WEBVTT - Super Micro Auditor Resigns, Eli Lilly Cuts Outlook 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.280 --> 0:00:12.160 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:00:12.240 --> 0:00:14.960 weekdays at ten am Eastern on Apple card playing and 0:00:15.080 --> 0:00:17.920 Broid Auto with the Bloomberg Business app. Listen on demand 0:00:18.000 --> 0:00:22.360 wherever you get your podcasts, or watch us live on YouTube. 0:00:23.720 --> 0:00:26.040 One of the names really in the news today for 0:00:26.079 --> 0:00:29.040 not the good reasons is super Micro Computer. 0:00:29.800 --> 0:00:31.800 It's order to resign. That's not good. 0:00:31.840 --> 0:00:33.919 The stock's all thirty percent on that news. Let's break 0:00:33.960 --> 0:00:36.640 down what's going over there, because this was a high 0:00:36.640 --> 0:00:40.600 flying AI type stock that peaked about one hundred and 0:00:40.600 --> 0:00:42.160 eighty dollars a share back in March. 0:00:42.240 --> 0:00:44.040 Yeah, it added to the s and P five hundred 0:00:44.080 --> 0:00:45.479 back in March, right, so. 0:00:45.560 --> 0:00:47.319 Right at the all time Hi, but boy down at 0:00:47.320 --> 0:00:49.800 thirty four dollars I share it now. Wu Jinhoge joins us. 0:00:49.800 --> 0:00:52.599 He's a senior technology analyst for Bloomberg Intelligence. He's sat 0:00:52.680 --> 0:00:56.080 in our Princeton, New Jersey office. Which what happened today 0:00:56.200 --> 0:00:57.880 over at super micro Computer? 0:00:59.000 --> 0:01:03.320 Yeah, so thanks Paul. Look, there's been some filing delays 0:01:03.320 --> 0:01:07.399 at super Micro, some differences of opinion in terms of 0:01:07.680 --> 0:01:10.800 the auditor and the management team and Essentially, the uh, 0:01:10.880 --> 0:01:15.880 the uditor resigned due to quote unquote integrity issues with 0:01:15.959 --> 0:01:16.960 the management team there. 0:01:17.400 --> 0:01:21.520 And and this isn't like Joe's CPAs. This is this 0:01:21.560 --> 0:01:23.280 is a big deal resigning and. 0:01:23.280 --> 0:01:27.839 This does not happen often at all. So what's Ernst 0:01:27.840 --> 0:01:32.399 and Young saying about why they resigned, Well, you know, 0:01:33.040 --> 0:01:33.520 in the. 0:01:33.480 --> 0:01:36.600 AK filing, essentially Ernest and Young is saying that there 0:01:36.640 --> 0:01:39.240 were some differences of opinion and they didn't think that 0:01:39.720 --> 0:01:44.080 there was enough transparency from the auditor committee as well 0:01:44.120 --> 0:01:49.920 as integrity issues from the auditor committee. So look, quite 0:01:49.960 --> 0:01:53.600 quite frankly, it's the first time I've ever seen language 0:01:53.640 --> 0:01:55.960 like that. And the other thing that I can state 0:01:56.400 --> 0:01:59.320 is that, you know, Ersten Young is the second auditor 0:01:59.400 --> 0:02:02.240 that super Micro had in the span of eighteen months, 0:02:02.240 --> 0:02:03.960 so they were supposed to clean up the issues from 0:02:03.960 --> 0:02:08.280 the prior orditor, and it sounds like they found issues 0:02:08.320 --> 0:02:10.399 that just couldn't be resolved. 0:02:10.560 --> 0:02:14.200 And of course the resignation comes after news broke last 0:02:14.240 --> 0:02:16.840 month that the DOJ had launched a probe into an 0:02:16.880 --> 0:02:20.720 ex employee's claims that super Micro actually valulated accounting rules. 0:02:20.720 --> 0:02:23.200 What do we know so far about how many different 0:02:23.240 --> 0:02:25.120 issues there are kind of more broadly when it comes 0:02:25.120 --> 0:02:25.760 to this company. 0:02:26.520 --> 0:02:26.920 Yeah, so. 0:02:29.080 --> 0:02:33.000 Not much news has come out of the DOJ probe, 0:02:33.600 --> 0:02:37.480 but it is bringing up some older issues that caused 0:02:37.520 --> 0:02:41.799 their delisting roughly three or four years back. Essentially, they 0:02:41.800 --> 0:02:44.400 were very aggressive on their accounting side, and it seems 0:02:44.400 --> 0:02:47.120 as if, based on a short report that came out 0:02:47.160 --> 0:02:50.640 in July, it seems as if they went back to 0:02:50.720 --> 0:02:54.680 their old ways in the recent months, in recent quarters. 0:02:54.919 --> 0:02:58.440 Well, which just as an outside observer here, I see 0:02:58.440 --> 0:03:00.920 a story like this and I say, we need change 0:03:00.960 --> 0:03:03.320 at the board level, and I need change in the 0:03:03.400 --> 0:03:05.960 c suite level. Are you hearing calls from some of 0:03:06.000 --> 0:03:09.760 their shareholders for some types of moves like that. 0:03:10.600 --> 0:03:15.480 Well, that's how we tidled. Are we react report? It's like, look, 0:03:15.520 --> 0:03:17.960 super Micro needs more than an orditor to change to 0:03:17.960 --> 0:03:22.119 fix this, and we were concerned about their corporate governance. 0:03:22.520 --> 0:03:26.000 If you keep in mind that there aren't many independent 0:03:26.040 --> 0:03:29.760 board members, one of whom includes the wife of the CEO, 0:03:31.320 --> 0:03:33.840 there really needs to be a lot more independence on 0:03:33.840 --> 0:03:38.800 the board. And quite frankly, given the now growing concerns 0:03:38.960 --> 0:03:42.680 of financial mofeasings, I think the CFO has to go 0:03:42.800 --> 0:03:45.880 and you know, if they can't clean this up, there 0:03:45.960 --> 0:03:48.160 might be a need for a change at the top. 0:03:48.600 --> 0:03:51.240 Paul mentioned the stocks being that we've been seeing in 0:03:51.280 --> 0:03:53.840 it so far today down over thirty percent on Paceports, 0:03:53.880 --> 0:03:57.800 worst day since October of twenty eighteen. From a technical perspective, 0:03:57.840 --> 0:03:59.640 how much more pain do you think there is to 0:03:59.720 --> 0:04:00.200 run here? 0:04:01.160 --> 0:04:06.200 Well, the question is is, you know, are the revenues real? 0:04:06.400 --> 0:04:09.800 I do think that the revenues are real. I don't 0:04:09.840 --> 0:04:13.280 know how real the profitability may be, right because there 0:04:13.320 --> 0:04:18.000 are multiple ways to probably manipulate the numbers. The one 0:04:18.000 --> 0:04:20.680 thing that we wrote is that you know, the near 0:04:20.760 --> 0:04:23.120 term deals are probably intact because it's really tough to 0:04:23.640 --> 0:04:27.840 change switch vendors for an AI deal. But longer term 0:04:27.880 --> 0:04:30.120 there are going to be downs in terms of water activity. 0:04:30.560 --> 0:04:33.800 I'm working with super micro, so it's going to be 0:04:33.880 --> 0:04:37.080 the future outlook going forward that that could be at 0:04:37.160 --> 0:04:39.400 risk and could drive the stock going forward. 0:04:39.760 --> 0:04:41.279 All right, well, just thanks so much for joining us. 0:04:41.320 --> 0:04:44.240 Woujin Hoo, he's a senior technology channels for Bloomberg Intelligence. 0:04:44.680 --> 0:04:47.440 He's based on there in our Princeton office. Again, the 0:04:47.480 --> 0:04:51.080 stock off thirty percent today. S MCI is the ticker. 0:04:51.440 --> 0:04:55.039 Despite that, it's still up about twenty percent on the year. Yeah, 0:04:55.080 --> 0:04:57.120 it's got a market cap right now, just about twenty 0:04:57.120 --> 0:05:00.279 billion dollars. But again, this thing back in March of 0:05:00.560 --> 0:05:02.120 this year was one hundred and eighty. 0:05:01.920 --> 0:05:02.360 Dollars, right. 0:05:02.400 --> 0:05:04.200 It had been the best performing stock in the S 0:05:04.240 --> 0:05:06.720 and P five hundred at one point for the year, 0:05:06.760 --> 0:05:09.039 even outpacing in videos earnings. But then once you see 0:05:09.040 --> 0:05:10.799 these big declines, obviously not anymore. 0:05:10.920 --> 0:05:13.680 And Wujin saying that this is the second auditor they 0:05:13.839 --> 0:05:15.880 had in eighteen months, I think tells you all you 0:05:15.920 --> 0:05:17.520 need to know here. It's just it kind of goes 0:05:17.560 --> 0:05:21.040 to a credibility of their reported financial results. And if 0:05:21.080 --> 0:05:23.640 as an investor, if you don't feel comfortable with, you know, 0:05:23.720 --> 0:05:26.680 the financial results, Yeah, it's tough to put evaluation on that. 0:05:26.760 --> 0:05:29.080 I think that's kind of what we're seeing today. We're 0:05:29.120 --> 0:05:31.960 seeing that move again, a seventy percent, seven zero percent 0:05:32.040 --> 0:05:35.720 move off of that March high. So again the market 0:05:35.800 --> 0:05:36.800 kind of voting with its feet. 0:05:38.200 --> 0:05:42.119 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:42.160 --> 0:05:46.000 weekdays at ten am Eastern on applecar Play and Android Auto. 0:05:46.120 --> 0:05:48.880 With the Bloomberg Business Act. You can also listen live 0:05:49.000 --> 0:05:52.159 on Amazon Alexa from our flagship New York station, just 0:05:52.240 --> 0:05:54.839 Say Alexa playing Bloomberg eleven thirty. 0:05:56.200 --> 0:05:59.440 We had some of the big European banks started reporting. 0:05:59.520 --> 0:06:00.920 UBS came out with. 0:06:00.880 --> 0:06:03.159 Some better than expected numbers, but management, I think, you know, 0:06:03.160 --> 0:06:05.760 they're saying, hey, there's some risks out there, so kind 0:06:05.760 --> 0:06:07.560 of tempering the outlook a little bit. So let's break 0:06:07.560 --> 0:06:10.840 it down with Alison Williams. She is the senior bank 0:06:10.880 --> 0:06:14.560 sannels for Bloomberg Intelligence. So Allison, I mean, you know, 0:06:14.839 --> 0:06:16.960 of the big European banks, UBS is the one I 0:06:16.960 --> 0:06:18.440 think a lot of people focus on because they have 0:06:18.520 --> 0:06:20.960 such a big presence here in the US. What did 0:06:20.960 --> 0:06:23.560 you see coming out of UBS and kind of what's 0:06:23.600 --> 0:06:24.240 their outlook? 0:06:24.520 --> 0:06:28.160 So a really strong quarter. Fundamentals look good. I think 0:06:28.240 --> 0:06:31.760 there are some concerns about capital and that might be 0:06:31.800 --> 0:06:34.640 weighing on the shriffes today. But you know, to your point, 0:06:34.800 --> 0:06:38.880 people look at their business. Sixty percent growth in their 0:06:38.920 --> 0:06:43.880 America's trading business, so so wow is the word. It 0:06:43.960 --> 0:06:47.880 was a record trading, record third quarter trading for them. 0:06:48.000 --> 0:06:49.960 Keep in mind that third quarter tends to be weak, 0:06:50.120 --> 0:06:54.480 so but it was that it was the strongest third 0:06:54.520 --> 0:06:57.159 quarter they've ever had, and that was really due to 0:06:57.400 --> 0:07:01.800 cash equities and derivatives strengths of the bank. So twenty 0:07:01.800 --> 0:07:05.279 seven percent growth really looking good and a lot of 0:07:05.320 --> 0:07:09.159 momentum coming into the fourth quarter. The other positive for UBS, 0:07:09.240 --> 0:07:14.040 you know, that core wealth franchise is really what sets 0:07:14.080 --> 0:07:18.720 them apart, and they did have very strong flows inflows 0:07:18.720 --> 0:07:22.840 across all the regions, especially Asia, so that's also very good. 0:07:23.520 --> 0:07:26.560 And then on the deal execution side, we also like 0:07:26.640 --> 0:07:30.240 what we're seeing there in terms of their cost progress. 0:07:30.520 --> 0:07:33.640 You know, the grossed cost saves are over fifty percent 0:07:34.640 --> 0:07:38.240 the way there, so that's a positive the non core unit, 0:07:38.360 --> 0:07:40.160 so that's you know, stuff they want to get rid of. 0:07:40.760 --> 0:07:45.080 They're making cuts there faster than expected. But capital, as 0:07:45.120 --> 0:07:47.120 I said, that was the one thing I think, you know, 0:07:47.120 --> 0:07:50.239 investors are still a little bit skittish on. They did 0:07:50.960 --> 0:07:55.520 actually take a cut to their capital ratio in the 0:07:55.600 --> 0:07:59.600 quarter basically because they voluntarily are kind of giving up 0:07:59.760 --> 0:08:03.280 some accounting relief. So you know, I think that that's 0:08:03.400 --> 0:08:07.200 you know, that's accounting is sort of just noise in 0:08:07.240 --> 0:08:11.880 my view. But they did say that, you know, they're 0:08:11.920 --> 0:08:14.120 not sure if when they report the fourth quarter of 0:08:14.160 --> 0:08:16.480 February if they're going to be able to give guidance 0:08:16.520 --> 0:08:21.800 on buybacks. And that's because you know, while they're executing 0:08:21.840 --> 0:08:26.240 on this deal, fundamentally regulators, you know, are concerned about 0:08:26.280 --> 0:08:29.120 the size and they may force them to hold more capital. 0:08:29.440 --> 0:08:31.720 Looking over at UBS's stock right now, down about three 0:08:31.760 --> 0:08:34.880 point six percent on pace, sports worst day since August. Second, 0:08:35.160 --> 0:08:37.520 of course, you were talking about obviously capital, but there 0:08:37.559 --> 0:08:41.520 was also a lack of any further guidance from executives 0:08:41.520 --> 0:08:43.400 on that analyst cause, well, so how much does that 0:08:43.440 --> 0:08:44.840 also wing on the stock at this point? 0:08:44.880 --> 0:08:47.400 Allison, Well, I think it really is the lack of 0:08:47.400 --> 0:08:50.880 guidance on capital to your point that that is weighing, 0:08:51.040 --> 0:08:55.480 because you know, if they basically they restarted their buyback. 0:08:55.920 --> 0:08:58.160 You know, in the first half, but people are very 0:08:58.200 --> 0:09:01.720 focused on the prospects for capital return and I think 0:09:01.760 --> 0:09:03.960 the fact that you know, not only did they not 0:09:04.080 --> 0:09:06.200 give guidance, but they said they might not be able 0:09:06.200 --> 0:09:09.040 to give guidance in February is the concern. 0:09:10.160 --> 0:09:13.440 So hel representatives you b s UBS of kind of 0:09:13.440 --> 0:09:16.559 some of the other European banks, Allison. 0:09:17.520 --> 0:09:22.240 So it's interesting that you know, Ubans versus the other bank. 0:09:22.320 --> 0:09:25.480 They are more skewed to the equities business. They do 0:09:25.559 --> 0:09:28.600 have a very strong US presence, as you said, they 0:09:28.600 --> 0:09:30.959 also tend to be strong in Asia, and we really 0:09:31.000 --> 0:09:33.719 saw a lot of strength their late quarter that benefited, 0:09:34.720 --> 0:09:38.280 you know, the companies such as JP Morgan and Morgan Stanley. 0:09:38.920 --> 0:09:40.840 So Deutsche Bank does. 0:09:40.679 --> 0:09:43.400 Not have the equities business, but they were very strong 0:09:43.440 --> 0:09:46.680 in stick and we'll see what happens with you know, 0:09:46.760 --> 0:09:50.319 BNP and zctin are the next ones to come, so 0:09:50.360 --> 0:09:53.640 they might not get that same lift that UBS saw 0:09:53.720 --> 0:09:57.040 from their kind of unique footprint. But generally we did 0:09:57.080 --> 0:10:01.719 hear about strength across regions of cross cash and derivatives, 0:10:01.760 --> 0:10:05.400 and derivatives is a strength for those two French bands, 0:10:05.400 --> 0:10:07.440 and so we think that we could see some strength 0:10:07.480 --> 0:10:08.240 there tomorrow. 0:10:08.679 --> 0:10:10.800 All right, Alison, thank you so much for joining us. 0:10:10.800 --> 0:10:13.120 As always, Alison Williams, she's a senior banks analyst for 0:10:13.120 --> 0:10:17.680 Bloomberg Intelligence globally. Full disclosure, I am a client of UBS. 0:10:17.760 --> 0:10:21.520 Or shout out to Tonyo C and the boys. 0:10:25.760 --> 0:10:29.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:10:29.720 --> 0:10:32.800 weekdays at ten am Eastern on Apple Card playing Android 0:10:32.840 --> 0:10:35.920 Otto with the Bloomberg Business app listen on demand wherever 0:10:36.000 --> 0:10:39.800 you get your podcasts, or watch us live on YouTube. 0:10:40.120 --> 0:10:42.559 Again, look at that Eli Lilly story. It stops down 0:10:42.600 --> 0:10:44.360 five percent, so it's well off. It's in traud de 0:10:44.480 --> 0:10:47.320 Loso's off about eleven or twelve percent earlier. But guess what, 0:10:47.360 --> 0:10:49.440 it's up forty seven percent year to date. So this 0:10:49.480 --> 0:10:51.880 one's had a nice run. It's got an eight hundred 0:10:51.880 --> 0:10:53.760 billion dollar market cap. Clearly a little bit of a 0:10:53.760 --> 0:10:55.480 miss here today. Let's break it down with somebody who 0:10:55.480 --> 0:10:58.600 knows Eli Lillly belderan anybody out there at Sam Fazeli, 0:10:58.640 --> 0:11:01.680 director of research for Global indust and a senior pharmaceuticals analyst. 0:11:01.760 --> 0:11:04.320 They go to Voice in the City of London if 0:11:04.320 --> 0:11:05.840 you want to talk about this healthcare stuff, and if 0:11:05.880 --> 0:11:09.360 you want to talk wine. He's also probably better adapted that. So, 0:11:09.440 --> 0:11:12.000 Sam Eli Lilly, I know you're you know this company 0:11:12.040 --> 0:11:15.080 really well? What did they disclose today and the results 0:11:15.080 --> 0:11:16.640 and why is the stock selling off? 0:11:17.720 --> 0:11:17.920 Yeah? 0:11:18.040 --> 0:11:21.040 So hi Paul, nice to see you all again. I'm 0:11:21.040 --> 0:11:23.840 looking at the screen. You know, as as you guys 0:11:23.840 --> 0:11:26.559 said earlier, it had been down like thirteen and a half, fourteen, 0:11:26.679 --> 0:11:29.280 fifteen percent and now it's kind of coming back. The 0:11:29.280 --> 0:11:33.320 call has just finished, the Q three call, and I'll 0:11:33.360 --> 0:11:35.840 just break it down quickly for you. When they reported 0:11:36.480 --> 0:11:38.680 we got a miss, right, and I'm looking at it 0:11:38.760 --> 0:11:41.280 right now, they missed by six percent on revenue. 0:11:41.640 --> 0:11:44.000 That is not what you do when you're a. 0:11:43.960 --> 0:11:47.360 Sixty pe company, right, It just it doesn't ide is 0:11:47.400 --> 0:11:49.880 the world's not forgiving enough of that. And by the way, 0:11:49.920 --> 0:11:52.600 those burritas, you're talking about seven hundred and eighty five 0:11:52.640 --> 0:11:55.480 calories for an average burreto. Wow, So if you want 0:11:55.480 --> 0:11:57.199 to help you like Lily, you have three of those 0:11:57.240 --> 0:11:57.520 a day. 0:11:57.840 --> 0:11:58.080 Yeah. 0:11:58.679 --> 0:12:03.000 No, So so just breaking that down further that this 0:12:03.320 --> 0:12:05.719 was two drugs on jar O and zep bound and 0:12:05.800 --> 0:12:08.400 those are the drugs that everybody talks about. This is 0:12:08.400 --> 0:12:12.160 the the obesity drugs that are. 0:12:12.080 --> 0:12:13.400 On the market. They missed. 0:12:13.440 --> 0:12:16.040 Why did they miss The company said that it's because 0:12:16.559 --> 0:12:20.320 there was an inventory d stocking going on at some wholesalers. 0:12:20.640 --> 0:12:23.600 So people go, wait a minute, you saying to me 0:12:23.760 --> 0:12:29.720 that demand cannot be satisfied, supply were supply limited, So 0:12:29.800 --> 0:12:32.200 why is there an inventory issue in the middle here? 0:12:32.800 --> 0:12:35.160 And of course that's what led to the question of 0:12:35.240 --> 0:12:37.920 oh my god, are we overestimating demand? 0:12:37.920 --> 0:12:38.120 Here? 0:12:38.280 --> 0:12:40.200 Is the company overestimated it? Why it's the world over 0:12:40.320 --> 0:12:43.600 estimating demand? So why have we come back from five percent? 0:12:44.960 --> 0:12:50.400 Simple answer. It sounds like with the twelve different forms 0:12:50.400 --> 0:12:53.640 of the drugs that they have that no one in 0:12:53.720 --> 0:12:57.000 this early launch phase we can call it early launch, right, 0:12:57.080 --> 0:12:59.760 given that it's been a couple of years, is really 0:12:59.800 --> 0:13:03.240 a to manage and work out what they need to 0:13:03.240 --> 0:13:07.280 have as inventory, because in such a massive product, you're 0:13:07.280 --> 0:13:10.320 going to have an impact on working capital, even for 0:13:10.360 --> 0:13:14.080 the wholesalers. It sounds like that that's the issue that 0:13:14.160 --> 0:13:18.040 even Lily themselves can't necessarily forecast here, right, I mean 0:13:18.120 --> 0:13:21.360 the actual details of how much of each product has made. 0:13:21.600 --> 0:13:24.040 If that's true then and I think you get a 0:13:24.080 --> 0:13:26.960 little with of that in the fact that Folier guidance 0:13:27.200 --> 0:13:30.360 wasn't dropped by as much as the miss that at 0:13:30.440 --> 0:13:33.920 least currently they are optimistic about picking a whole bunch 0:13:33.960 --> 0:13:35.960 of that back up in the Q four that you 0:13:36.000 --> 0:13:38.360 should not worry about demand you talk to any doctor 0:13:38.400 --> 0:13:41.360 you want, do they say, oh, I have no patience 0:13:41.400 --> 0:13:43.640 left to asking before he set bound or we go 0:13:43.760 --> 0:13:44.280 viaor whatever. 0:13:44.400 --> 0:13:46.000 So I think that's what's. 0:13:45.840 --> 0:13:50.360 Happening here the difficulty in managing and thinking about how 0:13:50.400 --> 0:13:51.480 to manage your inventory. 0:13:52.040 --> 0:13:53.960 Something I wanted to pick your brain about was when 0:13:54.000 --> 0:13:56.280 it comes to knockoffs, because we saw a huge drop 0:13:56.360 --> 0:13:59.880 in hymns and hers earlier this month. So they were 0:14:00.040 --> 0:14:03.400 so they previously were allowed to manufacture copycap drugs when 0:14:03.400 --> 0:14:05.920 they're deemed in short supplied by the FDA, But the 0:14:06.000 --> 0:14:08.160 FDA at that time said when it came to zetbound 0:14:08.200 --> 0:14:11.200 and Manjarro, specifically for Eli Lily, they weren't shortage anymore. 0:14:11.320 --> 0:14:12.959 So that's why you saw that drop there. But they 0:14:13.080 --> 0:14:15.959 still when it came to a zempic and Wegovi. When 0:14:16.000 --> 0:14:18.320 you think about Novo Nordisk, they were still able to 0:14:18.400 --> 0:14:22.240 offer compounded version actually versions of those. So I'm wondering, 0:14:22.240 --> 0:14:24.880 when you think about Eli Lily versus what's happening with 0:14:25.000 --> 0:14:27.480 Novo Nordists, how does that kind of come into play 0:14:27.560 --> 0:14:29.720 when you're thinking about when it comes to sort of 0:14:29.760 --> 0:14:31.880 the knockoffs and the copycat type drugs. 0:14:33.080 --> 0:14:33.280 Yeah. 0:14:33.320 --> 0:14:36.440 Sure, I mean I'm not even sure that people have 0:14:36.520 --> 0:14:41.080 stopped making compounded versions of zep bound and Manjara because 0:14:41.120 --> 0:14:44.200 the FDA kind of reeled back a little bit and said, oh, 0:14:44.240 --> 0:14:45.640 we're going to actually look at this again. 0:14:45.760 --> 0:14:47.760 So I don't think that story is finished. 0:14:47.800 --> 0:14:50.160 I think that these folks are some folks are still 0:14:50.200 --> 0:14:53.960 able to supply those from a compounded pharmacy perspective. So 0:14:54.840 --> 0:14:58.400 you know that is that's that's a lot, that's a 0:14:58.600 --> 0:15:01.000 root that the FDA does to people. If there's a 0:15:01.000 --> 0:15:03.000 shortage of a drug and someone else can make it, 0:15:03.040 --> 0:15:04.000 well let them do it. 0:15:05.000 --> 0:15:07.600 The interesting angle, of course, is that a whole bunch. 0:15:07.440 --> 0:15:10.600 Of people who are taking off the compounded pharmacists are 0:15:10.800 --> 0:15:14.600 probably paying less, and therefore if they're forced to go 0:15:14.640 --> 0:15:16.600 and take it from a prescription, they may have to 0:15:16.600 --> 0:15:18.480 pay more out of pocket. So that's not going to 0:15:18.520 --> 0:15:22.080 be a leaving a particularly good taste in folks mouths 0:15:22.400 --> 0:15:23.400 once that this. 0:15:24.760 --> 0:15:26.600 Actually happens. But it hasn't happened yet. 0:15:26.640 --> 0:15:28.560 So and they did say on the call that this 0:15:28.680 --> 0:15:33.040 is not because there's enormous demand being fulfilled by compounded pharmacies. 0:15:33.480 --> 0:15:38.960 It's literally to do with that inventory management issue, where 0:15:39.200 --> 0:15:39.560 what are. 0:15:39.440 --> 0:15:42.120 The companies saying sam about getting this in an oral format. 0:15:42.200 --> 0:15:44.440 I think that might be one of the next big 0:15:44.480 --> 0:15:47.440 I guess mileposts for this type of treatment. 0:15:48.640 --> 0:15:51.160 Yeah, I remember, Paul, there's already an oral form of this. 0:15:51.280 --> 0:15:54.120 It's called Robelsus. It's from over NOTICEK. It's just a 0:15:54.160 --> 0:15:56.000 tough drug to use because you have to have it 0:15:56.080 --> 0:15:58.760 within about half an hour of eating. You can't take 0:15:58.800 --> 0:16:01.800 it too close or too far from any team because 0:16:01.840 --> 0:16:03.520 you need an empty stomach. 0:16:03.160 --> 0:16:04.040 Before you take the drug. 0:16:04.080 --> 0:16:06.440 And it's a big dose, and maybe the side effect 0:16:06.480 --> 0:16:08.680 profile isn't as great and the weight loss isn't as great. 0:16:08.760 --> 0:16:13.120 So people are trying to develop oral versions of these drugs, 0:16:13.120 --> 0:16:17.280 but also oral drugs that are like normal drugs, small 0:16:17.360 --> 0:16:19.400 molecules that they can swallow as a pill once today. 0:16:19.560 --> 0:16:20.400 So that's coming. 0:16:21.360 --> 0:16:23.480 So what do you think shareholders need to watch for 0:16:23.680 --> 0:16:26.640 next when it comes to especially after its outlook disappointed. 0:16:28.600 --> 0:16:30.760 I think we need to see how Q four does. 0:16:31.200 --> 0:16:35.480 So let's hope that that they're current guidance. At least 0:16:35.480 --> 0:16:37.800 they meet it, maybe beat it, that would be nice. 0:16:39.080 --> 0:16:42.080 The issue is then we move into a Q four. 0:16:42.120 --> 0:16:44.480 There's an interesting result from a click or child that's 0:16:44.480 --> 0:16:47.360 coming up. They've done this before. They're comparing zep bound 0:16:47.640 --> 0:16:51.920 with big go V, and I suspect that they're hoping 0:16:52.000 --> 0:16:54.320 and that that data suggests that they might. They will 0:16:54.360 --> 0:16:58.160 show that it has better weight loss. Whether the side 0:16:58.160 --> 0:17:00.880 effect profile will be better or different, time will tell. 0:17:00.920 --> 0:17:03.400 But that's there are not many farmer companies do these 0:17:03.480 --> 0:17:07.159 type of excuse me, head to head trials because that 0:17:07.280 --> 0:17:08.800 takes some Uh yeah. 0:17:08.680 --> 0:17:10.360 Yeah, no, I just want to get real quick. 0:17:10.440 --> 0:17:13.320 What's the latest thinking on the size of this market? 0:17:13.359 --> 0:17:14.719 And you guys have done a lot of work on this. 0:17:15.800 --> 0:17:17.919 Yeah, I think I think my Key's latest numbers that 0:17:17.920 --> 0:17:19.040 are ninety three billion. 0:17:19.560 --> 0:17:22.920 I don't remember exactly. It's big, well out of nothing 0:17:23.000 --> 0:17:27.320 exactly so, but five we have a whole load of data. Company. 0:17:27.520 --> 0:17:30.639 Yes, is there any significant evidence that red wine is 0:17:30.680 --> 0:17:31.240 healthy for you? 0:17:33.480 --> 0:17:36.000 I'm not going to go there because I'm at a 0:17:36.000 --> 0:17:38.000 health drug analyst, not a red wine analyst. 0:17:38.080 --> 0:17:40.000 I just know that I enjoy a glass of two. 0:17:40.600 --> 0:17:43.360 You gotta you gotta have to remember it's also bad 0:17:43.400 --> 0:17:45.000 for you because it's cancer. 0:17:45.600 --> 0:17:49.680 All sorts of yes, loves important. 0:17:49.760 --> 0:17:51.920 We have to be fed a whole bunch of people 0:17:51.920 --> 0:17:53.760 listen to this. This is this is not this is 0:17:53.760 --> 0:17:55.679 not about a bottle of wine a day. Maybe a glass, 0:17:55.760 --> 0:17:58.359 but even then, I think the medical professional says be careful, 0:17:58.840 --> 0:18:01.320 but I choose to take that risk and I do 0:18:01.800 --> 0:18:02.119 love it. 0:18:02.119 --> 0:18:04.560 We separate. Sam Fazali, thank you so much for that. 0:18:04.680 --> 0:18:06.280 Sam Fazeli's a director of research. 0:18:06.440 --> 0:18:10.320 He also covers the pharmaceutical industry for Bloomberg. In Intelligence 0:18:10.359 --> 0:18:11.520 over in London. 0:18:12.880 --> 0:18:16.760 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:16.840 --> 0:18:19.880 weekdays at ten am Eastern on Apple card Play and 0:18:19.880 --> 0:18:22.800 Android Auto with the Bloomberg Business app. You can also 0:18:22.880 --> 0:18:26.359 listen live on Amazon Alexa from our flagship New York station, 0:18:26.760 --> 0:18:29.440 Just Say Alexa, playing Bloomberg eleven. 0:18:29.240 --> 0:18:32.560 Thirty rights back in the middle of earning season. 0:18:32.600 --> 0:18:36.000 This is the busiest week of the quarter in terms 0:18:36.000 --> 0:18:39.919 of companies market cap reporting big on last night friends. 0:18:39.880 --> 0:18:43.320 Google, it's right of the market cap for the S 0:18:43.359 --> 0:18:46.080 and P five supporting this week right Actually busy. 0:18:45.880 --> 0:18:49.240 Seek good quarter. I guess across the board. Ben Deep 0:18:49.280 --> 0:18:52.600 Singh joins us. He's a senior technology analyst for Bloomberg Intelligence. 0:18:53.640 --> 0:18:53.960 Mandy. 0:18:54.280 --> 0:18:56.359 Everybody knows Google, they know the shirt story. What did 0:18:56.400 --> 0:18:59.280 you learn last night from Google? And their results? 0:18:59.480 --> 0:19:00.119 That you know? 0:19:00.840 --> 0:19:06.840 Search Cloud YouTube. These are three separate businesses doing extremely 0:19:06.880 --> 0:19:10.040 well at scale, I mean double digit growth for search 0:19:10.160 --> 0:19:14.080 business is really stellar when you think of all the 0:19:14.160 --> 0:19:16.719 pressure they've been facing, you know, when it comes to 0:19:17.560 --> 0:19:22.640 new entrants like CHATGPT and Perplexity and whatnot. And everyone 0:19:23.440 --> 0:19:25.359 is of the belief that they would take at least 0:19:25.359 --> 0:19:29.960 some share from Google, at least in terms of ad revenue. 0:19:30.160 --> 0:19:33.320 Google hasn't lost any share. In fact, it's a very 0:19:33.320 --> 0:19:35.159 healthy growth at their scale. 0:19:35.200 --> 0:19:36.240 And YouTube. 0:19:36.280 --> 0:19:40.359 Look fifty billion plus revenue rundrate seventy thirty split between 0:19:40.400 --> 0:19:45.399 subscriptions ads is seventy and thirty percent of subscriptions, and 0:19:45.520 --> 0:19:49.040 subscriptions grew, you know, twenty eight percent. I mean, just 0:19:49.119 --> 0:19:53.520 think about fifteen billion dollar subscriptions business growing twenty eight percent. 0:19:53.560 --> 0:19:57.400 That's very impressive. And we're not even talking about Wevemo here. 0:19:57.680 --> 0:20:00.280 So when you look at you know, all the business 0:20:00.280 --> 0:20:03.720 says they clearly have a lot going on, and Vemo 0:20:03.960 --> 0:20:06.359 is a future bet, but something that could be huge 0:20:07.080 --> 0:20:08.680 in terms of you know, top line. 0:20:08.720 --> 0:20:10.440 You know, it's interesting you just mentioned fifty billion of 0:20:10.480 --> 0:20:14.240 runwright revenue for YouTube and advertising subscription. That sounds a 0:20:14.320 --> 0:20:18.399 lot like the cable television business, the cable network business. 0:20:18.440 --> 0:20:22.200