WEBVTT - IBM, Airlines Earnings Breakdown; Baker Hughes Reports; Award Shows in Focus 0:00:02.080 --> 0:00:05.880 This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 0:00:05.960 --> 0:00:09.200 The real app performance has been the US corporate high yield. 0:00:09.360 --> 0:00:11.680 Are the companies lean enough? Have they trimmed all the fats? 0:00:11.800 --> 0:00:15.360 The semiconductor business is a really cyclical business. 0:00:15.080 --> 0:00:18.680 Breaking market headlines and corporate news from across the globe. 0:00:18.720 --> 0:00:21.360 Do investors like the M and A that we've seen? 0:00:21.560 --> 0:00:24.640 These are two big time blue chip companies. 0:00:24.800 --> 0:00:28.400 The window between the peak and cut changing super fast. 0:00:28.560 --> 0:00:32.479 Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 0:00:31.960 --> 0:00:33.200 On Bloomberg Radio. 0:00:34.080 --> 0:00:36.800 Today's Bloomberg Intelligence Show, we dig inside the big business 0:00:36.800 --> 0:00:38.839 stories impacting Wall Street and the global markets. 0:00:39.080 --> 0:00:41.159 Each and every week we provide in depth research and 0:00:41.240 --> 0:00:43.040 data on some of the two thousand companies and one 0:00:43.120 --> 0:00:45.800 hundred and thirty industries are analysts cover worldwide. 0:00:45.840 --> 0:00:48.280 Today we take a look at momentum for cruise lines 0:00:48.280 --> 0:00:49.400 in twenty twenty four. 0:00:49.240 --> 0:00:52.480 Plus the future of award shows may be at risk. 0:00:52.680 --> 0:00:54.880 But first, it was a real week of earnings with 0:00:54.960 --> 0:00:57.960 names like Netflix, Tesla, and IBM reporting. For more on 0:00:58.000 --> 0:01:00.920 the numbers from IBM, we spoke with Bloomberg Intelligence Senior 0:01:00.960 --> 0:01:02.840 technology analyst an Arab Rana. 0:01:02.920 --> 0:01:05.000 One of the biggest things we talked about was the 0:01:05.000 --> 0:01:07.840 free cash flow number came out at twelve billion. I 0:01:07.840 --> 0:01:09.880 think we were you know, we were slightly above the 0:01:10.160 --> 0:01:12.120 street and saying that, you know, I'll be happy if 0:01:12.120 --> 0:01:14.959 they do eleven billion. So I think that really speaks 0:01:15.040 --> 0:01:19.039 both to the organic growth rate of the company, operational efficiencies, 0:01:19.200 --> 0:01:23.039 you know, improving margins, taking care of accounts, receivers, all 0:01:23.080 --> 0:01:25.800 sorts of things. So I think it's really good print 0:01:25.840 --> 0:01:29.320 for IBM in terms of free cash flow, but also 0:01:29.400 --> 0:01:33.360 the you know, the guidance on the you know, organic 0:01:33.400 --> 0:01:35.920 growth rate because we were going in so in fourth 0:01:36.000 --> 0:01:38.679 quarter they did three percent growth rate in constant currency. 0:01:38.920 --> 0:01:41.360 We thought, at least for the first you know, few quarters, 0:01:41.400 --> 0:01:43.520 they're going to talk about three to four percent and 0:01:43.560 --> 0:01:45.840 then accel rate, but they strayed away went with a 0:01:45.880 --> 0:01:49.280 mid single digit number. So I think overall, good for IBM, 0:01:49.400 --> 0:01:51.680 good for the rest of the tech space, and I 0:01:51.720 --> 0:01:53.120 feel pretty happy about it. 0:01:54.120 --> 0:01:56.040 What I know, this is kind of a probably dumb question, 0:01:56.120 --> 0:01:58.320 but like what in IBM's business model to let it 0:01:58.440 --> 0:02:00.960 like me, are they doing well, like break down the 0:02:00.960 --> 0:02:02.960 different categories in a way that makes sense to alex 0:02:03.800 --> 0:02:04.639 So they I mean. 0:02:04.520 --> 0:02:07.360 They still are a very big piece of the entire 0:02:07.440 --> 0:02:10.080 tech ecosystem. They have very strong relationships, they have a 0:02:10.080 --> 0:02:13.960 good consulting business, they have red hat, they tell mainframes. Now, 0:02:14.000 --> 0:02:16.160 remember one thing, I mean, I know people got very 0:02:16.520 --> 0:02:20.000 getting very excited. But if software spending is climbing between 0:02:20.040 --> 0:02:23.119 ten to twelve percent, IBM still growing you know, six 0:02:23.200 --> 0:02:26.280 to seven, So they are still underperforming the entire broader 0:02:26.360 --> 0:02:28.880 software space. But that's okay because you know, when you 0:02:28.960 --> 0:02:31.600 go from three to six, that's a big change. Also 0:02:31.720 --> 0:02:34.400 in terms of the growth rates. This is just a 0:02:34.400 --> 0:02:37.240 matter of overall tech spending improving after two years of 0:02:37.320 --> 0:02:39.800 under investment. This is something that we have been saying 0:02:39.840 --> 0:02:42.720 for so long. Tick as a portion of total GDP 0:02:42.880 --> 0:02:45.680 is a very small number. Most of the companies around 0:02:45.720 --> 0:02:48.519 the world, barring the consumer technology companies that we see, 0:02:48.720 --> 0:02:53.480 have underinvested in technology. So when you have rail companies 0:02:53.600 --> 0:02:56.880 or airlines or auto insurance companies, they really need to 0:02:56.880 --> 0:02:59.520 be more digital. And one way to get digital is 0:02:59.560 --> 0:03:02.200 to move a lot of their infrastructure to the cloud. 0:03:02.360 --> 0:03:04.520 So all of those things play in well. We have 0:03:04.639 --> 0:03:07.160 not seen good spending in two years. I'm pretty happy 0:03:07.160 --> 0:03:10.040 that twenty twenty four May we may see a rebound. 0:03:10.880 --> 0:03:14.919 How does IBM and fit into the AI discussion, because 0:03:14.919 --> 0:03:17.800 I know the CEO called out the client demand for 0:03:17.840 --> 0:03:20.959 AI is accelerating. How do they play in that space. 0:03:21.800 --> 0:03:23.680 The majority of the stuff that they're going to do 0:03:23.800 --> 0:03:25.560 is on the consulting side. So if you are a 0:03:25.639 --> 0:03:27.600 large company, you need to figure out what to do. 0:03:27.919 --> 0:03:29.760 They have a lot of consultants that can help you 0:03:29.840 --> 0:03:32.919 clean up the data. You know, use whichever model we 0:03:33.000 --> 0:03:34.640 want to use. You want to use something from open 0:03:34.639 --> 0:03:37.560 ai Andthropic, all these companies that are out there. They'll 0:03:37.560 --> 0:03:40.160 help you with that, help you train the models, and 0:03:40.240 --> 0:03:42.200 then at the end of the day make it for 0:03:42.280 --> 0:03:45.120 your business case. It's not as easy as just you know, 0:03:45.240 --> 0:03:49.240 using chat, GPD and answering questions for this. For an 0:03:49.360 --> 0:03:51.720 enterprise use, you need to do a lot of data 0:03:51.760 --> 0:03:55.160 clean up, data aggregation because that's what's needed to clean 0:03:55.200 --> 0:03:57.360 up your you know, the models itself. 0:03:57.840 --> 0:03:59.960 How fast and long can that kind of growth rate 0:04:00.120 --> 0:04:01.560 six seven percent go? 0:04:02.720 --> 0:04:04.480 I think if this year they are able to go 0:04:04.560 --> 0:04:07.080 to six seven percent, you know, I could expect then 0:04:07.280 --> 0:04:09.240 you know, another one hundred to two hundred basis points 0:04:09.240 --> 0:04:12.240 improvement next year. And that's actually not a bad deal 0:04:12.240 --> 0:04:14.640 because you remember the old IBM just about four or 0:04:14.640 --> 0:04:17.120 five years ago, they were not growing at all. So 0:04:17.279 --> 0:04:20.000 in order for them to actually come up with a 0:04:20.040 --> 0:04:22.919 high single legit number next year would be would be 0:04:23.000 --> 0:04:24.719 really welcome by the market. 0:04:24.960 --> 0:04:28.120 So what's the read through here, Anna rog for you know, 0:04:28.240 --> 0:04:30.840 greater tech here from IBM? Is can I say I'm 0:04:30.880 --> 0:04:32.440 just going to go out and start buying more of 0:04:32.440 --> 0:04:34.440 these stats I'm looking at like Nvidia for example, up 0:04:34.440 --> 0:04:36.159 twenty five percent year to date and of course up 0:04:36.200 --> 0:04:38.440 two hundred and twenty percent over the trailing twelve months. 0:04:39.000 --> 0:04:40.599 I guess this is a pretty good readthrough? Is that? 0:04:40.640 --> 0:04:41.159 Can I do that? 0:04:41.880 --> 0:04:44.120 Yeah? So, for you know, we had run a CIO 0:04:44.200 --> 0:04:46.480 survey back in December, and you know, we were we 0:04:47.000 --> 0:04:49.359 kind of got the indication that it's going to be 0:04:49.400 --> 0:04:52.360 a year of spending more aggressively compared to the last 0:04:52.360 --> 0:04:54.880 two in twenty twenty four. But you know, the way 0:04:54.920 --> 0:04:56.920 we had built that and you know, we got the 0:04:57.000 --> 0:04:59.880 chip strength going on right now that probably carries on 0:05:00.200 --> 0:05:02.719 the summer, and then after that we see you know, 0:05:02.760 --> 0:05:05.800 strength in the software and the consulting area, which are 0:05:05.839 --> 0:05:08.320 more of the downstream play. But it's possible that we 0:05:08.400 --> 0:05:10.640 may see that bounce back, you know, as early as 0:05:10.680 --> 0:05:14.080 second quarter road, you know, going into it because you 0:05:14.120 --> 0:05:16.400 know things, I think the leading indicators are good at 0:05:16.400 --> 0:05:19.880 this point. So so I'm pretty optimistic that you know, 0:05:19.920 --> 0:05:22.680 when we were thinking about a second half recovery for 0:05:23.000 --> 0:05:25.560 tech spending, you know it may actually happen in second 0:05:25.640 --> 0:05:28.360 quarter road, maybe even as late late as first. 0:05:28.160 --> 0:05:31.359 Quarter our thanks to Bloomberg Intelligence senior technology analyst and 0:05:31.440 --> 0:05:32.560 er Agrana. 0:05:32.160 --> 0:05:35.040 Let's turn out to airlines or names like American, Southwest 0:05:35.040 --> 0:05:38.400 and Alaska air surprised analysts by beating expectations for more. 0:05:38.400 --> 0:05:41.000 We spoke with Bloomberg Intelligence senior defense and airlines analysts 0:05:41.040 --> 0:05:41.760 George Ferguson. 0:05:42.120 --> 0:05:46.040 You know we got American, Alaska and Southwest yields were 0:05:46.080 --> 0:05:49.280 down in the domestic business on all three. Alaska yields 0:05:49.320 --> 0:05:53.599 were down six or seven percent, American yields down similar number. 0:05:54.520 --> 0:05:57.839 Southwest really just let a load factor fade away into 0:05:57.839 --> 0:06:00.760 the seventies and took a yield down to two percent. 0:06:01.320 --> 0:06:04.360 So to me, you know they're guiding to better results 0:06:04.440 --> 0:06:07.039 is as you know, next year, as we get into 0:06:07.040 --> 0:06:09.120 one que doesn't look great, but as we get past 0:06:09.200 --> 0:06:11.560 one queue, the overall guidance for the year looks a 0:06:11.600 --> 0:06:14.040 bit better. So airlines, I think, I think things are 0:06:14.200 --> 0:06:16.400 going to affirm as they get into next year, but 0:06:16.440 --> 0:06:18.800 I don't think it looks like a healthy market at all. 0:06:18.880 --> 0:06:20.600 From the numbers I'm seeing huge. 0:06:20.360 --> 0:06:22.680 Forour So give us a sense of where we are 0:06:22.760 --> 0:06:25.120 and just in terms of air travel, have we established 0:06:25.120 --> 0:06:29.760 a new post pandemic normality in terms of where leisure 0:06:29.760 --> 0:06:31.560 traffic is and where business traffic is? Do we kind 0:06:31.600 --> 0:06:34.160 of know how that market looks? 0:06:34.279 --> 0:06:37.360 So comments from United where that business traffic wasn't back 0:06:37.400 --> 0:06:40.640 to the twenty nineteen levels, They said they saw hopeful 0:06:40.640 --> 0:06:45.160 signs in one queue, So business hasn't come back fully. 0:06:45.560 --> 0:06:47.839 Is this the new normal? I would guess it is 0:06:47.920 --> 0:06:51.000 right because we're, you know, we're I don't know when 0:06:51.000 --> 0:06:53.920 the pandemic actually sort of ended, but we're probably a 0:06:54.040 --> 0:06:56.760 year and a half passed, and I would expect most 0:06:56.920 --> 0:07:00.520 of you know, normality to have returned to our lives. 0:07:00.839 --> 0:07:03.240 So it seems like we still have some level of 0:07:03.279 --> 0:07:07.760 deficit on pre pandemic business travel, but leisure travel has 0:07:07.760 --> 0:07:11.880 definitely exceeded that. I think the airlines are just sold capacity. 0:07:11.920 --> 0:07:14.280 They would have sold the businesses into the leisure side, 0:07:14.360 --> 0:07:15.960 and I think that's making the fair softer. 0:07:16.800 --> 0:07:19.600 So you say that the quarter did that great, first 0:07:19.640 --> 0:07:22.000 quarter looks soft. I get that, But then you said 0:07:22.000 --> 0:07:24.679 that after Q one things start to look a little better. 0:07:25.320 --> 0:07:27.920 What's going to look a little better. Is it business travel? 0:07:28.080 --> 0:07:30.400 Is it we just keep doing vacation stuff, we do 0:07:30.440 --> 0:07:33.320 it domestically rather internationally, or is it still across the board. 0:07:34.560 --> 0:07:37.720 I said that after Q one, the airlines, I think 0:07:37.760 --> 0:07:40.560 it's going to look better. I don't see it right. 0:07:40.560 --> 0:07:43.680 I think the big leisure bounce back was last year 0:07:44.360 --> 0:07:47.240 twenty twenty three, and I think that you could see 0:07:47.240 --> 0:07:50.240 software domestic yields all through the year. But you know, 0:07:50.680 --> 0:07:53.960 we had Scott Kirby at United Airlines earning earlier in 0:07:54.000 --> 0:07:56.960 the week and he's telling us how you know, he's 0:07:57.000 --> 0:08:00.000 getting traction from premium products and that's going to help 0:08:00.040 --> 0:08:03.680 and drive better profitability through next year. I mean, you know, 0:08:03.760 --> 0:08:08.640 companies like Alaska they have premium product, but I think 0:08:08.640 --> 0:08:11.680 they're a roughly the same amount, unlike United that's adding it. 0:08:12.040 --> 0:08:15.880 Southwest has no premium products, and there's a lot of 0:08:15.880 --> 0:08:18.240 other airlines that have no premium product, and I think 0:08:18.240 --> 0:08:21.120 they're going to be fighting for the base leisure traveler. 0:08:21.520 --> 0:08:23.960 I think it's going to be difficult. But George against 0:08:23.960 --> 0:08:25.880 the airline that they see it coming. 0:08:25.960 --> 0:08:29.200 Sorry, George, you're at in Los Angeles the Aerospace Supply 0:08:29.480 --> 0:08:33.840 Chain Conference. How is the supply chain for the airline industry? 0:08:33.920 --> 0:08:35.360 Can they get the planes they need? 0:08:36.480 --> 0:08:40.520 That's rough. So we saw the news. I'm boeing about 0:08:40.600 --> 0:08:44.760 not allowing them to increase the discussion that the Aerospace 0:08:44.920 --> 0:08:48.640 Supplier Conference is all about labor, labor and labor. There's 0:08:48.679 --> 0:08:50.840 been a lot of turnover. Yeah, there's a lot of 0:08:50.840 --> 0:08:54.559 turnover in the industry. The backfill needs to be trained. 0:08:54.920 --> 0:08:57.800 They're not fully trained, they're not efficient, and there's still 0:08:57.800 --> 0:09:02.280 people having a hard time finding and so the US 0:09:02.280 --> 0:09:05.839 aerospace industry is in pretty tough, tough straits. I think 0:09:06.679 --> 0:09:08.320 I think young kids, you know, a lot of discussion 0:09:08.360 --> 0:09:11.600 here is that young kids, you know, young professionals don't 0:09:11.600 --> 0:09:14.600 want to come to this industry. They'd rather work for Amazon, 0:09:14.640 --> 0:09:17.280 they'd rather work for Google than go to work in 0:09:17.320 --> 0:09:20.120 the aerospace industry. And so having a real hard time 0:09:20.760 --> 0:09:23.800 backfilling and training and keeping people in the industry. 0:09:24.360 --> 0:09:28.200 So to that point, what happens if Boeing isn't allowed 0:09:28.240 --> 0:09:31.560 to produce the plane that the FAA said, I can't 0:09:31.559 --> 0:09:33.760 even treat keep track, to be honest with you. But 0:09:34.000 --> 0:09:36.280 if they can't produce it, what happens to those that 0:09:36.320 --> 0:09:37.120 have ordered it? 0:09:38.240 --> 0:09:40.080 I mean, right now, what the FA said is that 0:09:40.120 --> 0:09:44.240 Bowing can't increase production right, increase of the mits they're 0:09:44.280 --> 0:09:47.000 already building. They were building about thirty one a month 0:09:47.080 --> 0:09:49.559 last year. They were supposed to rate break to about 0:09:49.640 --> 0:09:51.360 thirty eight a month at the end of the year. 0:09:51.840 --> 0:09:54.360 The question is have they so will the FA let 0:09:54.360 --> 0:09:57.080 them continue at thirty eight? And then as I understand that, 0:09:57.120 --> 0:10:01.440 the FA is going to inspect their manufacturing processes because 0:10:01.440 --> 0:10:05.200 they're quite concerned obviously after the Alaska incident, to make 0:10:05.240 --> 0:10:09.320 sure it's stable, make sure that Bone can build aircraft safely. 0:10:10.040 --> 0:10:11.599 So my guess is you've got something that's going to 0:10:11.720 --> 0:10:14.800 last part of this quarter. I mean, there's only so 0:10:14.880 --> 0:10:18.000 many sites that can really inspect, right. You've got a 0:10:18.000 --> 0:10:20.600 lot of inspection down in Wichita, a lot of inspection 0:10:20.679 --> 0:10:24.080 up in Renton, Washington. Those are the two main factories. 0:10:24.600 --> 0:10:26.840 If they could go deeper into so many other suppliers, 0:10:26.840 --> 0:10:29.000 which they probably will, but there's not a lot of 0:10:29.000 --> 0:10:33.000 sites to inspect. My guess is that deliveries for customers 0:10:33.000 --> 0:10:36.280 that expect the airplanes in twenty twenty four could get 0:10:36.320 --> 0:10:39.280 pushed out, probably will get pushed out, maybe into twenty 0:10:39.320 --> 0:10:45.280 twenty five. Could be customers core customers like United Southwest, Ryanair, 0:10:46.080 --> 0:10:49.440 Alaska Airlines. They've taken the majority of the orders recently, 0:10:49.960 --> 0:10:52.560 so you'll hear some howling from them. I think you 0:10:52.600 --> 0:10:56.160 already hurd some howling from United CEO Kirby right on 0:10:57.160 --> 0:11:00.360 the Max ten. So I think that's what's you go 0:11:00.400 --> 0:11:03.000 to see deliveries getting pushed out and pushed into next year. 0:11:03.559 --> 0:11:06.760 Hopefully boll And can recover that and bounce to higher rates. 0:11:06.880 --> 0:11:08.280 That's all about their recovery. 0:11:08.840 --> 0:11:10.520 I mean, I just kind of feel like they're kind 0:11:10.520 --> 0:11:12.520 of too big to fail, or too big for anybody 0:11:12.559 --> 0:11:14.960 to really do anything, because it's a daopoly them an airbus. 0:11:14.960 --> 0:11:18.360 But what is it like a downside scenario here for Fox? 0:11:18.360 --> 0:11:22.320 It would it be government regulation, would it be what's 0:11:22.400 --> 0:11:23.880 kind of spooking the market? 0:11:24.960 --> 0:11:27.000 Well, I think you already have part of that downside, 0:11:27.040 --> 0:11:31.880 right and that's more intense oversighting regulation. Frankly, that probably 0:11:31.880 --> 0:11:34.680 should have occurred anyways. You know, the FAA has also 0:11:34.720 --> 0:11:37.560 going through some difficult time during the pandemic, lost a 0:11:37.559 --> 0:11:41.880 bunch of personnel. They need their skill sets developed sharpened, 0:11:43.080 --> 0:11:45.280 so this process could be slow. 0:11:45.760 --> 0:11:46.240 But I don't. 0:11:46.280 --> 0:11:49.439 I mean, I do think they're you know, I think 0:11:49.480 --> 0:11:51.280 they are close to too big to fail, given that 0:11:51.320 --> 0:11:55.240 there's such an important government contractor you know, one of 0:11:55.240 --> 0:11:59.320 the few big primes that can make airplanes in serial production. 0:12:01.360 --> 0:12:03.080 Question is, you know, what could the government do if 0:12:03.080 --> 0:12:05.720 they had real big problems on the commercial side. I 0:12:05.720 --> 0:12:07.840 don't think we're there yet, though, I think it still 0:12:07.920 --> 0:12:10.080 isn't duopoly. If you wanted to get in the back 0:12:10.080 --> 0:12:12.480 of the line for an Airbus eight three twenty, the 0:12:12.520 --> 0:12:15.920 competitor right now, you know, if we just add up 0:12:15.960 --> 0:12:19.560 all the orders they have in their production increases, you're 0:12:19.600 --> 0:12:22.640 out eight years. I think some of those orders are 0:12:22.640 --> 0:12:24.959 definitely long data orders, so maybe if you got in 0:12:25.040 --> 0:12:26.720 the back of that mind, you'd be out five or 0:12:26.760 --> 0:12:29.959 six years before you started getting airplanes. That alone is 0:12:30.000 --> 0:12:33.880 going to keep Boeing, keep folks going towards Boeing for airplanes. 0:12:34.480 --> 0:12:37.000 But that's only if things don't degrade from air things 0:12:37.040 --> 0:12:39.440 degrave from here, you got a much bigger problem. 0:12:39.480 --> 0:12:41.960 Thanks to the Bloomberg Intelligence senior Defense and Airlines analyst 0:12:42.040 --> 0:12:43.160 George Ferguson. 0:12:42.800 --> 0:12:45.319 All right, coming up on the program, Baker Hughes breaks 0:12:45.360 --> 0:12:48.120 free from rivals with a lower shale view. This year 0:12:48.240 --> 0:12:49.360 we speak to the CEO. 0:12:49.760 --> 0:12:52.880 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing depth 0:12:52.920 --> 0:12:55.360 research and data on two thousand companies and one hundred 0:12:55.360 --> 0:12:58.079 and thirty industries. You can access Bloomberg Intelligence via b 0:12:58.240 --> 0:12:59.240 I go on the terminal. 0:12:59.320 --> 0:13:02.360 I'm Paul Sweeney and am Alex Steel, and this is Boomberg. 0:13:06.880 --> 0:13:11.040 You're listening to the Bloomberg Intelligence podcast. Catch us Saturdays 0:13:11.040 --> 0:13:14.560 at noon Eastern on Bloomberg dot Com, the iHeartRadio app 0:13:14.600 --> 0:13:17.520 and the Bloomberg Business App, or listening on demand wherever 0:13:17.559 --> 0:13:20.320 you get your podcasts. 0:13:20.720 --> 0:13:22.960 Conflict in the Middle East and uncertainty in the global 0:13:22.960 --> 0:13:25.959 economy have the energy sector facing a lot of unknowns. 0:13:26.120 --> 0:13:29.040 Baker Hughes, the world's number three oil field contracted by 0:13:29.040 --> 0:13:31.800 market value, is also filling the pressure. This week, the 0:13:31.840 --> 0:13:35.000 firm announced earnings that will blow expectations and analysts are 0:13:35.080 --> 0:13:36.200 raising concerns, all right. 0:13:36.240 --> 0:13:38.079 To take us through how Baker Hughes plans to manage 0:13:38.120 --> 0:13:41.360 all the risks facing oil, we spoke to Lorenzo Simonelli, Chairman, 0:13:41.480 --> 0:13:43.920 president and CEO at Baker Hughes. 0:13:44.240 --> 0:13:46.679 First of all, we're coming off some great results in 0:13:46.720 --> 0:13:49.280 twenty twenty three, and also we've laid out a clear 0:13:49.360 --> 0:13:52.760 strategy as Baker Hughes over the coming years. As you 0:13:52.800 --> 0:13:55.640 look at twenty twenty four, we've given a guidance that 0:13:55.800 --> 0:13:59.240 is the balanced approach with all of the geopolitical and 0:13:59.280 --> 0:14:03.040 also onsetty that's happening around the globe. So we stick 0:14:03.120 --> 0:14:06.000 to our guidance and we think that we're executing and 0:14:06.040 --> 0:14:08.760 as you look at the guidance, we've got considerable growth 0:14:08.840 --> 0:14:11.720 in twenty twenty four and great performance as well. 0:14:11.880 --> 0:14:15.360 So if you're more conservative than your peers, where is 0:14:15.400 --> 0:14:18.120 the question mark? Is it going to be the new 0:14:18.240 --> 0:14:21.280 energy orders? Is it going to be on shore demand 0:14:21.360 --> 0:14:23.280 or is it going to be offshore? Is it domestic 0:14:23.360 --> 0:14:26.520 or international that has you thinking questioning the most. 0:14:26.840 --> 0:14:28.960 You look at what's happening around the world, and you 0:14:29.000 --> 0:14:33.040 see the geopolitics, you see what's happening from the opequ cuts. 0:14:33.120 --> 0:14:36.680 You see what's happening from the consolidation in North America, 0:14:37.080 --> 0:14:41.120 and that leads some uncertainty relative to the activity levels 0:14:41.120 --> 0:14:47.560 within North America Land. We still see that North America 0:14:47.640 --> 0:14:50.880 should be flatish, but US Land will likely be negative 0:14:50.920 --> 0:14:53.600 for the year given some of the consolidation, and also 0:14:53.920 --> 0:14:56.960 some of the activity international again will be in the 0:14:57.080 --> 0:14:59.920 high single digits, So we still see that being robot 0:15:00.520 --> 0:15:03.200 and I think again, as we look at giving guidance, 0:15:03.400 --> 0:15:07.040 we're taking a balanced approach to what's taking place around 0:15:07.080 --> 0:15:10.720 the world at this moment, and also giving a predictability 0:15:10.800 --> 0:15:13.720 to our investors on what can be achieved and also 0:15:13.920 --> 0:15:15.400 confidence in what we can achieve. 0:15:15.480 --> 0:15:17.960 Lorenzo, I just looking at your business here and I 0:15:17.960 --> 0:15:19.840 see that about three quarters of your revenue has comes 0:15:19.840 --> 0:15:22.880 from outside of the United States. So obviously you are 0:15:22.920 --> 0:15:25.440 attuned as much as anyone to the geopolitical risks around 0:15:25.480 --> 0:15:28.280 the world. What are you telling your investors about what's 0:15:28.280 --> 0:15:31.360 happening in Eastern Europe, what's happening in the Middle East, 0:15:31.400 --> 0:15:32.600 and how that may impact your business. 0:15:32.680 --> 0:15:36.440 We're telling them that we've taken every caution and also 0:15:36.520 --> 0:15:40.360 we're managing the situation. We haven't seen any impact and 0:15:40.840 --> 0:15:44.680 we don't anticipate a big impact, but we do think 0:15:44.760 --> 0:15:48.200 some of the development plans may be delayed slightly over 0:15:48.200 --> 0:15:51.560 the long term. No change in what the NOCs and 0:15:51.640 --> 0:15:55.080 also large customers are laying out from a capital spend, 0:15:55.320 --> 0:15:58.080 but there may be some i would say delays. Again, 0:15:58.240 --> 0:16:01.920 as we look at the outlook internationally, we're still anticipating 0:16:02.320 --> 0:16:06.280 high single digit growth and we think that international is 0:16:06.280 --> 0:16:08.240 a key place for us to be and we look 0:16:08.280 --> 0:16:09.840 to perform there over the coming years. 0:16:09.960 --> 0:16:12.600 Lolrenzo, what's your take on the demand side. 0:16:12.360 --> 0:16:15.880 Well, Alex, it's always difficult to predict some of these elements, 0:16:15.960 --> 0:16:18.240 just like it is oil price and you know this 0:16:18.320 --> 0:16:22.800 space well, I think demand continues to be robust. A 0:16:22.840 --> 0:16:26.320 lot of it's going to depend on the economic situation 0:16:26.480 --> 0:16:30.000 as you look at some of the events unfolding also globally, 0:16:30.440 --> 0:16:34.720 and we anticipate that again demand will increase this year 0:16:35.200 --> 0:16:38.520 and continue to be strong, especially in the developing world. 0:16:38.600 --> 0:16:41.280 What are your customers telling you here? I know obviously 0:16:41.280 --> 0:16:44.240 close contact with them. What are they telling you about 0:16:44.320 --> 0:16:47.000 their spending plans over the next couple of years? 0:16:47.320 --> 0:16:52.160 Again, it varies. You've seen in North America obviously some consolidation, 0:16:52.360 --> 0:16:55.440 so people are going through that consolidation and they'll be 0:16:55.520 --> 0:16:58.720 looking to adjust some of their spending plans in the 0:16:58.760 --> 0:17:02.760 short term, but again continuing to be robust on the 0:17:02.800 --> 0:17:05.600 long term as you continue to see the demand be there. 0:17:05.960 --> 0:17:10.800 On the international side, these NOCs have multi year projects 0:17:10.800 --> 0:17:14.520 that they're executing. There'll be some variation in the timing 0:17:14.560 --> 0:17:17.800 of those, but again the long term continues to be solid, 0:17:18.200 --> 0:17:21.440 and as you look at our guidance, again we're anticipating 0:17:21.800 --> 0:17:25.520 that maybe there's some tempered view on some of the 0:17:25.640 --> 0:17:28.720 case of the developments, but the developments are going to happen. 0:17:29.080 --> 0:17:32.680 NC Paul just you know, national oil companies just pull 0:17:32.800 --> 0:17:37.320 up with the oil jargon there, Lorenzo, you mentioned the 0:17:37.400 --> 0:17:39.800 M and A situation, and I find that so interesting 0:17:39.840 --> 0:17:41.840 because that was one of my questions to all these 0:17:41.840 --> 0:17:44.720 CEOs when they announce these big mergers, is are you 0:17:44.760 --> 0:17:47.600 actually going to be slowing your oil production growth over time? 0:17:47.600 --> 0:17:50.000 And they're all like, no, no, no, no, no, it's 0:17:50.040 --> 0:17:51.800 going to be really good, it's going to keep growing. 0:17:52.440 --> 0:17:54.919 What do you think that timeline actually looks like? In 0:17:54.960 --> 0:17:57.040 the beginning, their synergies, they get more out of the ground, 0:17:57.040 --> 0:17:58.920 but then that tapers off. What do you notice? 0:17:59.080 --> 0:18:02.400 So as you look at the normal evolution of consolidation 0:18:02.560 --> 0:18:05.840 we've seen this cycle before. You are going to continue 0:18:05.880 --> 0:18:09.080 to see production increases, but you're also going to see 0:18:09.119 --> 0:18:12.360 synergies between the consolidation and as they go through their 0:18:12.400 --> 0:18:17.680 integration activities, I think you'll likely see some temperate measures 0:18:17.720 --> 0:18:20.920 relative to some of their procurement, but again production, they're 0:18:20.960 --> 0:18:24.440 going to seize the opportunity to continue to increase production 0:18:24.800 --> 0:18:26.000 as the demand is there. 0:18:26.160 --> 0:18:28.520 You know, I'm not an expert in this, unlike Alex, 0:18:28.840 --> 0:18:30.760 but a term you see here a lot, and I 0:18:30.760 --> 0:18:33.720 don't hear it that much anymore is peak oil? When 0:18:33.720 --> 0:18:35.399 are we going to be at peak oil? Are we 0:18:35.440 --> 0:18:38.479 at peak? I don't hear that discussion anymore. So when 0:18:38.520 --> 0:18:40.879 you're talking to investors, how do you talk to them 0:18:40.840 --> 0:18:44.399 about the long term kind of demand for oil? 0:18:44.720 --> 0:18:46.600 You've got to look at it from a standpoint of 0:18:46.760 --> 0:18:50.800 the energy transition is going to be multi decades and 0:18:50.920 --> 0:18:54.640 it's going to require an energy mix that is abundant 0:18:54.640 --> 0:18:59.920 of providing as clean as possible fuel sources to the public, 0:19:00.119 --> 0:19:02.160 and that means oil is going to have a role 0:19:02.240 --> 0:19:06.000 to play, and we see oil and gas in particular 0:19:06.359 --> 0:19:09.320 having a strong robust outlook as we go forward. And 0:19:09.760 --> 0:19:12.480 the question on PEA coil has been asked many times. 0:19:12.920 --> 0:19:15.639 There will be a time when PEA coil comes. I 0:19:15.680 --> 0:19:19.199 think it's not at this stage, and we continue to 0:19:19.200 --> 0:19:22.040 focus very much on gas and also LNG. 0:19:22.720 --> 0:19:27.840 Lorenzo somehow restricting LNG exports in the US is becoming 0:19:27.880 --> 0:19:31.560 something people are talking about. The permit process has gotten 0:19:31.640 --> 0:19:32.560 a lot slower. 0:19:32.640 --> 0:19:36.400 What is going on, alex It has gotten slower, and 0:19:36.480 --> 0:19:41.480 again we're monitoring the situation, and I'm disappointed because as 0:19:41.520 --> 0:19:45.399 you look at the benefits of USLNG not only for 0:19:45.480 --> 0:19:48.359 the US, but also for the world and also what's 0:19:48.400 --> 0:19:53.160 been achieved with the geopolitical uncertainty and also providing to Europe, 0:19:53.200 --> 0:19:55.840 there's been commitments that have been made and we should 0:19:55.920 --> 0:20:00.680 continue the USLNG exports and also the permitting of these projects. 0:20:01.160 --> 0:20:04.719 That being said, international projects are continuing to move forward, 0:20:05.160 --> 0:20:08.200 and we have an expectation that again in twenty twenty 0:20:08.200 --> 0:20:14.000