April 25, 2024 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.On today's podcast:
(1) Shares in Meta have dropped by as much as 19% in after-hours trading, after the social media giant said it plans to spend billions of dollars more than expected this year.
(2) The world's largest mining company, BHP Group, has made a takeover approach for rival Anglo American, a move that could spark the biggest shakeup in the industry in over a decade.
(3) BNP Paribas fixed-income traders trailed all of the large Wall Street banks in the first quarter, taking the shine off a strong performance in other parts of the investment bank.
(4) Deutsche Bank relied on its traders and investment bankers to make up for a slowdown in income from lending, as Chief Executive Officer Christian Sewing seeks to deliver on an ambitious revenue goal.
(5) President Joe Biden signed a $95 billion national security package into law and said assistance to Ukraine would begin to move within "hours," capping off a bruising fight with Republicans over long-delayed assistance for Kyiv and other besieged US allies.
(6) Now that President Joe Biden has signed off on a law that could expel TikTok from the US market, Beijing must decide how best to retaliate over an attack on the world's most-valuable start-up.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
This is the Bloomberg Day ba QT podcast, available every
morning on Apple, Spotify or wherever you listen. It's Thursday,
the twenty fifth of April in London. I'm Caroline Hepka.
Speaker 2 (00:11):
And I'm Stephen Carroll. Coming up today. Meta shares tank
as Zuckerberg tries to reassure investors over the social media
giants increase spending on AI.
Speaker 1 (00:21):
Mining giant BHP considers a takeover of Anglo American in
what could be the biggest deal of this year.
Speaker 2 (00:28):
Plus defending TikTok on TikTok, the social media firm says
it will win its fight against a possible US ban.
Speaker 1 (00:36):
Let's start with a roundup of our top stories.
Speaker 2 (00:38):
Shares in Meta have dropped by as much as nineteen
percent in after hours trading after the social media giants
said it plans to spend billions of dollars more than
expected this year. The parent company of Facebook and Instagram
says investments will increase meaningfully, with capital expenditure of up
to forty billion dollars this year. Mark Zuckerberg warned investors
(01:01):
it could take some time for the bets to pay off.
Speaker 3 (01:05):
As we're scaling capex and energy expenses for AI. We
all continue focusing on operating the rest of our company efficiently,
but realistically, even with shifting many of our existing resources
to focus on AI, will still grow our investment envelope
meaningfully before we make much revenue from some of the
new product.
Speaker 2 (01:25):
Zuckerberg's comments and the news and expenditure overshadowed what was
an otherwise solid first quarter for Meta. Revenue increased by
twenty seven percent to thirty six and a half billion dollars,
with profits more than doubling to twelve point four billion dollars.
Speaker 1 (01:41):
The world's largest mining company has made a takeover bid
for its UK rival Anglo American. Anglo says that it
has received an unsolicited all share merger proposal from BHP
after Bloomberg reported that the jant was considering an offer.
Bloomberg's James Willcock has more.
Speaker 4 (01:58):
It could be the biggest take up in mining for
a decade, and copper is at the heart of it.
Anglo American has long been seen as an m and
a target. The thirty four billion dollar company owns big
South American copper operations, which are a key metal for
electrification and renewable energy. It's possible the BHP's bid for
(02:19):
Anglo could prompt other giants to make a move.
Speaker 5 (02:21):
Regardless.
Speaker 4 (02:22):
If it happens, it may be the largest M and
A deal of the year. In London. James Wilcock Blueberg Radio.
Speaker 2 (02:29):
We've got some breaking news from European banks this morning.
Deutsche Bank reporting fixed income trading revenue above estimates of
two point five two billion euros for the first three
months of the year. The bank also sees its twenty
twenty four investment bank revenue higher year on year, but
the corporate bank revenue will beat slightly lower year on year.
(02:51):
The bank has announced plans to raise buybacks and dividends
by at least fifty percent a year on year in
twenty twenty four.
Speaker 1 (02:58):
And also breaking on the Bloomberg terminal, the French bank
BNP Paribat has reported fixed income, currencies and commodities trading
revenue that missed expectations in the first quarter. That number
came in at one point six billion euros versus estimates
of one point seventy four billion. Now overall, the lender
(03:19):
saw net income and revenue that came in ahead of
estimates and in terms of other BNP Pariba lines loan
loss provisions significantly lower than expected.
Speaker 2 (03:32):
The US has been secretly sending Ukraine its long range
army tactical missile systems or attack ems for sure since February.
President Joe Biden signed a new aid bill to provide
Ukraine sixty one billion dollars in military aid. Last night
was expected to include the ordinance. However, the State Department
(03:53):
spokesman Vedant Patel said the US leader had privately already
given the green light for the ballistic missiles to be sent.
Speaker 6 (04:01):
The United States provided Ukraine with long range attackers at
the President's direction. He quietly directed his National security team
to send attackers to Ukraine for use inside Ukrainian sovereign
territory in February. They started moving as part of the
military aid package we announced on March twelfth, and those
(04:24):
missiles arrived in Ukraine this month.
Speaker 2 (04:27):
The US had avoided sending the missiles, Patel spoke of
until now, because the Biden administration considered that it would
be seen as escalatory by the Kremlin. The missiles can
hit targets over a range of three hundred kilometers. The
New York Times reports they were used for the first
time in recent days to strike an airfield in Crimea.
Speaker 1 (04:45):
President Biden signed a fine aid package which includes a
measure that could ban TikTok in the US by next
year unless it's Chinese owner, Byte Dance sells it. The
flock is now ticking with the deadline in two hundred
and seventy days. Lawmakers say TikTok poses a security threat
to the US and to its users because China requires
(05:06):
its companies, upon request, to share any national security related
data with the government. But TikTok CEO show two says
that the law infringes the free speech rights of the
apps one hundred and seventy million monthly US users.
Speaker 5 (05:22):
It's obviously a disappointing moment, but it does not need
to be a defining one. It's actually ironic because the
freedom of expression on TikTok reflects the same American values
that make the United States a beacon of freedom.
Speaker 1 (05:36):
CEO Show two says the company will fight the US
measure in court. He says that the facts and the
US Constitution are on their side.
Speaker 2 (05:44):
That legislation on TikTok comes as US Secretary of State
Anthony Blincoln is in China. He says the two countries
must collaborate and manage their relationship responsibly.
Speaker 7 (05:53):
I think it's.
Speaker 8 (05:54):
Important underscore the value, in fact of the necessity engagement,
of sustained engagement of speaking to each other, laying out
our differences which are real, seeking to work through them,
as also looking for ways to build cooperation where we can.
Speaker 2 (06:13):
The US Secretary of State Anthony Blincoln speaking in Shanghai,
where he'll meet with American business leaders and students. His
visit comes as a tense time for Chinese American relations
after President Biden called Beijing xenophobic and vowed to impose
more tariffs on China. Last week. Blincoln expected to discuss
Chinese trade that could be strengthening Russia's industrial defense base,
(06:36):
as well as Beijing Beijing's claims over the island of Taiwan.
During his trip.
Speaker 1 (06:41):
Russia has vetoed a UN Security Council resolution on not
deploying nuclear weapons in space. China abstained. The proposal would
have reconfirmed a global commitment that dates back to nineteen
sixty seven, which bans nuclear weapons in orbit. The vote
comes just months after the US told allies that Russia
could deploy a real or mock warhead into space as
(07:05):
early as this year. The kremlins alleged ambition underscores what
security experts and Washington say is growing competition between the US, Russia,
and China to develop anti satellite weapons. Now, in a moment,
we'll bring you more details about Meta's results, plus are
reporting around the potential deal in the mining industry. But
(07:27):
another story caught Haai this morning had us all chatting.
A really lovely read from our Bloomberg opinion columnist Howard
jua Ewan, who has been in the UK six years
and he now wants your help, our help.
Speaker 2 (07:41):
He has to pick a football team and it's one
of those things that if it's sort of an experience,
it speaks very well to one of those of being
a foreigner in London and encountering this absolutely massive wave
of social pressure when people ask you the question who
do you support and you don't basically have an answer
for them, yeah, and then you have to sort of
talk yourself around us.
Speaker 1 (08:03):
Well, the column made me laugh out loud, which is
just recommendation and of itself to you know, thinking about
the footy sort of obsession, I think that actually choosing
the football team in the way that Howard's gone about
thinking about it actually is incredibly kind of revealing, and
I think that's why people actually choose a football club
(08:24):
in the end. Anyway, it kind of reveals something about
people's personality and their love and passion that you might
not see in another part of their life.
Speaker 2 (08:32):
Look, I suppose the thought process most people don't have
because essentially they feel like they're born into some sort
of dynasty. But look, it's a great read. It's a
really lovely insight into that experience. He's even asking readers
of his column to email them with who they support
and why, and I can't wait to see who he picks.
It definitely worth the read this morning from Howrod Chowe
(08:52):
there on the Bloomberg Ternel from Bloomberg Opinion.
Speaker 1 (08:55):
Absolutely right. Let's think about the tech space now. A
disappointing set of earnings from Meta has technology investors on edge.
The Facebook owners outlook for weaker sales and higher costs
has underlined questions about the impact of artificial intelligence. Meta
share price slumped fifteen percent in after hours trading. Amazon,
Alphabet and Microsoft also slipped on the back of that,
(09:19):
and so too did other social media companies. So It's
had a widespread impact and we get more tech results
from Microsoft, Alphabet and Intel today. Joining us now has
been very tech editor Vlad Savov, Vlad, great to have
you on the program. Lots of reasons, it seems why
investors were unhappy with Meta, the Facebook parent company, and
with Mark zuckerbergerg It seems.
Speaker 9 (09:41):
Well is the two big priorities that he has set
out for the company is one is the virtual reality
labs and the other one is AI. Both of them
have a challenge which is kind of different from what
Meta has been to this date. When you think about
digital internet companies, one of the great advantages is that
profit revenues are infinitely scalable, whereas costs are really under control.
(10:03):
What he's doing, what the company is undertaking, is a
project where there's a lot of capital intensity. If you're
going to build those virtual reality goggles, if you're going
to do all the R and D, he's going to
cost your money. And that's what we saw with the earnings.
He said is still going to cost billions of dollars.
And when you read analyst notes and when you look
at the investor reaction, it is questionable about what the
(10:25):
payoff is going to be there. And then on the
other side with AI, there's a lot of investment that
needs to go in to compete with the likes of
Amazon and Google and so on.
Speaker 2 (10:34):
But this is a question that a lot of companies
in this space are having, is the question about the
costs of investing in our ANAI versus the potential benefits
and how they convince their investors are the same.
Speaker 9 (10:46):
Yeah, exactly. I mean, I've been noticing the divergence because
I'm based in Hong Kong here in NASA. One of
the really fun things is just tracking the component suppliers
and how they're rocketing up into the share price in
terms of revenue. S k Heinex, one of the leading
memory made has just reported this morning their revenue more
than doubled for the first quarter and that's because of
AI demand. So the suppliers and video Heinex et cetera.
(11:09):
They're going up and that isn't going to slow down
and anytime soon. But then their customers, the likes of Meta,
they need to demonstrate that when they get all that
hardware in, when they do order development, it turns into
monetizable products. Mark Zackerbug said, Smart investors, He added the
word smart can see that the monetizable product is there.
(11:30):
It's just going to take probably longer than most investors
are willing to wait for that to happen.
Speaker 5 (11:36):
Yeah.
Speaker 1 (11:36):
Absolutely about time scales, isn't it.
Speaker 7 (11:39):
Yeah?
Speaker 1 (11:39):
What of alphabet then? And how competitive Google is in AARI?
Speaker 9 (11:45):
Well, this is the thing. We don't really have a
great metric, So I can't tell you how competitive anybody
is because there are no milestones that we can say
these people achieve that and that company didn't. The interesting
thing with Google is they have the Gemini product and
they're installing that. They're having Android manufacturers installed that by
the vault on their phones. When the likes of Samsung
(12:05):
order Chinese manufacturers want to differentiate and say they have
a quote unquote AI smartphone, they use Google Gemini. What
that means is as AI and AI processing moves to
the mobile ecosystem and arena, Google is going to be
in the lead, is going to be the default option
for many and even Bloomberg reporting said that Apple is
negotiating to put Gemini on the iPhone. So it may
(12:29):
be the case that in a year or two we
look around and the landscape is Google is the leader
just because it's the first option on smartphones.
Speaker 2 (12:37):
Okay, very much something in focus as we look ahead
to those results coming from ath about later Vlad Sava
for an how our tech editor.
Speaker 1 (12:44):
Thank you, Yeah, absolutely, very nice to speak to. Lad. Also,
he's got a really great piece on the Bloomberg terminal
that you should read about. It's I mean, I suppose
I'm not enormously surprised, but I still think that it's
interesting that we've got the data, which is that most
global tech leaders actually think that they're come plies are
unprepared for AI. So there's been a lot of talk
about AI. There is investment now and when that starts
(13:06):
to pay off, But the research shows that actually a
lot of IT leaders worldwide don't feel their businesses already yet.
Speaker 2 (13:13):
I'm sure those outside the art sector as well feeling
the same. Let's turn to our the big story this morning,
and are we heading for a big shake up in
the mining industry. With the price of copper soaring this year,
BHP has approached rival Anglo American about a takeover. Anglo's
board is reviewing what it described to Bloomberg as a
merger proposal with details we've got Bloomberg Commodities reporter Martin
Ritchie with us. Now, Martin, what do we know about
(13:35):
the deal that's on the table.
Speaker 7 (13:37):
This is a big deal for mining and it could
be one of the biggest Emmy transactions this year. It's
a deal that's really an essence of about copper, which you've
I guess pointed to already. BHP is one of the
biggest copper miners. It's going to take over a slightly
smaller arrival, but not much smaller, and it's going to
(13:57):
create the biggest global copper you sir, this is a
time when all the global mining companies are sort of
scouring the world trying to get more exposure to copper.
So BHP's really put its mark out there under the
relative and new CEO Micing.
Speaker 1 (14:15):
Okay, so that's what BHP then would gain from it.
Anglo America has been seeing as a takeout of target
for some time, so why why now for this deal?
Speaker 7 (14:26):
It has been a takeover target for some time, you know,
partially because it's been building up its copper profile, but
it's also got nickel, and it's also got other assets
to iron ore, especially in Brazil. That's quite valuable. The
reason why some people say it's not the people that
the BHP, for example, is going in now rather than earlier,
(14:49):
is because Angle's always seen as a bit of a
trickier asset to swallow. It's got a number of different
commodities don't always quite match together. So it's got diamonds business,
it's got platinum group metals, it's got iron ore in
South Africa that's got and all of these businesses we've
got sort of tangled ownership. Now, what BHP appears to
(15:12):
be doing, according to the preliminary statement we have from
Anglo BHP hasn't said anything yet, is that they're going
to spin off some of these South African businesses before
they go ahead with the merger. That will simplify things.
And I think that the fact they had to do
that speaks to, you know, the difficulties in taking over.
(15:33):
Other companies have been busy with their own efforts to
get copper. Rio Tinto has been building its own huge
mine and Mongolia, and it has indicated it might not
be so interested in large scale transaction. Glen Core is
trying to take over in a Canadian company to try
and get its copper and Metals Business.
Speaker 2 (15:51):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 1 (15:58):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (16:04):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (16:09):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka.
Speaker 2 (16:18):
And I'm Stephen Carol. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak Europe
This is the Bloomberg Day ba QT podcast, available every
morning on Apple, Spotify or wherever you listen. It's Thursday,
the twenty fifth of April in London. I'm Caroline Hepka.
Speaker 2 (00:11):
And I'm Stephen Carroll. Coming up today. Meta shares tank
as Zuckerberg tries to reassure investors over the social media
giants increase spending on AI.
Speaker 1 (00:21):
Mining giant BHP considers a takeover of Anglo American in
what could be the biggest deal of this year.
Speaker 2 (00:28):
Plus defending TikTok on TikTok, the social media firm says
it will win its fight against a possible US ban.
Speaker 1 (00:36):
Let's start with a roundup of our top stories.
Speaker 2 (00:38):
Shares in Meta have dropped by as much as nineteen
percent in after hours trading after the social media giants
said it plans to spend billions of dollars more than
expected this year. The parent company of Facebook and Instagram
says investments will increase meaningfully, with capital expenditure of up
to forty billion dollars this year. Mark Zuckerberg warned investors
(01:01):
it could take some time for the bets to pay off.
Speaker 3 (01:05):
As we're scaling capex and energy expenses for AI. We
all continue focusing on operating the rest of our company efficiently,
but realistically, even with shifting many of our existing resources
to focus on AI, will still grow our investment envelope
meaningfully before we make much revenue from some of the
new product.
Speaker 2 (01:25):
Zuckerberg's comments and the news and expenditure overshadowed what was
an otherwise solid first quarter for Meta. Revenue increased by
twenty seven percent to thirty six and a half billion dollars,
with profits more than doubling to twelve point four billion dollars.
Speaker 1 (01:41):
The world's largest mining company has made a takeover bid
for its UK rival Anglo American. Anglo says that it
has received an unsolicited all share merger proposal from BHP
after Bloomberg reported that the jant was considering an offer.
Bloomberg's James Willcock has more.
Speaker 4 (01:58):
It could be the biggest take up in mining for
a decade, and copper is at the heart of it.
Anglo American has long been seen as an m and
a target. The thirty four billion dollar company owns big
South American copper operations, which are a key metal for
electrification and renewable energy. It's possible the BHP's bid for
(02:19):
Anglo could prompt other giants to make a move.
Speaker 5 (02:21):
Regardless.
Speaker 4 (02:22):
If it happens, it may be the largest M and
A deal of the year. In London. James Wilcock Blueberg Radio.
Speaker 2 (02:29):
We've got some breaking news from European banks this morning.
Deutsche Bank reporting fixed income trading revenue above estimates of
two point five two billion euros for the first three
months of the year. The bank also sees its twenty
twenty four investment bank revenue higher year on year, but
the corporate bank revenue will beat slightly lower year on year.
(02:51):
The bank has announced plans to raise buybacks and dividends
by at least fifty percent a year on year in
twenty twenty four.
Speaker 1 (02:58):
And also breaking on the Bloomberg terminal, the French bank
BNP Paribat has reported fixed income, currencies and commodities trading
revenue that missed expectations in the first quarter. That number
came in at one point six billion euros versus estimates
of one point seventy four billion. Now overall, the lender
(03:19):
saw net income and revenue that came in ahead of
estimates and in terms of other BNP Pariba lines loan
loss provisions significantly lower than expected.
Speaker 2 (03:32):
The US has been secretly sending Ukraine its long range
army tactical missile systems or attack ems for sure since February.
President Joe Biden signed a new aid bill to provide
Ukraine sixty one billion dollars in military aid. Last night
was expected to include the ordinance. However, the State Department
(03:53):
spokesman Vedant Patel said the US leader had privately already
given the green light for the ballistic missiles to be sent.
Speaker 6 (04:01):
The United States provided Ukraine with long range attackers at
the President's direction. He quietly directed his National security team
to send attackers to Ukraine for use inside Ukrainian sovereign
territory in February. They started moving as part of the
military aid package we announced on March twelfth, and those
(04:24):
missiles arrived in Ukraine this month.
Speaker 2 (04:27):
The US had avoided sending the missiles, Patel spoke of
until now, because the Biden administration considered that it would
be seen as escalatory by the Kremlin. The missiles can
hit targets over a range of three hundred kilometers. The
New York Times reports they were used for the first
time in recent days to strike an airfield in Crimea.
Speaker 1 (04:45):
President Biden signed a fine aid package which includes a
measure that could ban TikTok in the US by next
year unless it's Chinese owner, Byte Dance sells it. The
flock is now ticking with the deadline in two hundred
and seventy days. Lawmakers say TikTok poses a security threat
to the US and to its users because China requires
(05:06):
its companies, upon request, to share any national security related
data with the government. But TikTok CEO show two says
that the law infringes the free speech rights of the
apps one hundred and seventy million monthly US users.
Speaker 5 (05:22):
It's obviously a disappointing moment, but it does not need
to be a defining one. It's actually ironic because the
freedom of expression on TikTok reflects the same American values
that make the United States a beacon of freedom.
Speaker 1 (05:36):
CEO Show two says the company will fight the US
measure in court. He says that the facts and the
US Constitution are on their side.
Speaker 2 (05:44):
That legislation on TikTok comes as US Secretary of State
Anthony Blincoln is in China. He says the two countries
must collaborate and manage their relationship responsibly.
Speaker 7 (05:53):
I think it's.
Speaker 8 (05:54):
Important underscore the value, in fact of the necessity engagement,
of sustained engagement of speaking to each other, laying out
our differences which are real, seeking to work through them,
as also looking for ways to build cooperation where we can.
Speaker 2 (06:13):
The US Secretary of State Anthony Blincoln speaking in Shanghai,
where he'll meet with American business leaders and students. His
visit comes as a tense time for Chinese American relations
after President Biden called Beijing xenophobic and vowed to impose
more tariffs on China. Last week. Blincoln expected to discuss
Chinese trade that could be strengthening Russia's industrial defense base,
(06:36):
as well as Beijing Beijing's claims over the island of Taiwan.
During his trip.
Speaker 1 (06:41):
Russia has vetoed a UN Security Council resolution on not
deploying nuclear weapons in space. China abstained. The proposal would
have reconfirmed a global commitment that dates back to nineteen
sixty seven, which bans nuclear weapons in orbit. The vote
comes just months after the US told allies that Russia
could deploy a real or mock warhead into space as
(07:05):
early as this year. The kremlins alleged ambition underscores what
security experts and Washington say is growing competition between the US, Russia,
and China to develop anti satellite weapons. Now, in a moment,
we'll bring you more details about Meta's results, plus are
reporting around the potential deal in the mining industry. But
(07:27):
another story caught Haai this morning had us all chatting.
A really lovely read from our Bloomberg opinion columnist Howard
jua Ewan, who has been in the UK six years
and he now wants your help, our help.
Speaker 2 (07:41):
He has to pick a football team and it's one
of those things that if it's sort of an experience,
it speaks very well to one of those of being
a foreigner in London and encountering this absolutely massive wave
of social pressure when people ask you the question who
do you support and you don't basically have an answer
for them, yeah, and then you have to sort of
talk yourself around us.
Speaker 1 (08:03):
Well, the column made me laugh out loud, which is
just recommendation and of itself to you know, thinking about
the footy sort of obsession, I think that actually choosing
the football team in the way that Howard's gone about
thinking about it actually is incredibly kind of revealing, and
I think that's why people actually choose a football club
(08:24):
in the end. Anyway, it kind of reveals something about
people's personality and their love and passion that you might
not see in another part of their life.
Speaker 2 (08:32):
Look, I suppose the thought process most people don't have
because essentially they feel like they're born into some sort
of dynasty. But look, it's a great read. It's a
really lovely insight into that experience. He's even asking readers
of his column to email them with who they support
and why, and I can't wait to see who he picks.
It definitely worth the read this morning from Howrod Chowe
(08:52):
there on the Bloomberg Ternel from Bloomberg Opinion.
Speaker 1 (08:55):
Absolutely right. Let's think about the tech space now. A
disappointing set of earnings from Meta has technology investors on edge.
The Facebook owners outlook for weaker sales and higher costs
has underlined questions about the impact of artificial intelligence. Meta
share price slumped fifteen percent in after hours trading. Amazon,
Alphabet and Microsoft also slipped on the back of that,
(09:19):
and so too did other social media companies. So It's
had a widespread impact and we get more tech results
from Microsoft, Alphabet and Intel today. Joining us now has
been very tech editor Vlad Savov, Vlad, great to have
you on the program. Lots of reasons, it seems why
investors were unhappy with Meta, the Facebook parent company, and
with Mark zuckerbergerg It seems.
Speaker 9 (09:41):
Well is the two big priorities that he has set
out for the company is one is the virtual reality
labs and the other one is AI. Both of them
have a challenge which is kind of different from what
Meta has been to this date. When you think about
digital internet companies, one of the great advantages is that
profit revenues are infinitely scalable, whereas costs are really under control.
(10:03):
What he's doing, what the company is undertaking, is a
project where there's a lot of capital intensity. If you're
going to build those virtual reality goggles, if you're going
to do all the R and D, he's going to
cost your money. And that's what we saw with the earnings.
He said is still going to cost billions of dollars.
And when you read analyst notes and when you look
at the investor reaction, it is questionable about what the
(10:25):
payoff is going to be there. And then on the
other side with AI, there's a lot of investment that
needs to go in to compete with the likes of
Amazon and Google and so on.
Speaker 2 (10:34):
But this is a question that a lot of companies
in this space are having, is the question about the
costs of investing in our ANAI versus the potential benefits
and how they convince their investors are the same.
Speaker 9 (10:46):
Yeah, exactly. I mean, I've been noticing the divergence because
I'm based in Hong Kong here in NASA. One of
the really fun things is just tracking the component suppliers
and how they're rocketing up into the share price in
terms of revenue. S k Heinex, one of the leading
memory made has just reported this morning their revenue more
than doubled for the first quarter and that's because of
AI demand. So the suppliers and video Heinex et cetera.
(11:09):
They're going up and that isn't going to slow down
and anytime soon. But then their customers, the likes of Meta,
they need to demonstrate that when they get all that
hardware in, when they do order development, it turns into
monetizable products. Mark Zackerbug said, Smart investors, He added the
word smart can see that the monetizable product is there.
(11:30):
It's just going to take probably longer than most investors
are willing to wait for that to happen.
Speaker 5 (11:36):
Yeah.
Speaker 1 (11:36):
Absolutely about time scales, isn't it.
Speaker 7 (11:39):
Yeah?
Speaker 1 (11:39):
What of alphabet then? And how competitive Google is in AARI?
Speaker 9 (11:45):
Well, this is the thing. We don't really have a
great metric, So I can't tell you how competitive anybody
is because there are no milestones that we can say
these people achieve that and that company didn't. The interesting
thing with Google is they have the Gemini product and
they're installing that. They're having Android manufacturers installed that by
the vault on their phones. When the likes of Samsung
(12:05):
order Chinese manufacturers want to differentiate and say they have
a quote unquote AI smartphone, they use Google Gemini. What
that means is as AI and AI processing moves to
the mobile ecosystem and arena, Google is going to be
in the lead, is going to be the default option
for many and even Bloomberg reporting said that Apple is
negotiating to put Gemini on the iPhone. So it may
(12:29):
be the case that in a year or two we
look around and the landscape is Google is the leader
just because it's the first option on smartphones.
Speaker 2 (12:37):
Okay, very much something in focus as we look ahead
to those results coming from ath about later Vlad Sava
for an how our tech editor.
Speaker 1 (12:44):
Thank you, Yeah, absolutely, very nice to speak to. Lad. Also,
he's got a really great piece on the Bloomberg terminal
that you should read about. It's I mean, I suppose
I'm not enormously surprised, but I still think that it's
interesting that we've got the data, which is that most
global tech leaders actually think that they're come plies are
unprepared for AI. So there's been a lot of talk
about AI. There is investment now and when that starts
(13:06):
to pay off, But the research shows that actually a
lot of IT leaders worldwide don't feel their businesses already yet.
Speaker 2 (13:13):
I'm sure those outside the art sector as well feeling
the same. Let's turn to our the big story this morning,
and are we heading for a big shake up in
the mining industry. With the price of copper soaring this year,
BHP has approached rival Anglo American about a takeover. Anglo's
board is reviewing what it described to Bloomberg as a
merger proposal with details we've got Bloomberg Commodities reporter Martin
Ritchie with us. Now, Martin, what do we know about
(13:35):
the deal that's on the table.
Speaker 7 (13:37):
This is a big deal for mining and it could
be one of the biggest Emmy transactions this year. It's
a deal that's really an essence of about copper, which you've
I guess pointed to already. BHP is one of the
biggest copper miners. It's going to take over a slightly
smaller arrival, but not much smaller, and it's going to
(13:57):
create the biggest global copper you sir, this is a
time when all the global mining companies are sort of
scouring the world trying to get more exposure to copper.
So BHP's really put its mark out there under the
relative and new CEO Micing.
Speaker 1 (14:15):
Okay, so that's what BHP then would gain from it.
Anglo America has been seeing as a takeout of target
for some time, so why why now for this deal?
Speaker 7 (14:26):
It has been a takeover target for some time, you know,
partially because it's been building up its copper profile, but
it's also got nickel, and it's also got other assets
to iron ore, especially in Brazil. That's quite valuable. The
reason why some people say it's not the people that
the BHP, for example, is going in now rather than earlier,
(14:49):
is because Angle's always seen as a bit of a
trickier asset to swallow. It's got a number of different
commodities don't always quite match together. So it's got diamonds business,
it's got platinum group metals, it's got iron ore in
South Africa that's got and all of these businesses we've
got sort of tangled ownership. Now, what BHP appears to
(15:12):
be doing, according to the preliminary statement we have from
Anglo BHP hasn't said anything yet, is that they're going
to spin off some of these South African businesses before
they go ahead with the merger. That will simplify things.
And I think that the fact they had to do
that speaks to, you know, the difficulties in taking over.
(15:33):
Other companies have been busy with their own efforts to
get copper. Rio Tinto has been building its own huge
mine and Mongolia, and it has indicated it might not
be so interested in large scale transaction. Glen Core is
trying to take over in a Canadian company to try
and get its copper and Metals Business.
Speaker 2 (15:51):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 1 (15:58):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (16:04):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (16:09):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka.
Speaker 2 (16:18):
And I'm Stephen Carol. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak Europe
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