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Speaker 2: A lot of news in the tech space. I guess
Speaker 2: it's just every day. We have a lot of news
Speaker 2: in the tech space. I want to jump out of me.
Speaker 2: Is Amazon rush us out latest AI chip to take
Speaker 2: on in Vidia and Google?
Speaker 3: When that gets my attention, let me check in with
Speaker 3: somebody who might know a thing or two about this stuff.
Speaker 2: Man Deep Singh, senior tech industry analysts, Bloomberg Intelligence. He's
Speaker 2: out there in San Diego. I don't know what's going
Speaker 2: on in San Diego. I didn't get the invite, but
Speaker 2: Man Deep's out there doing the.
Speaker 3: Zoom thing, Man Deep.
Speaker 2: Amazon chips, where do they stack up a relative to say,
Speaker 2: an Nvidio or Google.
Speaker 4: I mean, look, Amazon Reno is the largest cloud provide
Speaker 4: with almost fifty percent share. And when it comes to
Speaker 4: the GPUs, everyone so far except for Google has relied
Speaker 4: on it media, you know, for training and what Amazon
Speaker 4: is doing is really copying that Google playbook where they
Speaker 4: want to use their own chips. It's just that they
Speaker 4: haven't had that kind of success that Google has had
Speaker 4: with TPUs, and they're trying to speed things up because
Speaker 4: in the end, all these hyperscalers don't want to spend
Speaker 4: you know, twenty to twenty five percent of their CAPEX
Speaker 4: on procuring in videos chips, and that is what the
Speaker 4: endgame is. I think Google so far is ahead in that,
Speaker 4: but clearly Amazon is trying to catch up when it
Speaker 4: comes to their own chips efforts.
Speaker 5: Man deep, it feels like Amazon Google are becoming more
Speaker 5: formidable competitors to Nvidia in this space. In Vidia the
Speaker 5: AI darling. When you think about twenty twenty, who are
Speaker 5: some of the winners in these AI arms race.
Speaker 4: I mean, look, when you're running a cloud business, you
Speaker 4: know you're trying to optimize things across the stack, and
Speaker 4: that's where you know, a META is very different from
Speaker 4: a Google or an Amazon, which have a big public
Speaker 4: cloud business. I think what you're going to see is
Speaker 4: focus more on capex efficiency. If Google can deliver you know,
Speaker 4: a lot more with their ninety billion dollars in capex
Speaker 4: in terms of training and printing and having a cloud business.
Speaker 4: Everyone will be measured the same way, whether it's Amazon
Speaker 4: or Meta, and that's where CAPEX efficiency will be a
Speaker 4: much bigger focus in twenty twenty six than it was
Speaker 4: in the past two years, where you know, there was
Speaker 4: a gold rush going on in terms of getting these GPUs,
Speaker 4: making sure you have chips for training your models. I
Speaker 4: think we are moving into a phase where CAPEX efficiency
Speaker 4: will be front end center going forward.
Speaker 2: Mandy, if I see a Bloomberg News story Apple AI
Speaker 2: head to leave.
Speaker 3: This doesn't feel right to me. What's going on with
Speaker 3: Apple and AI? And should I?
Speaker 2: Am I reading too much into this? Seems like there's
Speaker 2: a lot of turnover there.
Speaker 4: I mean, look for a good reason, because Apple, when
Speaker 4: you think about the back seven players, has trailed in
Speaker 4: terms of having an AI strategy making those investments. And
Speaker 4: right now we are seeing even you know, just yesterday
Speaker 4: Deep Seek release their latest model by Dance is talking
Speaker 4: about a model that can be run on your operating system.
Speaker 4: So there is so much going on at the hardware
Speaker 4: and at the operating system layer that you feel like
Speaker 4: Apple is missing out one because they don't have any
Speaker 4: AI models of their own and also in terms of
Speaker 4: their partnerships, they haven't been that upfront about, you know,
Speaker 4: whether it's Open AI or Google in terms of making
Speaker 4: changes to their operating system. So even so the hardware
Speaker 4: sales haven't really suffered because of that. I mean, when
Speaker 4: you look two years out, if Apple doesn't have a
Speaker 4: good AI strategy, a good model that works natively on
Speaker 4: the operating system, I think you will start to see
Speaker 4: an impact on the hardware sales.
Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this.
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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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Speaker 2: Cyber Monday it's a thing, a lot of people spending
Speaker 2: a lot of money at the click of a button.
Speaker 3: Let's get some of the data here.
Speaker 2: Put him Goyle, senior US e commerce and retail analysts
Speaker 2: for Bloomberg Intelligence joints US here. Put them talk to
Speaker 2: us about cyber Monday. What were some of the trends
Speaker 2: you guys saw. There's more and more people if you
Speaker 2: need to shop online.
Speaker 6: Yeah, so people definitely came online to shop. But the
Speaker 6: results came out this morning. According to Adobe, sales were
Speaker 6: fourteen point two five billion dollars. That's just slightly ahead
Speaker 6: of the fourteen point two billion estimated, so a seven
Speaker 6: point one percent gain. So I'd say, you know, overall,
Speaker 6: things were largely to me as expected, maybe slightly better.
Speaker 6: We saw deals over Cyber Monday, which drew customers, but
Speaker 6: in all honesty, Paul, you know, we looked at eighty
Speaker 6: one brands online yesterday and what we found was that
Speaker 6: the majority of them, the deals were in line to
Speaker 6: last year. So we did see retailers pull back on
Speaker 6: discounting because there's just more costs that are built into
Speaker 6: this year from tariffs.
Speaker 5: Consumers buying what were they buying up a Cyber Monday,
Speaker 5: and what is that telling you about the health of
Speaker 5: the consumer. Was it big ticket items? Were they trading
Speaker 5: down to private labels?
Speaker 6: Yeah, what we saw. So we saw electronics still being
Speaker 6: very powerful this holiday season. The Apple air pods were
Speaker 6: cited to be among one of the top sellers. We
Speaker 6: also saw the PlayStation in high demand. People were shopping
Speaker 6: for fashion apparel, they were buying for the home across
Speaker 6: the news that we read, what we've seen sneakers, you know,
Speaker 6: athletic where was probably a little lore than expected. But
Speaker 6: once again, that's not really an item that you often
Speaker 6: put under the tree as much as you buy for yourself,
Speaker 6: So we think that could pick up.
Speaker 2: I'm thinking about some of the folks that really do
Speaker 2: a good job online, Walmart, Target, How are those guys,
Speaker 2: how are they performing?
Speaker 6: Yeah, so Walmart and Target, we think both actually had
Speaker 6: a good holiday season, but in terms of promotional activity,
Speaker 6: we think they were largely in line with last year.
Speaker 6: That said, we were in the store on Black Friday.
Speaker 6: We monitored their deals online over the weekend and say yesterday,
Speaker 6: and we think their deals were good, but they weren't
Speaker 6: aggressive or more aggressive i should say than last year,
Speaker 6: which is in a way a good thing because they'll
Speaker 6: help their margins or margins this holiday quarter won't suffer
Speaker 6: because retailers had to discount more aggressively than they did
Speaker 6: last year.
Speaker 5: How are you thinking about the retail sector going into
Speaker 5: next year? Do you expect that the strength will continue?
Speaker 6: I think it'll be tough. You know, we've seen shoppers
Speaker 6: come out to shop for events. Durven buying, whether that's
Speaker 6: back to school or holiday or birthdays or events they're
Speaker 6: coming out and their spending. But once we exit holiday,
Speaker 6: there is really no catalyst in January to shop. So
Speaker 6: we do think that you will kind of see the
Speaker 6: normal lull that you see after the holidays also creep
Speaker 6: into twenty twenty six. But next year it's really going
Speaker 6: to be more about what happens with pricing. We've seen
Speaker 6: retailers be able to hold prices study or raise them
Speaker 6: just slightly into the back half from tariffs, But next
Speaker 6: year will they have to implement bigger price increases because
Speaker 6: all the inventory will likely be impacted by some sort
Speaker 6: of tariff into next year.
Speaker 2: That's kind of where I want to go put on
Speaker 2: just lastly here, I mean, I don't know how to
Speaker 2: think about the tariff impact because it seems like we
Speaker 2: haven't really seen it too much at the consumer level,
Speaker 2: And maybe that means that, you know, the retailers the
Speaker 2: distributors that they've kind of taken it in their margin,
Speaker 2: and the tariff is what it is. That doesn't look
Speaker 2: like there's gonna be a second round of teriffs next year,
Speaker 2: So the tariffs are what they are in the economy,
Speaker 2: but you're saying that maybe there still could be some
Speaker 2: impact next year.
Speaker 6: Well, if you think about when the tariffs were implemented,
Speaker 6: it really affected the back half of this year, right,
Speaker 6: so when you go into the first half of next year,
Speaker 6: you're up against comparisons where there really wasn't a tariff impact.
Speaker 6: So that's one thing that you have to deal with.
Speaker 6: The second thing is is that prices are going up.
Speaker 6: I'm not you know, we did see select price increases.
Speaker 6: In fact, you know, Nike came out and said that
Speaker 6: they're directly raising prices but un select goods. And I
Speaker 6: think that's the approach that most retailers have been taking
Speaker 6: is we'll raise prices where we can, and where we
Speaker 6: know we can't, will absorb it or we'll offset it
Speaker 6: otherwise through a fit season supplier kickbacks. So that's what
Speaker 6: we'll continue to see happen next year. But there is
Speaker 6: still some pressure. Now. We'll see what happens next week
Speaker 6: right where the court ruling could be that the tariffs
Speaker 6: are just unwarranted and are unlawful. And if that happens,
Speaker 6: then I think we have some positive surprises and for
Speaker 6: us next year.
Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
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Speaker 2: We are waiting for a huge m and a trade
Speaker 2: to be announced Warner Brothers Discovery, with an enterprise value
Speaker 2: of about.
Speaker 3: Ninety billion dollars. It's up for sale.
Speaker 2: Second round bids for the company we're due yesterday. We
Speaker 2: understand that it's Netflix, it's Comcasts, and it's of course
Speaker 2: it's Paramount sky Dance and all that kind of stuff there.
Speaker 2: So Githa rang A Nathan. She is the senior media
Speaker 2: analysts for Bloomberg Intelligence. Keith, what's the latest there in
Speaker 2: Warner Brothers Discovery, because it seems like this is a
Speaker 2: company that wants to be sold and be sold quickly.
Speaker 7: Yeah, absolutely, Paul. I mean, things seem to be definitely intensifying.
Speaker 7: So the second round bids were due yesterday. The reporting
Speaker 7: so far seems to suggest that Netflix has mostly a
Speaker 7: cash bid. That's a little bit of a surprise, given
Speaker 7: that you know, when you compare Netflix with both comcasts
Speaker 7: and paramounts guidance. Obviously that stock has the most value.
Speaker 7: You know, they're treating it almost thirty times forwardy, but
Speaker 7: compared to a Comcast, which trades it about five times.
Speaker 7: So obviously, I mean, you know, it just goes to
Speaker 7: show that Netflix is very, very interested. There was obviously
Speaker 7: some you know, speculation earlier whether they were a serious
Speaker 7: bidder or not.
Speaker 8: I think this kind of puts that to rest. The
Speaker 8: offers this time are.
Speaker 7: Binding, means if the board likes something that it sees,
Speaker 7: they can absolutely go ahead and bring this whole process
Speaker 7: to a conclusion pretty quickly. So right now, just waiting
Speaker 7: to hear on the actual numbers. We haven't heard any
Speaker 7: any reporting on the actual bid numbers themselves. Warner Brothers,
Speaker 7: of course looking for thirty dollars a share.
Speaker 5: Githa Bank of America has a note that calls the
Speaker 5: bidding war for Warner Brothers quote industry realignment. Is that
Speaker 5: a fair characterization? And how do you see this bidding
Speaker 5: war transforming the industry?
Speaker 8: Absolutely agree with that.
Speaker 7: I mean, you know, you have Warner Brothers, which is
Speaker 7: one of the most iconic studios in Hollywood. You know,
Speaker 7: you have a great streaming service in HBO Max. You
Speaker 7: just look at the Warner Studio this week at the
Speaker 7: I mean sorry, this year at.
Speaker 8: The box office.
Speaker 7: They've had an absolutely phenomenal run. So they're leading with
Speaker 7: about a twenty eight almost thirty percent share of domestic
Speaker 7: box office. So this is a huge studio that could
Speaker 7: obviously or a huge company even that could you know,
Speaker 7: completely reshaped the media landscape. And it is transform transformative
Speaker 7: in many, many ways. So if you think about you know,
Speaker 7: Paramount sky Dances streaming assets right now, with Paramount Plus,
Speaker 7: they have about seventy million subscribers. You add HBO Max,
Speaker 7: you get over two hundred million. Same is true for Comcast.
Speaker 7: You know, these are this is kind of an existential deal,
Speaker 7: I would say for both those companies, and absolutely transformative.
Speaker 7: So you know, you take Warner Brothers and Paramount sky
Speaker 7: Dance for instance, if those two companies combine, that basically
Speaker 7: then becomes the second largest media company after Disney. So again, huge,
Speaker 7: huge things that stake here for all of these three bidders.
Speaker 2: How about valuation here, The company has said in the
Speaker 2: past that they would like thirty dollars share. The stock
Speaker 2: is trading at just north of twenty four dollars to share.
Speaker 2: John Malone, the company's chair emeritus and of course one
Speaker 2: of the biggest deal makers and media and telecom over
Speaker 2: the last fifty years, he says that number is quote possible.
Speaker 2: How do you think valuations can shake here? What's the
Speaker 2: price that's going to clear? Do you think?
Speaker 7: I think it's definitely going to be above twenty eight dollars.
Speaker 7: Part so we know that, you know, when all of
Speaker 7: this had started, Warner Brothers was trading at about twelve
Speaker 7: dollars a share. We're already up to twenty four dollars.
Speaker 7: We know that in the last bidding round, Paramount Guidance
Speaker 7: offered close to about twenty four dollars, which was rejected. Now,
Speaker 7: if you just think about the two parts of the
Speaker 7: business for Warner Brothers Discovery, you have the TV network's
Speaker 7: business again throwing out a lot of cash, but not
Speaker 7: necessarily big interms of valuation. I mean, this is a
Speaker 7: melting ice cube. You know, the multiple that you would
Speaker 7: slap on this part of the business would be maximum
Speaker 7: about a four or five x. But then you think
Speaker 7: about the streaming and the studio assets. Now that is
Speaker 7: where you have your scarcity asset. You have a lot
Speaker 7: of the IP sitting there. You have a streaming business
Speaker 7: that is that is turned profitable, that could become extremely
Speaker 7: profitable over the next few years, and so that's where
Speaker 7: most of the valuation is going to be. And you know,
Speaker 7: we ran some numbers. We think that just the streaming
Speaker 7: and the studio of the business alone could be worth
Speaker 7: about twenty eight dollars. So when you think about that
Speaker 7: thirty dollars per share that you know, John Malone says,
Speaker 7: as possible, we absolutely think yes.
Speaker 5: Etha, Can you please talk to us a little bit
Speaker 5: about what some of the long term strategic advantages will
Speaker 5: be for Warner Brothers when this deal closes. Whoever the
Speaker 5: you know, the final winner is.
Speaker 7: I think for the final winner you know, off the
Speaker 7: Warner Brothers asset. One thing is that it obviously completely
Speaker 7: transforms the business in terms of you know, increasing revenue,
Speaker 7: increasing scale, increasing EBITDA. But I think the big thing
Speaker 7: that everybody is looking for really is the synergy number.
Speaker 7: And if you think about you know, paramounts guidance, which
Speaker 7: is really looking to acquire all of Warner Brothers, so
Speaker 7: not just the studio and streaming, but also the linear networks.
Speaker 8: The synergies are going to be sizable.
Speaker 7: We think it could be anything upwards of five to
Speaker 7: six billion dollars. And that's really where you know, a
Speaker 7: lot of this is going to kind of flow down
Speaker 7: to the bottom line. Of course, you know, there's always
Speaker 7: this question about how much of synergies can be extracted,
Speaker 7: but actually Warner Brothers Discovery themselves have kind of provided
Speaker 7: us with an excellent template. They've done a fantastic job
Speaker 7: when it comes to extracting synergies both with the Scripts
Speaker 7: transaction as well as with the most recent Warner Brothers
Speaker 7: and Discovery merger. So we think if you know, they
Speaker 7: lay out a good plan, it can definitely be done.
Speaker 7: And so synergies really is the name of the game here,
Speaker 7: apart from, of course, monetizing all of the IP because
Speaker 7: they do have some of the best brands in the.
Speaker 3: Business, Comcast. How credible are they?
Speaker 2: I mean, we know the Roberts family, Brian Roberts loves
Speaker 2: to do deals, rarely goes more than five or six
Speaker 2: years without doing a big deal.
Speaker 3: Here, how do you handicap them here?
Speaker 7: You know, Paul so it you know, industry sources seem
Speaker 7: to suggest that Warner Brothers Discovery actually wants Comcasts to
Speaker 7: be the winner. And I think a lot of this
Speaker 7: has to do with the fact that, you know, David
Speaker 7: Zaslov obviously has this history with NBC. He used to
Speaker 7: work there. He obviously knows Brian Roberts extremely well. But
Speaker 7: I think they're all davids. Ozlav also kind of sees
Speaker 7: this as a path for him to ultimately run NBC.
Speaker 7: He doesn't necessarily want to exit Hollywood just yet, which
Speaker 7: is what would happen if he's sold to either paramount
Speaker 7: S Guidance or to Netflix. So I think in many
Speaker 7: ways he does want to kind of sell to Comcast. Again,
Speaker 7: it's going to come down to whether Comcast can put
Speaker 7: up the money, because they are right now in a
Speaker 7: very very tricky, precarious situation. Their cable business is struggling.
Speaker 7: They you know, the stock is trading at historical lows
Speaker 7: five times ebit, so really really in a tough spot,
Speaker 7: and they have to come up with a majority cash
Speaker 7: bid that you know, so we're looking at something like
Speaker 7: about sixty billion dollars. This has to be debt financed,
Speaker 7: and so you kind of think about all of that
Speaker 7: incremental interest expense for them, Paul, I mean this is
Speaker 7: going to be dilute up to free cash flow, and
Speaker 7: I don't think investors are going to like it.
Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 2: We have some news this week, big news for New
Speaker 2: York City, getting three casino licenses for the city, one
Speaker 2: in the Bronx.
Speaker 3: Two in Queens.
Speaker 2: This is to build like real casinos, not just the
Speaker 2: you know, some of the gaming stuff. This is real
Speaker 2: time stuff and it's big for the greater New York
Speaker 2: City metro area here. So we want to break it
Speaker 2: down with Briannegger, Senior Gaming and Launching analyst for Bloomberg Intelligence.
Speaker 3: So let's step back.
Speaker 2: Brian talk to us about kind of what the licenses
Speaker 2: represent and kind of where do we go from here.
Speaker 9: Sure, so this is a fairly protractive process, involving ultimately
Speaker 9: di selection of three recipients. By the way, the only
Speaker 9: three left in the running after a few others were
Speaker 9: eliminated and dropped out, and really it authorized resort casinos
Speaker 9: for the downstate New York area, mostly in New York City.
Speaker 9: And as it turned out, as you mentioned, the three
Speaker 9: casino qualified casino applicants, if you will, really are are
Speaker 9: in New York City, but outside the Borough of Manhattan itself.
Speaker 5: Brian, just looking at your note on these license approvals,
Speaker 5: you write that they face a narrow path to decent
Speaker 5: returns on investment. Can you please talk to us a
Speaker 5: little bit more about that idea?
Speaker 9: Sure? So, what we assume for those resorts is they
Speaker 9: will get what I would call a gaming revenue premium
Speaker 9: and room rate premium of ten twenty percent to other
Speaker 9: kind of high end urban area resorts such as the
Speaker 9: Burgat and Atlantic City wins Encore in Boston. However, are
Speaker 9: concerned if in terms of the return prospects are that
Speaker 9: development costs are quite high and perhaps some of the
Speaker 9: targeted non gaming contribution elements might be a bit ambitious.
Speaker 9: So for that reason, when we work the numbers, we
Speaker 9: came up with something like a ten percent return on investment,
Speaker 9: which is certainly a bit less than most operators would
Speaker 9: expect to attain in these regional markets.
Speaker 2: So I'm thinking here, I mean again, I'm just thinking
Speaker 2: about Steve Cohen's I was looking at his plans yesterday
Speaker 2: for in conjunction with his city field.
Speaker 3: He obviously he owns the Mets.
Speaker 2: City field is out there, the national tennis centers out.
Speaker 3: There the world.
Speaker 2: You know that we had the world's fair situations, so
Speaker 2: there's a ton of opportunity out there.
Speaker 3: It seems like these are going to be.
Speaker 2: More retail hotel than casino. How do you think the
Speaker 2: mix of revenue is going to be there?
Speaker 9: So there certainly is. I think when we work the numbers,
Speaker 9: we assume that with respect to either food and beverage
Speaker 9: or retail entertainment revenue, those will be fairly sizeable chunks
Speaker 9: of the overall revenue PI probably cumuatively close to half,
Speaker 9: which is true of many kind of gaming resorts in
Speaker 9: attractive environment where you get a lot of non gaming revenue.
Speaker 9: I think the same will be true here. The question
Speaker 9: is will it be enough and will be margins which
Speaker 9: we take to be about thirty percent, be sufficient to
Speaker 9: get a good return. But certainly, you know the logic
Speaker 9: of having a nexas city field makes a lot of sense.
Speaker 9: You know, the other locations, valleys at a golf course in
Speaker 9: the Bronx, you know, the resorts world in Queen's pretty
Speaker 9: much expanding and existing facility all have their merit. The
Speaker 9: question is will be enough to get a decent return.
Speaker 9: But certainly some of these locations have rational prospects.
Speaker 5: What does this victory for these three companies mean for
Speaker 5: their competitors like Sands, MGM, When where do they go
Speaker 5: from here?
Speaker 9: So it'd be queer. You know Sans exited this process
Speaker 9: back in April. When exited in May it's Hudson, York
Speaker 9: project because of community opposition at MGM in October because
Speaker 9: of the licensed terms. But bear in mind that they
Speaker 9: do have other prospects. You know, win is developing a
Speaker 9: UAE resort of its own, MGM is building in Osaka, Japan.
Speaker 9: They all can buy back in their own stock, So
Speaker 9: I think they're weighing this particular opportunity relative to other
Speaker 9: development prospects.
Speaker 2: All right, so we're gonna get the licenses by year end.
Speaker 2: What's the timetame? Have anybody any of these three licensed
Speaker 2: winners lay out of timetable for getting a shovel in
Speaker 2: the ground.
Speaker 3: And maybe even opening the doors.
Speaker 9: So I think it'll vary by operator, but the expectations
Speaker 9: that these resorts will generally open by twenty thirty or so.
Speaker 9: It'll take a few years to develop. There's always the
Speaker 9: possibility of construction challenges, but that's the target. And of course,
Speaker 9: our related to concerns since you mentioned MGM was MGM
Speaker 9: Bally's Caesars o operate casinos in Atlantic City, and you know,
Speaker 9: the proximity to Alantic City of resorts with casino elements
Speaker 9: at this caliber certainly presents a potential competitive challenge to
Speaker 9: Atlantic City itself.
Speaker 3: ACI. That's tough, tough.
Speaker 2: That is tough because I would see, you know, on
Speaker 2: the Parkway, Brian, I know you see it too. We
Speaker 2: have for years, for twenty thirty years, we've seen the
Speaker 2: limousines from New York City going down the Parkway to AC.
Speaker 2: That's going to get impacted, isn't.
Speaker 9: It It will? I think you know, some operators, Forgata,
Speaker 9: for example, a hard rock may hold up better than others.
Speaker 9: But you know, there's always a challenge when you've got
Speaker 9: this much additional gaming capacity, with resort elements opening up
Speaker 9: in relative close proximity to a to a key Atlantic
Speaker 9: city feeder market.
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