Intel's CEO Retires, Retailers Ready for Cyber Monday | Bloomberg Technology

Intel CEO Departure and Strategic Shifts

• Intel's CEO is leaving the company after a failed turnaround effort, and the board will search for a replacement with two interim CEOs taking the helm in the meantime (9s).
• Intel's shares rose more than 3% on the back of the news, potentially signaling more strategic shifts (5s).
• Many are not surprised by the CEO's departure, given the August numbers showed the restructuring would be painful and the board lost confidence (38s).
• Intel's foundry business has about $18 billion of revenue but negative gross margins, with most of the business coming from internal sources (56s).
• The US government is handing Intel a lot of money to build ships and be the future of onshoring, but the resilience of this plan is questionable (1m55s).
• The government wants Intel to succeed on the manufacturing side, but the optics are a problem, as competitors like Amazon and NVIDIA may not want to use Intel's foundry (2m6s).
• The core Intel business, which is how investors look at the sum of the parts, is still dominant, with more than 50% of the revenue still coming from core PC's (3m1s).

US Chipmaking Policy and Intel's Role

• The Biden administration unveiled new curbs on the sale of 27 different types of chip design and fabrication tools, impacting Chinese entities (3m34s).
• The new export controls came in slightly softer than some proposals floated earlier this year, exempting important allies like Japan and the Netherlands from the rules (4m15s).
• The US government is trying to home-grow chipmaking in the United States, with Intel solidifying a deal for $7.8 billion in funding from the CHIPS Act to bring chip manufacturing back to the US (5m1s).
• Intel's CEO, Pat Gelsinger, has retired, and his departure may not change the company's US expansion plans, but a new CEO will have to decide whether to pursue the options he left on the table (5m13s).
• The US government will be watching the situation closely, as Intel has plans to execute on factories in the US and has unique and valuable manufacturing capabilities onshore (5m32s).

Pat Gelsinger's Retirement and Intel's Turnaround Plan

• The announcement of Pat Gelsinger's retirement was a surprise, and it appears that he lost confidence and decided to leave abruptly after a difficult situation (5m56s).
• Intel's turnaround plan, which was four years in the making, failed to make the company a leading manufacturer, and the plan to go big with maximum political support did not work out (6m40s).
• The company's inability to compete with TSMC's model and preserve manufacturing capabilities led to the failure of the plan (7m4s).
• In August, Intel announced a restructuring plan that involved job losses and the separation of the foundry business to be managed separately (7m26s).
• The situation is complex, and the company's manufacturing capabilities onshore and ownership of the US company are unique assets in today's geopolitical context (8m12s).
• There is speculation about potential purchasing from Qualcomm in the chip designer ARM, but the situation is fluid and complex (7m47s).
• A merger between Qualcomm and Intel is not seen as a good opportunity to generate synergies, as the chips are very different and manufacturing is a complex business (8m42s).
• The best option for Intel may be to partner with TSMC and other large partners, such as NVIDIA, to create a sustainable US-owned manufacturing capability on US soil (9m12s).
• The company's failure to adapt to the AI evolution and compete with NVIDIA's AI chips is seen as a major frustration for the board (9m55s).
• The lack of prudence in the initial plan and the assumption that demand would follow led to the failure of the plan (10m15s).
• Pat Gelsinger stuck too much to his initial plan, which was ambitious and large-scale, and should have changed tack 18 months ago to smaller capabilities with other players in the market (11m6s).
• Intel could specialize in manufacturing in the US with US ownership, but the company needs to reorient its strategy quickly (11m35s).

Super Micro and Cyber Monday Sales

• Shares of Super Micro are soaring after the company found no evidence of wrongdoing and plans to appoint a new CEO, with the company's stock up 14% over the last two trading days (12m15s).
• Adobe expects consumers to spend a record $13.2 billion on Cyber Monday, up 6% year on year, with online spending expected to peak between 8:00 and 10:00 pm Eastern Time (14m1s).
• Despite economic concerns, consumers are showing up to save during the holiday season, with a focus on deal-making rather than spending (14m30s).
• The majority of traffic to Black Friday deals came from social media, with Meta being the number one source, followed by TikTok and YouTube (15m13s).
• Brands are recognizing the importance of social media in driving traffic to Black Friday deals and are investing dollars and time to gain mind share (15m31s).
• Companies like Walmart and Target are tracking their investments in social media and measuring their effectiveness using data, with retailers becoming data businesses and making significant margins selling data as a service (16m9s).
• Major brands are relying on retailers' first-party data and third-party sources to validate their measurements and ensure their investments are making sense (16m27s).
• According to Mikmak and Adobe data, there was a 1% increase in conversion rates during the Black Friday weekend this year compared to last year, which merits the $1 billion increase in revenue seen by Adobe (16m54s).

OpenAI, Export Controls, and EV Market in China

• Five Canadian publishers have sued OpenAI for breaching copyright, alleging the company scrapes content to train its products, while OpenAI claims its training data is publicly available and grounded in fair use (18m0s).
• Elon Musk has repeated earlier claims that OpenAI broke its promise to him and abandoned its founding purpose as a charity when it accepted backing from Microsoft in 2019 (18m20s).
• NVIDIA announced a manufacturing buildout in Thailand in October, and sticking with Asia, there's news about China and electric vehicle (EV) makers, including Tesla and BYD, which have unleashed more discounts and incentives in China in a final push to meet annual sales targets (18m54s).
• The discounts and incentives are part of a price war in China's EV market, with BYD launching a price war to put pressure on competitors and gain market share, and Tesla trying to hang in there in a tough market for model makers (19m38s).
• BYD is one of the few EV makers in China that makes money, which puts pressure on domestic rivals, and Tesla is trying to keep its market share up and keep cars moving (19m46s).
• Some of the deals include 0% loans, and there are new entrances in the market, with Tesla dependent on China in many ways and wondering if they will meet their fourth-quarter targets in terms of sales (20m7s).
• Navigating China's EV market is very difficult, with Europeans and General Motors having a tough time, and Tesla trying to stay in the game by discounting, while other car companies struggle because they are not willing to discount and sell at a loss (20m29s).
• BYD is driving a lot of this because they are huge, profitable, and trying to grow all over the world, with lower costs allowing them to do it in many ways (20m54s).
• There is a bit of a Darwinian game plan in China where top producers will go for market share, push others out of business, or into downsizing, so they dominate the market one day (21m8s).

Stellantis, Intel, and New Chipmakers

• Stellantis is left without clear leadership after a surprise departure from the CEO, which comes at a time when the company is under pressure to halt the sales slide in the US and Europe, where demand for EVs is waning (21m40s).
• Intel's CEO, Pat Gelsinger, has stepped aside and announced his resignation on the back of a frustrated board that could not get behind his turnaround of the iconic chipmaker, with the company's stock up 7% and two new interim CEOs named (22m17s).
• Intel's stock has risen 5% as the CEO will leave the job, and NVIDIA is up 10%, while Intel shares dropped 60% previously (23m24s).
• There are new entrants in the chipmaking world, including Tenstorrent, which is backed by Jeff Bezos and Samsung, and is hoping to make a cheaper operation an option for AI accelerator chips (24m1s).
• A company is building a team, products, and shipping products, with a mission to bring on developers and early customers, and license its ID while building a business on that (24m26s).
• The company's selling point is offering low-cost systems, transparency, and the ability for customers to see exactly what the technology is doing, which has turned into a great recruiting vehicle for software (24m41s).
• The company achieves lower costs by having less pricey components, unlike NVIDIA chips which are expensive but offer a full stack, and by not needing high-value memory chips (25m13s).
• The company's architecture keeps data on ship more, has a software stack good at partitioning, and allows information to be sent between components without going through memory, which lowers costs and enables scaling (25m34s).
• The company is looking at a price point that offers a real value proposition, with a goal of making $200 million next year, having already booked $50 million in revenue, and focusing on small, early players who want to own their technology (26m26s).
• The company's mission is to grow organically by focusing on smaller players who need differentiation, rather than targeting big companies first (26m57s).
• The company believes that AI will dominate computing over the next 10 years, and that there will be massive transformations in hardware and software, with a need for great designers, AI processors, and open-source engagement (27m25s).
• The company is building a talent team, with a focus on great designers, AI processors, chip design, system design, and software design, and is interested in open-source contributions from a community of passionate people (28m5s).
• The company's leader has managed talent across the board and has experience in chip design process in the U.S., having worked at AMD, Apple, and Intel, and has an opinion on the transition at Intel following Pat Gelsinger's resignation (28m21s).
• The company's leader believes that the market focuses too much on execution and AI transition, and that the key to success is building great products (28m57s).
• Intel needs a hands-on CEO to focus on product development, rather than AI execution, to succeed in the market (29m7s).

Open-Source Software and AI-Powered Drones

• A company is building open-source software technology, which is an open platform that attracts many people, but faces restrictions from the US government and trade rules (29m36s).
• The company is working closely with lawyers and compliance people to ensure they do the right thing for the business and remain compliant (29m50s).
• The company's business possibilities are significant, and if China is involved, it will be interesting, but if not, that's fine (30m9s).
• A company that provided AI software for drones and jet fighters is now making its own weapons, debuting a new attack drone with a $5 billion euro value (30m32s).
• The company's AI software allows drones to avoid GPS jamming, a major problem in the war in Ukraine, and they will be shipping new units (30m55s).
• The company sees its autonomous drones as a border deterrent not just in Ukraine but across the Eastern flank of European countries bordering Russia (31m20s).
• The company has prominent backers, including Spotify founder Daniel Ek, and has deals with Saab, Airbus, and drone manufacturers (31m48s).
• The company has raised nearly $1 billion to date but has not shared revenue or profit information (32m29s).

Bitcoin, MicroStrategy, and Crypto Regulations

• Bitcoin's rally has tempered, with the price off by 1.7%, and MicroStrategy, a bitcoin mining company, has announced it is buying more bitcoin, putting $38 billion into its balance sheet (33m39s).
• MicroStrategy's move is seen as good news for the coin, with Cathie Wood rejoicing, and the price inching closer to $100,000, currently around $97,000 (34m10s).
• Gary Gensler is stepping down, and Paul Atkins is being considered as a replacement, according to reports (34m26s).
• There are tailwinds in the space, with the establishment taking over Bitcoin, similar to what Tesla did in the past (34m35s).
• Cathie Wood is long on digital asset classes and praises the new regime under the administration, seeing positivity in crypto and fintech, M&A, and softer regulations on the space (34m56s).
• A bill could require the U.S. government to buy Bitcoin, potentially creating risks like volatility, and affecting the value of gold and Bitcoin (35m39s).
• Many companies now own more Bitcoin than others, and crypto regulation is looming over lawmakers in Washington (35m57s).

TikTok's Future and ByteDance Investment

• The future of TikTok is uncertain, with President-elect Trump threatening to impose tariffs on Chinese goods, but some investors believe Trump's presidency could be positive for TikTok (36m12s).
• Mark Zuckerberg has been dining with Trump at Mar-a-Lago, which may change the mood music, and some investors see TikTok as a huge opportunity, despite it being a single-digit percentage of ByteDance's business (37m25s).
• TikTok is seen as a real player and an existential threat to businesses like Facebook, Instagram, or Snapchat, with high usage patterns and daily active users (38m13s).
• Accessing deals on the secondary market and being long on China investments has become harder, but some investors believe it is cheap and the risk-adjusted reward is attractive (38m52s).
• ByteDance is being bought at sub-five times earnings for a business growing faster than Facebook, and the risk-adjusted reward is attractive, with potential for earnings growth and multiple expansion (39m29s).

Lebron James' Media Company and Movie Successes

• Lebron James' media company, valued highly in the past, lost $28 million in 2023, with the company initially benefiting from the streaming movement and raising money at high valuations that made no sense in retrospect (41m17s).
• The company, The Bronze Company, got a valuation of over $700 million when its revenue was around $70 million and it lost millions of dollars, with the market eventually crashing (41m42s).
• People are now looking at these companies differently, and The Bronze Company is managing to get "lemonade out of lemons" with a merger that gives them more scale, benefits them when other companies are cutting back, and provides complementary expertise (41m57s).
• The merger combines The Bronze Company, which is good at unscripted content, with Lebron's company, which is also good at unscripted content, and sometimes this combination works and sometimes it does not (42m24s).
• Maverick Carter runs the daily business of Lebron's company, and has been the expert in building the business around Lebron James (42m34s).
• Theaters are currently doing well, with successful movies like "Wicked," "Gladiator 2," and "Moana 2," which had the biggest opening of the year (43m5s).
• These movies are performing well across demographics, offering a mix of action, singing, and other elements that appeal to everyone (43m38s).
• The movies "Gladiator" and "Wicked" were expensive to make, with "Gladiator" costing around $250 million to produce, and will need to make money to be successful (43m47s).
• "Wicked" is expected to make enough money, while "Moana" is expected to make a fortune for Disney, with additional revenue coming from merchandise (44m2s).