Chapter 1: What is the main topic discussed in this episode?
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OpenAI fails to hit revenue and user targets as it sprints toward an IPO. Plus, the Trump administration pays two more companies not to develop offshore wind projects. And ahead of the Fed's rate decision tomorrow, we'll look at the pressure facing central bankers around the world.
The Bank of Japan is confronting the same problem that is bedeviling every central bank now, which is that war in Iran has made a mess of their inflation forecasts, it has made a mess of their growth forecasts, and they're left with very few good options on how to respond.
It's Tuesday, April 28th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today.
With just months to go before a planned IPO and its business in a slowdown, OpenAI's board is probing plans to spend $600 billion on data centers and questioning CEO Sam Altman's efforts to secure even more computing power. We're exclusively reporting that OpenAI CFO Sarah Fryer is worried that future revenues won't be able to make up for the massive outlays.
And here with more is Journal Finance Editor Alex Frangos. Alex, the strategy at OpenAI has for a long time been that massive spending would yield massive growth. It seems like that math, though, now might be facing a bit of a stress test.
Well, there seems to be a discussion going on within OpenAI as to how much money it should be spending. Its business has hit a few bumps in the road. It's losing ground and buzz to its chief rival, Anthropic. They're both racing towards doing initial public offerings. as soon as later this year.
And when you're going to do an IPO, you want your finances in order, you want everything to look, you know, as strong as possible. And there's this debate, they need to spend a lot of money to invest in data centers, but they want the business, the like end users, people using chat GPT and other tools to be actually growing and using it. And
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Chapter 2: Why is OpenAI struggling to meet revenue and user targets?
So it has a lot of echoes of when Facebook went public or when Uber went public, these kind of culture clashes, but also business clashes. Investors generally want a growth story, but they want solid revenue. They want to see maybe even some profit. And that tension there with OpenAI is like, how much revenue are they going to have? Will they be ready to have their debut on public markets?
And I think that debate is going on inside the company as to when that should happen and how quickly.
Yeah.
That was finance editor Alex Frangos. OpenAI's CEO and CFO said in a statement they are totally aligned on securing new computing resources. The Trump administration has announced payouts totaling nearly $900 million to a pair of energy companies to walk away from their offshore wind projects under development.
Arguing that the projects are untenable without taxpayer subsidies, the Interior Department said that Blue Point Wind and Golden State Wind would end their offshore leases for projects in New York, New Jersey, and California.
That comes after a recent deal with French company Total Energies, which is getting a $1 billion payout to walk away from projects off the coasts of North Carolina and New York. But as energy and climate reporter Ed Ballard explains, whether those deals are good for U.S. taxpayers is up for debate.
To critics of the administration, it looks pretty strange to be paying companies not to develop projects at a time when bills are going up, lots of data centers are being built that require lots of energy, and electricity is in short supply. An important thing to know about these arrangements is that the companies will get their money back contingent on investing in oil and gas infrastructure.
The Trump administration consistently views oil and gas and coal as the most reliable, low-cost form of energy. However, it's not quite that simple because one of these companies has agreed to put the money into an LNG export terminal. And of course, that's not a like for like thing. It's not like that is going to generate electrons for the grid. That's more about exporting American oil and gas.
The other strange thing about these deals is that these companies are forswearing offshore wind in the United States in future. And that's just legally a sort of strange thing for a private company to do. Assuming that a future administration says offshore wind is OK, what happens then?
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Chapter 3: What concerns are raised about OpenAI's spending strategy?
For long-term investors, the question isn't who buys Revolution Medicines, it's what the company looks like when it grows up.
Coming up, it's a big week for central banks looking to navigate rising inflation and competition for internships heats up as AI reshapes entry-level roles. We've got those stories and more after the break.
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Paramount is asking the FCC to let foreign investors take a major equity stake in the company as part of its deal to buy Warner Brothers Discovery.
In its petition yesterday, Paramount said that those investors, including Saudi, Qatari and Emirati sovereign wealth funds, would indirectly own nearly 50 percent of Paramount's equity interests, which, as the parent of CBS, include 28 local TV stations.
Current rules bar foreign investors from owning more than 25 percent of companies that hold broadcast licenses unless the FCC determines it serves the public interest. A Paramount spokesman called the filing completely standard and said it wasn't a condition to closing the Warner deal. Oil prices are gaining again today as peace talks between the U.S. and Iran continue to stall.
The higher crude prices have been a boon to some oil majors, with shares of BP up this morning after the British energy giant netted $3.2 billion in quarterly profits as traders capitalized on the volatility caused by the war.
And we'll also learn how other companies are faring, not least those exposed to a record drop in consumer sentiment when Coca-Cola, Mondelez, Starbucks, and Visa all release earnings today. And the Bank of Japan is signaling that interest rate hikes are firmly on the table as it stares down an expected jump in inflation driven by rising energy prices.
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