1 00:00:02,480 --> 00:00:09,959 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:10,039 --> 00:00:13,520 Speaker 2: This is the closing bell on this stock movers report 3 00:00:13,760 --> 00:00:16,680 Speaker 2: the company's making moves at the close of US trading 4 00:00:16,880 --> 00:00:21,360 Speaker 2: with Carol Masser, Tim Steneback, Romain Bostik, and Katie Greifel. 5 00:00:22,680 --> 00:00:25,400 Speaker 1: United Airlines crossing the wire right now, let's get right 6 00:00:25,400 --> 00:00:27,000 Speaker 1: to it here. We had gotten a little bit of 7 00:00:27,040 --> 00:00:29,440 Speaker 1: a CeNSE here while the airlines were doing after the 8 00:00:29,480 --> 00:00:33,199 Speaker 1: results last week by Delta United saying that in the 9 00:00:33,200 --> 00:00:36,159 Speaker 1: fourth quarter capex at one point eight nine billion EPs 10 00:00:36,159 --> 00:00:38,280 Speaker 1: looks like a beat. At three dollars and ten cents 11 00:00:38,280 --> 00:00:40,440 Speaker 1: a share. The street was looking for two dollars and 12 00:00:40,520 --> 00:00:44,080 Speaker 1: ninety two cents of share. Operating revenue fifteen point four billion, 13 00:00:44,320 --> 00:00:47,720 Speaker 1: relatively in line with estimates of shares up fractionally here 14 00:00:47,800 --> 00:00:49,879 Speaker 1: in the after hours trade. 15 00:00:50,040 --> 00:00:52,600 Speaker 3: Meanwhile, let's get to Netflix here, crossing the terminal, and 16 00:00:52,640 --> 00:00:54,720 Speaker 3: this is the red headline. When it comes to twenty 17 00:00:54,760 --> 00:00:59,200 Speaker 3: twenty six revenue, the outlook there fifty point seven billion 18 00:00:59,240 --> 00:01:02,520 Speaker 3: dollars to fifty one point seven billion dollars. The estimate 19 00:01:02,600 --> 00:01:06,720 Speaker 3: had been for fifty point ninety six billion dollars. Meanwhile, 20 00:01:06,760 --> 00:01:09,479 Speaker 3: you take a look in terms of what we saw 21 00:01:09,520 --> 00:01:12,000 Speaker 3: when it comes to the fourth quarter, you saw fourth 22 00:01:12,080 --> 00:01:15,679 Speaker 3: quarter revenue come in above expectations, coming in just over 23 00:01:15,760 --> 00:01:18,880 Speaker 3: twelve billion dollars the estimate had been for eleven point 24 00:01:18,959 --> 00:01:22,280 Speaker 3: ninety seven billion dollars, and then their free cash flow 25 00:01:22,360 --> 00:01:25,200 Speaker 3: in the fourth quarter coming in at one point eight 26 00:01:25,240 --> 00:01:29,000 Speaker 3: seven billion dollars versus one point four to six billion dollars. 27 00:01:29,040 --> 00:01:31,759 Speaker 3: So when it comes to the look back fourth quarter 28 00:01:31,800 --> 00:01:35,440 Speaker 3: EPs also coming in above expectations, it looks like we 29 00:01:35,520 --> 00:01:37,360 Speaker 3: beat on a lot of metrics. But then again you 30 00:01:37,440 --> 00:01:41,360 Speaker 3: go to the twenty twenty six numbers, AD revenue seen 31 00:01:41,520 --> 00:01:44,920 Speaker 3: about doubling versus twenty twenty five, and their second half 32 00:01:44,959 --> 00:01:48,280 Speaker 3: twenty twenty six operating income growth to exceed the first half. 33 00:01:48,280 --> 00:01:51,440 Speaker 3: But so you can see that investors finding something to 34 00:01:51,560 --> 00:01:54,480 Speaker 3: not really like in this report. Netflix shares currently down 35 00:01:54,520 --> 00:01:55,880 Speaker 3: about one percent after hours. 36 00:01:56,000 --> 00:01:59,520 Speaker 4: Yeah, perhaps it's a cautious forecast cited higher program spending 37 00:01:59,520 --> 00:02:02,040 Speaker 4: the cost of closing its deal with Warner Brothers Discovery, 38 00:02:02,080 --> 00:02:04,320 Speaker 4: so certainly a lot hinges on that if that deal 39 00:02:04,400 --> 00:02:06,600 Speaker 4: goes through. The company does plan to increase spending on 40 00:02:06,640 --> 00:02:10,200 Speaker 4: films and TV shows by ten percent this year. In forecast, 41 00:02:10,280 --> 00:02:12,720 Speaker 4: earning is if seventy six cents a share Wall Street 42 00:02:12,720 --> 00:02:15,239 Speaker 4: wanted to see eighty two cents a share. We'll see 43 00:02:15,240 --> 00:02:17,320 Speaker 4: if that Warner Brothers Discovery. I mean, I'm sure that's 44 00:02:17,360 --> 00:02:20,000 Speaker 4: going to be the question that analysts are looking for, 45 00:02:20,520 --> 00:02:23,840 Speaker 4: especially now as the company has changed what its offer 46 00:02:24,080 --> 00:02:25,920 Speaker 4: looks like going all cash at this point. 47 00:02:25,960 --> 00:02:28,320 Speaker 5: All right, so Netflix still down about two percent here 48 00:02:28,360 --> 00:02:30,760 Speaker 5: in the aftermarket. We're certain that that will come up 49 00:02:30,840 --> 00:02:32,840 Speaker 5: on the call with analysts. In the meantime, let's go 50 00:02:32,840 --> 00:02:35,960 Speaker 5: back to United Airliines because certainly a great read on 51 00:02:36,000 --> 00:02:39,640 Speaker 5: the consumer. We did see United actually beating Wall Street 52 00:02:39,720 --> 00:02:42,440 Speaker 5: estimates for the fourth quarter. It anticipates a strong twenty 53 00:02:42,560 --> 00:02:45,880 Speaker 5: twenty six driven by strong demand from high spending domestic 54 00:02:45,919 --> 00:02:49,760 Speaker 5: passengers and those international travelers. So they're looking at full 55 00:02:49,800 --> 00:02:52,400 Speaker 5: year earnings per share for twenty twenty six to be 56 00:02:52,440 --> 00:02:55,440 Speaker 5: in a range of twelve to fourteen dollars a share 57 00:02:55,440 --> 00:02:59,400 Speaker 5: compared to the thirteen dollars six cents that analysts are predicting. 58 00:02:59,480 --> 00:03:02,200 Speaker 5: Keep in mind, and their results driven by demand again 59 00:03:02,240 --> 00:03:06,520 Speaker 5: for those premium seating and overset overseas travel. Premium revenue 60 00:03:06,680 --> 00:03:09,160 Speaker 5: up nine percent, loyalty revenue up ten percent in the 61 00:03:09,160 --> 00:03:12,280 Speaker 5: fourth quarter, and that's stock popping up now up about 62 00:03:12,400 --> 00:03:14,600 Speaker 5: two is up about two and a quarter percent, now 63 00:03:14,680 --> 00:03:16,560 Speaker 5: up about one and a half percent. Here, guys in 64 00:03:16,600 --> 00:03:17,720 Speaker 5: the aftermarket. 65 00:03:17,440 --> 00:03:19,080 Speaker 1: I do want to go back to Netflix here. We 66 00:03:19,120 --> 00:03:21,040 Speaker 1: need to dive a little bit deeper into these numbers 67 00:03:21,040 --> 00:03:23,120 Speaker 1: because this isn't just a revenue and growth story. It's 68 00:03:23,120 --> 00:03:25,400 Speaker 1: a cost story as well, with the company saying that 69 00:03:25,440 --> 00:03:28,440 Speaker 1: it will boost by about ten percent it's spending on programs, 70 00:03:28,639 --> 00:03:31,360 Speaker 1: but it released a supplementary statement that's on its website 71 00:03:31,440 --> 00:03:33,919 Speaker 1: talking about what's actually driving that, and a big driver 72 00:03:34,040 --> 00:03:37,360 Speaker 1: of this, no surprise, is actually non English language titles, 73 00:03:37,360 --> 00:03:39,920 Speaker 1: saying they accounted for over a third of the viewing 74 00:03:39,960 --> 00:03:42,480 Speaker 1: that we saw in the most recent quarter. They specifically 75 00:03:42,480 --> 00:03:46,080 Speaker 1: side Korean, Spanish, and Japanese shows. They also talk about 76 00:03:46,080 --> 00:03:49,160 Speaker 1: this big push into other markets in Europe, including Denmark 77 00:03:49,760 --> 00:03:53,480 Speaker 1: and Norway, of speaking of which, but also the idea 78 00:03:53,520 --> 00:03:55,800 Speaker 1: of an expansion of some of their comedies, an expansion 79 00:03:55,840 --> 00:03:58,120 Speaker 1: of some of their live events, all of which we 80 00:03:58,160 --> 00:04:00,400 Speaker 1: should point out will cost them a lot more money. 81 00:04:00,400 --> 00:04:02,200 Speaker 1: And the question is our investor is going to be 82 00:04:02,200 --> 00:04:05,960 Speaker 1: comfortable with that spend, particularly potentially on top of another 83 00:04:06,000 --> 00:04:08,120 Speaker 1: eighty two billion or so that it might have to 84 00:04:08,120 --> 00:04:11,000 Speaker 1: pay up if it does win the rights for Warner Brothers. 85 00:04:11,320 --> 00:04:13,120 Speaker 3: Well, go ahead, Katie, I was just going to say, 86 00:04:13,120 --> 00:04:15,880 Speaker 3: it's interesting. You can also see in the commentary Netflix 87 00:04:15,920 --> 00:04:19,279 Speaker 3: plans to pause it share buybacks to cumulate the cash 88 00:04:19,400 --> 00:04:22,719 Speaker 3: it needs to help fund that pending Warner Brothers acquisition. 89 00:04:22,800 --> 00:04:26,159 Speaker 3: They amended that bid to be all cash as a result. 90 00:04:26,240 --> 00:04:29,960 Speaker 3: Pausing buybacks typically not exactly popular among. 91 00:04:29,800 --> 00:04:32,279 Speaker 1: Sure, and we should point out that this all cash bid, 92 00:04:32,320 --> 00:04:34,680 Speaker 1: which we keep talking about, a lot of that, more 93 00:04:34,720 --> 00:04:36,800 Speaker 1: than half of that is going to be actual debt, 94 00:04:36,880 --> 00:04:39,120 Speaker 1: So you're not only talking about a depletion of cash 95 00:04:39,200 --> 00:04:41,760 Speaker 1: on the balance sheet, you're adding debt to the balance sheet. 96 00:04:41,839 --> 00:04:44,200 Speaker 1: And then of course there's this general idea here as 97 00:04:44,240 --> 00:04:46,360 Speaker 1: well of all the other spending that they have to do. 98 00:04:46,600 --> 00:04:49,839 Speaker 4: Yeah, continue to look through the supplemental materials that Netflix 99 00:04:49,920 --> 00:04:52,360 Speaker 4: released in these earnings. Shares down after hours by about 100 00:04:52,360 --> 00:04:56,719 Speaker 4: three point three percent. The company said originals that Netflix 101 00:04:56,720 --> 00:04:59,960 Speaker 4: originals that thrilled audiences everywhere, of course K Pop, demon Hunters, 102 00:05:00,279 --> 00:05:04,239 Speaker 4: Stranger Things Wednesday, but then also an entire section about 103 00:05:04,240 --> 00:05:07,839 Speaker 4: non English late language titles that remained widely watched. The 104 00:05:07,880 --> 00:05:11,520 Speaker 4: Great Flood in South Korea, Love Untangled, bon Appetite Your Majesty. 105 00:05:11,560 --> 00:05:14,760 Speaker 4: In Japan, people like The Last Samurai Standing season one. 106 00:05:14,960 --> 00:05:18,040 Speaker 4: There are numbers in here too that title twenty one million. 107 00:05:18,240 --> 00:05:22,479 Speaker 4: For example, Spain had several popular shows Brazil Netflix making 108 00:05:22,520 --> 00:05:25,039 Speaker 4: the point and saying this, Hey, we've got something for 109 00:05:25,080 --> 00:05:26,880 Speaker 4: everyone out there, no matter where you live, no matter 110 00:05:26,920 --> 00:05:27,280 Speaker 4: what you like. 111 00:05:27,440 --> 00:05:28,880 Speaker 5: I want to go back to what you know, Romain 112 00:05:29,000 --> 00:05:31,000 Speaker 5: was talking about, you know, the spend, and certainly we 113 00:05:31,000 --> 00:05:33,400 Speaker 5: talk about these guys all the time, all of the streamers, 114 00:05:33,440 --> 00:05:36,239 Speaker 5: in terms of the spend in order to get content, 115 00:05:36,320 --> 00:05:38,800 Speaker 5: so people are signing up and staying on their platforms. 116 00:05:38,800 --> 00:05:41,760 Speaker 5: Having said that, the company again going back to the 117 00:05:41,839 --> 00:05:45,040 Speaker 5: year forecast, seeing operating margin thirty one point five percent. 118 00:05:45,080 --> 00:05:47,720 Speaker 5: The estimate was above that at thirty two point four percent. 119 00:05:48,040 --> 00:05:51,040 Speaker 5: Sees free cash flow about eleven billion. The estimate was 120 00:05:51,080 --> 00:05:53,520 Speaker 5: almost twelve billion. But I want to go back to 121 00:05:53,560 --> 00:05:56,760 Speaker 5: the commentary the company saying it sees quote plenty of 122 00:05:56,839 --> 00:06:00,960 Speaker 5: room to increase margins. Company intends to grow operating margin 123 00:06:01,000 --> 00:06:03,039 Speaker 5: each year. So right, we talk about the spend, but 124 00:06:03,080 --> 00:06:05,600 Speaker 5: we also talk about you know what that does basically 125 00:06:05,600 --> 00:06:07,920 Speaker 5: do the profitability remain of that company, And we. 126 00:06:07,880 --> 00:06:09,960 Speaker 1: Talk about the margins for the most recent quarter coming 127 00:06:10,000 --> 00:06:14,120 Speaker 1: in at about twenty four and a half percent. That's 128 00:06:14,160 --> 00:06:16,400 Speaker 1: the operating margin we should point out, and that is 129 00:06:16,480 --> 00:06:19,240 Speaker 1: up from about twenty two percent year over year. 130 00:06:21,000 --> 00:06:25,000 Speaker 2: The Stock Movers Report from Bloomberg Radio. Check back with 131 00:06:25,080 --> 00:06:27,680 Speaker 2: us throughout the day for the latest roundup of companies 132 00:06:27,760 --> 00:06:30,839 Speaker 2: making news on Wall Street and for the latest market 133 00:06:30,880 --> 00:06:35,360 Speaker 2: moving headlines. Listen to Bloomberg Radio Live, catch us on YouTube, 134 00:06:35,440 --> 00:06:38,919 Speaker 2: Bloomberg dot com, and on Applecarplay and Android Auto with 135 00:06:39,000 --> 00:06:40,479 Speaker 2: the Bloomberg Business app.