IF YOU ARE — IF YOU HOLD THE OPTION, YOU LOSE
GIVING UP THE TIME VALUE, AND THEN IF YOU ARE SHORT THE OPTION, THEN YOU ACTUALLY HAVE WHAT’S CALLED GAMMA RISK, AND YOU HAVE A HUGE ISSUE OF BEING UNPROFITABLE VERY QUICKLY. TRADE SMALL, TRADE OFTEN, AS THAT HE SAY AT TASTY TRADE. >> TRADE SMALL, TRADE OFTEN.pI .
JESSICA INSKIP, THANK YOU FOR JOINING US. >> THANK YOU. >>> AND STAY TUNED. ALL YOUR MARKETS ACTION STRAIGHT AHEAD. YOU’RE WATCHING YAHOO! FINANCE. >>> WELCOME BACK TO “YAHOO FINANCE LIVE.” I’M SENIOR HEALTH REPORTER ANJALEE KHEMLANI. WELL, NOVO NORDISK OUT WITH EARNINGS TODAY, SALES STRONG,
36% YEAR OVER YEAR DRIVEN BY THE OBESITY DRUG WEGOVY AND DIABETES DRUG OZEMPIC. THE OBESITY DRUG CAUSING SALES IN THE U.S. TO SPIKE. HERE TO DISCUSS THE FULL YEAR EARNINGS IS THE CFO OF NOVO NORDISK. THANK YOU SO MUCH FOR JOINING US TODAY. I’D LOVE TO START WITH JUST
BREAKING DOWN THIS STRONG EARNINGS FOR THE YEAR. >> WE’RE REALLY HAPPY AND VERY PROUD ABOUT THE RESULTS WE DELIVERED THIS MORNING. BEING ABLE TO GROW THE COMPANY BY 36% IS HISTORIC IN OUR CONTEXT AND IN AN INDUSTRIAL CONTEXT IN THE PHARMACEUTICAL
INDUSTRY, GROWING 36% IN AN INDUSTRY GROWING TO THE TUNE OF 4% IS ALSO VERY, VERY SPECIAL. AND THE ONLY WAY THAT HAPPENS IS THAT WE HAVE BEEN ABLE TO BRING PRODUCTS TO THE MARKET THAT REALLY MAKES A DIFFERENCE FOR THE PATIENTS USING THESE
PRODUCTS, AND THAT IS BOTH OZEMPIC AND WEGOVY, AS WELL AS OUR ALL IN ONE. BEING ABLE TO DELIVER THAT TO THE MARKET AND ENABLING US THEREBY TO SERVE TO THE TUNE OF 5 MILLION MORE PATIENTS AS OF TODAY COMPARED TO A YEAR AGO, SO
REALLY AN AMAZING LEVEL OF PATIENT REACH WITH A NET NET TURNS INTO 36% SALES GROWTH AND ATTRACTIVE 44% OPERATING PROFIT GROWTH AS WELL. >> WELL, LOOKING AT THE MARKET, OBVIOUSLY, YOUR TWO DRUGS, OZEMPIC AND WEGOVY, TAKING THE LEAD THERE. WHAT CAN YOU TELL US ABOUT
WEGOVY IN PARTICULAR? I KNOW IT’S STILL ON THE FDA’S DRUG SHORTAGE LIST. AND YOU HAVE HAD TO REDUCE THE PRODUCTION OF THOSE STARTER DOSES, SO WHAT CAN YOU TELL US ABOUT THE PLANS FOR 2024? >> WELL, SO, FIRST AND FOREMOST, THE PLANS FOR ’24 ARE TO
CONTINUE THE AMAZING GROWTH THAT WE SAW IN ’23. IT’S THE SAME GROWTH DRIVERS AND MORE OR LESS THE SAME MAGNITUDE OF GROWTH WE WERE LOOKING INTO FOR 2024. OZEMPIC AND WEGOVY AND REBELSIS BEING THE KEY GROWTH DRIVERS. WHEN WE TALK ABOUT WEGOVY, WE ANNOUNCED THIS MORNING THAT THE
EARLIER THIS WEEK, WE STARTED INCREASING THE SUPPLY INTO THE U.S. MARKET OF THE STARTER DOSES OF WEGOVY, SO WE’RE, AS OF THIS WEEK, MORE THAN DOUBLING THE AMOUNT OF STARTER DOSES WE’RE SUPPLYING THE AMERICAN MARKET, THE U.S. AND ALSO OUTSIDE U.S.,
YOU SHOULD EXPECT US TO ROLL OUT IN A VOLUME CONTAINED MANNER INTO MORE MARKETS AND INTERNATIONAL, SO WEGOVY WILL CONTINUE TO BE A VERY SIGNIFICANT GROWTH CONTRIBUTOR TO THE COMPANY, AND AS FOR OZEMPIC, PRETTY MUCH SAME STORY. WE HAVE A VERY LONG RUNWAY IN
TERMS OF GETTING GLP-1 OUT TO ALL THE PATIENTS WHO BENEFIT FROM THIS TYPE OF TREATMENT WITH OZEMPIC ON A GLOBAL SCALE WITH ONLY TO THE TUNE OF 6% OF PATIENTS GLOBALLY WITH DIABETES USING A GLP-1, SO A VERY, VERY LONG RUNWAY THERE.
AND TO ACCOMMODATE THAT, THEN, OF COURSE, WE REALLY NEED TO EXPAND OUR INDUSTRIAL FOOTPRINT IN TERMS OF OUR MANUFACTURING FACILITIES AND THEREFORE, AS YOU SAW IN ’23, WE INVESTED 26 BILLION TO THE TUNE OF SOME $3.5 BILLION, DOUBLE COMPARED TO THE YEAR BEFORE, AND WHAT WE ARE
GUIDING THIS YEAR IS 45 BILLION KRONER, AND WE HIRED MORE THAN 5,000 PEOPLE INTO OUR MANUFACTURING FOOTPRINT JUST THE LAST YEAR. SO, SIGNIFICANT INVESTMENTS INTO SCALING OUR INDUSTRIAL FOOTPRINT IN ORDER TO ACCOMMODATE THE GROWTH OPPORTUNITY IN TERMS OF MEETING PATIENT NEED ON A GLOBAL
SCALE FOR MANY YEARS TO COME. >> IT’S CERTAINLY GOING TO BE HEATING UP AS A COMPETITIVE MARKET FOR YOU THIS YEAR. YOU’RE GOING TO HAVE A COMPETITOR DIRECTLY IN COMPETITION THAT’S ELI LILLY WITH THEIR ZEPBOUND. A LITTLE BIT LESS ON THE PRICE SIDE.
WHAT CAN YOU TELL ME ABOUT HOW YOU PLAN TO COMPETE IN THIS BRAND-NEW MARKET FOR THE FULL YEAR? >> THIS IS A VERY SIGNIFICANT TIES, NEW MARKET, WE’RE TALKING ON A GLOBAL SCALE ABOUT MORE THAN 800 MILLION PEOPLE WITH OBESITY THAT COULD POTENTIALLY
BENEFIT FROM TREATMENT OF AGENTS LIKE THIS. SO, THIS IS LESS ABOUT COMPETITION, HEAD-TO-HEAD, IN A WELL-DEFINED MARKET. THIS IS REALLY ABOUT MARKET EXPANSION WITH MORE THAN ENOUGH SPACE FOR BOTH COMPANIES. >> DEFINITELY. AND WHAT CAN YOU TELL US ABOUT THIS PAST YEAR AND HOW IT HAS
REALLY BEEN SUCH A STELLAR YEAR, ONE OF THE REASONS WHY WE NAMED NOVO NORDISK COMPANY OF THE YEAR FOR 2023, REALLY AN INTERESTING YEAR AND SORT OF CREATING NEW OPPORTUNITY FOR YOU. WHAT ARE YOU LOOKING AT WHEN IT COMES TO ESPECIALLY YOU, I’M
SURE YOU LOVE LOOKING AT THE BALANCE BOOK RIGHT NOW. BUT OBVIOUSLY, INVESTORS ARE LOOKING AT YOU TO UNLOAD SOME OF THAT, AND WHERE MIGHT YOU BE UNLOADING SOME OF THAT CAPITAL ALLOTMENT THAT YOU NOW HAVE? >> THANK YOU SO MUCH FOR THE RECOGNITION FROM YAHOO! FINANCE,
MAKING US COMPANY OF THE YEAR. THIS IS SOMETHING WE’RE REALLY PROUD OF, AND TO US, THIS RECOGNITION IS ALSO ABOUT HOW WE RUN THE COMPANY AND ALL THE PATIENTS WE SERVE. AND I THINK IT’S IMPORTANT TO NOTE THAT BEING A SUCCESSFUL COMPANY IN THE PHARMACEUTICAL
INDUSTRY REALLY PUTS A LOT OF PRESSURE ON THE COMPANY TO REFRESH THE R&D PIPELINE, SO WHAT WE’RE DOING IN TERMS OF OUR LOCATION IS TO INNOVATE. SO, FIRST AND FOREMOST, WE INVEST IN OUR BUSINESS IN R&D AND SUPPLY CHAIN AS WE SPOKE
ABOUT BEFORE, SO WE ARE NOT JUST ENJOYING THE MOMENT OF TODAY AND THE NEXT FEW YEARS, SHORT, MEDIUM TERM, BUT WE ALSO HAVE AN ATTRACTIVE COMPANY AND GROWTH OUTLOOK FOR THE LONG-TERM INTO THE ’30s AND ’40s, SO REALLY DEPLOYING CAPITAL INTO R&D AND MANUFACTURING AND THIS
MORNING — OUR DIVIDEND PAYOUT AND OUR FULL-YEAR DIVIDEND PAYOUT FOR 2023 IS UP BY 52% COMPARED TO THE DIVIDEND PAYOUT FOR 2022. SO, A SIGNIFICANT PAYOUT TO SHAREHOLDERS ALSO IN THE FORM OF DIVIDENDS, AND THEN THE LAST YEAR, IN TERMS OF CAPITAL ALLOCATION, REALLY SHARE BUYBACK
AND WE JUST ANNOUNCED A NEW SHARE BUYBACK PROGRAM OF 20 BILLION DKK FOR 2024, AND THIS IS A NOTCH DOWN, 10 BILLION DOWN, COMPARED TO ’23, AND THAT IS REALLY A FUNCTION OF US STEPPING UP, AS I MENTIONED BEFORE, OUR INVESTMENTS INTO
CARE PICKS, NOW UP TO 45 BILLION DKK NEXT YEAR, BUT STILL SHARE BUYBACK ALSO IN ’24. >> ABSOLUTELY, AND I’M SURE INVESTORS ARE HAPPY TO HEAR ABOUT THE INCREASED DIVIDEND FOR THE YEAR. WE’LL HAVE TO LEAVE IT THERE, KARSTEN, BUT WE’LL BE WATCHING
NOVO WITH KEEN INTEREST AS YOU CONTINUE TO GROW IN THIS SPACE AND WHAT YOU DO WITH THAT CASH ON HAND. CFO OF NOVO NORDISK. >>> DON’T GO ANYWHERE. YAHOO!”YAHOO FINANCE LIVE” WILL RIGHT BACK. >>> WE’RE LESS THAN TWO WEEKS AWAY FROM SUPER BOWL LVII, AND
THE SAN FRANCISCO 49ers AND CHIEFS WILL FACE OFF IN AN EPIC SUNDAY GAME. WHO BETTER TO TALK TO THAN A TOP EXECUTIVE IN THE SPORTS INDUSTRY, 49ers TEAM PREPPING FOR THE BIG GAME, I’M JOINED NOW BY AL, SAN FRANCISCO 49ers PRESIDENT AND ELEVATES CHAIRMAN AND CEO.
GREAT TO HAVE YOU IN STUDIO WITH US. >> THANK YOU SO MUCH FOR HAVING ME. >> MY GOODNESS. ONCE AGAIN, YOU’VE GOT THIS MATCHUP, AND OFF A YEAR WHERE WE WERE JUST LOOKING AT SOME OF THE NUMBERS THAT HAVE COME IN FOR THE PLAYOFF VIEWERSHIP WHERE
WE’VE SEEN SOME NEW HIGHS SET HERE. HOW DO YOU KIND OF MAINTAIN THAT MOMENTUM FROM A VIEWERSHIP, A NEW FAN PERSPECTIVE, AND MAKE SURE THAT YOU’RE CAPITALIZING ON THAT FROM AN ORGANIZATIONAL SEAT THAT YOU HAVE? >> I THINK THE NFL’S DONE A FANTASTIC JOB THIS YEAR.
YOU’VE REPORTED HERE ON THIS NETWORK, 96 OUT OF THE TOP 100 VIEWED TELEVISION GAMES BUT WE GOT TWO GOOD STORY LINES HEADING INTO THIS. WE GOT TWO HISTORIC FRANCHISES, BROCK PURDY AGAINST PATRICK MAHOMES. I’M SURE WE’RE GOING TO TALK ABOUT TAYLOR SWIFT AND TRAVIS
KELCE AND ALL THE OTHER STUFF AROUND IT, BUT THE NFL IS LITERALLY NEVER BEEN IN A BETTER PLACE AS IT RELATES TO ON-FIELD TALENT, OFF-FIELD VIEWERSHIP, ALL THE POMP AND CIRCUMSTANCE ARNOLD IT. IT’S GOING TO BE A LOT OF FUN IN VEGAS. >> LET’S TALK ABOUT THAT.
SUPER BOWL IN VEGAS. THE SPORTS BETTING SCENE HAS JUST BEEN GROWING SO MUCH OVER THE PAST FEW YEARS HERE. WHAT DO YOU THINK IS NEXT FROM HOW ORGANIZATIONS LEAN INTO THIS, HOW THE NFL LEANS INTO THIS, AND WHAT DOES THAT MEAN
FOR HOW YOU LOOK AT THE FAN EXPERIENCE TOO? >> WELL, SPORTS BETTING, AS YOU’VE REPORTED, IT’S BEEN HERE FOR A WHILE, AND THERE’S NO QUESTION THAT THAT HAS REALLY GARNERED, I WOULD SAY, STARTED WITH YAHOO FANTASY, RIGHT, AND PEOPLE PLAYING FANTASY SPORTS
AND THAT’S WHAT GOT CASUAL FANS INVOLVED IN THE NFL, THEN SPORTS BETTING CAME ONLINE. BRAD, I WOULD SAY THE NEXT FRONTIER IS THE INTERNATIONAL GROWTH. WE SEE WHAT’S HAPPENING WHEN WE’RE PLAYING GAMES INTERNATIONALLY. NOW THAT FLAG FOOTBALL IS A HIGH SCHOOL WOMEN’S SPORT THAT’S
GOING TO BE IN THE OLYMPICS IN L.A. 2028, IT’S NOT JUST WHAT HAPPENS IN TACKLE FOOTBALL, BUT ALSO WHAT HAPPENS IN FLAG, THAT’S LEADING TO TREMENDOUS GROWTH, NOT JUST HERE IN NORTH AMERICA BUT ABROAD. >> LET’S TALK ABOUT SOME OF THE INTERNATIONAL FANDOM THAT IS
GROWING OUT, ESPECIALLY IN THE SPORTS COMMUNITY. YOU SPEAK OF THAT. WORLD CUP, THAT’S COMING TO YOU GUYS AT LEVI’S STADIUM. TELL US ABOUT THE SIGNIFICANCE OF THAT PARTNERSHIP AND MORE PARTICULARLY, WHEN ARE WE GETTING THE FIRST IN-GAME DENIM JERSEY? >> I’LL TELL YOU WHAT, I KNOW
LEVI’S WOULD WANT IT. THEY’RE THRILLED THEY GOT AN NFL APPAREL DEAL, AND LEVI’S IS A FANTASTIC PARTNER OF OURS. IT IS UNPRECEDENTED, BRAD, TO BE EXTENDING A DEAL THAT STILL HAD TEN YEARS IN IT AT RECORD NUMBERS. I MEAN, WE DID AN INCREASE OFF THE ORIGINAL 20-YEAR,
$220 MILLION DEAL. NOW THIS IS A TEN-YEAR EXTENSION FOR $170 MILLION. FRANKLY, THESE VENUES HAVE BECOME 365-DAY ASSETS. WE’VE DONE 155 EVENTS IN THE FIRST YEARS, TEN YEARS, OF OPENING LEVI’S STADIUM. WE’VE DONE $2 BILLION IN ECONOMIC IMPACT. BY THE WAY, 33 FOR OUR TAYLOR
SWIFT CONCERTS THIS PAST SUMMER, AND 12,000 JOBS HAVE BEEN CREATED IN THOSE TEN YEARS JUST IN THAT REGION BECAUSE OF LEVI’S. >> I WANT TO TALK ABOUT THE EXPERIENCE ECONOMY OUTLOOK, ESPECIALLY AS YOU WERE MENTIONING THE STADIUM AND THE
ROLE THAT THAT PLAYS AS A VENUE BUT ALSO THE VALUE THAT IT BRINGS TO THE LOCAL COMMUNITY TOO. WHEN WE THINK ABOUT THIS CONSUMER ENVIRONMENT RIGHT NOW, IS THIS CONSUMER ENVIRONMENT SHOWING CRACKS IN SERVICES SPENDING, AND WHAT’S THE NEXT BIG KIND OF DEMAND GENERATION
DRIVER THAT YOU ANTICIPATE NEEDING TO EXECUTE, NEEDING TO PULL THAT LEVER IN ORDER TO RETAIN THOSE CONSUMERS? >> WE’RE NOT SEEING IT ON THE ELEVATE SIDE. WE REPRESENT ABOUT 200 PROPERTIES WITHIN SPORTS ACROSS THE GLOBE, AND THERE’S NO QUESTION, CERTAIN AREAS ARE SEEING SOME SOFTNESS.
BUT AS IT RELATES TO THE MARQUEE BRANDS, THE MARQUEE ASSETS, WE’RE NOT SEEING ANY SOFTNESS. IF YOU LOOK AT THIS SUPER BOWL, I THINK IT’S REPORTED TO BE ON RECORD THE MOST EXPENSIVE TICKET PRICES OUT THERE. IF YOU LOOK AT WHAT F1’S DONE
THIS PAST YEAR WITH THE VEGAS RACE BUT FOR ME, I THINK SPORTS AND LIVE ENTERTAINMENT IS REALLY CAPTURING A LOT OF THOSE DOLLARS, SO IT’S PROBABLY ESCAPING THE ECOSYSTEM ELSEWHERE, BUT NOT IN THE SPORTS WORLD RIGHT NOW, AT LEAST WE’RE NOT SEEING IT.
>> WE’LL MAKE THIS A CIRCULAR CONVERSATION AND END WHERE WE STARTED AT AND THAT IS THE MATCHUP THAT IS COMING FORTH. THIS IS DIFFERENT THAN THE 2020 MATCHUP THAT WE SAW WHERE, NOW, YOU’VE GOT BROCK PURDY. YOU’VE GOT CHRISTIAN McCAFFREY, STORY LINES RUN ABOUND THERE.
BUT KANSAS CITY, THEY LOOK DIFFERENT TOO. THEY HAVE PATRICK MAHOMES, BUT THEY’VE ALSO GOT TAYLOR SWIFT, AND THAT’S AN EFFECT THAT WE’VE SEEN ABSOLUTELY BE A RISING TIDE FOR THE LEAGUE. HOW HAVE YOU BEEN ABLE TO QUANTIFY THAT TYPE OF EFFECT
THAT TAYLOR HAS BROUGHT TO THE NFL FOR THIS YEAR AND PERHAPS RETAINING SOME OF THAT NEW FAN BASE? >> IT’S HARD TO QUANTIFY, BUT OVER THE COURSE OF THE LAST 48 HOURS, THERE HAVE BEEN REPORTS THAT THE KANSAS CITY CHIEFS HAVE HAD EARN MEDIA OVER $300 MILLION
BECAUSE OF HER LIFT. I LEAN INTO IT. I HAVE THREE DAUGHTERS. THEY’RE HUGE TAYLOR SWIFT FANS. WE GOT TO HAVE HER IN THE BUILDING, AND YOU TALKED A LITTLE BIT ABOUT — AT LEAST WE TALKED AS I WAS COMING IN AS KRI CHARAC KRISTIN GETTING LICENSING.
SOMEBODY’S GOING TO TAKE THE LOMBARDI TROPHY HOME. I HOPE IT’S US, I’M BIASED, BUT EVERYTHING ELSE, WE SHOULD ALL LEAN INTO. THIS IS FUN. THIS IS AN ESCAPE FROM OUR DAILY LIVES. IT’S WHAT SPORTS IS ALL ABOUT. THE CAMARADERIE, THE PASSION, THE STORY LINES, EVERYTHING
GOING INTO IT, SO YOU KNOW WHAT? AS AN NFL TEAM, AS A PRESIDENT OF THE SAN FRANCISCO 49ers, LET’S LEAN IN TO ALL THIS JOY THAT’S HAPPENING. >> WHEN YOU THINK ABOUT THE STORIED ORGANIZATION, THE NAME THAT IS THE 49ers, THERE HAVE
BEEN, OF COURSE, OTHER TEAMS OUT THERE THAT HAVE LOOKED AT HOW THEY CREATE AN EQUITY STRUCTURE FOR SEASON TICKETHOLDERS, THE GREEN BAY PACKERS, NOTABLY, HAVE DONE THAT. MANCHESTER UNITED IS PUBLICLY TRADED. IS THAT SOMETHING THAT THE 49ers, YOU EVER SEE THE ORGANIZATION THINKING ABOUT?
HOW DO WE ENGAGE WITH FANS ON A VOTE WITH YOUR DOLLARS BUT ALSO KIND OF ANNEX YOUR FANDOM FINANCIALLY AS WELL HERE EVEN MORE SO? >> IT’S INTERESTING. I’M NOT SURE WE SEE IT AT THE SAN FRANCISCO 49ers, JUST GIVEN
WHERE WE’RE AT, BUT I DO THINK WE’RE HEADED TOWARDS A PATH — WE KNOW IN THE NBA AND OTHER LEAGUES HERE IN NORTH AMERICA, THEY’VE ALLOWED PRIVATE EQUITY INTO THOSE INVESTMENTS. WE’VE SEEN ASSET VALUE INCREASES FROM CALL IT A BILLION TO $8 BILLION OR $9 BILLION,
OBVIOUSLY, THE COMMANDERS TRADED FOR OVER $6 BILLION. WE’LL SEE IN THE NFL. THERE’S DISCUSSIONS AROUND WHETHER OR NOT PRIVATE EQUITY GETS LET INTO THE NFL. IT’S THE LAST LEAGUE IN NORTH AMERICA THAT DOES NOT ALLOW IT. I THINK THERE WAS A REPORT YESTERDAY, AT LEAST A RUMOR ON
THE BALTIMORE ORIOLES, BUT THERE’S NO QUESTION THAT IF YOU LOOK AT WHAT’S HAPPENING IN THE MEDIA MARKETS AROUND SPORTS AND WHAT THE SPENDING LOOKS LIKE, IF YOU’RE LOOKING AT WHAT’S HAPPENING AT THE GAME DAY AND HOSPITALITY AND MERCHANDISE, THEY’RE ALL AT REALLY RECORD
HIGHS, AND TRUTHFULLY, AT LEAST IN THE NFL, I DON’T SEE THOSE THINGS DECLINING, AND SO THE MAKE-UP OF THESE OWNERSHIP GROUPS, I THINK, WILL CONTINUE TO CHANGE. WE SAW WHAT MARK CUBAN JUST DID IN DALLAS. THERE’S A LOT OF TRANSACTIONS HAPPENING WITHIN THE SPORTS ECOSYSTEM.
>> AL, ALWAYS A PLEASURE TO GET YOUR TIME, INSIGHTS, AND OF COURSE, BIG GAME COMING UP. NO DOUBT. YOU’RE GOING TO HAVE ALL EYES, EARS TO THE GROUND. I MEAN, LOOK, WE MIGHT SEE YOU R RUNNING OUT THERE ON THE FIELD. AL GUIDO, SAN FRANCISCO 49ers
PRESIDENT, ELEVATE CHAIRMAN AND CEO JOINING US ON YAHOO! FINANCE. >>> THANK YOU SO MUCH FOR THAT INTERVIEW, BRAD. OUR THANKS TO AL GUIDO AS WELL. LET’S TALK ABOUT TAYLOR SWIFT. IS IT OVER NOW FOR TAYLOR SWIFT, DRAKE, AND JUSTIN BIEBER ON TIKTOK? UNIVERSAL MUSIC GROUP SET TO
REMOVE ALL ITS ARTISTS’ MUSIC OFF THE SOCIAL MEDIA PLATFORM IN THE COMING DAYS. FOR MORE ON THIS, ALEXANDRA CANAL IS HERE, AND WHEN WE TALK ABOUT THE SIGNIFICANT OF THIS, A LOT OF TIKTOK USERS ARE GOING TO BE PRETTY UNHAPPY. >> RIGHT NOW, TIKTOK USERS CAN
USE UP TO 60 SECONDS OF A SONG IN THEIR VIDEOS, BUT NOW, ON THE HEELS OF THIS NEWS, ARTISTS LIKE TAYLOR SWIFT, DRAKE, ARIANA GRANDE, ADELE, THAT’S NO LONGER GOING TO BE AVAILABLE. UNIVERSAL MUSIC GROUP IS ONE OF THE TOP MUSIC LABELS IN HOLLYWOOD.
IT FAILED TO NEGOTIATE A NEW LICENSING CONTRACT WITH TIKTOK, AND IN AN OPEN LETTER TO ARTISTS THAT WAS RELEASED LATE LAST NIGHT, UMG SAYS TIKTOK HAS BEEN BULLYING THEM, INTIMIDATING THEM INTO ACCEPTING A DEAL THAT IS LESS THAN WHAT THEY WANTED, LESS THAN WHAT THEY ULTIMATEL
DESERVE, ESPECIALLY WHEN IT RELATES TO A FEW ISSUES LIKE ARTIST COMPENSATION, ALONG WITH PROTECTIONS ON A.I. NOW, TIKTOK SAID IT IS SAD AND DISAPPOINTING THAT UMG HAS PUT THEIR OWN GREED ABOVE THE INTERESTS OF THEIR SONGWRITERS. THEY SAY THEY HAVE BEEN ABLE TO
NEGOTIATE CONTRACTS WITH OTHER TYPES OF LABELS. BACK IN JULY, IT DID REACH A DEAL WITH ANOTHER LABEL, WARNER MUSIC GROUP, BUT RIGHT NOW, IT LOOKS LIKE THE TWO SIDES ARE AT A COMPLETE STANDSTILL, AND LIKE YOU SAID, SEANA, THOSE SONGS ARE
GOING TO BE REMOVED IN THE COMING A DAYS, CHWHICH YOU WERE JUST TALKING ABOUT THE SUPER BOWL AND TAYLOR SWIFT. NO TAYLOR SWIFT ON TIKTOK, LEAST RIGHT NOW. >> WHAT DO YOU THINK THE SIGNIFICANCE OF THIS WITH THE TIMING, PLUS OTHER RED CARPET EVENTS THAT ARE FORTHCOMING?
>> TIKTOK IS A HUGE PLATFORM. BUT UMG IS ARGUING IT STILL ACCOUNTS FOR LESS THAN 1% OF ITS TOTAL REVENUE DUE TO HOW LITTLE THEY PAY ARTISTS. THEY ARE TRYING TO TAKE A STAND. THIS REMINDS ME OF WHAT WE HAVE BEEN SEEING IN HOLLYWOOD ACROSS THE BOARD.
WE TALKING ABOUT THE SAG-AFTRA STRIKES, THE ACTORS AND WRITERS FIGHTING ON THE PICKET LINES FOR PROTECTION SURROUNDING A.I. .A.I. IN MUSIC HAS BEEN A VERY STICKY TOUCHING POINT IN THE INDUSTRY, SO IT SEEMS LIKE NOW IS THE TIME THAT HOLLYWOOD
IS REALLY STEPPING UP TO THE MAN, SO TO SPEAK, AND TRYING TO MAKE SURE THEY ARE NOT FALLING BEHIND WHEN IT COMES TO THESE NEGOTIATIONS. >> YEAH, CERTAINLY, WE WILL SEE IF UMG IS SUCCESSFUL AT MAYBE FORCING SOME CHANGES INTO THESE CONTRACTS WITH TIKTOK.
THANK YOU SO MUCH. >>> LET’S TAKE A LOOK AT WHERE THE MARKET STANDS RIGHT NOW. ABOUT 90 MINUTES INTO THE TRADING DAY, AND BRAD AND I HAVE BEEN TALKING ABOUT IT OVER THE LAST TWO HOURS. A PLOT OF THE MARKET ACTION THIS MORNING AT LEAST BEING DRIVEN BY
THE TWO TECH GIANTS THAT REPORTED AFTER THE BELL LAST NIGHT. WE HEARD FROM ALPHABET. WE HEARD FROM MICROSOFT. A BIT OF A DISAPPOINTMENT, AT LEAST FROM INVESTORS’ VIEW, IN TERM OF THAT A.I. HYPE. WE’RE SEEING THAT REFLECTED IN THE MOVEMENT TO THE DOWNSIDE HERE THIS MORNING.
WE’VE GOT THE NASDAQ OFF JUST ABOUT 1.5%. >> INNOVATION CAN BE A A LOT OF EXPECTATIONS RIDING ON IT, AND THAT’S JUST WHAT WE’VE GOT COMING FORWARD. WE’VE GOT MUCH MORE, BUT THAT’S ALL FOR US TODAY. STAY TUNED FOR THE TOP OF THE 11:00 A.M. HOUR.
>>> WELCOME TO “YAHOO! FINANCE LIVE.” IT’S 11:00 A.M. ON THE EAST COAST, 8:00 A.M. ON THE WEST. I’M RACHELLE AKUFFO ALONGSIDE AKIKO FUJITA. HERE IS A LOOK AT WHAT WE’RE WATCHING THIS MORN. ALPHABET SHARES FALLING THIS MORNING AFTER MISSING ANALYST EXPECTATIONS ON AD REVENUE.
MICROSOFT STRUGGLING TO MEET THE STREET’S EXPECTATIONS FOR AI. INVESTORS HOPING FOR STRONGER RESULTS. APPLE, AMAZON AND META ALL SET TO REPORT AFTER THE BELL ON THURSDAY. >> BIG TECH CEOs HEADING TO CAPITOL HILL ANSWERING QUESTIONS ABOUT CHILD SAFETY ONLINE. WHAT THIS COULD MEAN FOR FUTURE LEGISLATION.
>> INVESTORS SETTING THEIR SIGHTS ON COMMENTS FROM FED CHAIR JAY POWELL THIS AFTERNOON. THE LATEST DECISION ON MONETARY POLICY AS TRADERS ARE SPLIT ON THE TIMING OF THE FIRST RATE CUT. >> FIRST, LET’S TAKE A LOOK AT WHERE ALL THREE MAJORS ARE
TRADING 90 MINUTES INTO THE TRADING DAY. AS YOU SAID, RACHELLE, IT IS ACT TECH TRADING. THE NASDAQ DOWN MORE THAN 1.5%. TAKE A LOOK AT WHERE THE DOW IS UP 34, S&P 500500 DOWN 41. OF COURSE INVESTORS KEEPING A CLOSE WATCH ON THE DECISION
EXPECTED TO COME DOWN AT 2:00 P.M. EASTERN. LET’S CHECK ON THE TREASURY MARKET AHELD OF THAT DECISION. WE HAVE SEEN SOME MOVES THERE ON THE LONGER END AS WELL AS THE SHORTER END HERE, ALL A PULLBACK, THE TEN-YEAR YIELD AT 3.95%. THE 30-YEAR YIELD AT 4.2%.
FIRST LET’S GET TO THE BIG STORY OF THE MORNING. TECH EARNINGS. DECLINE IN SHARES OF MICROSOFT AND ALPHABET, DESPITE THEM DELIVERING A BEAT ON EARNINGS. INVESTORS, THOUGH, NOT NECESSARILY IMPRESSED. RACHELLE, DON’T WANT TO MAKE TOO MUCH OF ONE DAY’S MOVE HERE. YOU CAN ARGUE THERE’S SOME
PROFIT-TAKING IN THERE GIVEN THE INCREDIBLE RUN-UP WE’VE SEEN. MAYBE A BIT OF SELL THE NEWS SITUATION. WE’VE BEEN LOOKING THROUGH ANALYST NOTES THIS MORNING THAT SEEM TO SUGGEST WHERE THE SENTIMENT IS DESPITE THE BEATS WE SAW FROM THE COMPANY. SPECIFICALLY ON ALPHABET.
THIS HEADLINE SAYS IT ALL “THE STRONG FINISH IS THERE, BUT INVESTORS WANTED MORE.” THERE’S A LOT OF FOCUS ON AD ROVE KNEW. WE SAW ACCELERATION BUT NOT WHERE INVESTORS WANTED IT TO BE. UP ABOUT 13% YEAR-ON-YEAR. YOUTUBE ADS UP 11% YEAR-ON-YEAR. >> WE KEEP SEEING THE WORD
EXPECTATIONS WHICH YOU YOU WONDER HOW MUCH OF THIS ALREADY BUILT INTO THE SHARE PRICE. WE KNEW AT SOME POINT THE RUBBER WAS GOING TO MEET THE ROAD. THEY’D WANT TO SEE THOSE EXPECTATIONS MAKE SENSE. STIFLE ANALYST MARK KELLY SAID NOT ENOUGH WITH THE STOCKS
REACHING ALL TIME HIGHS INTO THE PRINT. EXPECTATIONS TICKED HIGHER. ALMOST LIKE BEING A VICTIM OF YOUR OWN SUCCESS HERE. ALSO COMMENTARY FROM EVERCORE ISI SAYING THIS IS FUNDAMENTALLY A STRONGER QUARTER. THE PRICE ACTIONS FOLLOWING THE PRINT REFLECTING THAT HIGHER EXPECTATIONS THAT WEREN’T COMPETED.
THESE ARE EXPECTATIONS PUT ON THE STREET. SOME OF THIS WAS THE AI FUR VERY, THE PROFIT-TAKING AS WELL. THEY HAD TO REALIZE IT WASN’T GOING TO KEEP RIDING HIGH. PEOPLE WOULD WANT TO SEE THESE RESULTS SHOWING UP. >> YOU CAN ARGUE THERE’S A BIT
OF HEAD SCRATCHING COMING THROUGH, THE DAY AFTER A STOCK LIKE MICROSOFT SOME WOULD SAY WAS PRIZED TO PERFECTION. THOSE LIKE DAN IVES SAYING THIS IS A RESULT THAT THE COMPANY SHOULD FRAME BECAUSE IT WAS SO STRONG. THIS HEADLINE TO ME FROM GUGGENHEIM SAYS IT ALL.
GOOD ENOUGH. THAT’S THE HEADLINE COMING THROUGH FROM ANNUAL LIE DETECTOR TESTS AT GUGGENHEIM. GROWTH MODERATING OVERALL. HERE SPECIFICALLY IS WHAT THEY SAID. WE WONDER HOW FAR INTO THE FUTURE TO GET PAST IT. ARE WE ON THE CUSP OF THE RETURN TO HYPER DEMAND OR IS THIS
SPECIFICALLY A NEW NORMAL. SPECIFICALLY ON MICROSOFT YOU CAN ARGUE INVESTORS ARE LOOKING FOR ADDITIONAL COLOR ON REVENUE COMING THROUGH FROM AI AND THEIR PRODUCT COPILOT. HAVING SAID THAT, THE COMPANY DIDN’T REPORT ANY MATERIAL GAIN THERE ON THE REVENUE. IT ONLY LAUNCHED ONE MONTH INTO THE QUARTER.
THAT IS STILL TO BE DETERMINED. YOU HEARD SATYA NADELLA SAY SPECIFICALLY WE MOVED FROM TALKING ABOUT AI TO APPLYING AI AT SCALE. BASED ON THE SHARE MOVE YOU COULD ARGUE INVESTORS WANTED TO HEAR MORE ABOUT HOW THEY’RE APPLYING AND WHAT THAT MEANS FOR THE REVENUE PICTURE.
>> THAT’S TRUE. AS WE CONTINUE TO SAY AND AS YOU MENTIONED IN THAT CONTEXT, STILL VERY EARLY DAYS. A LOT OF THAT OVEREXCITEMENT BUILT IN. >>> SHIFTING GEARS TO SOMETHING HAPPENING IN D.C. ALMOST EVERY TEENAGER IN AMERICA IS ON SOCIAL MEDIA. ACCORDING TO U.S. SURGEON GENERAL ADVISORY RELEASED LAST
YEAR, 95% OF TEENS 12-17 ARE USING SOCIAL MEDIA PLATFORM WITH OVER A THIRD SAYING THEY USE THEM ALMOST CONSTANTLY. CEOs ARE ON CAPITOL HILL. LINDSEY GRAHAM STARTING THE HEARING WITH TOUGH WORDS FOR META CEO MARK ZUCKERBERG. >> MR. ZUCKERBERG, YOU AND THE
COMPANIES BEFORE US, I KNOW YOU DON’T MEAN IT TO BE SO, BUT YOU HAVE BLOOD ON YOUR HANDS. YOU HAVE A PRODUCT THAT’S KILLING PEOPLE. >> SO WHERE DO SOCIAL MEDIA CMPANIES GO FROM HERE? JOINING IS MATT PERRAULT, UNC TECH POLICY PROFESSOR AND FORMER FACEBOOK PUBLIC POLICY DIRECTOR.
THANK YOU SO MUCH FOR JOINING US THIS MORNING. WE WANT TO SET THE SCENE HERE ABOUT WHAT WE’RE COVERING HERE. IT’S NOT JUST ABOUT CHILD SAFETY. IT’S EXPLOITATION. IT’S ABOUT PREDATORS, DATA BEING SCRAPED FROM CHILDREN AGED 13 AND UNDER. WHAT IS GOING TO BE DIFFERENT THIS TIME?
THIS ISN’T META’S FIRST TIME IN THIS POSITION. >> I’M NOT SURE THAT ANYTHING IS GOING TO BE DIFFERENT. COMPANIES HAVE COME BEFORE CONGRESS NUMEROUS TIMES. EVERY TIME THEY’VE COME BEFORE CONGRESS, LEGISLATORS TALK ABOUT NOW IS THE TIME FOR ACTION. DESPITE THAT RHETORIC, WE HAVEN’T SEEN MUCH ACTIVITY, AT
LEAST AT THE FEDERAL LEGISLATIVE LEVEL, OVER THE LAST COUPLE YEARS. >> MATT, THAT’S NOT NECESSARILY A GOOD STARTING POINT WHEN YOU CONSIDER THIS IS A HEARING THAT’S STILL GOING ON. YOU’VE GOT ALL THE MAJOR CEO TESTIFYING HERE. THERE’S AN INHERENT CONFLICT, IT
APPEARS, BETWEEN THE MODEL THAT SOCIAL MEDIA COMPANIES HAVE VERSUS THE SAFETY ASPECT OF IT. DO YOU AGREE WITH THAT THESIS, THAT ESSENTIALLY THESE ALGORITHMS THAT BUILD THESE — THESE SOCIAL MEDIA COMPANIES ARE BUILT ON, SORT OF PLAY INTO THESE VERY CONCERNS THAT
LAWMAKERS ARE TRYING TO ADDRESS TODAY? >> I’M NOT SURE I AGREE WITH THE FRAMING OF THE QUESTION. THERE ARE KIDS ON SOCIAL MEDIA PLATFORMS AND KIDS HAVE LOTS OF POSITIVE EXPERIENCES, AND THERE ARE POSITIVE USE CASES FOR KIDS AND SOCIAL MEDIA. THERE ARE ALSO HARMS.
THOSE HARMS SHOULD BE MITIGATED BOTH BY THE PLATFORMS AND LEGISLATORS. IT DOESN’T SEEM TO ME LIKE WE’VE HAD MUCH ACTIVITY AND HOPE FOR ACTIVITY FROM CONGRESS. WE’RE IN AN ELECTION SEASON. IN AN ELECTION SEW SON, CONGRESS DOESN’T TAKE SIGNIFICANT ACTION. WHAT WE HAVE SEEN IS A LOT OF
ACTIVITY AT THE STATE LEVEL LAST YEAR THERE WERE ZERO BILLS PASSED IN CONGRESS TO REGULATE THE SECTOR. ZERO. STATES PASSED ABOUT 65 ON ISSUES LIKE ARTIFICIAL INTELLIGENCE AND PRIVACY, CONTENT MODERATION. THE LEAD ISSUE IN 2023 IN STATE LEGISLATURES WAS CHILD SAFETY. STATES PASSED ABOUT 23 BILLS ACROSS 13 STATES.
THIS WAS AN AREA OF SIGNIFCANT ACTIVITY AT THE STATE LEVEL, AND I THINK WE CAN ANTICIPATE THAT WILL HAPPEN IN 2024 AS WELL. >> MATT, WE KNOW THAT A NUMBER OF DIFFERENT COMPANY CEOs, FROM X, SNAP, DISCORD, BUT META GETTING THE BULK OF THE
ATTENTION BECAUSE OF BEING SUED BY 33 STATES. WITH THAT IN MIND, THEN, WHEN YOU DON’T HAVE ANY SORT OF SET FEDERAL REGULATIONS THAT COVER EVERYTHING AND YOU HAVE THIS PIECEMEAL APPROACH FROM STATES, HOW DIFFICULT DOES IT MAKE IT FOR SOMETHING LIKE SOCIAL MEDIA
WHICH IS ESSENTIALLY BORDERLESS? >> I THINK THAT’S YET TO BE SEEN. FIRST OF ALL, THERE ARE 13 STATES THAT PASSED LEGISLATION IN THIS AREA. THAT LEAVES A LARGE NUMBER OF STATES THAT HAVE NOT. IN THOSE OTHER STATES, THERE CURRENTLY ARE NO ON THE BOOKS
PROTECTIONS IN THIS AREA, AT LEAST EXPLICITLY RELATED TO ONLINE CHILD SAFETY. I THINK YOU’RE RIGHT TO POINT TO THE POSSIBILITY OF A PATCHWORK OF RULES ACROSS STATES. THAT’S NOT GOOD FOR COMPANIES THAT HAVE TO DEAL WITH LOTS OF DIFFERENT COMPLIANCE REGIMES. LIVE IN NORTH CAROLINA, I HAVE
KIDS IN NORTH CAROLINA. THE RIGHTS I HAVE AS A PARENT AND THE RIEPTS MY KIDS HAVE AS POTENTIAL USERS, I DON’T THINK THEY SHOULD CHANGE WHEN WE DRIVE FROM NORTH CAROLINA TO VIRGINIA AND WE CROSS THE BORDER. >> MATT, YOU MENTIONED THE
LEGISLATION WE’VE SEEN AT THE STATE LEVEL. THEY RANGE FROM SETTING A MINIMUM AGE FOR SOME OF THESE PLATFORMS TO REQUIRING PARENTAL CONSENT. ARE THERE ANY IN PARTICULAR YOU HAVE SEEN AT THE STATE LEVEL THAT YOU HAVE A LOT OF MUSCLE IN ADDRESSING THIS VERY ISSUE ABOUT
CHILD EXPLOITATION? >> THE QUESTION ABOUT SOLUTIONS IS A REALLY, REALLY HARD ONE. THIS IS AN ISSUE WHERE THERE’S A LOT OF UNITY AMONGST PARENTS AND AMONGST LAWMAKERS THAT THERE IS CHALLENGE THAT WE SHOULD ADDRESS IN SOME FORM. AS A PARENT, I FEEL A LOT OF
SYMPATHY WITH THAT PERSPECTIVE. I THINK THE QUESTION IS, HOW DO WE DO IT IN A WAY THAT IS RESPECTIVE OF KIDS’ RIGHTS TO FREE EXPRESSION AND RESPECTIVE OF KIDS’ PRIVACY? THAT IS REALLY DIFFICULT TO DO IN PRACTICE. IT’S EXTREMELY DIFFICULT. IF YOU JUST TAKE THE BASELINE
ISSUE, IN ORDER TO PROTECT CHILDREN WE NEED TO KNOW WHO IS A CHILD, THAT’S REALLY DIFFICULT TO DO IN PRACTICE. YOU CAN DO THINGS LIKE REQUIRE INDIVIDUALS TO SUBMIT IDENTIFICATION, BUT THAT THEN MEANS THAT SOCIAL MEDIA COMPANIES ARE COLLECTING A LOT
MORE DATA ABOUT WHO THEIR USERS ARE, INCLUDING COLLECTING SENSITIVE DATA LIKE ACTUAL IDENTIFICATION. EVEN THAT BASELINE ISSUE OF FIGURING OUT HOW DO I IDENTIFY WHO IS A KID AND WHO IS NOT. THE SOLUTIONS ARE REALLY, REALLY DIFFICULT. >> WE DID HEAR RANKING MEMBER
SENATOR GRAHAM TALKING ABOUT SECTION 230 WHICH ESSENTIALLY PROTECTS SOCIAL MEDIA COMPANIES FROM GETTING SUED FROM SOME OF THE CONTENT THAT USERS POST ONLINE. THAT CAME OUT IN 1996 WHEN ABOUT 40 MILLION PEOPLE WERE USING THE INTERNET. CURRENTLY LOOKING AT ABOUT 5 BILLION PEOPLE ONLINE.
IN TERMS OF THE PROGRESSION OF HOW SOME OF THESE SOCIAL MEDIA COMPANIES HAVE EVOLVED, IS PERHAPS REVOKING OR ADJUSTING SECTION 230 THE WAY TO DO IT? YOU ARE SEEING THIS UNWILLINGNESS TO SELF-REGULATE IN A WAY MAKING A MEANINGFUL IF DIFFERENCE.
>> I THINK SECTION 230 IS IMPORTANT IN PROVIDING PROTECTIONS LAWMAKERS WANT. FIRST OF ALL, IT MAKES IT LESS LIKELY THAT SOCIAL MEDIA COMPANIES WILL SENSOR USERS, AND THAT’S AN ISSUE REALLY IMPORTANT TO CONSERVATIVES. IT MAKES IT IKS POLICE IT THAT SOCIAL MEDIA COMPANIES HAVE THE
ABILITY TO MODERATE CONTENT ON THEIR PLATFORM. THAT’S PARTICULARLY OF INTEREST TO DEMOCRATS WHO WANT TO MAKE SURE TECH COMPANIES TAKE ACTION TO ADDRESS HARMFUL CONTENT. I THINK SOCIAL MEDIA — I THINK SECTION 230 IS LIKELY MORE PART OF THE SOLUTION THAN PART OF THE PROBLEM.
OUR CENTER AT UNC HAS PARTNERED WITH LAW FAIR AND SLATE TO PUBLISH A LIST OF ALL THE 230 PROPOSALS INTRODUCED IN CONGRESS OVER THE LAST COUPLE YEARS. IF ANYBODY WANTS TO CHECK THAT OUT, THEY CAN GO TO THE WEBSITE TO SEE THE CATALOG OF THE
DIFFERENT APPROACHES LAWMAKERS HAVE USED. WHAT’S MORE CHALLENGING IS THAT LAWMAKERS BEAT THE DRUM ON THIS BUT DON’T ACTUALLY TAKE ACTION. AGAIN, WE’RE IN AN ELECTION YEAR. SO IT’S UNLIKELY WE’LL SEE MUCH ACTION IN THE COMING MONTHS. >> FINALLY, MATT, A QUESTION
THAT MAY BE A BIT CYNICAL HERE. WHEN YOU LOOK AT A COMPANY LIKE META, A PUBLICLY-TRADED COMPANY, PROFITS HAVEN’T NECESSARILY TAKEN A HIT AS A RESULT OF ALL THESE CONCERNS THAT HAVE BEEN RAISED. SHAREHOLDERS AREN’T NECESSARILY RESPONDING TO THE RESEARCH AND STUDIES THAT HAVE COME OUT.
AT WHAT POINT DOES THIS, AS IN THE CONCERNS AROUND HARMS ON USERS, AT WHAT POINT DOES THAT BECOME A BUSINESS CONCERN FOR A COMPANY LIKE META? OR IS IT ALREADY EVEN THOUGH THAT’S NOT NECESSARILY REFLECTED IN THEIR FINANCIALS? >> I THINK IT ACTUALLY HAS BEEN
REFLECTED IN SOME COMPANIES’ FINANCIALS. META’S STOCK PRICE IS UP RIGHT NOW. IT WENT THROUGH A LONG PERIOD OF A SLUMP. WE CERTAINLY HAVE SEEN X FACE SIGNIFICANT CHALLENGES WHEN THERE’S BEEN A PERCEPTION THAT THEY’VE UNDERINVESTED IN TRUST AND SAFETY. THAT HAS RESULTED IN ADVERTISER FLIGHT.
I DO THINK WE’VE SEEN COMPANIES PERCEIVE THIS AS A BUSINESS ISSUE. I ALSO THINK IT’S IMPORTANT TO RECOGNIZE THAT IT’S NOT JUST MARK ZUCKERBERG WHO IS TESTIFYING TODAY, EVEN THOUGH HE’S THE PERSON ON THE SCREEN RIGHT NOW. IT’S A RANGE OF DIFFERENT PLATFORMS.
THOSE PLATFORMS ALSO HAVE AN INTEREST IN HAVING STRONG EXPERIENCES FOR KIDS ONLINE WHICH I THINK MEANS INCLUDING KIDS IN THOSE ONLINE EXPERIENCE, NOT CENSURING THEM ENTIRELY OR PREVENTING THEM FROM HAVING ACCESS TO SOCIAL MEDIA PLATFORMS THAT PEOPLE OF OTHER ABLES HAVE. ALSO, THERE’S A RESPONSIBILITY
FOR TECH TO HOPEFULLY DO IT IN A WAY THAT ALLOWS FOR A DIVERSE SET OF COMPANIES. THERE ARE COMPANIES TESTIFYING TODAY THAT HAVEN’T TESTIFIED BEFORE, LIKE DISCORD AND SNAP, FOR INSTANCE. AT LEAR THEIR CEOs HAVEN’T TESTIFIED. I THINK IT’S IMPORTANT TO HEAR
ABOUT THE RANGE OF THINGS THEY DO TO PROTECT KIDS ONLINE AND THE UNIQUE EXPERIENCES THEY HAVE DEALING WITH THESE COMPLIANCE CHALLENGES. IT’S TYPICALLY THE CASE WHERE SMALLER COMPANIES CAN COMPLY WITH DIFFERENT RULES ACROSS STATE LINES. THEIR VOICE HERE I THINK IS IMPORTANT FOR THINKING ABOUT
SOLUTIONS THAT WILL WORK NOT JUST FOR THE METAS OF THE WORLD BUT SMALLER PLATFORMS. >> MATT, OBVIOUSLY A LOT OF HEADLINES WERE MADE WHEN DISTORTED AND DEEP FAKED IMAGES OF TAYLOR SWIFT WERE CIRCULATING ALL OVER X. IT DID TAKE A WHILE FOR THE IMAGES TO COME DOWN.
IF SOMEONE AS BIG AS TAYLOR SWIFT, CAN TAKE A MACHINE OF HER FAN BASE TO GET CONTENT MODERATORS TO PAY ATTENTION. IF YOU’RE AN AVERAGE PERSON, HAVING THESE COMPROMISING IMAGES ONLINE, WHAT CAN PEOPLE DO TO PROTECT THEMSELVES AS SOME OF THESE PROTECTIONS ARE NOT BUILT
IN, YOU HAVE TO OPT INTO THEM, ESPECIALLY IF YOU’RE A YOUNG PERSON. >> THIS IS A REALLY DIFFICULT SET OF ISSUES. I THINK PEOPLE FACE A RANGE OF CHALLENGES IN THE RELATIONSHIP THEY HAVE WITH TECH COMPANIES. I DO THINK IT’S IMPORTANT THAT THEY UNDERSTAND THE SETTINGS
AVAILABLE TO THEM. I THINK YOUR QUESTION IS SPOT ON. THAT CAN BE REALLY HARD TO DO, IT CAN BE COMPLICATED, IN THE WEEDS OF VARIOUS DIFFERENT COMPANIES’ SETTINGS OFFERINGS. I THINK IT’S IMPORTANT FOR PEOPLE TO FIGURE OUT THE SETTINGS THAT WORK BEST FOR THEM
AND THE USAGE THAT WORKS BEST FOR THEM, THAT GIVES THEM A POSITIVE EXPERIENCE. I THINK THAT’S THE KIND OF THING WE NEED TO EDUCATE PEOPLE ABOUT AND TO PROMOTE GOOD, SPECIFIC TACTICS FOR DIGITAL CITIZENSHIP AND DIGITAL HEALTH. >> ALWAYS APPRECIATE YOUR PERSPECTIVE, MATT PERREAULT,
FORMER FACEBOOK POLICY DIRECTOR. >> THANK YOU. >>> ALL YOUR MARKET ACTION STRAIGHT AHEAD. STAY TUNED. YOU’RE WATCHING YAHOO! FINANCE. >>> THE FOMC OUT WITH ITS POLICY DECISION THIS AFTERNOON. NO CHANGE EXPECTED IN INTEREST RATES THIS AFTERNOON. INVESTORS WILL BE LISTENING ABOUT SIGNAL FOR A RATE CUT WHEN
JEROME POWELL TAKES THE PODIUM AT 2:30 EASTERN THIS AFTERNOON. 60% ARE EXPECTING A RATE CUT AT THE MARCH MEETING. LET’S BRING IN CINDY BELLU, CON KNEE NORTH AMERICA CIO. CINDY, GOOD TO TALK TO YOU TODAY. WHAT SPECIFICALLY ARE YOU EXPECTING TO HEAR FROM THE FED
CHAIR THIS AFTERNOON? >> GREAT TO SPEAK WITH YOU AS WELL. AS WE’RE LOOKING AT THE FED’S SPEECH TODAY FOLLOWING THEIR MEETING, THEIR TWO-DAY MEETING, WE EXPECT IT TO BE REALLY KNEW TRAL. I THINK WE SAW POWELL TURN TO A MORE DOVISH STANCE WHEN HE TOOK
THE PODIUM IN DECEMBER OF LAST YEAR AND THAT SENT MARKETS FLYING PRETTY QUICKLY AND MAYBE SOME LESSONS LEARNED FROM THAT. ALSO, THE REALITY IS THE EVIDENCE ISN’T QUITE THERE YET FOR THEM TO BE AS DEFINITIVE ABOUT WHEN TO START CUTTING RATES.
WE EXPECT THAT THEY WILL TRY TO ABSORB SOME OF THE FIRST QUARTER DATA WHICH THEY HAVEN’T HAD THE OPPORTUNITY TO SEE MUCH OF YET. WE DON’T HAVE A READING ON JANUARY JOBS. THAT WILL COME AT THE END OF THIS WEEK. WE KNOW THERE ARE CPI REVISIONS
THAT ARE COMING. THAT’S IMPORTANT AS WELL. HE DOES HAVE THE BENEFIT OF THE HUMPHREY HAWKINS TESTIMONY WHICH WILL BE DONE IN EITHER LATE FEBRUARY OR EARLY MARCH BEFORE THE NEXT FET MEETING. MAYBE WE’LL GET MORE INSIGHT FROM THE FED OVER THE NEXT COUPLE MONTHS.
WE EXPECT TODAY TO BE NO CHANGE IN RATES AND TRY TO STAY PRETTY QUIET ON WHAT THEY’RE PLANNING TO DO AS FAR AS CHANGING THE TRAJECTORY OF THE BALANCE SHEET REDUCTION. >> CINDY, WHAT DO YOU THINK IS GOING TO BE THE KEY THEM?
SINCE WE’RE NOT EXPECTING A CUT, WHAT DO YOU EXPECT CHAIR POWELL TO HONE IN ON? >> WE THINK IT’S GOING TO BE THIS BATTLE BETWEEN INFLATION AND THE LABOR MARKETS. EVERYBODY IS GETTING PRETTY COMFORTABLE WITH THE IDEA THAT INFLATION IS SLOWLY MOVING
TOWARDS THE FED’S TARGET AND CONSISTENTLY GOING TO GET THERE. WE’RE NOT QUITE ON THE SAME PAGE WITH THAT. WE’RE WATCHING MONTHLY INFLATION OF .2 OR .3%. AS YOU ANNUALIZE THOSE, THAT DOESN’T GET US TO THE FED’S 2% TARGET. WE’RE NOT QUITE AS COMFORTABLE, BUT THE MARKET IS CONFIDENT THAT
INFLATION IS WELL IN CHECK. WHAT’S THE OTHER PART OF THE FED’S MANDATE? THE LABOR MARKETS. WE’RE WONDERING TODAY IF CHAIR POWELL WILL GIVE IN A LITTLE BIT TO THE QUESTIONS HE GOT ASKED LAST TIME AND PROBABLY AGAIN TODAY WHICH IS MORE IMPORTANT. IF INFLATION IS TRULY IN CHECK
AND IF FED CHAIR POWELL IS WILLING TO SAY THAT THE LABOR MARKETS ARE MORE IMPORTANT, THAT MEANS THE FED IS GETTING MORE COMFORTABLE ON INFLATION. IT DOES TURN THE ATTENTION FULLY ON THE LABOR MARKETS WHICH IS WHAT WE’VE BEEN FOCUSED ON FOR QUITE SOME TIME.
WITH STRONG, TIGHT LABOR MARKETS, THE CONSUMER WILL CONTINUE TO FEEL GOOD ABOUT SPENDING. THAT MAY CREATE SOME CHALLENGES FOR SOME OF THOSE STUBBORN, STICKY PORTIONS OF INFLATION. IT MAKES THE QUESTION ABOUT WHEN THEY START EASING A LITTLE BIT LESS OBVIOUS TO US.
IF THEY SHOW A SIGNAL THEY FEEL GOOD ABOUT INFLATION, MARKETS WILL PERCEIVE THAT AS MARCH IS THE FIRST CUT AND THERE WILL BE A SERIES OF THEM FROM THERE. >> CINDY, LET’S LOOK AHEAD TO FRIDAY. OBVIOUSLY THE BIG JOBS NUMBER COMING THROUGH.
IF THAT HEADLINE NUMBER COMES IN STRONGER THAN EXPECTED AND YOU SORT OF LOOK AT ALL OF THE DATA WE’VE GOTTEN ON INFLATION SO FAR, IN YOUR MIND, DOES THAT MAKE MARCH A LIVE MEETING? HOW DO YOU THINK ABOUT THAT IN THE CONTEXT OF ALL THE OTHER
ECONOMIC DATA THAT’S COME THROUGH? >> SURE. IT’S CERTAINLY A MURKY PICTURE WHEN YOU TRY TO PUT IT ALL TOGETHER. ONE OF THE THINGS WE’RE LOOKING AT WITH THE LABOR MARKETS, WEAVE HEARD FROM THE FED LOOKING FOR UNEMPLOYMENT TO BREAK ABOVE 4%. WE’VE BEEN CHALLENGED TO DO THAT.
THE EXPECTATIONS FOR A SLIGHT UPTICK TO 3.8. IF WE SEE THE RISE OF UNEMPLOYMENT, THAT SHOULD GET THE ATTENTION OF THE FED AND IT BRINGS THE MARCH MEETING A BIT MORE INTO FOCUS FOR THAT FIRST CUT. IF, HOWEVER, WE SEE THAT
CONTINUED STRENGTH IN THE LABOR MARKETS AND THE UNEMPLOYMENT RATE STAYS IN CHECK AND IMPORTANTLY AS WELL, WHAT WE SEE FOR WAGE INFLATION, WE GOT THE EMPLOYMENT COST INDEX TODAY. IT WAS BETTER THAN EXPECTED AT .9%. EXPECTATIONS WERE 1%. THE FULL YEAR WAS 1.2%.
THAT MEANS REAL WAGE GROWTH FOR 2023. THOSE WAGE DATA POINTS FOR THE EMPLOYMENT REPORT ON FRIDAY WILL BE EQUALLY IMPORTANT BECAUSE THAT WILL INFORM THE FED ABOUT FORWARD.CONSUMER WILL FEEL GOIN- SO STRENGTH IN THAT EMPLOYMENT REPORT WOULD SUGGEST THE FED PROBABLY CAN STAY ON HOLD LONGER.
WEAKNESS IN THAT EMPLOYMENT REPORT MAY BRING FORWARD THAT FIRST RATE CUT TO MARCH. >> CINDY, EVEN AS WE LOOK AT SOME OF THE FED SPEAK LEADING UP TO THIS MEETING, NOT REALLY SEEING AN IMPETUS TO CHANGE AS THEY’RE NOT SEEING A CONSISTENT DECLI
DECLINE, ESPECIALLY IN CORE INFLATION. >> I THINK THE QUESTION THAT INVESTORS MOSTLY HAVE IS WHAT ARE YOU WAITING TO SEE BREAK IF YOU’RE WILLING TO HOLD RATES AT THESE LEVELS? WE’RE IN THE CAMP THAT THEY SHOULD HOLD RATES HIGHER FOR LONGER.
IF THEY’RE TRUE ABOUT THE 2% TARGET, WE’RE NOT THERE YET. THE MONTHLY DATA DOESN’T SUPPORT US GETTING THERE ANY TIME QUICKLY. WE SEE THE HIGHER FOR LONGER. THE MARKETS ARE FIGHTING THAT. THEY’RE TRYING TO FIGURE OUT WHAT IS IT GOING TO TAKE FOR THE
FED TO SEE, TO ACTUALLY BREAK BEFORE THEY’RE WILLING TO ADMIT THEY’RE GOING TO START CUTTING RATES AND NEED TO DO IT MORE AGGRESSIVELY THAN WHAT THEIR DOT PLOTS ARE SUGGESTING. THERE’S A HUGE GAP BETWEEN THOSE TWO THINGS. BACK TO FIVE OR SIX RATE CUTS BY
THE MARKETS AND ONLY THREE BY THE FED. I THINK THAT’S ANOTHER BIG PIECE OF IT. WHEN WILL THE FED FEEL CONFIDENT ENOUGH THEY CAN START LEAVING LIQUIDITY SITUATION THE SAME IN THE MARKETS. IN OTHER WORDS, GETTING BACK TO THEIR BALANCE SHEET. WHAT ARE THEY GOING TO DO WITH
THAT? I THINK THAT’S A BIG LINGERING QUESTIONS FOR TODAY AS WELL. >> I KNOW MARKETS WILL BE LOOKING FOR ANY DOVISH TONE THEY CAN EXPECT FROM THE FED. HE’LL KEEP IT STEADY IN THAT ANNOUNCEMENT. APPRECIATE YOU JOINING US THIS MORNING. CINDY BELLU, CONTINUING NORTH AMERICA CIO.
>>> STARBUCKS SALES GETTING HIT BY SLOWING CONSUMER DEMAND AND INFLATION. CHINA IS LEAVING INVESTORS PARTICULARLY WORRIED EVEN WITH THE BEVERAGE COMPANY’S PUSH INTO SMALLER CITIES. LET’S BRING IN YAHOO! FINANCE’S BROOKE DiPALMA. >> CERTAINLY STARBUCKS RESULTS DIDN’T ALLEVIATE WALL STREET’S CONCERNS OVER THE FUTURE GROWTH
PLANS IN CHINA. JUMPING 10% THIS PAST QUARTER IN CHINA, FALLING SHORT OF THE 16% JUMP THAT WALL STREET EXPECTED. THAT WAS LARGELY DRIVEN BY A COUPLE OF KEY FACTORS. THAT SLOWER SALES OF HIGHER-PRICED MERCHANDISE IN ADDITION TO A MORE CAUTIOUS CONSUMER THEY’RE SEEING IN CHINA.
DESPITE ALL THAT, FOOT TRAFFIC DID JUMP 21%. THAT WAS LARGELY DUE TO A LAPSE IN COVID-19 RESTRICTIONS. TECH SIZE DROPPED 9%. THIS COMES AS LOCAL BRANDS LIKE LUCKEN COFFEE AND COTY COFFEE ARE COMING IN WITH LOW PRICE VAT GEES. DESPITE THE LOW PRICE COMPETITORS, INTUKS CFO RACHEL
AND JERRY TELLING US MORE ON THAT THIS MORNING. >> WE CONTINUE TO FOCUS ON BEING PREMIUM. THAT MEANS A PREMIUM EXPERIENCE. WE HAVE DISTINCT AND COMPETITIVE ADVANTAGES TO DRIVE THAT INCLUDING A VERY LOCALLY RELEVANT COFFEE FORWARD INNOVATION STRATEGY WITH OUR BEVERAGES AND FOOD.
WE SAW GOOD SUCCESS WITH THAT IN THIS QUARTER AND WE’LL CONTINUE THAT. WE EXPECT OVER TIME YOU’LL START TO SEE THE PER CAPITA COFFEE CONSUMPTION INCREASE WHICH IS A GOOD THING. WE’LL BENEFIT FROM THAT. >> ON THE CALL LAST NIGHT CEO BRENDA WONG MADE IT CLEAR
THERE’S A PROMOTIONAL ENVIRONMENT THEY’RE SEEING IN CHINA BUT NOT INTERESTED IN ENTERING A PRICE WAR THERE. THEY DO PLAN TO SEE IT AS A PREMIUM PLAYER. THEY PLAN TO GROW RAPIDLY TO 9,000 STORES BY 2025. THEY DID LOWER THEIR FISCAL 2024 GUIDANCE, PARTICULARLY FOR SALES GROWTH.
IN CHINA THEY EXPECT TO GROW LOW SINGLE DIGITS, DOWN ROUGHLY 4% TO 6% RANGE THEY HAD PREVIOUSLY ANTICIPATED. >> BROOK, STAY THE COURSE, NO REAL PROMOTIONS. YET YOU’RE TALKING ABOUT THE COMPETITION FROM THE LIKES OF LUCKEN. HOW DOES STARBUCKS DIFFERENCE EIGHT THEMSELVES?
>> KIKO, THEY’RE DOUBLING DOWN SAYING THEY BELIEVE AS TIME GOES ON THEY’RE GOING TO GROW THAT COFFEE CONSUMPTION AMONG CHINESE CONSUMERS. BUT THEY’RE STICKING TO THAT PREMIUM STRATEGY, TRYING TO ENGAGE CHINESE CONSUMERS AS THEY GROW AND MAKE THAT AGGRESSIVE GROWTH STRATEGY THERE. ONE THING THEY’RE DOING IS
MAKING A SIGNIFICANT INVESTMENT IN TECHNOLOGY. THEY NOW KNOW FROM BEING THERE AND GROWING RAPIDLY IN RECENT YEARS THAT THESE CONSUMERS TEND TO ENGAGE MORE ON DIGITAL. WE NOW KNOW DIGITAL CHANNELS ACCOUNTED FOR A RECORD 52% OF SALES THERE. THEY AIM TO INVEST IN TECHNOLOGY THERE.
OTHER WAYS THEY PLAN TO DO IT, A BT UNTRADITIONAL MAYBE FOR THIS MARKET, INCREASE ENGAGEMENT AND SOCIAL MEDIA, RATHER TRADITIONAL WITH INFLUENCERS AND PARTNERSHIPS. INTERESTINGLY ENOUGH, A LOT OF LOW-PRICED COMPETITORS, THEY AIM TO GO TO MARKETS WHERE THEY ARE. THEY SAY THEY’RE INCREASING PERCENTAGES OF NEW STORES
OPENING IN LOWER TIER MARKETS. TRYING TO TARGET PLACES THEY HAVEN’T BEEN BEFORE AND TRANSCRIBING TO UNDERSTAND THE CONSUMER MORE AS THEY CONTINUE TO STAY THE COURSE, LOOK TO GROW THERE, BUT THEY’RE NOT NECESSARILY SEEING THE RESULTS THAT THEY MAY HAVE EXPECTED. >> WE’LL CONTINUE TO TRACK THAT.
APPRECIATE THAT AS ALWAYS, OUR VERY OWN BROOKE DiPALMA. ALL YOUR MARKETS ACTION STILL AHEAD. STAY TUNED. YOU’RE WATCHING YAHOO! FINANCE. >>> THE NASDAQ DOWN ABOUT 1.5% HERE WITH TECH SHARES CONTINUING TO COME UNDER PRESSURE. THIS COMES AFTER MICROSOFT AND ALPHABET REPORTED EARNINGS, BOTH BEAT OVERALL EARNINGS ESTIMATES
BUT DID NOT BEAT INVESTORS’ LOFTY EXPECTATIONS. FOR MORE ON HOW TO DIVERSIFY YOUR EXPOSURE WITH MAG SEVEN AS PART OF OUR ETF REPORT BROUGHT TO YOU BY INVEST CO-QQQ. CYNTHIA, THE MAG SEVEN BEEN A VERY POPULAR TRADE WHEN YOU TALK ABOUT ETFs.
>> AKIKO, IT’S BEEN IN THE LAST YEAR OR SO INVESTORS CAN’T GET ENOUGH OF THE MAG SEVEN AS YOU WELL KNOW. A LOT OF MONEY HAS GONE INTO EVERYTHING FROM YOUR BIG CLASSIC TECH FUNDS, YOUR QQQs OF THE WORLD AND INTO MORE THE AI
FOCUSED TYPE OF STRATEGIES IT’S BEEN LIKE ANYWHERE YOU FIND SOME OF THESE NAMES, YOUR NVIDIAs, AMDs, APPLES, THE MONEY HAS GONE THERE. WE’RE STARTING TO SEE A LITTLE PAUSE THERE, A LITTLE HESITATION BECAUSE THERE’S A LITTLE UNCERTAINTY ON WHAT THIS LOOKS LIKE GOING FORWARD.
APPETITE HAS BEEN STRONG FOR THESE NAMES AS YOU KNOW ACROSS ETFs, ACROSS THE STOCK MARKET DIRECTLY. ANYWHERE THEY CAN GET THEIR HANDS ON THEM. >> SO SINTHIA, AS WE OWN IN ON AI, YOU HAVE PURE ETF PLAYS, MORE WHERE AI IS A THEME BUT
INCLUDE DIFFERENT POCKETS OF THINGS. YOU HAVE SOME COMPANIES ALMOST PLANNING ON USING AI AS A COPILOT TO FUEL BUSINESS GROWTH. WHAT ARE SOME THAT YOU LIKE AS YOU DIG DOWN INTO THESE DIFFERENT SEGMENTS? >> WHAT’S INTERESTING ABOUT THE AI SPACE IS THERE’S SO MANY WAYS
TO TACKLE IT. AI AS AN INVESTMENT THEME, YOU WANT TO CAPTURE THAT AI INNOVATION, THE DISRUPTION. THESE AI FUNDS COME IN MANY DIFFERENT FLAVORS. SOME ARE ALL ROBOTICS, SOME ARE BROADER TAKES. YOU CAN SLICE AND DICE IT IN DIFFERENT WAYS. WHAT’S BEEN INTERESTING IS SINCE
CHATGPT CAME OUT ABOUT A YEAR AGO OR SO, ALL THAT HYPE, ALL THAT ENTHUSIASM OVER THE INNOVATION IN THE SPACE HAS REALLY KIND OF COOLED DOWN. IT’S LIKE WE’VE GONE FROM THE HYPE TO GROWING PAINS, A LITTLE MATURITY SINKING IN. FROM AN INVESTMENT PERSPECTIVE
IN THE ETFs WHAT HAS REALLY WORKED WELL IS CONCENTRATION. SO THE MORE MAG SEVEN YOU HAVE IN YOUR AI PORTFOLIO, THE BETTER YOU’VE DONE. GOING FORWARD, THAT MAY OR MAY NOT BE THE CASE. MOST MARKET STRATEGISTS ARE CALLING FOR DIVERSIFICATION. BE WARY OF TOO MUCH AI EXPOSURE.
AS AN INVESTOR, WHAT YOU REALLY HAVE TO DO IS TAKE A LOOK AT WHAT DOES THE PORTFOLIO LOOK LIKE. ONE OF THE CLASSIC AI BATTLES IS BETWEEN FUNDS LIKE ROBO VERSUS BOTS WHICH WERE TWO OF THE FIRST ROBOTICS FOCUSED ETFs. THEY’RE A CLASSIC EXAMPLE OF THIS.
WITH BOTS, NVIDIA IS THE BIGGEST HOLDING, IT REPRESENTS SO MUCH OF THE PORTFOLIO EXPOSURE WHERE ROBO IS MORE DIVERSIFIED, TILTS MUCH MORE TO SMALLER CAP SO HASN’T PERFORMED AS WELL. GOING FORWARD, IF DIV DIVERSIFICATION BECOMES THE WAY TO GO ABOUT THIS, YOU OUGHT TO
LOOK OUT FOR THOSE KIND OF THINGS, HOW MUCH ARE YOU CONCENTRATED ON THE TOP NAMES. THESE ARE THE WAYS TO THINK ABOUT THE SPACE AS YOU LOOK TO INVEST. >> IS THAT WHAT YOU’RE ADVISING CLIENTS, CINTHIA, TO NOT THROW ALL YOUR ELGS IN ONE BASKET, BUT
IF YOU ARE GOING TO INVEST IN AI, MAYBE DIVERSIFY A LITTLE? >> THIS IS WHAT WE’RE HEARING FROM PEOPLE WE’VE BEEN TALKING TO. IT’S THE CALL FOR DIVERSIFICATION. IT’S TOUGH TO EMBARK ON DIVERSIFICATION WHEN YOU’VE SEEN THE KIND OF PERFORMANCE MAG SEVEN B HAS DELIVERED.
IT’S EASY TO WANT TO BET ON THE WINNERS BIG TIME, BUT EVERYONE WE’VE BEEN TALKING TO THIS YEAR IS REALLY CAUTIOUS. WE DON’T KNOW WHAT THE FED IS GOING TO SAY. WE DON’T KNOW WHAT THE ENVIRONMENT IS GOING TO BE FOR GROWTH NAMES.
THERE’S A LOT OF CALL FOR SLOW DOWN ON GROWTH, LET’S GO INTO MORE MICK CAL SECTORS. IF YOU LOOK AT FORWARD PE EARNINGS, THESE COMPANIES ARE SO OVERVALUED RELATIVE TO THE REST OF THE MARKET, IS THERE A PERIOD OF CONSOLIDATION COMING? ALL THESE THINGS ARE SUGGESTING
WATCH OUT FOR DIVERSIFICATION, MAKE SURE YOUR PORTFOLIO IS NOT HEAVILY TILTED TOWARDS TWO OR THREE NAMES. IT’S ALL ABOUT RISK MANAGEMENT AT THE END OF THE DAY. >> SPEAKING OF RISK MANAGEMENT, HAVE TO TALK ABOUT SPOT BITCOIN ETFs. STILL EARLY DAYS BUT AT LEAST
SOME SENSE OF SOME OF THE FLOWS ‘RE SEEING. GRACE BITCOIN TRUST SEEING NET OUTFLOWS OF ABOUT $5 BILLION. RECIPIENTS REALLY BENEFITING FROM THIS. BLACKROCK AND FIDELITY. WHAT ARE WE SEEING AS THIS IS BECOMING SLIGHTLY MORE MATURE EVEN THOUGH IT’S STILL EARLY DAYS HERE?
>> IT’S BEEN A BUSY TWO WEEKS FOR THESE ETFs. I THINK NO ONE IS TOO SURPRISED TO SEE THE OUTFLOWS FROM GBTC. IF YOU REMEMBER, THAT WAS A TRUST BEFORE IT CONVERTED TO AN ETF. ALL THAT MONEY WAS LOCKED IN THERE. THIS IS THE FIRST OPPORTUNITY
THESE INVESTORS HAVE TO REALLY GET OUT. GBTC COSTS THREE, FOUR, FIVE TIMES AS MUCH AS SOME OF THE OTHER ETFs. WE’VE SEEN SOME OF THE MONEY GET OUT, THEY LOCK IN PROFITS AND MAY GO TO CHEAPER FUNDS. WE CAN’T REALLY RELATE ONE-TO-ONE HERE.
THE ETFs THAT CAME OUT OTHER THAN THAT, THEY’RE LOW AND EASY ENTRY. WE’RE STARTING TO SEE MONEY FLOW. ALL NINE ETFs HAVE SEEN POSITIVE INFLOUS, SO DEMAND IS THERE. WE’RE ALSO STARTING TO SEE WHO IS EMERGING AS CATEGORY LEADERS. MAYBE TO NO ONE’S SURPRISE,
COMPANIES LIKE I SHARES, FIDELITY, THE BIG BOX SHOPS ARE LEADING THE RACE THERE. THERE’S ALSO INTERESTING MOMENTUM BEHIND WHAT WE CALL THE CRYPTO NATIVES, FUNDS LIKE BIT WISE AND ARK EVEN IS GETTING STRONG FLOWS HERE. IT’S A SPACE WHERE SO FAR EVERYONE IS DOING WELL OUTSIDE
OF GPTC BUT MAYBE HASN’T BEEN THE BLOCKBUSTER. WE HAVEN’T SEEN $100 BILLION GO INTO THESE FUNDS IN TWO WEEKS. I THINK SENTIMENT IS A LITTLE MORE TEMPERED. WE’RE WAITING TO SEE THE GPTC STOCK LEADING AND HOW THINGS SETTLE DOWN. >> WE’LL KEEP TRACK OF THAT.
A BIG THANK YOU TO CYNTHIA MURPHY ETF THINK TANK DIRECTOR OF RESEARCH. THANKS SO MUCH. >>> COMING UP, SHARES OF PHARMACEUTICAL COMPANY TETHER ARE RISING AFTER REPORTING BETTER-THAN-EXPECTED RESULTS. CEO RICHARD FRANCE IS WITH US ON THE OTHER SIDE OF THIS BREAK.
>>> JOINING US TO DIVE INTO EARNINGS IS RICHARD FRANTZ’ CEO AND OUR OWN HEALTH REPORTER ANJALEE KHEMLANI. SOME INVESTORS ARE HONING IN ABOUT THE PROFIT OUTLOOK. OVERALL, WHAT DO YOU THINK WAS BEHIND WHAT YOU SAW IN THE FOURTH QUARTER, RICHARD? >> FIRSTLY, THANK YOU FOR HAVING
ME ON. IT WAS A GOOD QUARTER AND GOOD YEAR FOR TETH TEF VA. THIS IS OUR FIRST GROWTH FOR MANY YEARS. THIS IS THE COMBINATION OF A LOT OF HARD WORK. WE LAUNCH ADD PIVOT-TO-GROWTH STRATEGY EXECUTING ACROSS FOUR PILLARS. AS WE’VE EXECUTED, WE’VE CONTINUED TO IMPROVE RESULTS.
THE PRIMARY REASON IS WE’VE BEEN DOUBLING DOWN ON OUR INNOVATIVE PORTFOLIO, AS STET TOE GREW AT 28% AND AJOVI AT 18. THEY HELPED DRIVE OUR REVENUE GROWTH. GENERICS HAS GROWN AS WELL. THAT’S ALLOWED US TO PUT IN THESE RESULTS AND ACHIEVE THAT GROWTH.
SOMETHING WE WANT TO CONTINUE TO DO IN 2024. >> RICHARD, ANJALEE HERE. I KNOW THE COMPANY IS HAVING SOMEWHAT OF A COMEBACK IF YOU WILL. THERE WAS A LOT OF EXCITEMENT EVEN AT JPM OVER THE PRESENTATION FOR THE COMPANY. TALK TO ME ABOUT THAT AND WHAT
YOU SEE AS A TRUE GROWTH STRATEGY AND PATH FOR THE COMPANY. >> THANK YOU, AND THANK YOU FOR RECOGNIZING THAT. I THINK OBVIOUSLY THERE’S BEEN SOME CHALLENGES IN THE PAST. WHEN I CAME IN, I SAW FUNDAMENTALS WHICH IF YOU LOOK
AT THEM, ALLOW US TO DRIVE A SUCCESSFUL COMPANY, DRIVE THE TOP LINE AND BOTTOM LINE. WHEN WE LOOKED AT IT, THERE ARE A FEW THINGS THIS COMPANY HAD WHICH I THINK WERE UNDERAPPRECIATED. I JUST MENTIONED AS STET TOE AND — THE SECOND THING IS OUR PIPELINE.
WE’VE ACCELERATED THAT THROUGH THE CLINIC AND WE’LL BE HAVING LEADOUTS LATER THIS YEAR ON OUR LONG ACTING TREATMENT FOR SCHIZOPHRENIA. WE ACCELERATED THAT SIX MONTHS. THAT’S EXCITING. IF THAT HITS THE TARGET PRODUCT PROFILE, THAT CAN BE QUITE TRANSFORMATIONAL FOR PATIENTS
WHO WANT A LONG ACTING FORM OF THE DRUG. ON THE GENERICS BUSINESS, WE LOOKED AT THE FUNDAMENTALS AND THOUGHT WE HAVE GOOD STUFF THERE. WE NEED TO EXECUTE IT BETTER. WHEN YOU ASK ME ABOUT WHAT THE SHORT AND LONG TERM IS FOR GROWTH, WE’VE RETURNED TO
GROWTH. WE WILL ACCELERATE THAT GROWTH ’25 TO ’27 AND WE’LL MAINTAIN IT GOING FORWARD. I THINK WE’VE BEEN REWARDED FORGIVING A CLEAR PLAN AND EXECUTING ON THAT PLAN. OUR JOB IS TO KEEP EXECUTING ON. I THINK THAT WILL BUILD MORE CREDIBILITY AND SUPPORT FOR THE COMPANY.
>> I HEAR YOU ON THAT GROWTH AND I CAN SEE IT. I KNOW THERE ARE MOVES YOU’VE BEEN MAKING. I KNOW YOU’RE COMING BACK AND PULLING THE COMPANY BACK FROM THE OPIOID SAGA AS WELL AS PRICE FIXING CONCERNS. SO WITH THAT IN THE REAR VIEW
AND WITH THAT IN MIND, WE DID GET JPM ANALYST SAYING SENTIMENT HAS BECOME MORE POSITIVE ON SHARES. HOWEVER, WITH A RELATIVE LACK OF GROWTH IN THE PORTFOLIO IN THE NEAR TERM, WE DO NOT SEE A COMPELLING RISK-REWARD IN SHARES HERE. WHAT WOULD YOU SAY TO THAT,
CONSIDERING ALL THE STUFF YOU’RE FOCUSED ON AND WHAT YOU HAVE TO CONTEND WITH? THEY’RE LOOKING FOR CLEARLY AN ANCHOR, A BLOCKBUSTER IN THE NEAR TERM. >> LOOK, I THINK WHAT I WOULD SAY, I THINK YOU CAN GET SOME SENTIMENT LIKE THAT BECAUSE OF THE PAST STILL.
I THINK YOU SAID IT’S IN OUR VIRU MIRROR AND I THINK IT ACTUALLY IS. I THINK THAT LINGERS IN SOME PEOPLE’S MINDS. II TALKED ABOUT AS STET TOE. IT DID $1.2 BILLION IN 2023. WE’VE GIVEN GUIDANCE FOR 1.5 BILLION IN 2024 AND WE SAID 2.5 BILLION BY ’27.
I THINK WE HAVE CLARITY ON WHERE THE REVENUE IS COMING FROM AND WHERE THE PROFITABILITY WILL COME FROM AS WELL. I THINK WHAT’S PROBABLY IN THE BACK OF YOUR MIND IS CAN THEY KEEP DOING IT? IN A WAY, I UNDERSTAND THAT. OUR RECENT PAST HAS BEEN A BIT
CHALLENGING. WE’VE HAD A GOOD 23. WHAT WE NEED TO DO IS MAKE SURE WE EXECUTE ON A ’24. I THINK SOME OF THAT RETICENCE WILL TURN TO POSSIBILITY. FUNDAMENTALS OF OUR INNOVATIVE PORTFOLIO ARE GOOD. AS WE KEEP POSTING IMPROVEMENTS IN THE TOP LINE, I THINK THAT’S
WHERE WE’LL GARNER EVEN MORE SUPPORT. IT IS FOR US TO EXECUTE AND CONTINUE TO EXECUTE. I THINK THAT’S THE WAY I READ IT. >> HOW MUCH OF AN OVERHANG IS THE OPIOID SETTLEMENT FOR YOU RIGHT NOW. ALSO, PIVOTING AWAY FROM THE API
BUSINESS IN A WORLD WHERE WE SEE PRESSURES FROM IRA, THE FTC, EXPLAIN THAT LOGIC TO ME. >> LOOK, I THINK WHEN I CAME IN AND WE DID THE PIVOT TO GROWTH STRATEGY, WE LOOKED ACROSS ALL THE BUSINESSES AT TEVA. WE CLEARLY WANT TO GROW OUR ITERATIVE BUSINESS.
THE API BUSINESS, THE SECOND BIGGEST API MANUFACTURER IN THE WORLD. IT IS WORLD-CLASS. TWO THINGS WE SAW AND ANALYZED WHICH IS, ONE, IT’S CONSTRAINED BEING PART OF TEVA. THE GLOBAL MARKET IS AN $85 BILLION MARKET. THAT BUSINESS WE SET UP TO SERVE PREDOMINANTLY US AS TEVA AND
LESS TO SERVE THE EXTERNAL MARKET. WE THINK FOR IT TO REALLY FLOURISH, IT SHOULD BE ADDRESSING THE EXTERNAL DEMAND, EXTERNAL MARKET OF 85 BILLION. FOR US IN TEVA, IT COMES OUT TO CAPITAL ALLOCATION. IT’S BEEN REALLY FOCUSED ON CAPITAL ALLOCATION.
WE FREE UP CAPITAL TO INVEST IN THE BUSINESS TO ENSURE WE CAN GROW OUR INNOVATIVE BUSINESS AND GROW OUR GENERICS BUSINESS WHICH WE BELIEVE WILL GROW TOP AND BOTTOM LINE WITH THAT SINGLE FOCUS. >> WE’RE LOOKING AT THE SHARE PRICE, A 52-WEEK HIGH, SEEING
INVESTORS SHARE SOME OF THAT OPTIMISM AS WELL. RICHARD FRANCIS, TEVA CEO, AND ANG LEIGH KHEMLANI. >> THANK YOU. >>> ALL YOUR MARKETS STILL AHEAD. STAY TUNED. YOU’RE WATCHING YAHOO! FINANCE. >>> THERE’S A POTENTIAL BUY GROWING THE LIST TO BUY PARAMOUNT. SHARES OF PARAMOUNT MOVING TO THE UPSIDE.
UP MORE THAN 8% AFTER BYRON ALLEN MADE A $14.3 BILLION BID TO BUY ALL OF PARAMOUNT’S OUTSTANDING SHARES. THAT’S ACCORDING TO BLOOMBERG. LET’S BRING IN OUR VERY OWN ALI CANAL WHO HAS THE DETAILS HERE. THERE’S A NUMBER OF COURTERS, SUITORS WE SHOULD SAY, FOR PARAMOUNT.
WOULD COULD POTENTIALLY PUT BYRON ALLEN IN A BETTER STANDING? >> AKIKO, WHAT’S INTERESTING ABOUT BYRON ALLEN’S DEAL, IT SEEMS HE WANTS TO MAINTAIN THOSE LINEAR NETWORKS. THAT’S BEEN THAT BIG QUESTION, WHO WOULD ULTIMATELY WANT TO BUY A DYING LINEAR NETWORK BUSINESS. ESCALATE ACROSS THE BOARD.
YOU’VE ALSO SEEN ADVERTISING COME IN REALLY WEAK FOR THOSE LINEAR NETWORKS. BYRON ALLEN HAS EXPERIENCE WITH THESE ASSETS. HIS COMPANY, ALLEN MEDIA GROUP, OWNS TEN TABLE NETWORKS INCLUDING THE WEATHER CHANNEL. THE COMPANY OWNS BROADCAST STATIONS ACROSS THE COUNTRY. 21 MARKETS WITH 28 BIG NETWORKS.
THE BIG FOURNETTE YOSHGS BEING ABC, CNBC, FOX AND NBC. THAT’S REALLY KEY HERE. THE REPORT SAYS BYRON WOULD MAINTAIN THOSE LINEAR NETWORKS, BUT HE WOULD SELL OFF THE STUDIO AND FILM SIDE OF THE BUSINESS. THE FILM SIDE HAS BEEN REALLY ATTRACTIVE AND LIKELY WILL
CONTINUE TO BE OF SOUTHWEST TO A LOT OF THE OTHER BUYERS OUT THERE. WE KNOW PARAMOUNT HAS PRODUCED TOP PROGRAMMING, TOP MOVIES LIKE THE MISSION IMPOSSIBLE FRANCHISE ALONG WITH “TOP GUN: MAVERICK,” PAW PATROL, SMILE. THERE WILL BE A LOT OF INTEREST THERE.
ONE THING THAT IS A BIT UNCLEAR IS HOW BYRON ALLEN WOULD ULTIMATELY FINANCE THIS DEAL. MOFFETT NATHANSON SAYING THE FACT THAT IS UNCLEAR HAS CASTED SOME DOUBT AND SOME SHADOWS OVER THE CREDIBILITY OF THIS OFFER. OTHERS ON WALL STREET ARE MORE OPTIMISTIC. WELLS FARGO ANALYST STEVE KEHOE
SAID THE FACT HE WANTS TO SELL SOME OF THE REAL ESTATE INCLUDING THE LOT AT PARAMOUNT, THAT THAT WOULD ULTIMATELY FINANCE ANY POTENTIAL DEAL. SO WE’LL SEE IF SOMETHING COMES TO FRUITION. CERTAINLY THIS ONE SEEMS LIKE IT COULD HAPPEN, BUT AGAIN, SHARI REDSTONE, THE PRESIDENT OF
NATIONAL AMUSEMENT, THE HOLDING COMPANY THAT CONTROLS PARAMOUNT GLOBAL, SHE SEEMS HESITANT TO WANT TO DO SOMETHING. WE KNOW SHE’S BEEN EXPLORING TALKS, SHE WANTS THAT HIGH PREMIUM. SHE THINKS PARAMOUNT IS WORTH A HECK OF A LOT OF MONEY. THERE’S BEEN A LOT OF SUITORS OUT THERE.
MAYBE WE’LL HAVE A BIDDING WAR DOWN THE LINE. >> THIS ISN’T BYRON ALLEN’S FIRST TIME TRYING TO GET A PIECE OF PARAMOUNT. HE TRIED IT BEFORE WITH BET MEDIA GROUP. WHAT DO YOU THINK WILL BE THE STICKING POINT? THE CNBC PART OF IT LIKELY OFF THE TABLE.
>> THIS IS ATTRACTIVE CONSIDERING IT’S AN ALL-CASH DEAL FOR ALL OF THE BUSINESS. THIS WOULD BENEFIT THE CLASS B SHAREHOLDERS, THE SHAREHOLDERS THAT DON’T HAVE VOTING POWER. KEY BANK SAID THIS IS AN ATTRACTIVE DEAL THAT PARAMOUNT SHOULD REALLY JUMP OUT, ESPECIALLY CONSIDERING THE
PREMIUM THEY’D BE GETTING. THE STOCK IS UP TODAY BUT STILL NOT TRADING AT THE LEVEL THAT BYRON ALLEN WOULD BE WILLING TO PAY FOR IT. ACCORDING TO BLOOMBERG HE OFFERED $20.58 FOR THE COMPANY’S VOTING SHARES. AGAIN, THAT 50% PREMIUM COMPARED TO CURRENT TRADING LEVELS. FOR THE NON-VOTING SHARES,
$21.53. YOU’RE SEEING SHARES TRADING JUST UNDER 15 BUCKS A SHARE RIGHT NOW. WE’LL SEE. I THINK IT’S ALL GOING TO COME DOWN TO PRICE. >> WE’LL WATCH THIS SPACE. APPRECIATE YOU BREAKING THAT DOWN FOR US, OUR VERY OWN ALI CANAL. >>> THAT DOES IT FOR NOW.
I’M RACHELLE AKUFFO ALONGSIDE AKIKO FUJITA. THANK YOU FOR WATCHING YAHOO! FINANCE. STAY WITH US.