1 00:00:00,280 --> 00:00:11,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,400 --> 00:00:13,440 Speaker 1: with Alex Steel and Paul Sweeney. 3 00:00:13,600 --> 00:00:16,799 Speaker 2: The real our performance has been in US corporate high yield. 4 00:00:17,000 --> 00:00:18,120 Speaker 3: Are the companies lean enough? 5 00:00:18,160 --> 00:00:19,320 Speaker 4: Have they trimmed all the facts? 6 00:00:19,400 --> 00:00:22,640 Speaker 2: The semiconductor business is a really cyclical. 7 00:00:22,160 --> 00:00:26,360 Speaker 1: Business, breaking market headlines and corporate news from across the globe. 8 00:00:26,400 --> 00:00:28,880 Speaker 5: Do investors like the M and A that we've seen? 9 00:00:29,080 --> 00:00:32,040 Speaker 2: These are two big time blue chip companies. 10 00:00:32,280 --> 00:00:36,080 Speaker 5: Window between the peak and cunt changing super fast. 11 00:00:35,920 --> 00:00:40,960 Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 12 00:00:41,760 --> 00:00:44,200 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 13 00:00:44,240 --> 00:00:46,600 Speaker 2: business stories impacting Wall Street and the global markets. 14 00:00:46,680 --> 00:00:48,560 Speaker 5: Each and every week we provide in depth research and 15 00:00:48,680 --> 00:00:50,400 Speaker 5: data on some of the two thousand companies and one 16 00:00:50,440 --> 00:00:53,000 Speaker 5: hundred and thirty industries our analysts cover worldwide. 17 00:00:53,080 --> 00:00:55,560 Speaker 2: Today, we'll look at why shares of the Danis drugmaker 18 00:00:55,680 --> 00:00:58,120 Speaker 2: Novo Nordisk could drop the most since late December. 19 00:00:58,160 --> 00:01:00,840 Speaker 5: Plus we'll discuss why the department Storeles gave a week 20 00:01:00,880 --> 00:01:02,000 Speaker 5: sales outlook for the year. 21 00:01:02,240 --> 00:01:05,120 Speaker 2: But first we begin with the computer technology company Oracle. 22 00:01:05,280 --> 00:01:07,200 Speaker 5: This week, the company shares fell out here gave a 23 00:01:07,240 --> 00:01:09,720 Speaker 5: sales and profit forecast for the current quarter that fell short, 24 00:01:09,720 --> 00:01:11,560 Speaker 5: and analyst expectations for more. 25 00:01:11,680 --> 00:01:13,920 Speaker 2: Guest hosts Isabelle Lee and I were joined by Anna 26 00:01:14,000 --> 00:01:17,560 Speaker 2: Rock RNA Bloomberg Intelligence Technology Analysts. We first asked Anorrock 27 00:01:17,640 --> 00:01:20,440 Speaker 2: for his take on Oracle and why investors reacted negatively 28 00:01:20,440 --> 00:01:21,120 Speaker 2: to its earnings. 29 00:01:21,400 --> 00:01:23,800 Speaker 6: Yeah, the little bit likeness in for Q that you 30 00:01:23,880 --> 00:01:26,959 Speaker 6: alluded to is primarily due to supply challenges, which is, 31 00:01:27,319 --> 00:01:31,120 Speaker 6: you know, the data center expansion everybody's undertaking, so the 32 00:01:31,160 --> 00:01:34,360 Speaker 6: realization of revenues from that. I'm to be honest, a 33 00:01:34,360 --> 00:01:37,000 Speaker 6: bit surprised about the stock reaction because the company gave 34 00:01:37,319 --> 00:01:40,280 Speaker 6: two or three really interesting nuggets for us to chew on. 35 00:01:40,920 --> 00:01:44,280 Speaker 6: The first one was very large bookings in quarter or 36 00:01:44,880 --> 00:01:49,080 Speaker 6: so their remaining performance obligations of the contracts booked, you know, 37 00:01:49,120 --> 00:01:52,200 Speaker 6: spiked up sixty three one hundred and thirty billion, and 38 00:01:52,240 --> 00:01:55,240 Speaker 6: along with that for their FI twenty six which starts 39 00:01:55,280 --> 00:01:58,720 Speaker 6: in June, and FY twenty seven, they talked about sales 40 00:01:58,720 --> 00:02:02,440 Speaker 6: growth of fifteen percent twenty percent, respectively. So those are 41 00:02:02,520 --> 00:02:05,200 Speaker 6: very strong numbers. So we are a bit surprised about 42 00:02:05,480 --> 00:02:06,000 Speaker 6: the reaction. 43 00:02:06,360 --> 00:02:09,520 Speaker 7: How did Oracle and other companies really react to Chinese 44 00:02:09,600 --> 00:02:11,800 Speaker 7: upstart Deep Seek. I mean they release an open source 45 00:02:11,840 --> 00:02:14,880 Speaker 7: AA and that torpedo basically the whole a outlook that 46 00:02:15,000 --> 00:02:18,600 Speaker 7: I mentioned it under earnings call and any of their statements. 47 00:02:19,080 --> 00:02:22,959 Speaker 6: Yeah, so they were already talking about some of that impact. 48 00:02:23,120 --> 00:02:25,919 Speaker 6: But these guys reported very strong bookings. But I think 49 00:02:25,960 --> 00:02:28,400 Speaker 6: your question is probably the most important one right now, 50 00:02:28,720 --> 00:02:31,400 Speaker 6: because I think one reason for the stock selling off 51 00:02:31,480 --> 00:02:34,399 Speaker 6: despite these bookings could be, you know, do this does 52 00:02:34,440 --> 00:02:37,160 Speaker 6: this trait continue going forward in the next two years 53 00:02:37,240 --> 00:02:39,840 Speaker 6: or so? And I think that's really why people may 54 00:02:39,840 --> 00:02:42,720 Speaker 6: be skeptical that there twenty percent growth they are talking 55 00:02:42,720 --> 00:02:45,840 Speaker 6: about two years from now. You know how dependable that 56 00:02:46,000 --> 00:02:49,640 Speaker 6: is depending on you know, do the companies such as 57 00:02:49,639 --> 00:02:53,600 Speaker 6: the cloud vendors keep on spending very aggressively on capital. 58 00:02:53,200 --> 00:02:56,960 Speaker 2: Expenditures, margins, profit margins? Would you learn at Oracle kind 59 00:02:56,960 --> 00:02:58,359 Speaker 2: of some folks are calling that out. 60 00:02:58,639 --> 00:02:59,280 Speaker 8: Yeah, so we we. 61 00:02:59,560 --> 00:03:01,720 Speaker 6: Think that to go down next year. They really did 62 00:03:01,760 --> 00:03:03,640 Speaker 6: not address that issue because I think they're going to 63 00:03:03,639 --> 00:03:05,960 Speaker 6: talk about it in four Q See when you take 64 00:03:06,040 --> 00:03:09,200 Speaker 6: up your capis from seven billion to fourteen to sixteen 65 00:03:09,240 --> 00:03:12,240 Speaker 6: to twenty over the next know, just let's say two years, 66 00:03:12,720 --> 00:03:16,000 Speaker 6: it's going to have an impact on profitability because the 67 00:03:16,040 --> 00:03:19,960 Speaker 6: business that's coming in it's less profitable than your core 68 00:03:20,120 --> 00:03:23,760 Speaker 6: database business or your applications business. So we think margin 69 00:03:23,840 --> 00:03:25,200 Speaker 6: is going to be dented by one hundred to two 70 00:03:25,240 --> 00:03:29,040 Speaker 6: hundred basis points next year. Consensus doesn't have that figured 71 00:03:29,040 --> 00:03:32,200 Speaker 6: it in their outlook at this point. We think those 72 00:03:32,280 --> 00:03:33,639 Speaker 6: numbers do come down. 73 00:03:33,440 --> 00:03:36,360 Speaker 2: Our Thanks to anorog Run, a Bloomberg Intelligence technology analyst. 74 00:03:36,720 --> 00:03:39,280 Speaker 5: This week, I was at Sarah Week's Global Energy Conference 75 00:03:39,320 --> 00:03:42,120 Speaker 5: in Houston, Texas. It's where all the energy CEOs and 76 00:03:42,160 --> 00:03:44,640 Speaker 5: officials meet to discuss policy and make deals, and I 77 00:03:44,680 --> 00:03:47,440 Speaker 5: had the pleasure I was speaking with Larry Coben, CEO 78 00:03:47,600 --> 00:03:48,760 Speaker 5: of Energy Energy. 79 00:03:49,200 --> 00:03:53,000 Speaker 2: Energy Energy is involved in energy generation and retail electricity, 80 00:03:53,200 --> 00:03:56,280 Speaker 2: and it provides energy and related services to residential, industrial, 81 00:03:56,320 --> 00:03:57,440 Speaker 2: and commercial customers. 82 00:03:57,520 --> 00:04:00,280 Speaker 5: Larry Coben and I discussed power demand and energy and 83 00:04:00,280 --> 00:04:02,840 Speaker 5: I first asked him if rising power growth is driven 84 00:04:02,880 --> 00:04:05,120 Speaker 5: primarily by data demand and AI. 85 00:04:05,680 --> 00:04:07,640 Speaker 9: I think it's a lot of things. It's also on 86 00:04:07,840 --> 00:04:11,800 Speaker 9: shoring of manufacturing. For example, here in Texas, there's a 87 00:04:11,920 --> 00:04:14,480 Speaker 9: one gig Samsung plant that's going to be opened in 88 00:04:14,480 --> 00:04:17,159 Speaker 9: a couple of years. It's the Internet of Things, it's 89 00:04:17,200 --> 00:04:20,880 Speaker 9: smart homes, people are just it's electric cars. People are 90 00:04:21,000 --> 00:04:25,200 Speaker 9: just using more electricity in ways that they never did before. 91 00:04:25,600 --> 00:04:27,599 Speaker 9: And as a result of that, that's part of the 92 00:04:27,640 --> 00:04:30,480 Speaker 9: demand cycle. Obviously, data centers are a big part of it. 93 00:04:30,520 --> 00:04:33,279 Speaker 9: But data centers aside. All of the people who build 94 00:04:33,320 --> 00:04:37,120 Speaker 9: data centers also are involved with cloud and a whole 95 00:04:37,120 --> 00:04:39,960 Speaker 9: slew of other services search that we don't think about 96 00:04:40,400 --> 00:04:43,120 Speaker 9: because we've had them for so long, but growth for 97 00:04:43,160 --> 00:04:44,840 Speaker 9: those is increasing every. 98 00:04:44,640 --> 00:04:45,280 Speaker 10: Bit as much. 99 00:04:45,960 --> 00:04:48,440 Speaker 5: And you guys are one of the largest independent power 100 00:04:48,480 --> 00:04:51,039 Speaker 5: producers in the United States, right, so you can really 101 00:04:51,040 --> 00:04:54,640 Speaker 5: take advantage of this. Where is the biggest demand for 102 00:04:54,720 --> 00:04:56,760 Speaker 5: what kind of power? Give me some insights into the 103 00:04:56,839 --> 00:04:58,240 Speaker 5: conversations you're having right now. 104 00:04:58,279 --> 00:05:01,359 Speaker 9: Sure, I think you know competitive markets. The two biggest 105 00:05:01,400 --> 00:05:06,720 Speaker 9: ones would be Texas and PJAM in the northeast. Texas 106 00:05:06,800 --> 00:05:09,000 Speaker 9: is a primary focus for us that we do have 107 00:05:09,040 --> 00:05:12,560 Speaker 9: a strong PJM presence. One of the things we like 108 00:05:12,600 --> 00:05:16,920 Speaker 9: about Texas is it has a friendlier permitting environment and 109 00:05:16,960 --> 00:05:19,840 Speaker 9: it has one Public Utilities Commission. 110 00:05:19,320 --> 00:05:20,080 Speaker 10: And one governor. 111 00:05:20,600 --> 00:05:23,880 Speaker 9: Urkatt has thirteen states in it, plus the District of Columbia. 112 00:05:23,920 --> 00:05:28,280 Speaker 9: So that's fourteen commissions, fourteen governor like people, and FIRK, 113 00:05:28,360 --> 00:05:31,880 Speaker 9: which doesn't have any jurisdiction here. So but I think 114 00:05:31,920 --> 00:05:34,000 Speaker 9: you're going to see data centers in all of these 115 00:05:34,040 --> 00:05:37,240 Speaker 9: places and every and in other places where economic growth 116 00:05:37,279 --> 00:05:37,800 Speaker 9: is going on. 117 00:05:37,880 --> 00:05:40,160 Speaker 10: It's not going to be limited. But I think Texas 118 00:05:40,200 --> 00:05:41,040 Speaker 10: is going to be first. 119 00:05:41,440 --> 00:05:43,640 Speaker 5: Do you think that the hyperscaler hype about how much 120 00:05:43,640 --> 00:05:45,960 Speaker 5: they're going to spend on power demand is real. 121 00:05:46,040 --> 00:05:47,040 Speaker 4: Right to fall short? 122 00:05:47,480 --> 00:05:50,560 Speaker 10: I think yes, I mean it won't. It will not 123 00:05:50,640 --> 00:05:52,320 Speaker 10: fall short. It may even go up. 124 00:05:52,440 --> 00:05:52,719 Speaker 4: Okay. 125 00:05:52,920 --> 00:05:54,440 Speaker 9: And the reason I think that is, you know, it's 126 00:05:54,480 --> 00:05:57,760 Speaker 9: interesting after Deep Seek, everybody was super concerned about that, 127 00:05:58,120 --> 00:05:59,960 Speaker 9: and then three of the hyperscalers came out. 128 00:06:00,080 --> 00:06:02,039 Speaker 10: Essentially doubled their capital commitments. 129 00:06:02,560 --> 00:06:05,719 Speaker 9: Now if they actually, after looking at Deepseek, decide it's 130 00:06:05,720 --> 00:06:08,360 Speaker 9: going to be twice as much, then that gives me 131 00:06:08,440 --> 00:06:09,440 Speaker 9: a great deal of comfort. 132 00:06:09,520 --> 00:06:11,200 Speaker 10: The power demand is going to be there. 133 00:06:11,640 --> 00:06:14,359 Speaker 9: And you know, I know everybody's talking about GEVNS paradox 134 00:06:14,360 --> 00:06:16,479 Speaker 9: because everyone has now googled it for the first time. 135 00:06:16,520 --> 00:06:18,840 Speaker 9: I'm actually old enough to remember what it was originally. 136 00:06:19,440 --> 00:06:22,240 Speaker 9: But you know, I think people will start using this 137 00:06:22,320 --> 00:06:24,279 Speaker 9: more and more. I already see it in our business. 138 00:06:24,640 --> 00:06:29,440 Speaker 9: We are using enormous amounts of AI and customer service 139 00:06:29,440 --> 00:06:31,160 Speaker 9: and we're only just scratching the surface. 140 00:06:31,520 --> 00:06:34,360 Speaker 5: Speaking of you're going to be developing five point four 141 00:06:34,440 --> 00:06:37,760 Speaker 5: gigawatts by twenty thirty two, right, how much of that 142 00:06:37,880 --> 00:06:39,760 Speaker 5: is going to be fully contracted and how much of 143 00:06:39,760 --> 00:06:41,239 Speaker 5: that will be more merchants spot price? 144 00:06:41,680 --> 00:06:42,479 Speaker 10: You know, we have. 145 00:06:43,880 --> 00:06:47,120 Speaker 9: One point five gigs that is shovel ready that will 146 00:06:47,200 --> 00:06:49,320 Speaker 9: probably go Most of that will go directly into the 147 00:06:49,360 --> 00:06:52,920 Speaker 9: Texas market. Okay, anything we build beyond that, I would 148 00:06:52,960 --> 00:06:56,640 Speaker 9: anticipate would be fully contracted for related either to a 149 00:06:56,720 --> 00:06:58,320 Speaker 9: data center or another kind. 150 00:06:58,120 --> 00:07:01,800 Speaker 10: Of large user along the way. We are not in. 151 00:07:01,760 --> 00:07:04,360 Speaker 9: The business of taking merchant risks some of the other 152 00:07:04,440 --> 00:07:08,880 Speaker 9: folks are. We actually like to protect our downside and 153 00:07:08,920 --> 00:07:11,920 Speaker 9: give ourselves a lot of optionality to the upside so 154 00:07:11,960 --> 00:07:14,240 Speaker 9: that we don't have to care whether the growth is 155 00:07:14,280 --> 00:07:17,280 Speaker 9: two percent or ten percent. Both of those are ginormous 156 00:07:17,320 --> 00:07:17,720 Speaker 9: for us. 157 00:07:17,880 --> 00:07:19,840 Speaker 5: So what kind of pricing are we talking about for 158 00:07:19,920 --> 00:07:21,240 Speaker 5: a gas fire plant. 159 00:07:21,000 --> 00:07:23,680 Speaker 4: For renewable for other power? Like, what does it look 160 00:07:23,720 --> 00:07:24,160 Speaker 4: like right now? 161 00:07:24,200 --> 00:07:26,880 Speaker 9: I mean gas fired plants. We think they're going to 162 00:07:26,920 --> 00:07:30,160 Speaker 9: be done for fifteen hundred to two thousand a kW installed. 163 00:07:30,640 --> 00:07:32,680 Speaker 9: The ones that are shovel ready because we started on 164 00:07:32,720 --> 00:07:35,440 Speaker 9: them five years ago will be much less. But if 165 00:07:35,480 --> 00:07:38,080 Speaker 9: you're not in the business actively doing it, you're going 166 00:07:38,120 --> 00:07:39,880 Speaker 9: to have a hard time hitting the top end of 167 00:07:39,920 --> 00:07:45,320 Speaker 9: the range. Renewable pricing hasn't changed dramatically. It's just that 168 00:07:45,360 --> 00:07:48,560 Speaker 9: the load curve is changing as people need. There's more 169 00:07:48,600 --> 00:07:51,760 Speaker 9: twenty four to seven power use coming in. And you know, 170 00:07:52,040 --> 00:07:54,440 Speaker 9: sun doesn't shine at night, wind doesn't always blow. 171 00:07:54,840 --> 00:07:58,400 Speaker 10: But renewables aren't dead. They're going to be sure. 172 00:07:59,600 --> 00:08:04,200 Speaker 9: Yes, actually I am sure, okay, because there's still a 173 00:08:04,240 --> 00:08:08,120 Speaker 9: place for them when they're working in conjunction with gas plants, 174 00:08:08,400 --> 00:08:11,200 Speaker 9: I mean part of our portfolio. Now we actually shut 175 00:08:11,200 --> 00:08:13,920 Speaker 9: off our fossil fuel plants during the day when there's 176 00:08:13,920 --> 00:08:16,080 Speaker 9: a lot of salta in win in Texas. We buy 177 00:08:16,120 --> 00:08:18,680 Speaker 9: from the grid their power and sell it to our customers, 178 00:08:18,720 --> 00:08:22,280 Speaker 9: generating it ourselves. Those options are still going to be available, 179 00:08:22,320 --> 00:08:23,960 Speaker 9: at least in competitive markets. 180 00:08:24,000 --> 00:08:27,200 Speaker 5: Well, speaking of your renewable unit is thirty percent of 181 00:08:27,200 --> 00:08:29,440 Speaker 5: your annual earnings right, and it's twenty percent of the 182 00:08:29,480 --> 00:08:31,400 Speaker 5: renewable market share here in the US. 183 00:08:31,640 --> 00:08:33,400 Speaker 4: How much do you think that can grow for you? 184 00:08:34,160 --> 00:08:39,000 Speaker 9: I are renewable. You know, we generally actually contract for 185 00:08:39,120 --> 00:08:42,360 Speaker 9: renewables rather than own them. It's a strange thing because 186 00:08:42,400 --> 00:08:45,640 Speaker 9: we own two coal plants. Everyone else gets cheaper renewable 187 00:08:45,720 --> 00:08:48,240 Speaker 9: capital than we do, even though we're a big company 188 00:08:48,280 --> 00:08:50,760 Speaker 9: and quite good at this, and as a result, what 189 00:08:50,800 --> 00:08:54,199 Speaker 9: we generally do is contract for that power from other developers. 190 00:08:54,520 --> 00:08:55,440 Speaker 10: Right now, we've. 191 00:08:55,240 --> 00:08:57,720 Speaker 9: Got two gigs and we're probably going to have a 192 00:08:57,720 --> 00:09:01,000 Speaker 9: solicitation for more going forward. So I still see it 193 00:09:01,000 --> 00:09:03,880 Speaker 9: as an integral part of our strategy, and a lot 194 00:09:03,920 --> 00:09:06,480 Speaker 9: of them also will be driven by what the customers want. 195 00:09:06,880 --> 00:09:08,480 Speaker 9: So the end of the day, we are in the 196 00:09:08,520 --> 00:09:13,080 Speaker 9: customer service business, not the electricity business. So it's our 197 00:09:13,160 --> 00:09:15,480 Speaker 9: job to sell you the kind of electrons that you 198 00:09:15,640 --> 00:09:19,480 Speaker 9: want in terms of you know, time, place, and and 199 00:09:19,559 --> 00:09:23,920 Speaker 9: fuel generation. So if you want green electrons, decarbonized electrons, 200 00:09:24,080 --> 00:09:25,880 Speaker 9: we will have them and we will sell. 201 00:09:25,720 --> 00:09:26,120 Speaker 10: Them to you. 202 00:09:26,880 --> 00:09:27,240 Speaker 3: Thank you. 203 00:09:28,600 --> 00:09:33,080 Speaker 5: In terms of in terms of the actual agreements, how 204 00:09:33,160 --> 00:09:35,760 Speaker 5: many agreements are you talking about that's like, hey, we're 205 00:09:35,760 --> 00:09:38,400 Speaker 5: going to sign like yeah, yeah, well we like your 206 00:09:38,400 --> 00:09:41,040 Speaker 5: electricity will sign in versus like firm demand. 207 00:09:41,160 --> 00:09:42,000 Speaker 4: Here's your paycheck. 208 00:09:43,320 --> 00:09:44,800 Speaker 10: You know we do this every day. 209 00:09:45,160 --> 00:09:48,280 Speaker 9: We actually supply power already to every one of the hyperscalers. 210 00:09:48,679 --> 00:09:52,400 Speaker 9: We have the second largest commercial CNI electricity book in 211 00:09:52,440 --> 00:09:54,960 Speaker 9: the country and the largest natural gas one. So we 212 00:09:55,080 --> 00:09:57,360 Speaker 9: sign those kind of arrangements. Some of them are short terms, 213 00:09:57,400 --> 00:09:59,640 Speaker 9: some of them are long term. I think the new 214 00:09:59,720 --> 00:10:02,880 Speaker 9: data center ones will all be at least ten and 215 00:10:02,960 --> 00:10:04,680 Speaker 9: probably closer to twenty years. 216 00:10:04,960 --> 00:10:05,960 Speaker 10: ABE is we won't. 217 00:10:05,720 --> 00:10:08,760 Speaker 9: Want to dedicate our site to something that's less than that. B. 218 00:10:08,920 --> 00:10:10,960 Speaker 9: We won't want to build a dedicated power plant for 219 00:10:11,040 --> 00:10:13,320 Speaker 9: less than that. And see if you're going to pay 220 00:10:13,320 --> 00:10:15,240 Speaker 9: all that money for those chips and to build a 221 00:10:15,360 --> 00:10:18,240 Speaker 9: data center, which actually costs more than a power plant, 222 00:10:18,600 --> 00:10:21,120 Speaker 9: you're going to want that kind of stability. 223 00:10:20,480 --> 00:10:22,080 Speaker 10: For an extended period of time. 224 00:10:22,559 --> 00:10:24,240 Speaker 9: So I think a lot of those are going to 225 00:10:24,240 --> 00:10:28,320 Speaker 9: be fixed price deals off market with power scale. They 226 00:10:28,320 --> 00:10:30,640 Speaker 9: will still be in front of the meter because people 227 00:10:30,640 --> 00:10:33,160 Speaker 9: will want to be connected to the grid, but they 228 00:10:33,160 --> 00:10:35,520 Speaker 9: will definitely be long term fixed contracts. 229 00:10:35,360 --> 00:10:36,520 Speaker 4: How soon you're signing more. 230 00:10:36,440 --> 00:10:37,079 Speaker 3: Of those. 231 00:10:39,520 --> 00:10:41,240 Speaker 10: Stay tuned? Fair question? 232 00:10:42,120 --> 00:10:43,920 Speaker 9: You know my next earning is call is may it 233 00:10:43,920 --> 00:10:47,319 Speaker 9: will not be then, okay, but you know we're working 234 00:10:47,360 --> 00:10:49,400 Speaker 9: on these as fast as we possibly can. 235 00:10:49,440 --> 00:10:50,319 Speaker 10: They're complicated. 236 00:10:50,720 --> 00:10:53,760 Speaker 9: People, you know, think electricity is just like flicking a switch. 237 00:10:54,320 --> 00:10:58,880 Speaker 9: It's super complicated. But we are making substantial progress towards 238 00:10:58,920 --> 00:11:02,679 Speaker 9: some very interesting trends. Actions talking both to hyper scalers 239 00:11:02,720 --> 00:11:04,040 Speaker 9: and to developers were. 240 00:11:03,880 --> 00:11:06,400 Speaker 4: I let you go, though. What makes it complicated? Is 241 00:11:06,440 --> 00:11:07,200 Speaker 4: it the pricing? 242 00:11:07,480 --> 00:11:07,760 Speaker 3: Is it? 243 00:11:08,280 --> 00:11:09,720 Speaker 4: How to structure the deal? 244 00:11:09,880 --> 00:11:12,000 Speaker 5: Like is your power going to the grid and then 245 00:11:12,160 --> 00:11:13,559 Speaker 5: selling back to the hyper scale? 246 00:11:13,600 --> 00:11:13,640 Speaker 3: Like? 247 00:11:13,760 --> 00:11:14,760 Speaker 4: What makes it so hard? 248 00:11:14,840 --> 00:11:18,760 Speaker 9: You need interconnection agreement, You need a construction agreement, you 249 00:11:18,800 --> 00:11:21,760 Speaker 9: need a turbine agreement. Now you know we have all 250 00:11:21,800 --> 00:11:24,080 Speaker 9: of these in place generically, but they all need to 251 00:11:24,120 --> 00:11:27,440 Speaker 9: be site specific. You need to decide how big a 252 00:11:27,520 --> 00:11:30,200 Speaker 9: data center you want to put on the site. How 253 00:11:30,240 --> 00:11:32,360 Speaker 9: fast are you going to grow that data center? So 254 00:11:32,679 --> 00:11:34,400 Speaker 9: are you going to start at two hundred megs and 255 00:11:34,440 --> 00:11:35,920 Speaker 9: go up two hundred a year? Do you want to 256 00:11:35,960 --> 00:11:39,120 Speaker 9: start at a gig? So what makes it complicated is 257 00:11:39,160 --> 00:11:42,440 Speaker 9: putting all of those pieces together. And what people forget 258 00:11:42,520 --> 00:11:45,120 Speaker 9: is actually for this type of data center is new, 259 00:11:45,960 --> 00:11:48,959 Speaker 9: unlike existing data centers where people have done lots of them. 260 00:11:49,160 --> 00:11:51,880 Speaker 9: There aren't a lot of AI data centers out there yet. 261 00:11:52,320 --> 00:11:56,360 Speaker 9: But it's complicated, but so is general power plant development. 262 00:11:56,400 --> 00:11:59,000 Speaker 9: All the permitting in those things. So it's nothing that 263 00:11:59,040 --> 00:12:02,240 Speaker 9: we're worried about, something we actually think we're pretty good at. 264 00:12:02,400 --> 00:12:05,839 Speaker 4: But hyberkailers are willing to put down that money. You're 265 00:12:05,840 --> 00:12:07,080 Speaker 4: showing up knocking on your door. 266 00:12:07,080 --> 00:12:08,920 Speaker 10: They're there, they're there. Okay, they're there. 267 00:12:09,080 --> 00:12:11,920 Speaker 9: We're there, and you know, because of the agreements Wen 268 00:12:11,960 --> 00:12:14,720 Speaker 9: asked last week, the turbines and the contractors are there. 269 00:12:14,920 --> 00:12:17,960 Speaker 5: All right, thanks to Larry Coben, CEO of nerg Energy. 270 00:12:18,160 --> 00:12:19,520 Speaker 5: All right, coming up, we're gonna have more from the 271 00:12:19,520 --> 00:12:22,280 Speaker 5: Sarah Week Energy Conference and a conversation with CEO of 272 00:12:22,400 --> 00:12:23,200 Speaker 5: ge Vernova. 273 00:12:23,400 --> 00:12:26,200 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 274 00:12:26,240 --> 00:12:28,480 Speaker 2: depth research and data on two thousand companies and one 275 00:12:28,559 --> 00:12:31,559 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 276 00:12:31,600 --> 00:12:33,640 Speaker 2: b I go on the terminal on Paul Sweeney. 277 00:12:33,360 --> 00:12:35,440 Speaker 3: And am Alex Steele and this is Bloomberg. 278 00:12:40,120 --> 00:12:43,839 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 279 00:12:43,920 --> 00:12:47,000 Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android 280 00:12:47,000 --> 00:12:50,319 Speaker 1: Auto with the Bloomberg Business App, listen on demand wherever 281 00:12:50,360 --> 00:12:53,880 Speaker 1: you get your podcasts, or watch us live on YouTube. 282 00:12:54,160 --> 00:12:56,880 Speaker 2: We move next to the drug and pharmaceutical space. This week, 283 00:12:57,000 --> 00:13:00,480 Speaker 2: shares of the Danish drugmaker Noko Nordisk dropped the since 284 00:13:00,520 --> 00:13:01,560 Speaker 2: December twentieth. 285 00:13:01,760 --> 00:13:04,280 Speaker 5: That's after Novo said that people treated with the obesity 286 00:13:04,360 --> 00:13:07,640 Speaker 5: drug Kagri Semma showed underwhelming weight loss, and a clinical 287 00:13:07,679 --> 00:13:09,880 Speaker 5: trial of people with diabetes For. 288 00:13:09,800 --> 00:13:12,439 Speaker 2: More guests, Isabelle Lee and I were joined by Sam Fazzelli, 289 00:13:12,440 --> 00:13:15,600 Speaker 2: Bloomberg Intelligence, Director of Research for Global Industries and senior 290 00:13:15,640 --> 00:13:19,280 Speaker 2: pharmaceuticals analysts, who first asked Sam where Novo is now 291 00:13:19,320 --> 00:13:21,600 Speaker 2: in a fast growing market for weight loss treatments. 292 00:13:22,000 --> 00:13:24,240 Speaker 8: Fifteen point seven percent is what they lost in the 293 00:13:24,360 --> 00:13:27,120 Speaker 8: sixty eight big trial, and then when you correct that 294 00:13:27,240 --> 00:13:30,840 Speaker 8: for the placebo, so obviously you tell people to also diet, 295 00:13:30,840 --> 00:13:35,680 Speaker 8: et cetera, that falls down to twelve point six percent 296 00:13:36,240 --> 00:13:40,400 Speaker 8: is not a big number. Therefore, people are upset and 297 00:13:40,440 --> 00:13:42,760 Speaker 8: this was supposed to be the drug that is going 298 00:13:42,840 --> 00:13:46,840 Speaker 8: to beat or hope they hoped would beat potentially or 299 00:13:46,880 --> 00:13:49,760 Speaker 8: be their main way of competing with zeppetite from or 300 00:13:49,880 --> 00:13:54,160 Speaker 8: Munjaro from Eli Lilly. The reality is it's actually in 301 00:13:54,200 --> 00:13:56,320 Speaker 8: this trial it seems about in line with what cha 302 00:13:56,360 --> 00:13:59,880 Speaker 8: Zeppetite gave us. So it's not that it's that bad. 303 00:14:00,000 --> 00:14:03,000 Speaker 8: It's just these guys set themselves up a while ago 304 00:14:03,080 --> 00:14:06,480 Speaker 8: saying twenty five percent in OBEs, twenty percent or so 305 00:14:06,640 --> 00:14:10,120 Speaker 8: in obi's diabetics. Diabetics for some reason respond less. And 306 00:14:10,240 --> 00:14:12,400 Speaker 8: of course both of those have been lower. We had 307 00:14:12,400 --> 00:14:15,679 Speaker 8: that one the first one in the obesity population before Christmas, 308 00:14:15,679 --> 00:14:18,600 Speaker 8: if you remember, and this one. So this market is 309 00:14:18,640 --> 00:14:22,440 Speaker 8: so awful, with the sea of red everywhere that it's 310 00:14:22,520 --> 00:14:26,200 Speaker 8: really difficult to parse out specific company thing or people 311 00:14:26,240 --> 00:14:28,240 Speaker 8: are just miffed taking a. 312 00:14:28,200 --> 00:14:31,040 Speaker 7: Step back when it comes to the reintroduction of legislation 313 00:14:31,120 --> 00:14:34,600 Speaker 7: to modify the Inflation Reduction Act. How does large pharma 314 00:14:35,040 --> 00:14:36,360 Speaker 7: sit amidst all of. 315 00:14:36,320 --> 00:14:40,840 Speaker 8: Those Oh, just a small question then, right, No, I mean, look, 316 00:14:40,880 --> 00:14:42,080 Speaker 8: at the end of the day, a lot of these 317 00:14:42,120 --> 00:14:45,160 Speaker 8: folks are being told you're going to have your within 318 00:14:45,240 --> 00:14:48,000 Speaker 8: that context, We've done a lot of analysis on this. 319 00:14:48,600 --> 00:14:52,360 Speaker 8: Every year fifteen drugs are chosen to be negotiated for 320 00:14:52,520 --> 00:14:58,440 Speaker 8: price by the Medicare plans. So and it's possible that 321 00:14:58,600 --> 00:15:01,280 Speaker 8: novos we go V is going to be part of 322 00:15:01,280 --> 00:15:03,840 Speaker 8: one of those four twenty twenty six or twenty twenty seven, 323 00:15:03,880 --> 00:15:06,960 Speaker 8: I can't remember exactly that's what's happening with these guys, 324 00:15:07,280 --> 00:15:09,200 Speaker 8: but there a lot of farmer companies have said, look, 325 00:15:09,240 --> 00:15:11,480 Speaker 8: we can manage this. It's within our realms to be 326 00:15:11,480 --> 00:15:13,640 Speaker 8: able to cope. And so I think the market is 327 00:15:13,680 --> 00:15:18,040 Speaker 8: generally accepted that IRA isn't that bad for the farmer industry. 328 00:15:18,240 --> 00:15:22,680 Speaker 2: SAM talk to us about kind of these generic weight 329 00:15:22,760 --> 00:15:26,000 Speaker 2: loss drugs, and I guess they're I don't know if 330 00:15:26,000 --> 00:15:28,600 Speaker 2: they're generic or if they're a different term. 331 00:15:28,440 --> 00:15:31,240 Speaker 8: But compounded compound phrase. 332 00:15:31,400 --> 00:15:34,160 Speaker 2: Look for how effective are they should and how safe 333 00:15:34,160 --> 00:15:34,440 Speaker 2: are they? 334 00:15:35,600 --> 00:15:35,880 Speaker 3: Well? 335 00:15:35,960 --> 00:15:42,160 Speaker 8: I mean, look, you the companies buy active from somebody 336 00:15:43,000 --> 00:15:46,320 Speaker 8: and they make it in the pharmacy and they sell 337 00:15:46,320 --> 00:15:49,240 Speaker 8: it to you. Right, so it's usually a needle and 338 00:15:49,320 --> 00:15:51,640 Speaker 8: as yringe, right, a needle and syringe in a wile. 339 00:15:52,280 --> 00:15:53,520 Speaker 8: And how safe are they? 340 00:15:53,600 --> 00:15:54,440 Speaker 6: Who knows? 341 00:15:55,200 --> 00:15:58,760 Speaker 8: No one's done trials on them. I think the FDA 342 00:15:58,920 --> 00:16:01,920 Speaker 8: has to believe, even they do go through rigorous and 343 00:16:02,080 --> 00:16:05,040 Speaker 8: assessment that the active that they're buying isn't going to 344 00:16:05,120 --> 00:16:07,520 Speaker 8: kill people. And I don't think that there's been that 345 00:16:07,640 --> 00:16:10,000 Speaker 8: much issue. But then at the end of the day, 346 00:16:10,120 --> 00:16:12,720 Speaker 8: it's not the branded drug, it's not the drug that 347 00:16:12,760 --> 00:16:16,480 Speaker 8: the manufacturers live and die by if there's an issue. 348 00:16:16,640 --> 00:16:19,040 Speaker 8: So the reality is they should be out of the 349 00:16:19,040 --> 00:16:22,960 Speaker 8: way anyway because they can only sell what are essentially 350 00:16:23,080 --> 00:16:27,120 Speaker 8: on patent drugs which they're not supposed to write if 351 00:16:27,160 --> 00:16:29,440 Speaker 8: there's a shortage, and the FDA said there's no shortage 352 00:16:29,440 --> 00:16:31,760 Speaker 8: for either of the drugs from Novo or Lilina, so 353 00:16:31,800 --> 00:16:33,400 Speaker 8: those folks have to take them off the market. 354 00:16:33,480 --> 00:16:37,120 Speaker 7: Going back to this tagrisema, if Nova plants take regulatory 355 00:16:37,160 --> 00:16:40,280 Speaker 7: approval in the first quarter of next year, what happens 356 00:16:40,640 --> 00:16:42,400 Speaker 7: if it gets approved and if it doesn't. 357 00:16:42,760 --> 00:16:48,320 Speaker 8: Yeah, so look, these are all drugs that are in 358 00:16:48,360 --> 00:16:52,760 Speaker 8: the evolution of the pipeline of the company, so we go. 359 00:16:52,840 --> 00:16:57,320 Speaker 8: V from Novo is often viewed as less impactful in 360 00:16:57,440 --> 00:17:01,840 Speaker 8: terms of efficacy than Lili's Monjaro. So here comes Novo 361 00:17:01,920 --> 00:17:04,680 Speaker 8: with something that matches it with a slightly different mechanism 362 00:17:04,800 --> 00:17:08,680 Speaker 8: that potentially can help you maintain a little bit more 363 00:17:08,760 --> 00:17:11,840 Speaker 8: muscle rather than what you get with some of these 364 00:17:12,280 --> 00:17:15,200 Speaker 8: earlier versions like Pickov. So that's the idea, but they 365 00:17:15,200 --> 00:17:17,040 Speaker 8: still have to prove that and then of course there'll 366 00:17:17,040 --> 00:17:20,960 Speaker 8: be another generation that we'll call triple therapy from Lily. 367 00:17:21,560 --> 00:17:23,480 Speaker 8: So basically what they're trying to do is to keep 368 00:17:23,560 --> 00:17:26,359 Speaker 8: raising the bar and raising the bar on efficacy and 369 00:17:26,480 --> 00:17:29,480 Speaker 8: raising the bar on giving you the good weight loss e, 370 00:17:30,480 --> 00:17:32,359 Speaker 8: less muscle, morephat our. 371 00:17:32,400 --> 00:17:35,199 Speaker 2: Thanks to Sam Fazelli, Bloomberg Intelligence, Director of Research for 372 00:17:35,200 --> 00:17:37,600 Speaker 2: Global Industries and senior pharmaceuticals Analysts. 373 00:17:37,920 --> 00:17:40,879 Speaker 5: This week, I was at SMP Globals Sarah Week Energy 374 00:17:40,920 --> 00:17:42,560 Speaker 5: Conference in Houston, Texas. 375 00:17:42,720 --> 00:17:45,000 Speaker 2: It's where all the energy CEOs and officials meet to 376 00:17:45,040 --> 00:17:46,919 Speaker 2: discuss policy and make deals. 377 00:17:47,000 --> 00:17:49,600 Speaker 5: HI the pleasure of speaking with Scott Straisik, CEO of 378 00:17:49,680 --> 00:17:50,520 Speaker 5: ge Vernova. 379 00:17:50,640 --> 00:17:53,720 Speaker 2: Gevnova is a gas and wind turbine manufacturer and it 380 00:17:53,760 --> 00:17:55,840 Speaker 2: was spun off a year ago by General Electric. 381 00:17:56,080 --> 00:17:58,360 Speaker 5: I spoke to its CEO about the company's grid investments 382 00:17:58,359 --> 00:18:01,200 Speaker 5: and artificial intelligence and energy, and I begin by asking 383 00:18:01,240 --> 00:18:04,600 Speaker 5: Scott what he thinks the biggest change is leading the 384 00:18:04,640 --> 00:18:05,760 Speaker 5: company in the last. 385 00:18:05,600 --> 00:18:08,160 Speaker 11: Year, and I'm proud of the first year, but most 386 00:18:08,160 --> 00:18:10,439 Speaker 11: importantly it's really just the beginning for us because a 387 00:18:10,480 --> 00:18:13,040 Speaker 11: lot of these trends, whether it be AI, whether it 388 00:18:13,040 --> 00:18:16,120 Speaker 11: be the electrification of these industries, it's really just starting. 389 00:18:16,240 --> 00:18:19,640 Speaker 11: So our end markets continue to strengthen. I think there's 390 00:18:19,680 --> 00:18:22,679 Speaker 11: a more reality based focus on both the need for 391 00:18:22,720 --> 00:18:25,240 Speaker 11: gas and nuclears, so the demand cycle for both of 392 00:18:25,280 --> 00:18:28,480 Speaker 11: those continues to get even stronger today than where we 393 00:18:28,480 --> 00:18:31,560 Speaker 11: were twelve months ago. And it really then comes back 394 00:18:31,560 --> 00:18:34,120 Speaker 11: to how do we deliver safely and in a high 395 00:18:34,200 --> 00:18:37,919 Speaker 11: quality way to serve this incredible market that we're walking into. 396 00:18:38,080 --> 00:18:41,639 Speaker 5: Your backlog is huge, right, it's like seventy three billion dollars, right? 397 00:18:41,960 --> 00:18:43,600 Speaker 5: Can you give me perspective, like how much of that 398 00:18:43,680 --> 00:18:44,800 Speaker 5: is AI demand driven? 399 00:18:44,920 --> 00:18:47,480 Speaker 3: How much of that is like wind stuff? How much 400 00:18:47,480 --> 00:18:47,760 Speaker 3: of that. 401 00:18:47,840 --> 00:18:50,320 Speaker 5: Is transformers which is the stuff you got to plug. 402 00:18:50,080 --> 00:18:50,639 Speaker 3: Into the grid. 403 00:18:50,720 --> 00:18:51,040 Speaker 12: You bet. 404 00:18:51,040 --> 00:18:53,879 Speaker 11: It's still a very small proportion of our backlog is 405 00:18:53,920 --> 00:18:56,480 Speaker 11: directly attached to AI. I mean, when you really think 406 00:18:56,520 --> 00:18:59,439 Speaker 11: about even data centers in total, there's only about sixty 407 00:18:59,480 --> 00:19:03,200 Speaker 11: gig goofs of data centers globally today, and only fifteen 408 00:19:03,240 --> 00:19:06,200 Speaker 11: percent of that it's really explicitly related to AI. Most 409 00:19:06,200 --> 00:19:09,680 Speaker 11: of it's still cloud and storage. So that's why there's 410 00:19:09,720 --> 00:19:12,480 Speaker 11: so much growth to come, because we're really just starting. 411 00:19:12,560 --> 00:19:14,920 Speaker 11: But I'm sure us sitting down a few years from now, 412 00:19:14,960 --> 00:19:17,000 Speaker 11: it's going to be a larger proportion of our backlog. 413 00:19:17,600 --> 00:19:20,200 Speaker 3: How much do you think it would be best guess. 414 00:19:19,840 --> 00:19:21,439 Speaker 11: Oh, it's going to be a lot more. There's no 415 00:19:21,560 --> 00:19:23,919 Speaker 11: question about dear. No, I don't think we get to 416 00:19:23,960 --> 00:19:26,600 Speaker 11: that proportion. But it's going to become more AI centric, 417 00:19:26,600 --> 00:19:30,240 Speaker 11: and it's becoming even more US based because the amount 418 00:19:30,240 --> 00:19:31,879 Speaker 11: of growth that we're going to see in the US 419 00:19:32,000 --> 00:19:33,800 Speaker 11: the rest of the decade relative to the rest of 420 00:19:33,840 --> 00:19:36,000 Speaker 11: the world, it's going to be more tomorrow than it's 421 00:19:36,000 --> 00:19:37,920 Speaker 11: certainly been the last five to ten years. 422 00:19:38,000 --> 00:19:39,920 Speaker 5: In the meantime, you cannot get a CEO on the 423 00:19:39,960 --> 00:19:42,520 Speaker 5: stage at Sarah Week that isn't talking about GeV Ronova 424 00:19:42,600 --> 00:19:44,960 Speaker 5: because everyone's buying your gas turbines at the end of 425 00:19:45,000 --> 00:19:49,439 Speaker 5: the day. How much of this is firm contracting. How 426 00:19:49,520 --> 00:19:51,159 Speaker 5: much of that is just like, yeah, we like it, 427 00:19:51,200 --> 00:19:52,760 Speaker 5: we're gonna buy it. Can you give me some insight 428 00:19:52,760 --> 00:19:53,080 Speaker 5: into that. 429 00:19:53,880 --> 00:19:57,800 Speaker 11: Well, we're very firm in contract, certainly with our gas turbine, 430 00:19:57,800 --> 00:20:01,440 Speaker 11: our transformer, our switch gear backlaw really through twenty seven 431 00:20:01,480 --> 00:20:03,760 Speaker 11: into twenty eight right now, I would expect by the 432 00:20:03,840 --> 00:20:06,880 Speaker 11: end of the summer will be largely sold out. 433 00:20:06,680 --> 00:20:09,600 Speaker 12: Through the end of twenty eight with those equipment. 434 00:20:10,320 --> 00:20:12,520 Speaker 11: But we're also looking to kind of find ways to 435 00:20:12,520 --> 00:20:15,280 Speaker 11: get better every day and a culture of continuous improvement, 436 00:20:15,320 --> 00:20:18,639 Speaker 11: and if we can increase capacity smartly as we figure 437 00:20:18,640 --> 00:20:21,439 Speaker 11: out this ramp, we'll do that. But for context, last 438 00:20:21,480 --> 00:20:25,240 Speaker 11: fall we announced a really almost thirty five percent increase 439 00:20:25,480 --> 00:20:29,240 Speaker 11: in supply from twenty five levels to twenty seven. So 440 00:20:29,320 --> 00:20:31,600 Speaker 11: thirty five percent increases a lot. It doesn't mean we 441 00:20:31,640 --> 00:20:33,560 Speaker 11: stop there, but we've got to get there first and 442 00:20:33,600 --> 00:20:36,639 Speaker 11: then re evaluate what the art of the possible really is. 443 00:20:37,200 --> 00:20:40,400 Speaker 5: Okay, So to that point, what are the issues with execution? 444 00:20:40,480 --> 00:20:40,640 Speaker 3: Then? 445 00:20:40,760 --> 00:20:43,040 Speaker 5: Like, it's a lofty goal, right, you're investing six hundred 446 00:20:43,040 --> 00:20:44,720 Speaker 5: million dollars to plants in the US. 447 00:20:44,720 --> 00:20:45,160 Speaker 4: It's a lot. 448 00:20:45,200 --> 00:20:47,360 Speaker 3: How fast can that happen? And what are the roadblocks 449 00:20:47,440 --> 00:20:47,639 Speaker 3: for you? 450 00:20:47,760 --> 00:20:50,080 Speaker 11: It's got to happen in the next two years, you know, really, 451 00:20:50,119 --> 00:20:52,320 Speaker 11: this company is going to look very different between now 452 00:20:52,359 --> 00:20:53,480 Speaker 11: and the summer at twenty six. 453 00:20:53,560 --> 00:20:55,120 Speaker 3: What's the biggest hurdle for you to get that done? 454 00:20:55,280 --> 00:20:55,720 Speaker 12: Workers? 455 00:20:56,160 --> 00:20:57,800 Speaker 11: Right, We're going to add over We're going to add 456 00:20:57,800 --> 00:21:01,720 Speaker 11: over fifteen hundred employees. That's a combination of engineering and 457 00:21:01,920 --> 00:21:05,879 Speaker 11: craft labor. That's all in the US. Take gas as 458 00:21:05,880 --> 00:21:08,639 Speaker 11: an example. We've got to add over five hundred heavy 459 00:21:08,680 --> 00:21:12,720 Speaker 11: duty pieces of machinery into our global factories to drive 460 00:21:12,800 --> 00:21:15,000 Speaker 11: this growth in this ramp. So that's a lot in 461 00:21:15,160 --> 00:21:18,639 Speaker 11: existing factory footprints. We're highly capable of doing it, but 462 00:21:18,680 --> 00:21:20,720 Speaker 11: it's a lot between now and let's say the fourth 463 00:21:20,720 --> 00:21:24,000 Speaker 11: of July of next year. So I like our chances, 464 00:21:24,040 --> 00:21:26,880 Speaker 11: but there's a lot of work to do. 465 00:21:26,920 --> 00:21:28,920 Speaker 5: Talk to me about the wind part, okay, because that's 466 00:21:28,920 --> 00:21:31,000 Speaker 5: sort of like the cousin no one wants to talk 467 00:21:31,000 --> 00:21:34,240 Speaker 5: about right now, or the oncle. If someone came to 468 00:21:34,280 --> 00:21:36,280 Speaker 5: you and said, hey, Scott, I'd like to buy your 469 00:21:36,320 --> 00:21:38,520 Speaker 5: wind business, would you be like, yes, take it off 470 00:21:38,520 --> 00:21:38,920 Speaker 5: my hands. 471 00:21:39,080 --> 00:21:39,119 Speaker 3: No. 472 00:21:39,160 --> 00:21:40,159 Speaker 12: I don't think it's that simple. 473 00:21:40,400 --> 00:21:41,960 Speaker 11: I think at the end of the day, we've got 474 00:21:41,960 --> 00:21:44,720 Speaker 11: a big onshore wind business today. Even in the US, 475 00:21:44,800 --> 00:21:47,919 Speaker 11: we have over thirty five thousand wind turbans that are 476 00:21:47,960 --> 00:21:52,119 Speaker 11: spinning creating electricity today. We see real opportunities to repower 477 00:21:52,200 --> 00:21:55,760 Speaker 11: that existing install base using the infrastructure that's already been built, 478 00:21:55,760 --> 00:21:58,760 Speaker 11: but putting longer blades onto the wind turbines that helps 479 00:21:58,760 --> 00:21:59,240 Speaker 11: the world. 480 00:21:59,560 --> 00:22:01,560 Speaker 12: We think that there's a role for wind, and with 481 00:22:01,680 --> 00:22:02,880 Speaker 12: that role for wind. 482 00:22:02,680 --> 00:22:06,400 Speaker 11: We're focused today on just operationally running this business better 483 00:22:06,440 --> 00:22:09,200 Speaker 11: every day, waiting for the growth and inflection that comes. 484 00:22:09,280 --> 00:22:11,560 Speaker 11: So we really are a believer in and all the 485 00:22:11,600 --> 00:22:14,920 Speaker 11: above technology suite. But we'll also look at our portfolio 486 00:22:15,040 --> 00:22:17,960 Speaker 11: every day with a steely eye and on what creates 487 00:22:18,080 --> 00:22:21,399 Speaker 11: value for our shareholders. But there's no binary yes or 488 00:22:21,400 --> 00:22:24,560 Speaker 11: no answer to that question. But we're focused on running 489 00:22:24,600 --> 00:22:27,000 Speaker 11: these businesses better and ultimately creating value. 490 00:22:27,119 --> 00:22:28,440 Speaker 3: All right, So sticking to the wind. 491 00:22:29,000 --> 00:22:30,440 Speaker 5: The other part of your business, which I think is 492 00:22:30,480 --> 00:22:32,000 Speaker 5: so cool, are the transformers. 493 00:22:32,000 --> 00:22:32,960 Speaker 3: So yes, you can have. 494 00:22:32,880 --> 00:22:34,399 Speaker 5: All the wind farms you want, all the solarer that 495 00:22:34,440 --> 00:22:36,240 Speaker 5: you want, but if you have to plug it into 496 00:22:36,280 --> 00:22:37,800 Speaker 5: the grid, so I think it is like a big socket. 497 00:22:37,800 --> 00:22:40,120 Speaker 3: I'm sure it's much more complicated than that. But talk 498 00:22:40,160 --> 00:22:41,320 Speaker 3: to you about the growth. 499 00:22:40,960 --> 00:22:43,439 Speaker 5: There, because everyone talks you about AI and data demand, 500 00:22:43,440 --> 00:22:45,480 Speaker 5: but like, that's where the potential growth is. 501 00:22:45,520 --> 00:22:46,720 Speaker 3: Walk me through the percentages. 502 00:22:46,800 --> 00:22:49,040 Speaker 11: And that's also for context where a lot of our 503 00:22:49,040 --> 00:22:52,960 Speaker 11: first interactions really came to be more intimate with the hyperscalers. 504 00:22:53,000 --> 00:22:55,679 Speaker 11: I mean, we did over half a billion dollars of 505 00:22:55,760 --> 00:23:01,720 Speaker 11: direct electrical equipment with the hyperscalers and orders last year withsformers. 506 00:23:00,680 --> 00:23:03,520 Speaker 12: With switch gears attached to their data centers. 507 00:23:04,400 --> 00:23:07,760 Speaker 11: That's a business that we see substantially growing from here. 508 00:23:07,800 --> 00:23:10,800 Speaker 11: Two years ago, our backlog coming into twenty twenty three 509 00:23:11,240 --> 00:23:14,560 Speaker 11: was about six billion dollars equipment backlog. It's north of 510 00:23:14,600 --> 00:23:17,600 Speaker 11: twenty billion dollars today. So it's a growth rate. 511 00:23:18,000 --> 00:23:19,160 Speaker 12: It'll stay growing. 512 00:23:19,160 --> 00:23:21,840 Speaker 11: Our backlogs certainly will grow at that same level for 513 00:23:21,880 --> 00:23:26,280 Speaker 11: another year here to expanding margins. So this is I 514 00:23:26,280 --> 00:23:30,480 Speaker 11: think we can have debates between nuclear gas when what 515 00:23:30,520 --> 00:23:33,000 Speaker 11: are the power generation sources that are going to power 516 00:23:33,040 --> 00:23:33,480 Speaker 11: the world? 517 00:23:33,600 --> 00:23:35,800 Speaker 12: Regardless, we need to invest in the grid. 518 00:23:36,359 --> 00:23:38,560 Speaker 5: Yes, and that then leads us to transformers. Before I 519 00:23:38,640 --> 00:23:40,720 Speaker 5: let you go, North America's what like twenty twenty five 520 00:23:40,720 --> 00:23:43,680 Speaker 5: percent of your business right now? Uncertainty is quite high. 521 00:23:43,760 --> 00:23:46,480 Speaker 5: We saw it with the nfib A survey of small businesses. 522 00:23:47,680 --> 00:23:50,119 Speaker 5: Is now a good time to invest in the US 523 00:23:50,240 --> 00:23:51,960 Speaker 5: and what part of that business do you think it 524 00:23:52,000 --> 00:23:54,200 Speaker 5: could be in the next five years. 525 00:23:54,359 --> 00:23:56,600 Speaker 12: I think it's a great time to invest in the US. 526 00:23:56,720 --> 00:24:01,240 Speaker 11: Yes, We've gone through multiple decades with very little load growth, 527 00:24:01,240 --> 00:24:04,119 Speaker 11: and it's really impossible to underwrite a case that we 528 00:24:04,200 --> 00:24:08,640 Speaker 11: don't need substantially more electrical equipment and supply here over 529 00:24:08,680 --> 00:24:11,800 Speaker 11: the next decade. And yeah, that's data centers, but it's 530 00:24:11,840 --> 00:24:15,159 Speaker 11: not just that we're reindustrializing parts of the US to 531 00:24:15,200 --> 00:24:18,160 Speaker 11: an extent that is going to require more electrical load. 532 00:24:18,280 --> 00:24:21,200 Speaker 11: You know, EVS, home heating, there's a lot of other 533 00:24:21,240 --> 00:24:24,240 Speaker 11: factors and beyond that, we just need to modernize what 534 00:24:24,320 --> 00:24:27,400 Speaker 11: we have for resilience and energy security. 535 00:24:27,440 --> 00:24:29,280 Speaker 5: Aw big of a percentage could the US or North 536 00:24:29,320 --> 00:24:31,160 Speaker 5: America be in your portfolio in five years? 537 00:24:31,240 --> 00:24:33,879 Speaker 11: It's going to grow as a proportion, for sure, but 538 00:24:33,920 --> 00:24:36,240 Speaker 11: it's not the only market. We're continuing to see real 539 00:24:36,280 --> 00:24:39,520 Speaker 11: growth in Asia and in Europe. But we're very bullish 540 00:24:40,040 --> 00:24:42,199 Speaker 11: on the US and we're going to keep investing in 541 00:24:42,280 --> 00:24:45,520 Speaker 11: the US. You cited the six hundred million dollars and 542 00:24:45,560 --> 00:24:48,359 Speaker 11: fifteen hundred jobs attached to that, but that's not the end, 543 00:24:48,520 --> 00:24:51,560 Speaker 11: that's just the beginning as we continue to serve this market. 544 00:24:51,680 --> 00:24:51,959 Speaker 3: All right. 545 00:24:51,960 --> 00:24:55,320 Speaker 5: Thanks to Scott Straisik, CEO of g e Vernova. Coming up, 546 00:24:55,320 --> 00:24:57,280 Speaker 5: we'll have more from the Sarah Week Energy Conference and 547 00:24:57,320 --> 00:25:01,080 Speaker 5: a conversation with Joe Dominguez, the CEO of Constellation Energy. 548 00:25:01,240 --> 00:25:04,119 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 549 00:25:04,160 --> 00:25:06,320 Speaker 2: depth research and data on two thousand companies in one 550 00:25:06,359 --> 00:25:09,199 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 551 00:25:09,320 --> 00:25:10,399 Speaker 2: Big in the terminal. 552 00:25:10,480 --> 00:25:13,200 Speaker 5: I'm Paul Sweeney and I'm Alex Steel, and this is Bloomberg. 553 00:25:20,880 --> 00:25:24,760 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch the program 554 00:25:24,880 --> 00:25:28,280 Speaker 1: live weekdays at ten am Eastern on Applecarplay and Android 555 00:25:28,320 --> 00:25:31,280 Speaker 1: Auto with the Bloomberg Business App. You can also listen 556 00:25:31,400 --> 00:25:34,640 Speaker 1: live on Amazon Alexa from our flagship New York station. 557 00:25:35,200 --> 00:25:39,360 Speaker 1: Just say Alexa Play Bloomberg eleven thirty Move. 558 00:25:39,240 --> 00:25:41,680 Speaker 2: Next to the retail space. This week, the department store 559 00:25:41,720 --> 00:25:44,080 Speaker 2: Coles said that comparable sales this year will drop as 560 00:25:44,119 --> 00:25:45,000 Speaker 2: much as six percent. 561 00:25:45,119 --> 00:25:47,640 Speaker 5: This comes as the company has been making sweeping changes 562 00:25:47,680 --> 00:25:49,480 Speaker 5: in an attempt to get back on track after three 563 00:25:49,560 --> 00:25:50,760 Speaker 5: years of declining sales. 564 00:25:51,119 --> 00:25:53,120 Speaker 2: For more guestsos Isabel Lee and I were joined by 565 00:25:53,119 --> 00:25:56,439 Speaker 2: Mary Ross Gilbert, Bloomberg Intelligence, senior equity analysts covering retail. 566 00:25:56,600 --> 00:25:58,760 Speaker 2: We first asked Mary about Cole's guidance and why came 567 00:25:58,800 --> 00:25:59,800 Speaker 2: in weaker than expected. 568 00:26:00,359 --> 00:26:01,120 Speaker 3: With regard to. 569 00:26:01,080 --> 00:26:04,439 Speaker 13: Cole's guidance, First of all, I think they're really hoping 570 00:26:04,600 --> 00:26:08,200 Speaker 13: to beat the numbers, but they're expecting their comp sales 571 00:26:08,280 --> 00:26:11,840 Speaker 13: to be down five to seven percent in this coming year. 572 00:26:12,320 --> 00:26:14,520 Speaker 13: And if you look at the performance in the fourth quarter, 573 00:26:15,080 --> 00:26:18,600 Speaker 13: their revenues came in sort of in line, fairly close. 574 00:26:18,680 --> 00:26:21,160 Speaker 13: Their comp sales were down about six point seven percent. 575 00:26:21,640 --> 00:26:22,480 Speaker 3: But when you look at. 576 00:26:22,400 --> 00:26:24,840 Speaker 13: What's going on this so for a business was up 577 00:26:24,920 --> 00:26:28,640 Speaker 13: thirteen percent on a comp basis, that means that the 578 00:26:28,640 --> 00:26:32,160 Speaker 13: rest of their categories and they're mostly apparel related, were 579 00:26:32,160 --> 00:26:35,360 Speaker 13: down double digits. So it's it's very concerning because that's 580 00:26:35,359 --> 00:26:38,040 Speaker 13: so for a business since they brought it in is 581 00:26:38,119 --> 00:26:41,960 Speaker 13: now one point eight billion in annual revenues. Meanwhile, they 582 00:26:42,000 --> 00:26:45,040 Speaker 13: lost about three billion in revenues and now we're looking 583 00:26:45,160 --> 00:26:50,000 Speaker 13: for further declines this year. So that's what's really concerning. 584 00:26:50,520 --> 00:26:52,840 Speaker 13: Now we have a new CEO. This is the third 585 00:26:52,920 --> 00:26:57,640 Speaker 13: CEO in four years, Ashley Buchanan, and you know, he 586 00:26:57,680 --> 00:27:01,359 Speaker 13: gave a quick peek at what he sees are the 587 00:27:01,400 --> 00:27:05,120 Speaker 13: opportunities they need to really get their merchandise assortments right. 588 00:27:05,680 --> 00:27:11,240 Speaker 13: They did bring back in private label jewelry and petites, 589 00:27:11,560 --> 00:27:13,640 Speaker 13: because those were some of the things that they took 590 00:27:13,800 --> 00:27:17,880 Speaker 13: out when they brought in some new brands and they 591 00:27:17,920 --> 00:27:21,040 Speaker 13: found that they were alienating their core customer. Another issue 592 00:27:21,080 --> 00:27:23,920 Speaker 13: was on the promotional side. They always have these great 593 00:27:23,920 --> 00:27:27,360 Speaker 13: little coupons, but what they did was they had raised 594 00:27:27,560 --> 00:27:30,720 Speaker 13: the number of brands that were excluded from the promotions 595 00:27:30,720 --> 00:27:33,520 Speaker 13: to an all time high in twenty twenty four. Their 596 00:27:33,560 --> 00:27:36,880 Speaker 13: objective is to reduce that to make it more compelling. 597 00:27:37,400 --> 00:27:39,520 Speaker 13: So they have a number of strategies that they have 598 00:27:39,600 --> 00:27:43,000 Speaker 13: to employ here and it's going to take time. So 599 00:27:43,080 --> 00:27:46,400 Speaker 13: that's why the outlook for this year looks dismal, along 600 00:27:46,440 --> 00:27:49,560 Speaker 13: with the fact that the consumer climate, particularly for their 601 00:27:49,680 --> 00:27:55,399 Speaker 13: low income cohort are challenged by still high inflation and 602 00:27:55,520 --> 00:28:00,000 Speaker 13: just an uncertain environment with the ramifications of higher tariffs. 603 00:28:00,880 --> 00:28:02,760 Speaker 7: Among the many things that jumped out to me is 604 00:28:02,800 --> 00:28:04,879 Speaker 7: why are they're bringing back find Jewelry. How do you 605 00:28:04,920 --> 00:28:07,679 Speaker 7: square that with a struggling consumer base. They're not the 606 00:28:07,760 --> 00:28:09,920 Speaker 7: latest retailer to cast out on the strength of the 607 00:28:10,040 --> 00:28:10,760 Speaker 7: US consumer. 608 00:28:12,119 --> 00:28:16,200 Speaker 13: Yes, Isabelle, So it's a good point, but it's important 609 00:28:16,200 --> 00:28:18,560 Speaker 13: that you have that for a gifting option. And these 610 00:28:18,680 --> 00:28:22,280 Speaker 13: items are not It includes not just fine jewelry but 611 00:28:22,320 --> 00:28:27,240 Speaker 13: also costume jewelry and that category. Because they did bring 612 00:28:27,280 --> 00:28:31,080 Speaker 13: it back in, their sales were flat. So that shows 613 00:28:31,119 --> 00:28:33,399 Speaker 13: that that strategy of bringing it back because it's very 614 00:28:33,440 --> 00:28:36,359 Speaker 13: important for gifting. And once again, if you look at 615 00:28:36,359 --> 00:28:38,800 Speaker 13: the promotions that they offer for a jewelry, they have 616 00:28:38,920 --> 00:28:41,680 Speaker 13: buy one item, get the second item like half off 617 00:28:41,760 --> 00:28:44,800 Speaker 13: or something like that. So they do have some compelling 618 00:28:44,960 --> 00:28:48,280 Speaker 13: value that they're bringing the consumer there. It's important for gifting, 619 00:28:48,360 --> 00:28:51,800 Speaker 13: so for example for Valentine's Day and then also for 620 00:28:51,840 --> 00:28:52,600 Speaker 13: the holidays. 621 00:28:53,160 --> 00:28:56,360 Speaker 2: What are they saying, Mary about tariffs and their ability 622 00:28:56,400 --> 00:29:02,040 Speaker 2: to pass along price increases or conversely take it in 623 00:29:02,040 --> 00:29:02,520 Speaker 2: their margin. 624 00:29:03,480 --> 00:29:06,840 Speaker 13: Yeah, so tariffs, it wasn't a huge topic on their call, 625 00:29:07,080 --> 00:29:11,320 Speaker 13: and if you look at the past, they weren't really impacted. 626 00:29:11,360 --> 00:29:13,080 Speaker 13: They were able to pass it on. And I think 627 00:29:13,120 --> 00:29:16,080 Speaker 13: what they do is they work with their vendors and 628 00:29:16,320 --> 00:29:18,840 Speaker 13: they source So if you look at their private slash 629 00:29:18,960 --> 00:29:24,480 Speaker 13: exclusive labels, that business they're able to you know, they 630 00:29:24,520 --> 00:29:27,600 Speaker 13: haven't disclosed exactly how much they source from China, but 631 00:29:27,680 --> 00:29:32,000 Speaker 13: they're able to basically work with their vendors on you know, 632 00:29:32,040 --> 00:29:35,680 Speaker 13: creating that price the product at a price point that 633 00:29:35,840 --> 00:29:40,360 Speaker 13: fits into their value equation. And so the last time around, 634 00:29:40,400 --> 00:29:44,000 Speaker 13: if you looked at twenty eighteen twenty nineteen, they really 635 00:29:44,000 --> 00:29:47,400 Speaker 13: didn't call out a specific impact related to tariffs. They 636 00:29:47,480 --> 00:29:50,600 Speaker 13: said that they were they were okay, they were able 637 00:29:50,600 --> 00:29:54,000 Speaker 13: to offset it with either cost savings or just the 638 00:29:54,000 --> 00:29:56,840 Speaker 13: way that they were able to price it in. You know, 639 00:29:56,880 --> 00:29:59,280 Speaker 13: in terms of building the margin. 640 00:30:00,120 --> 00:30:02,960 Speaker 7: How about store visits calls? Isn't the only ones struggling 641 00:30:03,000 --> 00:30:06,560 Speaker 7: with that. I myself have just shopped basically online. How 642 00:30:06,560 --> 00:30:09,960 Speaker 7: are they attempting to attract customers back in store? 643 00:30:11,600 --> 00:30:11,840 Speaker 3: Yeah? 644 00:30:11,880 --> 00:30:16,160 Speaker 13: So Isabelle. Actually their stores performed better. Now remember they 645 00:30:16,200 --> 00:30:21,000 Speaker 13: were you know, the sales were down, but they outperformed online. 646 00:30:21,520 --> 00:30:24,720 Speaker 13: So you know, earlier in the year we had seen 647 00:30:24,760 --> 00:30:29,280 Speaker 13: where online did better than in store, but actually, you know, 648 00:30:29,360 --> 00:30:32,440 Speaker 13: the stores are are doing better than online. So they're 649 00:30:32,480 --> 00:30:34,960 Speaker 13: actually and we're seeing that from a number of retailers 650 00:30:35,000 --> 00:30:39,080 Speaker 13: where we do see really good performance in store. And 651 00:30:39,120 --> 00:30:41,120 Speaker 13: if you look at off price, I mean that's really 652 00:30:41,200 --> 00:30:44,480 Speaker 13: based and built on in store visits. 653 00:30:45,120 --> 00:30:47,840 Speaker 2: Our thanks to Mary Ross Gilbert Bloomberg Intelligence senior equity 654 00:30:47,880 --> 00:30:48,920 Speaker 2: analysts covering retail. 655 00:30:49,240 --> 00:30:50,000 Speaker 3: This week, I was. 656 00:30:49,920 --> 00:30:53,200 Speaker 5: At SMP Globals Sarah Week's Energy Conference in Houston, Texas. 657 00:30:53,240 --> 00:30:55,280 Speaker 5: It's where all the energy CEOs and officials meet to 658 00:30:55,280 --> 00:30:58,200 Speaker 5: discuss policy, make deals, and talk to shareholders. I had 659 00:30:58,200 --> 00:31:01,600 Speaker 5: the pleasure of speaking to Joe Domingaz see of Constellation Energy. 660 00:31:01,920 --> 00:31:04,720 Speaker 2: Constellation operates to the largest fleet of nuclear reactors in 661 00:31:04,760 --> 00:31:07,320 Speaker 2: the US, and the company recently signed its largest ever 662 00:31:07,400 --> 00:31:08,920 Speaker 2: power purchase agreement with Microsoft. 663 00:31:09,080 --> 00:31:12,040 Speaker 5: It's a deal that will restore Constellation's three Mile Island 664 00:31:12,120 --> 00:31:14,880 Speaker 5: nuclear plant, and it shows that carbon free electricity is 665 00:31:14,920 --> 00:31:17,840 Speaker 5: more valuable when it's available around the clock. I began 666 00:31:17,920 --> 00:31:20,440 Speaker 5: the conversation with Joe Dominguez by talking about the company 667 00:31:20,440 --> 00:31:23,080 Speaker 5: and asking about recession and slowing growth and whether he's 668 00:31:23,160 --> 00:31:24,840 Speaker 5: noticing any of that At Constellation. 669 00:31:25,280 --> 00:31:27,200 Speaker 14: We don't see an end in sight right now. We're 670 00:31:27,240 --> 00:31:29,800 Speaker 14: starting to see it get rationalized, and by that I 671 00:31:29,880 --> 00:31:32,920 Speaker 14: mean we're not seeing the same request for data centers 672 00:31:32,920 --> 00:31:35,520 Speaker 14: popping up in five or six utilities. So I think 673 00:31:35,600 --> 00:31:39,200 Speaker 14: the hyperscalers are beginning to figure out where they want 674 00:31:39,240 --> 00:31:42,200 Speaker 14: to go. And it's not the frenzy of activity, but 675 00:31:42,280 --> 00:31:44,920 Speaker 14: in terms of the deal pace, it continues the same 676 00:31:44,960 --> 00:31:46,160 Speaker 14: way we saw it last year. 677 00:31:46,440 --> 00:31:48,560 Speaker 5: And how are the deals? Like, how is it to 678 00:31:48,560 --> 00:31:50,360 Speaker 5: get them done? Is it hard? 679 00:31:50,720 --> 00:31:53,080 Speaker 3: Is it coming up with the structure the money? 680 00:31:53,160 --> 00:31:53,240 Speaker 8: Like? 681 00:31:53,280 --> 00:31:54,240 Speaker 3: What is it? 682 00:31:53,640 --> 00:31:57,160 Speaker 14: It's not hard, but they're complicated because they're multi billion 683 00:31:57,240 --> 00:32:00,600 Speaker 14: dollar deals, right, So we're talking about twenty year deals 684 00:32:00,600 --> 00:32:03,800 Speaker 14: for power that sometimes could cost five or ten billion dollars. 685 00:32:03,880 --> 00:32:06,800 Speaker 14: So like any commercial deal of that scale, it's going 686 00:32:06,840 --> 00:32:09,480 Speaker 14: to take a long time to negotiate, and each time 687 00:32:09,520 --> 00:32:11,600 Speaker 14: you need to do that with a new party, you 688 00:32:11,680 --> 00:32:13,800 Speaker 14: have to go through all the terms and conditions again. 689 00:32:13,960 --> 00:32:16,600 Speaker 14: But I think we're going to get some some deals 690 00:32:16,640 --> 00:32:17,280 Speaker 14: done this year. 691 00:32:17,520 --> 00:32:20,200 Speaker 5: Can you give me some hints, like in maybe areas, 692 00:32:20,280 --> 00:32:22,200 Speaker 5: what kind of deals? 693 00:32:22,240 --> 00:32:23,400 Speaker 3: Like what kind of power? 694 00:32:23,800 --> 00:32:27,200 Speaker 14: Well, I think nuclear continues to be very attractive for 695 00:32:27,280 --> 00:32:30,920 Speaker 14: the hyperscalers because it operates twenty four to seven, it's cleaned, 696 00:32:31,000 --> 00:32:33,479 Speaker 14: so it meets their environmental goals, and it matches up 697 00:32:33,520 --> 00:32:35,600 Speaker 14: really well from a reliability standpoint. 698 00:32:35,800 --> 00:32:37,320 Speaker 3: So let's go to money then for a second. 699 00:32:37,520 --> 00:32:40,440 Speaker 5: So coming up with the deals is very interesting, particularly 700 00:32:40,440 --> 00:32:42,880 Speaker 5: the one you do with Microsoft to restart three Mile Island. 701 00:32:43,560 --> 00:32:45,120 Speaker 3: Are your costs going up right now. 702 00:32:46,840 --> 00:32:47,520 Speaker 10: A little bit? 703 00:32:47,640 --> 00:32:51,160 Speaker 14: But it's really labor inflation that we mostly see now. 704 00:32:51,200 --> 00:32:54,400 Speaker 14: Remember we have existing nuclear plants that are already built, 705 00:32:54,520 --> 00:32:57,080 Speaker 14: so a lot of the cost of the raw materials 706 00:32:57,080 --> 00:33:00,560 Speaker 14: that you're saying, you know, potentially impacted by tariff's in 707 00:33:00,560 --> 00:33:03,440 Speaker 14: the long run. But in escalation through inflation, we're not 708 00:33:03,480 --> 00:33:07,040 Speaker 14: seeing much of that tiny bid on uranium pricing. But 709 00:33:07,120 --> 00:33:09,280 Speaker 14: most of what we're seeing is labor contracting. 710 00:33:09,360 --> 00:33:11,719 Speaker 5: If you wind up seeing an increase right even in labor, 711 00:33:12,840 --> 00:33:15,080 Speaker 5: how does that change in your contracts, Like you already 712 00:33:15,120 --> 00:33:17,720 Speaker 5: said it, you have to go back to them and say, hey, listen, 713 00:33:18,040 --> 00:33:19,600 Speaker 5: we got to renegotiate my costs. 714 00:33:19,400 --> 00:33:20,160 Speaker 3: Are going on now. 715 00:33:20,320 --> 00:33:23,800 Speaker 14: There's no reopeners up or down for those sorts of inflation, So. 716 00:33:23,840 --> 00:33:24,880 Speaker 3: You're really shaking on that risk. 717 00:33:25,080 --> 00:33:28,200 Speaker 14: Sure, yeah, we're taking it on for over twenty year period. 718 00:33:28,240 --> 00:33:31,040 Speaker 14: And that's the importance of being able to do this 719 00:33:31,480 --> 00:33:34,560 Speaker 14: with nuclear right we know exactly what our cost structure 720 00:33:34,640 --> 00:33:37,320 Speaker 14: is going to be within a range for ten and 721 00:33:37,480 --> 00:33:38,480 Speaker 14: twenty years. 722 00:33:38,480 --> 00:33:39,560 Speaker 12: Harder to do with our. 723 00:33:39,520 --> 00:33:42,240 Speaker 14: Natural gas assets, where we don't know what the price 724 00:33:42,240 --> 00:33:44,200 Speaker 14: of natural gas is going to be ten years out, 725 00:33:44,320 --> 00:33:46,400 Speaker 14: or whether we're going to have a carbon tax, or 726 00:33:46,440 --> 00:33:48,720 Speaker 14: what the changes in environmental regulations are. 727 00:33:48,560 --> 00:33:50,080 Speaker 3: Going to be So how do you manage that risk? 728 00:33:50,280 --> 00:33:52,920 Speaker 14: Well, I think what's really difficult to do that In 729 00:33:53,240 --> 00:33:55,680 Speaker 14: the case of natural gas, I think there what you're 730 00:33:55,720 --> 00:33:58,520 Speaker 14: doing is something that looks more like an index product 731 00:33:58,520 --> 00:34:02,080 Speaker 14: that is indexed either inflation or natural gas prices. 732 00:34:02,600 --> 00:34:05,160 Speaker 5: When you talk about the different parts of your business, 733 00:34:05,360 --> 00:34:07,680 Speaker 5: how much of the capex that you're spending is going 734 00:34:07,760 --> 00:34:12,200 Speaker 5: to new stuff, beefing up old stuff, or just replacing 735 00:34:12,239 --> 00:34:13,520 Speaker 5: and making sure everything stays on track. 736 00:34:13,640 --> 00:34:17,280 Speaker 14: Yeah, So for us alex we face a critical decision 737 00:34:17,480 --> 00:34:20,680 Speaker 14: as to whether to relicnse the nuclear plants for another 738 00:34:20,719 --> 00:34:24,040 Speaker 14: twenty years, and we're facing that across the fleet. So 739 00:34:24,080 --> 00:34:27,319 Speaker 14: when you say new, if we don't do this, it's 740 00:34:27,360 --> 00:34:29,760 Speaker 14: going to be retired, very much like Three Mile Island 741 00:34:29,880 --> 00:34:35,319 Speaker 14: was retired. So the distinction between keeping existing open and 742 00:34:35,520 --> 00:34:38,239 Speaker 14: something that's truly new is immaterial. 743 00:34:38,320 --> 00:34:38,520 Speaker 10: Right. 744 00:34:38,600 --> 00:34:41,120 Speaker 14: If it's gone, it's gone. It's the same as if 745 00:34:41,160 --> 00:34:43,960 Speaker 14: it were never built. So we are investing all of 746 00:34:44,000 --> 00:34:47,600 Speaker 14: our moneies to secure that fleet for the future, and 747 00:34:47,680 --> 00:34:50,839 Speaker 14: we're also doing uprights and restarts and other things like that. 748 00:34:50,880 --> 00:34:53,640 Speaker 14: In terms of a percentage to your question, I would 749 00:34:53,640 --> 00:34:57,239 Speaker 14: say ninety percent of our spend is in the existing 750 00:34:57,280 --> 00:34:59,920 Speaker 14: assets and getting them ready to run for decades. 751 00:35:00,480 --> 00:35:04,359 Speaker 5: So when we talk about power demand booming and increasing 752 00:35:04,760 --> 00:35:06,920 Speaker 5: by multiple digits, right, I mean. 753 00:35:08,360 --> 00:35:09,040 Speaker 3: Would be huge. 754 00:35:09,760 --> 00:35:11,720 Speaker 5: How do you play that, Like, if it's not new, 755 00:35:11,920 --> 00:35:13,319 Speaker 5: is it just expanding? 756 00:35:13,960 --> 00:35:16,160 Speaker 14: Well, it is expanding. A lot of our clients are 757 00:35:16,200 --> 00:35:20,920 Speaker 14: interesting interested in operating that's increasing the output of existing 758 00:35:21,000 --> 00:35:23,560 Speaker 14: nuclear plants, and we're doing that in a number of 759 00:35:23,560 --> 00:35:27,000 Speaker 14: different regions. Obviously, the restart is more limited. You had 760 00:35:27,080 --> 00:35:29,319 Speaker 14: one plant there that you could turn on, and I 761 00:35:29,320 --> 00:35:31,600 Speaker 14: think there might be another in the nation. And then 762 00:35:31,640 --> 00:35:35,000 Speaker 14: the rest of that is going to be probably spent 763 00:35:35,239 --> 00:35:38,799 Speaker 14: on renewables, storage and natural gas for the time being 764 00:35:39,120 --> 00:35:41,480 Speaker 14: and then the fullness of time new nuclear m and 765 00:35:41,560 --> 00:35:41,960 Speaker 14: A for that. 766 00:35:42,040 --> 00:35:43,799 Speaker 5: I know you just bought Calpine, so that really beefs 767 00:35:43,880 --> 00:35:46,640 Speaker 5: up your natural gas. Nuclear is now fifty percent of 768 00:35:46,640 --> 00:35:48,080 Speaker 5: your portfolio versus say seventy. 769 00:35:48,120 --> 00:35:50,920 Speaker 3: That was a big shift. What else is in your pipeline. 770 00:35:50,480 --> 00:35:52,560 Speaker 14: For that, Well, we've got a lot on our plate. 771 00:35:52,880 --> 00:35:53,759 Speaker 10: We've got a lot of food. 772 00:35:53,880 --> 00:35:57,760 Speaker 14: Yeah, and so this year we're going to spend making 773 00:35:57,800 --> 00:36:00,920 Speaker 14: sure that we're ready to integrate Calpine and prepared for 774 00:36:01,080 --> 00:36:03,160 Speaker 14: regulator our approvals at the back end of the year. 775 00:36:03,200 --> 00:36:05,080 Speaker 14: But as you said, it's a big deal, and I 776 00:36:05,080 --> 00:36:07,719 Speaker 14: think what we've indicated as a company is M and 777 00:36:07,800 --> 00:36:10,160 Speaker 14: A is a big part of our strategy. 778 00:36:10,120 --> 00:36:13,959 Speaker 5: Yes, M and A in beefing up nuclear, natural gas, 779 00:36:14,040 --> 00:36:15,839 Speaker 5: or you want to divers all of the above. 780 00:36:15,640 --> 00:36:16,280 Speaker 10: All of the above. 781 00:36:16,760 --> 00:36:19,200 Speaker 14: I think storage is going to increasingly be a part 782 00:36:19,239 --> 00:36:22,360 Speaker 14: of the story, so we'll look at those opportunities as well. 783 00:36:22,680 --> 00:36:24,680 Speaker 5: Everyone now wants to get into power. It is the 784 00:36:24,800 --> 00:36:27,640 Speaker 5: coolest thing right now in the market. Whether you're looking 785 00:36:27,640 --> 00:36:31,320 Speaker 5: integrated utilities, regulated utilities, even energy companies, are you seeing 786 00:36:31,360 --> 00:36:32,080 Speaker 5: more competition. 787 00:36:32,400 --> 00:36:35,200 Speaker 14: I think what people are trying to figure out is 788 00:36:35,239 --> 00:36:39,080 Speaker 14: whether they too can secure longer term contracts. I don't 789 00:36:39,120 --> 00:36:43,880 Speaker 14: see people building spec power plants hoping the demand will come. 790 00:36:44,760 --> 00:36:47,440 Speaker 14: So I think there's going to be a lot of 791 00:36:47,480 --> 00:36:50,800 Speaker 14: interest there, but it's largely going to be fossil. It'll 792 00:36:50,800 --> 00:36:53,799 Speaker 14: continue to be renewables, but it always has been renewables, 793 00:36:54,040 --> 00:36:56,240 Speaker 14: and then we'll see whether they could get deals done 794 00:36:56,440 --> 00:36:56,640 Speaker 14: all right. 795 00:36:56,680 --> 00:36:59,520 Speaker 5: Thanks to Joe Domingez, CEO of Constellation Energy. 796 00:37:00,320 --> 00:37:05,000 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 797 00:37:05,200 --> 00:37:09,160 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 798 00:37:09,360 --> 00:37:12,640 Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the 799 00:37:12,719 --> 00:37:16,600 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 800 00:37:16,640 --> 00:37:19,920 Speaker 1: can also watch us live every weekday on YouTube and 801 00:37:20,160 --> 00:37:22,120 Speaker 1: always on the Bloomberg Terminal