WHEN: Today, Monday, April 12th
WHERE: CNBC’s “Squawk on the Street”
Following is the unofficial transcript of a CNBC exclusive interview with Microsoft CEO Satya Nadella and Nuance Communications CEO Mark Benjamin on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM ET) today, Monday, April 12th. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
JON FORTT: Hey Carl. Yes, Satya Nadella, Mark Benjamin, CEOs of Microsoft and Nuance Communications. Great to have you on CNBC this morning. Satya get straight to this nearly $20 billion deal inclusive of debt. Give us the rationale and how important specific industries and depth and knowledge in those industries are as you build out this AI driven cloud strategy.
SATYA NADELLA: Good morning Jon, it’s fantastic to be with you. It’s a very exciting announcement for us. If you think about this, it always starts for us with our mission to empower people in organizations in this case it’s about healthcare, it’s about the patients, it’s about doctors, it’s about health outcomes. And Nuance and Mark and team have done a fantastic job of taking perhaps the most defining technology of our times, artificial intelligence, applying it in the most critical of industries, healthcare, and doing it also with that platform first partner first approach. And so for us at Microsoft to bring everything that we’ve done in healthcare over the years and over the decades with Nuance with partners is what this deal is all about.
FORTT: Tell us about the timing Satya because you look at Nuance’s stock chart, it’s had quite a run over the last year it seems like there might have been a possibility of getting it cheaper a while ago and I know you’ve been working with them for a while a lot of their new innovative services are built on Azure. So what’s the opportunity that you see for growth in the future, both in healthcare and to take some of what Nuance has been doing in this very complicated area, and perhaps extrapolate it out to other verticals where you’re also looking to grow.
NADELLA: Right. Coming out of this pandemic Jon, we are going to see some real structural change. We’ve already seen in the pandemic of massive acceleration of digital transformation, but coming out of it is going to be real structural change in across industries and in healthcare in particular so for example, this particular opportunity when you think about the provider market, in order for us to keep improving health outcomes in reducing costs digital tech is going to be key. We have participated in it as Microsoft on the IT side but what Nuance and Mark and team have done is take that most critical part which is at the point of care and really transform it with integrations, with Epic, Cerner and all the critical EHRs. And so to us, it’ll double our total addressable market as Microsoft going forward, not only will we be able to serve all the providers with everything we do in Microsoft 365, Dynamics 365, Azure, but Nuance will be able to still help us deliver these AI first solutions for doctors and radiologists and overall clinical decision support in partnership with the rest of the ecosystem.
FORTT: And mark you, you’ve been on a tear. Why sell, I mean not just the stock price which we like to look at but as you noted in the last earnings call, your net promoter scores 59 for software that’s really good. There’s a lot that you’ve been doing on the acquisition front say Saykara has some really, really innovative software that, that lets physicians really be a lot more efficient. Tell me, why sell.
MARK BENJAMIN: Yeah, thanks Jon. I mean, we’ve been working with our partner Microsoft for the last near couple of years and you know we have big ambitions here at Nuance and the more we work closely with Microsoft and developing our Dragon Ambient eXperience or DAX which will change the way medicine is delivered, the patient physician experience, we just saw an opportunity to really, you know, to create hyper scaling opportunities on a global basis. And you know we’re, you know, we’re purpose driven here at Nuance very similarly to Microsoft so the opportunity to really take, you know, AI capabilities alongside of the cloud based capabilities that Microsoft and Azure and the power platform and dynamics, we really feel there’s a great opportunity where we’re not only solving the industry’s hardest problems, but in healthcare is one example we believe we can create more access to care and we believe that is a great calling for the two companies to come together for.
JIM CRAMER: Congratulations, I think this is a huge deal and obviously if you think it’s going to double the TAM, it’s amazing. What do you think about the idea, you’ve never been able to crack the, the, near oligopoly of Cerner and Epic, but if you can somehow get their data, which frankly Mark already has great deals with them, wouldn’t you be able to make it so that we would as individuals know exactly, we can put it on our watch, we can put it on our PC, which of course is a Microsoft PC, we can make it so everybody would be able to be in control, we would be in charge of our healthcare, if you guys pull this off, what do you think?
NADELLA: You know Jim I come at this from fundamentally empowering, enabling the providers because, you know, as tech companies sometimes you overstretch what technology on its own can do. Ultimately, I want my healthcare to get better because of great doctors spending more time with patients. And so, the approach we’re going to take, Jim, whether it’s what Nuance has taken and what Microsoft has taken is historically work with a broad ecosystem in this case, EHRs, Epic, Cerner, critical to your point, they build the databases, which then get used by the Providence’s and all the other healthcare providers in the world to provide great healthcare so I think sometimes we kind of think about this as somehow one party doing it all, I just don’t think complex industries work like that. Complex industries work to better everyone if there is a real ecosystem approach where everybody does good stuff in their swim lane instead of trying to stretch and do everything so that’s at least how we will approach. We get, we know something about AI, Nuance knows something about AI, we know about cloud, we know about data, EHR renders like Epic, Cerner know about databases in healthcare, all that ultimately though is just technology to help providers.
CRAMER: Well, let me follow up on that, I know that a lot of doctors want to spend more quality time with patients, they have a lot of paperwork, then I have a really drill down and I would say use the word, be empathetic to patients, there’s too much that they have to do. Can there actually be a notion of empathy that can be driven by this?
NADELLA: I mean Mark’s the expert. He should talk about this but one of the fundamental things that I’ve seen.
CRAMER: Alright, Mark?
NADELLA: One of the fundamental things, I’ll just say this, which is, if you look at DAX, it is about that which is doctors inherently have empathy for patients. It’s just that sometimes they are overburdened, doing all of this data entry, and what if this Ambient AI can help doctors focus more on the patients and so it’s fantastic. We should show you the demo it’s just phenomenal to see what happens in terms of the conversation and how the burden comes down for the physician.
BENJAMIN: That’s right and Jim, I would add that, you know, we serve almost 600,000 physicians here in the US and could you imagine going to 15 years of training to practice your profession and then learn that for every one hour a patient time you, you spent upwards of two hours in documentation and administrative time and it’s, it’s truly a burden, it’s created a massive burnout among the healthcare system. So, you know, we believe that, you know, our solutions coupled with Microsoft’s platform and capabilities will bring actually the practice of medicine back to that, I think, intimate physician patient interaction and really reduce that administrative burden, you know, if not eliminated altogether, improving the quality of care, improving patient satisfaction. These are just some of the things that DAX and other opportunities that we’ve, we see in the future will help, I think, change an industry where we’re doing that with other industries as well we have solutions that serve financial services with our enterprise AI solution so it’s very much our calling in and we will work in this ecosystem that one of the, you know, matches of the two companies is that we, we really work well in a partnership model so whether it’s the EHRs or whether it’s all of our customers, that’s really how we envision the future as well.
DAVID FABER: Satya, it’s David Faber. On the face of it, this deal shouldn’t raise a good deal of questions for regulators but it’s a new regime when it comes to regulation under the Biden administration. I’m just curious as to your thoughts about how you’re going to make an argument that this is pro-competitive and how you’ll deal with any objections that may arise from privacy considerations.
NADELLA: Yeah, on the, on the aspects of regulation and privacy and security, these are super important topics obviously in, in this particular context of the deal as well as the segment in healthcare. So, one of the things that we are doing here, David, is this this is all about providers, patients, doctors and their data, and our job is to provide technology so that they can in fact keep all that data secure, use even the AI that gets created on top of the data to benefit healthcare so this is not about some aggregation play, this is about pure platform providers. And that’s sort of why makes, it makes Microsoft very distinct in how we approach most of what we do.
FORTT: Mark, I want to go back to what you do at Nuance and how that has shifted and perhaps intensified over the last year. How’s the quality and intensity of engagement within healthcare changed over the past year? I know you’ve noted your salesforce has been hard at work, your growth numbers have reflected that. How has, especially during the COVID period, the desire to leverage not just technology but the cloud as you’re making that transition, how is that driven your results?
BENJAMIN: Yeah, so, you know, pre-pandemic we saw great momentum in the market with all of our solutions, you know, really within the framework of this digital revolution across industries. And I think during the pandemic, you know, all of our leadership team really, you know, took a customer first approach is how do we help our customers because we’re serving the healthcare community and we really went out of our way to make it not about commercial but more about, you know, support and partnerships so I think as the pandemic has, has carried forward and we see some light at the end of the tunnel, we’re seeing our customers and our partners really understand that we need to accelerate the way in which we operate and the way in which we conduct our business and the way that our customers do business with us and, you know, the economic pressures within the healthcare systems was already, you know, a major challenge and it’s only really gotten worse in compound so you know our salesforce has done a remarkable job, our engineering teams have created truly market leading solutions so, and the partnerships with the EHRs, the partnerships with, you know, the world’s largest retailers and financial services firms that we work with, they view us very much as a trusted partner and quite honestly when we partnered with Microsoft 18 months ago, that was really part of the, the, the sauce making if you will because we’re viewed very much together as a trusted partner for our customers.
FORTT: Well when, when we’re talking about cloud transformation AI to solve a complex problem, highly regulated industry and privacy and security issues that have to be tackled, it’s hard to see, find a company that’s handling all of those like Nuance is. Mark Benjamin, Satya Nadella of Microsoft announcing this $19.7 billion acquisition considering debt, thanks for being with us on CNBC.
BENJAMIN: Thank you, Jon.
