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Luke Kawa

D-Wave Quantum leads massive rally in quantum computing stocks as its revenue outlook goes parabolic

D-Wave Quantum is ripping higher, leading an across-the-board surge in pure-play quantum computing stocks, after its Q4 results indicated a rapid improvement in its sales outlook.

Bookings, which are the value of customer orders received that are expected to be converted into revenues in the future, soared. At $18.3 million, these bookings are now higher than all the revenue the company has generated over the past two years.

Peers IonQ, Rigetti Computing, and Quantum Computing are all up double digits as of midday.

“Our mission is unwavering: to help organizations realize the benefits of quantum computing now,” CEO Alan Baratz said. “With record bookings, a record cash position, and an unequivocal demonstration of our quantum system outperforming classical on a real-world problem, our progress toward achieving that mission is clear.”

The hype around the possibility of quantum computing in the wake of Alphabet’s Willow chip sparked a run-up in the shares of companies operating in the space. But investor focus shifted to the lack of commercial utility of the technology to date after Nvidia CEO Jensen Huang said it would be decades before quantum computing would be “very useful.” (The chip designer is hosting a “Quantum Day” to recognize and celebrate the progress in this industry at its conference next week.) Quantum computing stocks proceeded to tumble thereafter, with losses piling up during the market’s recent rout.

In an interview with Sherwood News following Huang’s remarks, Baratz pointed to the different strategy D-Wave takes in developing the technology (preferring annealing to a gate-based approach) as a critical differentiating factor that enables the company to be “commercial and delivering useful results today.”

Ahead of its earnings, D-Wave recently announced “the world’s first and only demonstration of quantum computational supremacy on a useful, real-world problem.”

That progress, and the surge in bookings, serve as green shoots for the commercial viability of quantum computing, even though we’re still talking fairly small numbers here.

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CHICAGO - DECEMBER 13: Benny the Bull, the mascot of the Chicago Bulls, eats popcorn during the game against the Dallas Mavericks on December 13, 2004 at the United Center in Chicago, Illinois.

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GE Vernova jumps after company secures first wind repower upgrade contract outside the US with Taiwan Power

GE Vernova is soaring as its onshore wind repower business goes international.

The company signed a deal to supply 25 repower upgrade kits to Taiwan Power Company, which will modernize its existing fleet to extend its lifespan, along with a five-year operations and maintenance services agreement.

“The milestone international contract builds on GE Vernova’s track record of repowering over 6,000 wind turbines in the United States, extending that expertise to support Taiwan’s decarbonization goals,” per the press release.

GE Vernova boasts 57,000 turbines installed worldwide. Turning past customers into a recurring revenue stream via these upgrade contracts is certainly a tidy piece of higher-margin business for the firm.

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A potential Netflix purchase of Warner Bros. streaming and studio assets is causing headaches for investors, per Morgan Stanley

On the surface, it’s easy to see why Netflix would be interested in bidding for Warner Bros. Discovery’s studio and streaming assets: the opportunity to add iconic franchises like DC Comics, “Harry Potter,” and “The Lord of the Rings,” as well as legions of HBO original shows that have stood the test of time.

However, the introduction of all this content, much of which has traditionally generated revenue in ways that Netflix does not, might be adding too many tentacles for even the creator of “Squid Games” to effectively manage, per Morgan Stanley, which also notes that it’s questionable if regulators would agree to such a tie-up.

“While Netflix is the largest of the reported bidders by a factor, it may have the smallest synergy opportunity and perhaps the toughest regulatory path,” analyst Benjamin Swinburne wrote. “NFLX shares have been under pressure over concerns that a WB acquisition, if announced, would complicate the investment thesis, distract management, and/or dilute EPS.”

The other interested parties are Paramount Skydance and Comcast, per reports.

In short, a successful Netflix acquisition may see the streaming giant need to be able to raise prices and/or subscribers to make enough money from the acquired properties under its distribution umbrella as it veers away from how these assets have made bank, oftentimes through theaters and third-party distribution.

This introduces many “strategic questions,” as Swinburne wrote:

“If acquired, Netflix could choose to shift all theatrical distribution at Warner Bros. to direct release on Netflix, believing that it can generate more value by keeping these films exclusive to Netflix rather than monetizing in other windows — including theatrical. Over time, it could similarly exit the third-party licensing business and distribute all TV series produced by Warner Bros. studios on its own platform.

Such a transition would take time, as TV distribution is built on run-of-series agreements and multi-year licensing deals and talent relationships would likely require some in-production films to still see theatrical distribution. Long-term, however, this kind of business model pivot would put downward pressure on the earnings power of the acquired businesses, which would need to be recouped through faster growth at core Netflix to justify the acquisition price, if a deal were to be announced.

If Netflix were to announce a bid for WB, HBO could bring some similar strategic questions for Netflix. For example, Netflix could shut the service down and shift all content, both originals and licensed, onto Netflix. That would be walking away from nearly $2bn of adj. EBITDA, but Netflix may feel the content can be better monetized on core Netflix.”

Congressman Darrell Issa has written to the attorney general expressing antitrust concerns over the potential for Netflix to purchase Warner Bros. studio and streaming properties, writing that it “currently wields unequaled market power,” adding that these assets would “further enhance this position” to a level “traditionally viewed as presumptively problematic under antitrust law.”

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