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tv   Tech Check  CNBC  December 6, 2022 11:00am-12:00pm EST

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back in the late '60s. >> yeah. historic day, and good to have you there. phil lebeau, again, with the end of the 747 >> speaking of the end, of course, the end of our show. tomorrow, we're going to have bob bakish join us that's going to do it for us on "squawk on the street. "tech check" starts now. >> good tuesday morning. welcome to "tech check." i'm carl quintanilla with deirdre bosa and jon fortt today is the microsoft activision deal going to come down to call of duty we'll break down microsoft's olive branch to sony today is there uncertainty at the top of salesforce. stock at its lowest level since march 2020 have two key executives recently departing. later, binance tried to connect the narrative, and two wall street firms with opposite tacks
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on crypto. >> take a look at the nasdaq, down 1.5% today. weaker start this week let's start with the divergence in small cap tech versus the mega caps. >> pretty familiar story it was the once most embraced stocks down. the nasdaq 1 wn for example did not establish itself as a leadership group this is the s&p tech sector, the nazdic 100, as well as small cap tech this tracks the smaller cap universe it's outperformed nicely on a one-year basis it's essentially not really had the valuations issues some of the larger stocks did. it's very hardware centric, a lot of semis, a lot of electrical equipment maybe more adjacent to industrials and less in the way of big internet and social media
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stocks that's been a solid trend for a while now. on the mega cap side, you're talking in depth about salesforce look at salesforce relative to amazon that's down a lot more than the nasdaq is in particular. amazon has traded a lot more like a cloud stock in the last year, year and a half, than it has an e-commerce play i don't think that's the entire story here you're talking about big valuation premiums in these kind of winner take most type platforms, but they have revenue growth issues. obviously, leadership questions as well. kind of an interesting bit of harmony between the two stocks >> mike, i would love to know what you're thinking about the financials in particular this morning because a lot of commentary coming out of the goldman financial conference, wells fargo saying that consumer account balances starting to come down. solomon saying no meaningful -- we were hopeful we would see a meaningful recovery in capital markets this quarter, not happening yet? >> a lot of anxiety is around the main street banks right now,
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which had outperformed quite a bit, comerica with a warning about deposit declines really the cost of retaining deposits and just in general the market for the last two days has been caught up in this idea that okay, maybe now it seems like the fed will overtighten into a recession. so i know that pendulum has swung back and forth psychologically for a while, but that's where we're at at the moment and it's coming out of the financials on a two-day basis. >> all right, we'll see how long this pendulum swings mike, thanks >> now let's kick things off with two important earnings movers after the bell. mongodb and sentinelone. starting off with sentinelone, cybersecurity has been interesting lately to say the least. sentinelone is down about 25% over the last three weeks. and that has happened as crowdstrike and zscaler reported these quarters where the sales cycles are longer.
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the guide was cautioned and had investors questioning whether cybersecurity is as much of a safe haven as a lot of the analysts on the street had been leading folks to believe this quarter, i think, raises the question when is enough caution enough given that it's down so much along with the others, does it get a bounce here if it's not worse than the others were >> remember that good enough approach you know, chief information security officers would have to convince their ceo, cfos that wasn't good enough you can't just have all of those old systems so there was this thinking if budgets are caught, at least it's not -- cut, excuse me, it's not cut in the suber security space, but they're subject to the same pressures as other executives and you're starting to see it soften a little bit we have long talked about consolidation in the cybersecurity space. many analysts who come on, even ceos and you have to wonder with valuations coming down, coming in line with the rest of
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software, maybe there's opportunity here who's going to do it, though microsoft is an interesting one but we're going to talk in a moment how they have their hands full with another larger acquisition. >> let's turn to that. microsoft in the news today. they're offering sony a ten-year deal for call of duty to be available on playstations if microsoft's acquisition of activision does get regulatory approval that olive branch despite microsoft president brad smith's article in the "wall street journal," steve kovac joins us to break down this analog they're trying to build, talking about how nice it is to stream movies wouldn't it be nice to do the same in gaming >> microsoft already has that product. they launched it over a year ago and their vision is you can have anything with the screen and an internet connection where you can stream video games just like you can stream movies on netflix. what they want activision for and what brad smith is making
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the argument here is that we need more games to make this kind of service more enticing to more people and broaden the base there and activision like you mentioned has just key franchises, especially call of duty, and as they work through this regulatory process, carl, we have heard over and over and over again from sony telling various regulators and the eu and here, that look, if microsoft is allowed to do this, there are already a huge giant in the technology space, even if they are third in console gaming behind us, what this will do is give them an unfair advantage by having that huge content library. like you said, this is important that brad smith finally said publicly, yes, we're going to commit to saying for ten years, and by the way, regulators, they're saying they can enforce this on us if they want, the remedy we're going to offer, ten years of call of duty the same day it launches on our platforms, we'll let it launch on sony. i can bet you sony is still going to find complaints with this
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>> to put this in context, this is really about those blockbuster games. the nightmare scenario is that microsoft takes the activision blizzard library and the most important games and says, we're only going to launch these on xbox, only going to launch these on windows, on xbox live, on our own platforms and this is their way of saying for a whole decade, we promise not to do that with the biggest game in the library. kind of a show of goodwill, saying hey, we're willing to give at least this much, if not more >> yeah, and it's not just willing to give that they're also willing to give up on other stuff like labor, jon so just yesterday, a division, a video gaming division within microsoft, they started the unionization process, and microsoft said, hey, we'll let them do it we're not going to challenge it. the cwa, the union representing the workers, praised microsoft how often do you hear a union praising a company
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they're doing all these efforts like the call of duty with sony and this labor issue they're saying just to alleviate any concerns that have been protup and preempting any potential lawsuit they're expecting to come out of the ftc. on the exclusive front, i'll note that sony also has their exclusives that's what sells consoles sony is the number one leader in consoles because they have exclusive games you can only play on playstation. microsoft does that too. they bought another company called bethesda and they're about to launch a highly anticipated game -- i can't remember the name, but it's a space game they're going to put only on xbox everyone is pointing their fingers but no one is adhering to what they want exactly, jon >> right, and it's funny, there's so many mentions of blockbuster, did you notice that i think brad smith mentioned it twice in the op-ed sony is as excited about this deal as blockbuster was about
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the rise of netflix. anyway, what objections would sony have remaining? is ten years not enough time how would they maybe respond to this >> so the other part of it that they also complained about is just the benefits that this deal does to microsoft's cloud business overall so they're claiming look, we have this unfair -- microsoft has this unfair advantage in cloud already. sony has a kind of similar service, but because microsoft has this chops that sony doesn't, any benefit to microsoft in that space, in that cloud gaming space, is going to be hurtful to sony so that's what they'll continue to focus on. and who knows, they may say ten years isn't enough, it needs to be indefinite? >> interesting, steve, the idea that normally you try to satisfy regulators' concerns in this case, you're really trying to satisfy a rival's concerns who obviously have a big direct tie or at least open phone line to the regulators >> yeah, that's right. not just the regulators.
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i mean, look, there's stuff being brought up in the case from day one when they announced it first, the ftc on the same day announced they're going to go after mergers just like this you can say it's wrong or not, but this idea that big companies shouldn't be allowed to buy other big companies. on top of that, other concerns from regulators and lawmakers about the labor issue. so all these other issues like exclusives are being kind of tossed into here, and we're seeing microsoft give leeway to those because strictly on an antitrust basis, that's not how these deals are typically judged but seem lie they may be this time >> this is going to have important implications for the rest of the space. if you think you're going to see more consolidation beyond this, what happens now thank you so much for being with us great breakdown. our resident gamer and gaming expert >> meantime, in crypto, goldman sachs and jpmorgan see the space differently this morning the former getting aggressive in
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acquisition, hunting for crypto firms, while jamie dimon reiterating his bear take on crypto earlier on squawk with us >> crypto is a complete side show, and you guys spend too much time on it. i made my views perfectly clear about crypto tokens are like pet rocks. people hyping the stuff up >> and all of this while binance's cz takes to twitter to correct the narrative on his role in the ftx fallout. kate rooney joins us to sort through all of this. first, i was looking at that cz thread, all the focus on ftx what about clearing up some narratives when it comes to binance? the whole industry moving towards proof of reserves. they don't exactly have that yet. they're still a lot of shortcomings, audited financials it feels like he's using the ftx episode like a lot of crypto companies to take attention away from what they're doing. >> it brought more skepticism and criticism on binance, so
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he's trying to defend some of the criticism that's come out, and they have got some of these similar vulnerabilities that ftx had, including its own exchange token. there's a lot of questions around that and trust in the industry he's still trying to take shots at ftx one point he made is if a tweet brings down your company, probably not our fault he had some pithy words on that, but a ton of questions about binance and the stability. they are now by far the biggest global exchange with 75% of global trading volume. >> kate, so bitcoin is now right about $17,000 even, which is below $20,000 for sure i take issue with jamie dimon's pet rock metaphor here i think it's more like chuck e. cheese tokens, crypto, because there's like one little market where these things have a lot of value. people are very excited inside chuck e. cheese about these tokens and how many they can
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get, what they can get the problem is when you have to go out into reality, when you go outside. is the crypto market still inside the chuck e. cheese, right? >> a great anall ogy jon. very niche market and those within the chuck e. cheese market to use that analogy, still see the value, they still talk about really being bullish in the long term it's funny, take you back to jamie dimon for a second the pet rock joke. he's been really skeptical and critical of cryptocurrencies themselves jpmorgan and a lot of large banks have massive blockchain teams. they have onyx at jpmorgan, about 200 employees. they're spending time making private blockchains in their own insulated version of the technology you hear these ceos talk and they'll hedge it, criticize the cryptocurrencies and they have a point in a lot of cases but they'll always hedge it and say by the way, i believe in the
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technology, because they're spending a lot on it >> yes, there's chuck e. cheese tokens, pet rocks, these are the tokens which are hugely spentulative, which it's so easy to duck on, but it's blockchain technology that goldman sachs is trying to pick up cheap now in terms of the companies it's looking at and jamie dimon had to hedge in that interview we listen to the pet rock, and if he's watching "tech check," maybe he would have gotten good coverage on the blockchain technology and all of cnbc, not just "tech check," but we talked about the technology throughout all of this as well. less so the tokens, all the different kinds of tokens. >> you talk to people internally that work at onyx or morgan stanley or goldman sachs in the blockchain group they feel isolated and ostracized so these ceos have to be careful not to lose that talent, if they believe in this technology, they can criticize and of the cryptocurrencies but
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jpmorgan lost the head of their digital asset group. they have to be careful to conserve talent and hire part of this may also be what they call apple hiring buying a start-up on the cheap and saying you have brilliant engineers who know about blockchain maybe we'll buy this company for a discount and bring in the talent >> which is an important thing to keep an eye on. not to say that's not overhyped as well. kate rooney, thanks so much. carl meantime, the president's trip to arizona this afternoon is coming up next. we'll talk about that. salesforce trading at lows not seen since march of 2020 "tech check" is just getting started.
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. welcome back let's get a check on getlab. the company issuing an upbeat outlook, revenue of $113 million. grew 69% year over year. it has been cut in half since the start of the year.
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>> let's turn to salesforce, and the departure of bret taylor and slack chief stewart butterfield, sending the stock plunging take a look. shares now at their lowest levels since march 2020. at about $133 a share. with us to break down the fallout, what comes next, sanjay kunan. the thing that's most interesting, concerning to me about this is the question of the value that you get from big acquisitions and quip and certainly slack, both big acquisitions for salesforce and benioff, even if you pay a lot, part of the argument usually is look how long this founder, this ceo, this executive stuck around. they're part of the future leadership and management of this company they're going to inject innovation bret stayed around for 6 1/2 years so that's different, but stu butterfield leaving rather quickly. what does that signal? >> jon, deirdre, and carl, thank
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you for having me on i was coming back from a great show at aws, quite a week. typically, as an operating executive when we do acquisitions i have done many in my life, you have a contingency plan for executives, about the two-year mark that stewart butterfield, and you know, if you can, you get them to stay much longer but you typically have that sort of two-year mark. that's about exactly the time, so i don't think these two are related. stewart at some point in time probably wanted to think about what he was doing. i know bret much better. i texted him over the weekend and wished him well. the one constant about salesforce that's amazing is marc benioff has had this uncanny ability to have executives come in and fill holes. so there's many other executives he has found a way to fill them and the opportunity is still pretty strong, albeit the growth slowing down in salesforce >> we're about to get another
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cybersecurity report in sentinelone this afternoon and the sector has been beaten down a bit after the reports from zscaler and from others so what do you think is happening here, considering what happened with krcrowdstrike, perhaps cyber not as isolated as some folks thought you're operating somewhat in that space demand remains strong but not as insulated from the macro as many thought? >> you have to take these companies one at a time. i talked about palo alto i think they have the strongest portfolio. they play in network security and cloud a.i. security. crowdstrike has a strong portfolio, and now going after the security analytics opportunity, they have to exploit the opportunity and go after companies in that space. sentialone i'm going to look closely at how they operate today. their billings growth was down
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from 50% down to 37%, their opportunity in that secure access service edge, remote work opportunity, and the general was on cnbc earlier today. he was talking about ransomware and our focus area on data cohe. i think the cybersecurity category is in the top three rankings of cios and has done well even in recessions but each company has to prosecute their own company to their best capabilities >> i want to go back to salesforce because they have such a big presence in the bay area there's real questions about what is going to happen next not only did they lose a number of important executives but some of their most important engineering talent, butterfield, bret taylor, but also the ceo of tableau left in the last week. they were critical in attracting engineering talent where do they go from here comes at a moment when competition with microsoft, it's
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only getting fiercer >> yeah, i think these are all good people, but remember, there is one attractor of talent at salesforce i have known salesforce for many years, been a key customer of theirs at vmware, competed with them you can't count marc out he's the constant. he's got parker harris there, and sweeney in engineering there's a strong team and he's found a way to attract talent from other companies he's in touch with tech executives at bigger companies and entrepreneurs. while it's a loss for some of these folks, some of them had career fans, the bigger picture in salesforce is as you look at the cloud 100, there's so many companies that do some small piece of sales intelligence. if i name them, gong and outreach and seismic, on top of salesforce and adobe and you probably haven't heard of some of those companies, they have tremendous offers to build or partner or buy their way into these markets, on top of their
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platforms. >> absolutely. drift, i have been talking to a lot of them. sanjay, thank you. >> thank you, jon. >> as we go to break this morning, want to remind you to join the cnbc financial adviser summit today we're going to discuss key themes of market turmoil, inflation risk, macro economic headwinds while providing recession proofing strategies for all investors. we're back in a moment hi, my name is tony cooper. and if you have both medicare and medicaid, i have some really encouraging news that you'll definitely want to hear. depending on the plan you choose, you may be eligible to get extra benefits with a humana medicare advantage dual-eligible special needs plan. all of these plans include a healthy options allowance. depending on the plans available in your area, you could get up to $1800 a year to help pay for essentials like eligible groceries, utilities, rent,
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. good tuesday morning welcome back to "tech check. i'm carl quintanilla with jon fortt and deirdre bosa we're going to check in on the chip sector, under some pressure as the predgoes to arizona in the meantime, dow is down 250. let's get a news update with kristina partsinevelos >> thank you, carl here's what's happening at this hour hate crime and murder charges
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filed against the suspect in the colorado springs gay nightclub shooter. anderson lee aldrich is accused of killing five people and wounding 17 others before he was wrestled to the ground and beatb into submission by patrons of the club >> for a second day, there are reports of drone attacks inside russia regional officials say a fuel tank at an air field was hit 60 miles from the ukrainian border. local media show fire and smoke caused by the air strike russian officials accuse ukraine of carrying out two attacks but have not said who they believe responsible for today's strike >> in georgia, voters braved rain to cast their ballots in the runoff election. record early voting numbers show an advantage for democratic incumbent raphael warnock. republican voters are more likely to vote on election day carl, back over to you >> thanks so much. >> let's get back to the broader market nasdaq under some pressure this morning, down more than 3% for the week
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our next guest says with continued uncertainty around inflation and earnings growth, investors not ready to pay premium valuations at least in technology joining us is delonis. i know you have been cautious for a big part of the year and i wonder if you think we just hit some wall of resistance once the s&p got back to the 200-day? >> yeah, carl, thanks for having me back. i would say it's part of that. also if you look at a pretty good trading strategy for short term investors is looking at the 20 range and selling some of the gains there. usually see kind of the falloff of a rally at that point investors are looking closely at those two items and looking at where, especially with tech valuations, we have come down from 2021, but we're still trading higher than the rest of the sp &p and the rest of the market in the long term range we talked
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about what you can pick at >> are you getting ready to sell into any strength we get in q1 >> yeah, i would say q1, q2 and reason being is one, i think tech obviously has done a good job in cost constraints and cost control. we have seen most of the announcement of layoffs which are not fortunate things happen within the tech sector so i think that's a positive sign but if you look into q1, i think there's more going down the pipe as you look at how budgets are made for a lot of these companies and still the earnings question is in play. we had revisions revised, the outlook for the next year, and especially the tech sector, is still to be seen, especially seeing how the consumer does it's more of the q1, q2 range that it would be safe for investors to dive back in. >> yesterday, we were looking at
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ibm versus snowflake a year ago, they were at $100 billion market cap since then, which probably would have been surprising, snowflake has massively underperformed while ibm has created massive value. who would you bet on >> as a growth investor, you have to look at the difference the stalwart standard giant for a while has been a value play for many of us for a while that's someone doing well in 2022 if you look going forward, as i mentioned, i still want to lean on growth going forward. i still want to look at snowflake, the valuations come down to a more favorable range and they have to do things to grow in a time of interest rates being higher that's an area where i would still look at snowflake. i still think you have to wait a bit, but i would bet on snowflake in the further term. >> part of this narrative has to do with, you know, growth at any cost and some of the growthier names like snowflake and others have
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improved their bottom line and valuations have come down so much is the idea that you would bet on a snowflake, you think they are bottoming out some of these growthier tech names >> yes and i think they will bottom out. one, you have to look at it with bimeals. they're creeping back up in the last five daves so investors are flying back toward safety. i do think they will bottom out. i do think earnings and profitability for a lot of growth names that were doing well in 2021 will return timing on when that happens is sill to be seen. you're going to see more on the employment data and how that shakes out over time, how consumers are still spending over time and in general, investors getting comfortable with a lot better, more attractive valuations in growth companies that had, we all saw it and participated in it, those valuations in 2021 now that they're more favorable, it's obviously a good thing for
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investors who saw these companies as strong and not just companies we're betting on to dive back into solid companies >> it's interesting. the bull narrative to a large degree right now is that we're seeing some deflation in goods but wages are sticking so your consuming power is get agbit of a tailwind, the opposite of what happened earlier in the year. i wonder if it leads you to favor names in tech at least that are more consumer facing than say enterprise? >> yeah, 100%. i think one of the things we saw is as you mentioned the consumers did spend during the holiday season, but the growth rate of the spending was lower than we had in the past couple years. and the trend is still being online the trend is shifting to online with cyber monday having the bulk of the $210 billion that was spent over the holiday season so i think the consumer facing makes sense. we have to -- we're still seeing wages not obviously affecting
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inflation. but consumer, as mentioned by jamie dimon earlier this morning, still has plenty of savings, still everyone, there are job openings you have much higher job openings the consumer is still strong you see enterprises ratchet back down on cost and tighten their belts. while the consumer is still spending a little bit. that would play favor to consumer facing side of tech companies rather than enterprise facing side. >> a lot of discussion of the remaining pandemic excess savings even from the likes of jamie dimon this morning on "squawk box. great stuff. great to see you again thanks so much >> after the break, meta warns it may remove news from facebook, plus some employees claim they're not getting promised severance that story up next back in two. r health has more to do with your zip code than your genetic code? that doesn't seem fair. we agree. but where you live determines access to doctors, green spaces and fresh food. that's why we grow our own.
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meta shares are taking a hit today, down 5% we have headlines out of the tech giant this morning. it's threatening to remove news from its platform in the u.s. if congress passes the journalism preservation and conservation act. meta's spokesperson writes in a tweet, they would rather remove
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news altogether than submit to unfair government mandated negotiations then there's the oversight board. out with a new report claiming that meta's cross check program which gives special treatments to its vip users is unfair and misleading the board now blaming meta for prioritizing its own business interests instead of the program's goals to control content moderation and lastly, as meta continues to mass layoffs employees who were part of the corporate trading program are getting half the severance they were promised what does this mean for the stock? under some pressure, significantly, doing a bit of a turn after hitting higher levels in recent weeks. >> none of those individual headlines are necessarily positive for the stock now shares down over 5.5%. over the last month, up 27%, jon. maybe the fact we're talking about social media as a whole, the same tried and true problems we have been talking about for years, maybe that's a positive
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we're not talking about the metaverse, which i can only imagine is music to your ears, jon. >> i think facebook as a core business appears to be okay. it appears to be stable. maybe it's not growing gangbusters like it was, but frankly in this market, what is? the issue for investors i think is, you said the m-word, metaverse. that's weighing down the profit coming out of that core facebook, instagram, et cetera, engine and even though there is investment going into things like reels, it seems to be a relatively back seat effort compared to trying to create this future platform that said, the oversight board actually has impressed me over time this is not a kid gloves ruling on how cross check worked. it has, i think, implications for social media writ large, and i think people are going to look at elon musk's actions at twitter and how it treats people
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and organization with privilege through partly the lens of the oversight board. so carl, i think in a way, something that a lot of people looked askance at, this oversight board, i think it's coming out with rulings that could have implications for these organizations and for inv investors. >> i would agree, especially since we didn't know what a board makeup would look like now we know what it's like when there's no board at all. people starting to make comparisons. the other thing is the overall ad market. paramount this morning, bob ba bakish, now sees the fourth quarter coming in a bit below q3 that's adding to concern the overall ad market continues to weaken >> absolutely. and you have netflix and disney's ad supported models coming online, which could take money away from others in terms of the stock price, looking like a value play. it's so far below, even google is at 20 times forward pe.
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meta, facebook, is at 12 >> be careful, though. always spend more, you can always spend more. >> still to come, taiwan semi-conductor investing $40 billion to build new chip plants in arizona we'll have more on that and how it could disrupt the competitive landscape. stay with us you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠.
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welcome back as companies look to cut costs they continue to invest in new technologies to do so. cybersecurity remains a key area of focus we asked members of the cnbc technology executive council how their companies are thinking about these investments. take a listen. >> companies that are going to be successful demonstrating relevance, demonstrating tangible value and growing are the companies that are investing in technology. with the proper mindset and the proper talent and culture, technology can be an incredible enabler to insure success. >> there are also will just be a constant ability to innovate in these new areas and really outpace and that's really cybersecurity at the end of the day, all about that continued innovation >> we're always trying to keep on top of technology so we're going to look at what does an atonmous vehicle look like >> what we see specifically in cybersecurity domain is that our
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domain will continue to rise in importance
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welcome back
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president biden traveling to arizona as taiwan semi-conductor announces it's going to spend more than $12 billion, it's going to be $40 billion to construct new chip plants. kristina partsinevelos has more on the impact. kristina >> we can call it made in america with a little help from taiwan taiwan semi-conductor is tr tripling its initial investment, promising to spend $40 billion on two new semi-conductor hup hubs the first will produce even more advanced chips, four nanometers instead of the five nanometer promise. the second will produce three nanometer chips which means faster power, efficiency and computing performance. both rare expect to produce at least 600,000 a year by 2026, as well as create 10,000 permanent high-tech jobs in the region and 10,000 construction jobs apple is tsmc's biggest customer
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and will source some of the chips from the arizona plant, lowering its reliance on the location in taiwan tim cook will company president biden at the phoenix fab for a press conference the ceos of nvidia and amd will also attend to discuss their partnerships with tsmc keep in mind, these two fabs will offer the most advanced chips in the united states tsmc's taiwan plant will be producing even more advanced chips. >> which is a key point. kristina, thank you very much. let's stick with chips joining us for more on the explain chain for semis, stacey rascot do you see this as a hedge against any china conflict if you do, is it a good one considering they won't be manufacturing the most advanced chips? >> it's a hedge in a sense that it's a good thing to diversify the supply chain somewhat. that's the whole point of the chips act and everything else. at the same time, you have to put these numbers in context
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they sound very big. they're not very big so 600,000 wafers a year by '26 is like 50,000 a month tsmc has well over 1 million wafers a month of install capacity more by 2026 it's like a low single digit percentage of tsmc's at the same time it is in some sense important. you know, taiwan is it is it is an increasingly sort of untenable geopolitical environment over there and the world is effectively dependent on taiwan for leading edge semiconductors, so you've got to start somewhere any beginning to this i think is helpful, which i think that's the whole point. >> what about intel? where is pat in terms of his
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plans, ambitions to manufacture chips also here in the united states >> yes, he's also building a factory in arizona he's building a packaging plant in new mexico, and he's also building, you know, a complex similar to what tsmc is doing in arizona. so the arizona site can support something like s6,000. i think intel talked about $20 billion initial investment and could go as high as $100 billion over a longer period of time we're going to see more and more of this. at the end of the day if you want leading edge there's only three companies that can do it there's only tsmc, samsung and intel. >> so what it comes down to, i take it, is execution. can intel actually execute at
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the high level that they're promising with the leading edge semiconductors they say are going to come out of these if they can and they're in the u.s. and relatively speaking it's not a huge supply, so it's not necessarily going to contribute to global oversupply particularly at those process notes then it would be successful the question is tsmc and samsung have a track record of doing this >> for example, look at the announcement today it's actual customers. so this is the important thing you don't really want to have to dig a hole and throw 20 billion or 40 billion or whatever it is and wait for customers to come around >> intel has said aws and qualcomm was thrown in and said they'd be in there >> they do have good packagic ip in terms of everything else we've gotten into the
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spreadsheet for intel. it's like, oh, yes, we'd be interested in exploring -- anybody would want an alternative edge at the same time whether intel can do it, call in five years. i'm convinced of that. you've got nvidia, amd i don't know who is going to be in these intel fabs if and when. i don't know, call me in five years. >> we talk about a lot of things where there's policy led demand either infrastructure or the chips act is where we find the labor. do you think that's going to be a material question once this thing opens? >> absolutely. so one advantage of doing this in arizona for all the factories who want to build there probably aren't
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enough -- maybe i should go back to this. 15 years ago if this wall street thing doesn't work out maybe i can find a gig in the fab someplace. arizona they've got already a lot of clusters there, and there's already people there, and there's education. and in ohio you don't have that yet. this is why intel is actually investing money in the ohio educational system to try to train engineers and operators and everything absolutely, i think there's a massive shortage of semiconductor talent like already today i think it's hard to find qualified people. they're going to build all these factories, that is absolutely going to be a critical issue >> where are you on the sector as a whole in terms of its investability. that is more than the 42% downturn during previous
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declines >> that note was a couple months ago. we've started to see earnings counts and the stocks have actually held in most regionally well in the wake of those cuts when the earnings go down and the multiple goes up that's the part of the cycle we're in right now i think investors would like to see cuts usually the stocks are anticipatory the best time to buy the stocks is about three months before estimates bottom so you want to see them start to come down and almost want to buy in front of the last cut if you have perfect foresight we've had consumer areas pcs, it bes, those have already cut massively. people are starting to look at those as a sort of first in, first out hypothesis there's other parts like auto motive and industrial which have not cut. and if we go into recession maybe they will. >> we have to leave it there appreciate your insights
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one more thing before we go and that's apple announcing apple music sing it's coming later this month reminds you of karaoke there's good reason, features allow users to view lyrics, adjust the volume of prerecord vocals on a track. the product doesn't actually remove the vocals but uses an algorithm to isolate them from the rest of the song you can imagine the uses in basements perhaps. >> i will say the household will be using this feature. we just need to pick up a few of those microphones. it's interesting because you have to imagine spotify will have to come out with something like this. you have to use apple music, carl our audience may not know that john is a very good singer i don't know if in the fort household they're going to be using it and carl with an appreciation of
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all things music >> interesting we may have to get me and john doing some hollow notes, what do you think, john? >> dr. dre and tupac, there's a whole universe of opportunity. >> let's get to the judge and the half thanks very much and welcome, everybody, to the half time report. front and center this hour directionless december is that what we're in for? stocks fail to find much footing. some still call for a year end rally. joining me for the hour today stephanie link, jim lavebthal. let's check the markets. just past 12:00 noon in the east and the dow is down more than 700 points in the last couple of days so we're losing 270 today it's just shy of 1%. the s&p is down a little more than 1%. that's a


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