WEBVTT - Tesla Costs Undermine Record EV Sales 0:00:02.520 --> 0:00:13.360 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.400 --> 0:00:17.200 from coast to coast with Caroline Hide in New York 0:00:17.520 --> 0:00:20.680 and Eva though in San Francisco. 0:00:21.960 --> 0:00:23.560 This is Bloomberg Tech coming up. 0:00:23.640 --> 0:00:27.520 Tesla's profits plunged despite record vehicle sales and a must 0:00:27.600 --> 0:00:31.440 hijack moment on his proposed trillion dollar pay package, Plus. 0:00:31.240 --> 0:00:34.280 The White House says it is weighing broad software restrictions 0:00:34.280 --> 0:00:37.239 against China as it pushes for tech self reliance. 0:00:37.760 --> 0:00:40.839 And we sit down with t Mobiles incoming CEO Shriny 0:00:40.840 --> 0:00:43.879 Gopalan about the company's third quarter results. 0:00:44.120 --> 0:00:47.120 So first we check in on these markets, which despite 0:00:47.120 --> 0:00:51.160 the geopolitical tensions, despite concern about some numbers not hitting 0:00:51.159 --> 0:00:53.000 the mark in the earnings underneath the bench, but we're 0:00:53.000 --> 0:00:55.240 still up six ten percent on the NASAQ one hundred ED. 0:00:55.480 --> 0:00:58.040 That feels like there's a risk on sentiment more broadly, 0:00:58.280 --> 0:01:00.000 and that says we eye all prices on the hig 0:01:00.200 --> 0:01:02.040 side inflationary concerns, but we. 0:01:02.120 --> 0:01:03.680 Shake it off when it comes to the NASDAK. We're 0:01:03.680 --> 0:01:04.800 looking underneath to herd. 0:01:05.400 --> 0:01:09.479 Yep, let's go to Tesla down three percent, but not 0:01:09.520 --> 0:01:11.960 as down as much as it was when the stock opened. 0:01:12.280 --> 0:01:15.959 The story from earnings was really simple, record vehicle sales 0:01:15.959 --> 0:01:20.560 and deliveries, but profits plunged higher cost Tesla talked about tariffs, 0:01:20.720 --> 0:01:23.240 talked about the impact of policy and how it had 0:01:23.280 --> 0:01:27.080 expanded its products to react to that. But then right 0:01:27.160 --> 0:01:29.680 at the end of the earning school the story became 0:01:29.720 --> 0:01:32.679 about Elon Musk and his proposed pay package. 0:01:32.800 --> 0:01:33.320 Listen to this. 0:01:34.480 --> 0:01:36.440 The point is, I just like that the needs to 0:01:36.480 --> 0:01:38.480 be enough boarding control to give a strong influence, but 0:01:38.560 --> 0:01:40.920 not not so much that I can't be fair if 0:01:40.959 --> 0:01:42.160 I go insane. 0:01:42.760 --> 0:01:46.000 Elon mus there, ending his final moments on the conference call, 0:01:46.080 --> 0:01:48.800 making the case to shareholders for his one trillion dollar 0:01:48.880 --> 0:01:49.640 pay package. 0:01:49.880 --> 0:01:51.960 Let's get more on all of the Tesla numbers. 0:01:52.120 --> 0:01:54.600 Ita mckeenny is with us, senior analyst of autos and 0:01:54.600 --> 0:01:56.960 auto Paths at td Karen, and you're joining us go 0:01:57.120 --> 0:01:59.040 buy rating on the company five on a nine dollars 0:01:59.040 --> 0:02:00.960 price target, which is about twenty percent higher than where 0:02:00.960 --> 0:02:05.080 we currently trade. Going straight to the numbers perspective before 0:02:05.360 --> 0:02:06.640 perhaps a pay package. 0:02:06.840 --> 0:02:08.120 Was there anything to shout about? 0:02:09.360 --> 0:02:11.400 So the quarter overall, thank you again for having me, 0:02:12.280 --> 0:02:14.800 was fairly in line with our preview thoughts that the 0:02:14.800 --> 0:02:18.160 setup was fairly balanced for the stock going in. As 0:02:18.160 --> 0:02:20.360 you know, the stock had kind of rallied into the quarter, 0:02:21.120 --> 0:02:23.200 estimates had gone up a little bit since the record 0:02:23.440 --> 0:02:26.360 kind of deliveries and then and the upside there, and 0:02:26.400 --> 0:02:27.840 so we did think that the balance that the setup 0:02:27.919 --> 0:02:31.280 was fairly balanced. Going in the numbers themselves, we were 0:02:31.280 --> 0:02:35.560 fairly mixed, but overall in line on an operating basis 0:02:36.000 --> 0:02:39.079 that the numbers were about seven percent above street expectations 0:02:39.120 --> 0:02:42.160 when you exclude the restructuring item that came out a 0:02:42.320 --> 0:02:44.560 bit of a surprise. There were some below the line 0:02:44.600 --> 0:02:46.959 items such as a higher tax rate that caused EPs 0:02:47.000 --> 0:02:49.400 to miss. Free cash flow was actually very strong. So 0:02:49.440 --> 0:02:51.840 over some put and takes in the numbers, but fairly 0:02:52.720 --> 0:02:55.920 in line, maybe even a bit better operationally versus consensus, 0:02:56.080 --> 0:02:57.920 including on a better gross margin overall. 0:02:58.240 --> 0:03:01.200 Okay, so that gross margin and actually the cash that's 0:03:01.200 --> 0:03:04.400 still coming into the business, is that enough to really 0:03:04.480 --> 0:03:07.280 drive forward on basically the now focus of Elon Musk 0:03:07.320 --> 0:03:09.720 and Tesla more broadly, which is AI, which is robotics, 0:03:09.720 --> 0:03:10.639 which is autonomous. 0:03:11.960 --> 0:03:14.760 Yes, to your point, the gross margin actually beat nicely 0:03:14.800 --> 0:03:17.640 in the quarter eighteen percent verse consensus at seventeen point 0:03:17.639 --> 0:03:21.240 three percent. Oppex was actually higher, including for SGNA, So 0:03:21.240 --> 0:03:25.280 you're seeing the company making still substantial investments in future growth, 0:03:25.280 --> 0:03:28.720 including of course AI. But the free cash flow very strong. 0:03:28.760 --> 0:03:31.760 Catpex came in a bit below expectations. At the balance 0:03:31.840 --> 0:03:35.360 sheet is very strong with with over forty billion dollars 0:03:35.520 --> 0:03:38.920 of cash and low thirties of net cash after dead 0:03:39.400 --> 0:03:41.000 so the balunary is in great shape. You are seeing 0:03:41.000 --> 0:03:43.080 the company can team to make an investment. Go to 0:03:43.120 --> 0:03:45.200 see the gross margin beat as well. 0:03:45.360 --> 0:03:49.240 We're trying to tie must comments about the compensation package 0:03:49.600 --> 0:03:52.240 to the earnings that were posted. And the way that 0:03:52.280 --> 0:03:54.600 I look at it is that the boarders set him 0:03:54.640 --> 0:03:59.440 over ten years, both operational and financial goals twenty million 0:03:59.560 --> 0:04:02.640 vehicles over ten years. That means he needs to average 0:04:02.680 --> 0:04:06.000 five hundred thousand a quarter. They've set him ebit our 0:04:06.080 --> 0:04:09.080 goals and in the earning statement and on the call, 0:04:09.200 --> 0:04:13.240 they tried to explain with a broader portfolio of models 0:04:13.440 --> 0:04:16.880 and more affordable models how they will achieve that. 0:04:17.320 --> 0:04:19.120 Did they answer those questions? 0:04:20.600 --> 0:04:23.599 Yes? I think when we looked at the CEO compensation 0:04:23.760 --> 0:04:26.560 proposal when it came out, we were actually very encouraged, 0:04:26.560 --> 0:04:28.720 and a lot of analysts have views over what Tesla 0:04:28.760 --> 0:04:31.240 should do, where they should be investing, and what the 0:04:31.240 --> 0:04:34.560 future will hold. We've been very bullish on autonomy, not 0:04:34.600 --> 0:04:37.240 only for the Robotaxi vertical, but also for what we 0:04:37.279 --> 0:04:40.880 call the consumer av vertical, the FSD vertical, and we 0:04:40.960 --> 0:04:43.240 thought the product goals, the four of them kind of 0:04:43.279 --> 0:04:46.640 laid out in the compensation proposal, were very aligned with 0:04:46.680 --> 0:04:49.360 our kind of long term thesis of where Tesla should 0:04:49.360 --> 0:04:52.640 be investing, what they should do, particularly around the FSD 0:04:52.800 --> 0:04:55.320 part of it, given how disruptive that could be, but 0:04:55.400 --> 0:04:57.240 that the company's comments last night on the call were 0:04:57.240 --> 0:04:59.760 supportive of that, including kind of making the point that 0:05:00.120 --> 0:05:04.039 as the launched use incremental FSD features that could accrue 0:05:04.080 --> 0:05:06.800 very nicely to ev demand to kind of address that 0:05:06.920 --> 0:05:09.839 issue as well. So those girls seemed very aligned with 0:05:09.880 --> 0:05:12.320 our thesis. That actually turned us more bullish on the 0:05:12.320 --> 0:05:15.119 star kind of long term, but we read those proposals. 0:05:15.800 --> 0:05:16.240 It's either. 0:05:16.240 --> 0:05:19.359 This morning, the New York State Controller joined us on 0:05:19.360 --> 0:05:22.440 Bloomberg Surveillance. Listen to his take on why they voted 0:05:22.520 --> 0:05:24.200 no on the compackage. 0:05:24.960 --> 0:05:28.760 When you see the excessive compensation package. I mean, you know, 0:05:29.360 --> 0:05:31.960 credit to mister Musk, He's already one of the richest 0:05:32.200 --> 0:05:35.640 men in the world. How much more rich does one 0:05:35.680 --> 0:05:36.479 person have to be? 0:05:38.279 --> 0:05:41.760 But for Elon Musk, it wasn't about money or how rich. 0:05:41.920 --> 0:05:45.359 It was about voting control, the argument that he needs 0:05:45.400 --> 0:05:48.919 a certain level of control for Tesla to realize the 0:05:49.000 --> 0:05:52.960 vision of humanoid robotics and more broadly, AI, where do 0:05:53.000 --> 0:05:53.760 you stand on that? 0:05:55.040 --> 0:05:58.400 Sure? Yeah, absolutely, Elon kind of made that point very clear. 0:05:58.520 --> 0:06:01.640 You know, ultimately the proposals you know, are tied to 0:06:01.680 --> 0:06:06.039 market cap targets as well. They are to your point, ambitious. 0:06:06.040 --> 0:06:09.920 They will require very very strong execution. But once they're delivered, 0:06:09.920 --> 0:06:12.760 if they're delivered, there's a substantial amount of upside to 0:06:12.839 --> 0:06:16.560 EP a longer term as we see it. And and 0:06:16.640 --> 0:06:19.400 you know, we give Tesla a very significant competitive positioning 0:06:19.440 --> 0:06:22.240 as well. So given the amount of execution, UH the 0:06:22.360 --> 0:06:24.440 needs to take there, I told you kind of understand 0:06:24.600 --> 0:06:28.360 UH management and the point around this, and again, those 0:06:28.400 --> 0:06:31.040 goals very well alignment where we think Tesla should focus 0:06:31.080 --> 0:06:34.039 on over the next five plus years. And and so 0:06:34.200 --> 0:06:36.640 you know, we felt pretty good about you know, the 0:06:36.720 --> 0:06:40.240 overall game plan for where to invest where to focus on, 0:06:40.600 --> 0:06:43.440 and we felt those goals for us were positive in 0:06:43.480 --> 0:06:45.240 the scheme of where we see the company going. 0:06:46.400 --> 0:06:49.080 It's I'm mcayley of TD Karen, thank you very much. 0:06:49.120 --> 0:06:51.920 Now coming up, the White House says it's weighing more 0:06:52.000 --> 0:06:56.279 export limits against China, this time targeting critical software. 0:06:56.680 --> 0:06:59.760 We have more in that story. Next, this is Bloomberg Tech. 0:07:13.360 --> 0:07:16.360 Let's get over to the Evident AI symposium taking place 0:07:16.440 --> 0:07:18.880 right now in New York and bring it together hundreds 0:07:19.080 --> 0:07:22.920 of banking executives and innovators to discuss AI adoption in 0:07:23.000 --> 0:07:28.080 financial services. Goldman Sachs cio Marco Orgenti speaking with Bloomberg's 0:07:28.160 --> 0:07:29.360 jeen Eric Shaska. 0:07:30.000 --> 0:07:32.480 How do you take people through this journey? And so 0:07:32.560 --> 0:07:36.360 the human fact or the human element are more important 0:07:36.400 --> 0:07:39.120 than ever today. I say that technology is even what 0:07:39.280 --> 0:07:44.000 technology or what AI can do, is ahead of what 0:07:44.160 --> 0:07:46.720 people accept that they can do with it. 0:07:47.160 --> 0:07:47.840 So there is a. 0:07:47.760 --> 0:07:50.920 Gap there, there's a cultural gap, friction. Think there is friction, 0:07:51.040 --> 0:07:56.400 but it's also like sometimes fear right. And this period 0:07:56.440 --> 0:07:59.640 of transformation creates for the first time, creates almost like 0:07:59.640 --> 0:08:03.520 a competitor to the human species which we never had before, 0:08:04.000 --> 0:08:07.000 which could be in some cases smarter than us. And 0:08:07.360 --> 0:08:11.080 the way people face that pret is very different, and 0:08:11.120 --> 0:08:13.480 some people adopted and embrace it, and some people are 0:08:13.480 --> 0:08:16.520 just resisting it. But back to the importance of the 0:08:16.520 --> 0:08:21.400 first topic that I talked about, why is data so important? 0:08:21.480 --> 0:08:23.800 Sometimes when a lot of you know, we talk with 0:08:24.040 --> 0:08:27.360 other people in the business and other CIOs, etc. Or 0:08:27.480 --> 0:08:31.000 people are asking me what's the best advice, And today 0:08:31.040 --> 0:08:32.920 the best advice is really make sure that you have 0:08:32.960 --> 0:08:38.080 a great data quality story in your firm, because that 0:08:38.320 --> 0:08:41.839 will be the single most important determinant of the. 0:08:41.840 --> 0:08:45.520 Government sachs Ceio there Marco Argenti talking about their own. 0:08:45.760 --> 0:08:47.360 Eric Shatska catch. 0:08:47.120 --> 0:08:50.719 The full conversation going on at the symposium on live go. 0:08:51.520 --> 0:08:53.679 But now we switch gears to what the White House 0:08:53.720 --> 0:08:57.319 is saying. Well, perhaps it's weighing new export limits on China, 0:08:57.320 --> 0:09:00.480 but this time targeting critical software that can send ripples 0:09:00.480 --> 0:09:03.240 through the tech sector. From Vaccinia tech editor Mike shev 0:09:03.240 --> 0:09:05.439 It joins us Now and more. And it's trying to 0:09:05.520 --> 0:09:08.760 understand how far reaching such limitations would be. 0:09:08.840 --> 0:09:12.160 Mike, Well, it's a great question, Karen. We still don't 0:09:12.200 --> 0:09:14.600 know the answer about how far the scope of this 0:09:14.720 --> 0:09:18.720 will go. But the Treasury Secretary said yesterday that everything 0:09:18.840 --> 0:09:21.800 is on the table. And really this is another instance 0:09:21.960 --> 0:09:25.080 of the US or China trying to escalate ahead of 0:09:25.080 --> 0:09:27.680 a key round of negotiations, and we have one coming 0:09:27.760 --> 0:09:30.480 up this weekend where the two sides will try to 0:09:30.480 --> 0:09:33.160 hash out their differences. What the US is hoping to 0:09:33.200 --> 0:09:35.760 get from China this time around as a relaxation of 0:09:35.800 --> 0:09:39.320 some new export controls on rare earths at Beijing just 0:09:39.400 --> 0:09:42.160 imposed much to the chagrin of the US and many 0:09:42.240 --> 0:09:45.679 of its allies, and Treasury Secretary Beston not only says 0:09:45.720 --> 0:09:47.920 that everything is on the table, but he's also saying 0:09:47.960 --> 0:09:51.079 that the US may act in concert with its allies. 0:09:51.240 --> 0:09:53.120 And some of the areas that could be targeted are 0:09:53.480 --> 0:09:58.720 critical software, including chip software used to design chips, but 0:09:58.800 --> 0:10:02.360 it also could be brought Reuters reported yesterday that they 0:10:02.400 --> 0:10:06.360 may go as far as looking at anything made with 0:10:06.600 --> 0:10:09.600 US origin software and trying to restrict that. And that 0:10:09.679 --> 0:10:12.480 is a measure that the US took against Russia back 0:10:12.520 --> 0:10:16.200 in twenty twenty two following Russia's invasion of Ukraine. 0:10:16.480 --> 0:10:20.760 Mike overnight a communicate from the Communist Party's Central Committee 0:10:20.800 --> 0:10:23.960 in China the country who aimed to quote greatly increase 0:10:24.000 --> 0:10:27.200 the capacity for self reliance in the domains of science 0:10:27.200 --> 0:10:28.959 and technology timing. 0:10:29.200 --> 0:10:31.640 What do we need to know well ed? 0:10:32.080 --> 0:10:35.280 This is clearly a challenge for the US because one 0:10:35.280 --> 0:10:37.679 thing we have heard from the Trump administration is an 0:10:37.800 --> 0:10:41.719 articulated desire to try to sell back into the Chinese 0:10:41.760 --> 0:10:44.679 market some of the American tech stack and the idea 0:10:44.800 --> 0:10:47.120 this is one that we have heard from White House 0:10:47.120 --> 0:10:50.280 AI advisor David Sachs and others that if we can 0:10:50.360 --> 0:10:54.160 sell into China, we can compete with China in other 0:10:54.360 --> 0:10:57.559 markets globally. So this is something where we see China 0:10:57.640 --> 0:11:00.880 is perhaps pushing away from the US tech SEC and 0:11:00.920 --> 0:11:03.320 trying to go on its own. We also have some 0:11:03.360 --> 0:11:06.160 great reporting from our colleagues in Asia and Africa that 0:11:06.360 --> 0:11:09.280 is an example of how important this is. We see 0:11:09.280 --> 0:11:13.640 how Deepseek is making inroads in Africa in today's Big Take. 0:11:13.760 --> 0:11:16.280 It's worth reading on the terminal and elsewhere if you 0:11:16.400 --> 0:11:18.520 haven't seen it, but it shows just how China is 0:11:18.520 --> 0:11:23.600 building this model at home of lower cost AI, both 0:11:23.640 --> 0:11:26.920 the hardware and the software, and then offering it in 0:11:27.000 --> 0:11:30.040 markets where the US is hoping to compete, but perhaps 0:11:30.240 --> 0:11:32.800 being beaten to the punch by Chinese innovators. 0:11:34.400 --> 0:11:37.640 Bloomberg's Mike Shephard out of DC, thank you very much. 0:11:37.679 --> 0:11:40.920 We have breaking news crossing the Bloomberg terminal, reporting from 0:11:40.960 --> 0:11:45.840 the Wall Street Journal. President Trump pardoned Binance founder Changpeng 0:11:45.920 --> 0:11:50.319 Jau on Wednesday. The markets are reacting vik at xbi 0:11:50.440 --> 0:11:54.559 usd Binance coin. It is spiked as those headlines cross 0:11:54.559 --> 0:11:56.559 the Bloomberg terminal, the team in New York getting it 0:11:56.640 --> 0:11:59.839 up on the screen. The Wall Street Journal citing sauce 0:11:59.880 --> 0:12:02.640 it is on the pardon of jaw by the President. 0:12:02.760 --> 0:12:05.880 Bloomberg's not match the reporting. We'll showing you the market reaction. 0:12:06.160 --> 0:12:08.040 We'll look into it, and when we have more we'll 0:12:08.040 --> 0:12:10.360 bring it to you. Let's get back to Bloomberg Tech. 0:12:10.920 --> 0:12:14.880 Natalie Galla Princevill economists and director at Board, an aipower 0:12:14.920 --> 0:12:19.560 and enterprise planning platform. Natalie, you provide macroeconomic analysis and 0:12:19.640 --> 0:12:24.760 strategic guidance on business investment and economic policy to global companies. 0:12:24.760 --> 0:12:28.720 You just heard shep going through the software component on 0:12:28.800 --> 0:12:31.840 trade back and forth, and then China realizing that it 0:12:31.840 --> 0:12:34.240 has to look at itself in some domains where it 0:12:34.240 --> 0:12:37.720 relies on the United States as you track trade right now, 0:12:37.840 --> 0:12:41.199 I'd like you to answer, does software actually play any role. 0:12:41.000 --> 0:12:42.240 In any of this negotiation? 0:12:42.800 --> 0:12:43.000 Yeah? 0:12:43.040 --> 0:12:45.400 You know, I think it plays a really significant role 0:12:45.400 --> 0:12:48.240 on this negotiation right because as we talk about AI 0:12:48.320 --> 0:12:51.520 and the importance of really being a leader in this space, 0:12:51.640 --> 0:12:55.080 we know that the US right now outspends China on 0:12:55.120 --> 0:12:57.160 a ratio about five to one. But of course there's 0:12:57.280 --> 0:13:02.040 a lot of accusations around distillation, and when we zone 0:13:02.080 --> 0:13:04.400 out from an economists point of view, it becomes a 0:13:04.400 --> 0:13:07.440 lot less about what's the marginal cost to China to 0:13:08.080 --> 0:13:11.280 produce a model and more about are we doing what 0:13:11.320 --> 0:13:14.520 we can to protect US innovation? And it's really key 0:13:14.520 --> 0:13:17.000 that we get this right because this is an industry 0:13:17.080 --> 0:13:21.360 that's estimated to translate into trillions of dollars in global 0:13:21.440 --> 0:13:23.040 GDP over the next decade. 0:13:23.520 --> 0:13:25.960 So when we think about the actual US names that 0:13:26.000 --> 0:13:29.400 get caught up in this analysappoint to Cadence Design Systems, 0:13:29.400 --> 0:13:32.520 DESCO Systems, Synopsis, as well as being companies that might 0:13:32.559 --> 0:13:35.480 be limited in their ability to export to China. But 0:13:35.520 --> 0:13:39.160 more broadly, what is the biggest element that US can 0:13:39.200 --> 0:13:41.720 bring to bear? It still seems to be semiconductor, it 0:13:41.760 --> 0:13:44.320 still seems to be the IP when it comes to 0:13:44.440 --> 0:13:45.640 GPU and compute. 0:13:46.679 --> 0:13:49.280 Yeah, I would absolutely agree with that. You know, our 0:13:49.360 --> 0:13:52.040 power is really an intellectual property. We've shown a lot 0:13:52.080 --> 0:13:55.160 of resiliency there, a lot of leadership there. That's our 0:13:55.200 --> 0:13:57.280 key metric for as we move forward, what we bring 0:13:57.320 --> 0:13:57.839 to the table. 0:13:57.920 --> 0:14:01.280 Absolutely have to sort of continue. 0:14:01.000 --> 0:14:03.240 To lean into that and really have these conversations around 0:14:03.280 --> 0:14:05.720 policy to continue to lead in that space. 0:14:07.000 --> 0:14:12.240 Right now, are you seeing any data, primary data or 0:14:12.280 --> 0:14:17.240 secondary data from any economy around the world that tariffs 0:14:17.720 --> 0:14:22.120 in the technology context or export controls are damaging any 0:14:22.200 --> 0:14:24.600 industries that we're talking about here. 0:14:25.040 --> 0:14:28.160 So it's actually been really incredible. Tech has shown an 0:14:28.400 --> 0:14:32.280 amazing resiliency. Our global economy has shown an amazing resiliency 0:14:32.320 --> 0:14:35.240 when we talk about the effect of tariffs right and 0:14:35.480 --> 0:14:37.360 where we would anticipate to see it when we talk 0:14:37.400 --> 0:14:40.600 about especially these relations with China, we would anticipate it 0:14:40.640 --> 0:14:45.000 to see in consumer electronics. Now, the story of twenty 0:14:45.040 --> 0:14:47.040 twenty five so far, and I wouldn't just say this 0:14:47.120 --> 0:14:49.880 for the US book, globally has really been this idea 0:14:49.960 --> 0:14:53.560 of delayed pass through effects. Now, as we get into 0:14:53.600 --> 0:14:55.920 the later half of twenty twenty five into twenty twenty six. 0:14:56.440 --> 0:15:00.080 Very likely that it's going to not continue in that 0:15:00.120 --> 0:15:04.480 we expect inflation to be persistent, really moderately accelerate as 0:15:04.480 --> 0:15:06.120 we go into twenty twenty six, So there will. 0:15:05.960 --> 0:15:08.200 Be an en We're talking about the environment, and some 0:15:08.240 --> 0:15:12.200 of it is about headwinds and risk, But actually, when 0:15:12.240 --> 0:15:14.760 I think about where your research is at, you're looking 0:15:14.800 --> 0:15:18.600 at M and A, you're looking at investment flows, deals 0:15:18.600 --> 0:15:20.760 are getting done at least of the infrastructure wise in 0:15:20.800 --> 0:15:22.800 this country. That's all quite positive. 0:15:23.200 --> 0:15:24.280 Yes, absolutely. 0:15:24.360 --> 0:15:27.080 I mean, in many ways the tech sector has acted 0:15:27.160 --> 0:15:30.960 as a macroeconomic stabilizer for greater economic growth, and it's 0:15:30.960 --> 0:15:32.480 been fascinating to see. 0:15:33.120 --> 0:15:37.800 What's also been fascinating is how we discern where we 0:15:37.840 --> 0:15:40.880 protect talent or not. Look, there's been a lot of 0:15:40.880 --> 0:15:42.920 focus on H one B visas and been a lot 0:15:42.960 --> 0:15:47.360 of focus on trying to make the US more self 0:15:47.360 --> 0:15:50.800 sufficient with its own people, But should we be looking 0:15:50.800 --> 0:15:53.400 more broadly at who the AI talent is in some 0:15:53.440 --> 0:15:55.320 of these big tech companies and where they're coming from 0:15:55.320 --> 0:16:01.440 from a national security and in decent economic perspective, athlete. 0:16:00.080 --> 0:16:01.920 I mean, it is such a fair question right. 0:16:01.920 --> 0:16:04.960 When we take a step back, we see that overall 0:16:05.040 --> 0:16:07.880 the labor market has softened meaningfully. But when we talk 0:16:07.920 --> 0:16:12.560 about the specific talent around AI and machine learning, we 0:16:12.640 --> 0:16:15.600 see a lot of labor market titness, meaning there is 0:16:15.640 --> 0:16:17.920 so much demand. So as we talk about H one 0:16:17.960 --> 0:16:20.920 B visas and the overall impact, it's very likely that 0:16:21.080 --> 0:16:25.040 the demand is absolutely there for AI investment to necessitate 0:16:25.680 --> 0:16:27.080 global talent in this space. 0:16:28.240 --> 0:16:30.800 Natalie, it's been great having some time with the Natalie Gallia, 0:16:30.920 --> 0:16:33.920 principal and economist at Board, appreciated. 0:16:39.040 --> 0:16:39.600 New Mobile. 0:16:39.800 --> 0:16:42.560 It added one million post paid mobile customers, it raised 0:16:42.600 --> 0:16:44.640 its outlook for the year, and the boost is coming 0:16:44.640 --> 0:16:46.440 at a time when we're seeing the deal that was 0:16:46.480 --> 0:16:48.360 done with the US Cellular, the launch of the new 0:16:48.360 --> 0:16:51.640 iPhone seventeen. But interestingly, the market's kind of digesting this 0:16:51.680 --> 0:16:54.200 with perhaps looking a little bit at the revenue expectations, 0:16:54.320 --> 0:16:56.720 potentially missing there a little bit, and it's locked in 0:16:56.760 --> 0:16:59.120 a fist battle of course competition at and T Verizon. 0:16:59.440 --> 0:17:01.200 Who better to speak about all of this as Team 0:17:01.200 --> 0:17:04.560 Obile's chief operating officer, but he's the incoming CEO training 0:17:04.600 --> 0:17:06.240 up plan and I know this is a special day 0:17:06.280 --> 0:17:08.040 with really being there for the first set of earnings 0:17:08.040 --> 0:17:11.480 as the incoming CEO. But the market is kind of 0:17:11.480 --> 0:17:14.040 trying to find the flies in the ointment here. Why 0:17:14.080 --> 0:17:17.040 why do you think that million subscriber to postpaid wasn't enough. 0:17:17.680 --> 0:17:20.080 Look, I don't spend my time trying to predict market 0:17:20.160 --> 0:17:22.679 trading on a day to day basis. My focus is 0:17:22.680 --> 0:17:26.320 on building a solid, robust business, which is what we've got, 0:17:26.560 --> 0:17:30.280 and a business where we're constantly expanding and widening our differentiation. 0:17:30.760 --> 0:17:32.800 That's the core of what we're focusing on. Because when 0:17:32.840 --> 0:17:35.280 you look at this quartters results, you know, T Mobile 0:17:35.280 --> 0:17:38.120 has been the growth leader for thirteen years, and yet 0:17:38.119 --> 0:17:43.359 this quatter we added our highest number of new customers ever. 0:17:44.119 --> 0:17:48.120 And it's not just volume growth that translated into value growth. 0:17:48.160 --> 0:17:51.840 I'm not sure where you got the missing revenue expectations from, 0:17:51.920 --> 0:17:56.600 because we exceeded consensus on service revenue and we delivered 0:17:56.840 --> 0:18:00.119 nine percent service revenue growth along with six percent and 0:18:00.160 --> 0:18:02.800 deep a DA growth, and all of that translates into 0:18:02.840 --> 0:18:06.960 that all important metric cash twenty six percent cash conversion, 0:18:07.119 --> 0:18:09.320 which is the highest in the industry. So we're feeling 0:18:09.680 --> 0:18:12.240 really really good about where the business is. 0:18:12.480 --> 0:18:13.560 Just to go into the nuances. 0:18:13.600 --> 0:18:15.920 For example, service revenue eighteen point twenty four billion, it 0:18:16.000 --> 0:18:18.280 was up nine percent, but the estimate according to Bloomberg 0:18:18.320 --> 0:18:21.520 andsensus was for a little bit less than that eighteen 0:18:21.520 --> 0:18:24.400 point one six. Yes, but the revenue of twenty one 0:18:24.400 --> 0:18:26.520 point ninety six was perhaps slightly shy at the. 0:18:26.440 --> 0:18:27.400 Twenty one point nine to eight. 0:18:27.680 --> 0:18:30.240 As I'm saying, this is flies in the ointment perspective here, 0:18:30.280 --> 0:18:32.359 but I think the average revenue we use perhaps is 0:18:32.400 --> 0:18:33.920 one to look at how it's being pulled down a 0:18:33.960 --> 0:18:36.639 little bit. Because you are in this phase competition, and 0:18:36.680 --> 0:18:39.320 I'm interested as to how much to get over all 0:18:39.359 --> 0:18:42.040 these new subscribers, you are having to go toe to 0:18:42.040 --> 0:18:43.880 toe with some of the more incentives out there. 0:18:44.560 --> 0:18:46.880 So let me pass that question into three bits, right, 0:18:47.040 --> 0:18:49.680 getting new customers. Now, if you look at our cost 0:18:49.720 --> 0:18:52.800 of acquisition of new customers and all of that flows 0:18:52.840 --> 0:18:55.560 through to the bottom line, we added a million post 0:18:55.640 --> 0:18:59.040 paid phone customers and still delivered six percent earnings growth. 0:18:59.280 --> 0:19:01.080 That's because of a lot of the new customers are 0:19:01.119 --> 0:19:04.199 coming to us because there's only one place where you 0:19:04.240 --> 0:19:08.240 can get best network, best value, and best experience in 0:19:08.280 --> 0:19:10.760 that's Team Mobile. So while we talk about you know 0:19:10.840 --> 0:19:13.880 cost of new customers and the rest. When you have differentiation, 0:19:14.480 --> 0:19:18.119 you can drive earnings growth as well as bringing in 0:19:18.200 --> 0:19:22.040 new customers. From a competition perspective, look, this industry has 0:19:22.119 --> 0:19:25.240 always been competitive, and let's just pull back out of 0:19:25.240 --> 0:19:27.479 the detail of promotions in the rest you look at 0:19:27.480 --> 0:19:30.359 it on an industry level. The industry SEA has seen 0:19:30.359 --> 0:19:33.560 a fifty percent growth in free cash flow in the 0:19:33.640 --> 0:19:37.800 last three years, right at the same point as delivering 0:19:38.160 --> 0:19:41.520 more value to customers and your last piece of average 0:19:41.520 --> 0:19:44.520 revenue per user. Our POO actually went up by one 0:19:44.520 --> 0:19:47.159 point eight percent this year. In our guide. We have 0:19:47.240 --> 0:19:50.000 an in built two percent guidance increase on our pooh, 0:19:50.200 --> 0:19:53.440 which was higher than our earlier guide. And so from 0:19:53.480 --> 0:19:56.680 our perspective, you know, some other players have a different problem, 0:19:57.040 --> 0:19:59.960 which is some of the incumbents have their existing customers 0:20:00.040 --> 0:20:02.480 being a high price, so when they try and attract 0:20:02.560 --> 0:20:06.160 new customers, what lands up happening is dilution of our 0:20:06.440 --> 0:20:10.080 We don't have that problem. We've historically been the value 0:20:10.160 --> 0:20:10.600 leader in. 0:20:10.560 --> 0:20:16.600 This Hatriny five ten cycles. Yes, are great for attracting switches. 0:20:17.280 --> 0:20:18.760 You and I have talked about that a lot at 0:20:18.800 --> 0:20:23.240 Apple Park, but the companies those incumbents and you don't 0:20:23.280 --> 0:20:27.159 make any money on those handsets, is it fair to 0:20:27.200 --> 0:20:33.040 say you're sacrificing revenues for higher customer numbers in the 0:20:33.119 --> 0:20:35.520 event of a new product cycle light we're having in 0:20:35.560 --> 0:20:36.240 the iPhone. 0:20:36.400 --> 0:20:38.920 So two parts to that, one I agree with and 0:20:39.040 --> 0:20:43.479 one I debate. I just reject the starting point that 0:20:44.200 --> 0:20:48.080 we don't make money when we do new iPhones. Our 0:20:48.119 --> 0:20:50.840 customer lifetime value, which is the way we think about 0:20:50.880 --> 0:20:53.879 the profitability of a customer over the lifetime, are really 0:20:53.920 --> 0:20:56.320