Yahoo Finance Live anchors Brian Sozzi and Brad Smith break down the decline in stock for Zoom.
Video Transcript
BRIAN SOZZI: All right, Zoom heading into potential further pressure. Growth rates, according to Citi, noting a negative catalyst watch on Zoom. And you're seeing Zoom shares under pressure there a little bit on this call.
Really, Citi can drop in the hammer on Zoom. They already rated a sell, saying things might actually even get worse when the company reports in a few weeks. And, Brad, to me, this makes sense.
Really, I talked to so many leaders and when they do, I ask them, what platform do you use. They're all using Teams. And I think the functionality that Microsoft has built in with the teams platform has taken it to a whole other level, to the point where it is absolutely obliterating Zoom.
BRAD SMITH: Well, they had a larger base of clients to go out to, even when Zoom had started up their business. And of course, it wasn't just like Zoom launched and they were the only video or webcast type of solution out there. Microsoft had been doing this with Skype, it just didn't feel any pressure to really have to innovate on top of Skype. And so with that, I think Zoom really put the pressure on for Microsoft to then again reiterate to its client base how powerful its video solutions could be, where it could be integrated into other parts of its collaborative suite. For Zoom, it's really come on the back of just trying to figure out, OK, what other additional features, how many different screens can we pop in there for people to be able to put as a fake background behind them while they're doing these calls so that people don't see your dog or the Chipotle burrito--
[INTERPOSING VOICES]
BRIAN SOZZI: That's nice.
BRAD SMITH: The dog is also-- any pets. Pets are always welcome here on Yahoo Finance, by the way. But I think at the end of the day, too, for a company in Zoom, it's been tough to go up against the competition in a behemoth like a Microsoft, or even like a Cisco and what they've been able to put forward, at least in much of the in-person conference rooms that are in offices, especially, as people or companies trying to shift people back into their offices.
BRIAN SOZZI: The other problem here, too, Brad, is in this AI discussion, I don't hear Zoom being mentioned. And if you're a Microsoft devotee, of course, now you're thinking about chat GPT being built somehow, some way into Teams.
You look at Salesforce, which of course, owns Slack. They are now building AI into various parts of Slack. Where is Zoom in these things? You're not hearing this. Really, all you're hearing from Zoom is them trying to stand up more Zoom phones to compete with Cisco and then laying people off.
BRAD SMITH: Yeah, absolutely. Some of the challenges in this note at least saying that the enterprise connect indicated this is going to challenge some Zoom renewals. So on the renewals, that might be a thing to hotkey when they report, or not hotkey, but you can Control F, Command F when they report [INAUDIBLE]
BRIAN SOZZI: So no burrito photos, either?
BRAD SMITH: No burrito photos.
BRIAN SOZZI: No burritos, but puppies are good.
BRAD SMITH: Well, puppies are great.
BRIAN SOZZI: OK, puppies are always great.
BRAD SMITH: That would be a good poll--
BRIAN SOZZI: Just checking.
BRAD SMITH: --puppies or burritos.
