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Speaker 1: Good morning. I'm Brian Curtis and I'm Doug Krisner. Here

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Speaker 1: are the stories we're following today.

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Speaker 2: Well, Nike stock now down eleven percent in late trading.

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Speaker 2: Nike reported quarterly revenue of thirteen point three nine billion dollars.

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Speaker 2: Now that was roughly in line with analysts expectations, but

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Speaker 2: the company said it sees a softer second half revenue outlook,

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Speaker 2: and this comes as sales in the Greater China region

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Speaker 2: came in lower than expected for the current quarter. We

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Speaker 2: heard from Bloomberg's Red.

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Speaker 3: Brown, Nike's been kind of playing this dangerous game, if

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Speaker 3: you will, where a lot of their growth is really

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Speaker 3: heavily reliant on on China, when their sales in Europe,

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Speaker 3: their sales in America, their bigger markets have really slowed down.

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Speaker 3: So with those sales numbers in China coming in a

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Speaker 3: little bit below expectations, I think that is a little

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Speaker 3: bit of a worry for the company when they do

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Speaker 3: have such an outsized importance for for Nike.

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Speaker 2: That's Bloomberg Diggs Red Brown. Nike also said that it's

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Speaker 2: looking for as much as two billion dollars in cost

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Speaker 2: savings as it streamlines operations. The sportswear and sneaker Giant

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Speaker 2: said it would incur restructuring charges of four hundred to

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Speaker 2: four hundred and fifty million dollars in the current quarter,

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Speaker 2: and again as we speak, Nike shares down almost eleven percent.

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Speaker 4: Do well.

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Speaker 1: There are more problems on the horizon for Apple after

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Speaker 1: the company lost that patent dispute over a blood oxygen

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Speaker 1: sensor on the Apple Smartwatch. Here is Bloomberg's tom Buzzby.

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Speaker 5: As part of that patent dispute settlement, Apple today stop

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Speaker 5: selling the Apple Watch Series nine and the Ultra two

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Speaker 5: on its US online store, and it'll have to stop

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Speaker 5: selling them at its two hundred and seventy physical US

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Speaker 5: stores this coming Sunday. Apple Watch se models that do

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Speaker 5: not have the ability to measure blood oxygen. Those are

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Speaker 5: still on sale, but in another potential problem, at least

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Speaker 5: for Apple customers, the company is also no longer repairing

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Speaker 5: older smart watches that are now out of warranty. Tom

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Speaker 5: usby Bloomberg Radio.

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Speaker 2: Boeing is getting a break after being shut out of

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Speaker 2: China's aviation market for the past four years. More from

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Speaker 2: Bloomberg's Tracy Junkie.

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Speaker 6: There's a lot riding on a Shanghai bound flight that

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Speaker 6: took off Thursday from Washington State. And we're not talking

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Speaker 6: passengers and luggage. The jet is a brand new Boeing

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Speaker 6: sevent eighty seven Dreamliner and it's the first to be

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Speaker 6: delivered directly to China since twenty nineteen. The Chinese government,

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Speaker 6: by signing off on the delivery, may be signaling and

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Speaker 6: easing of strained US China trade relations, and it's a

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Speaker 6: breakthrough for Boeing that could next lead to the first

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Speaker 6: seven thirty seven next deliveries to China in five years.

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Speaker 6: Tracy Jonkie Bloomberg Radio.

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Speaker 1: Well, speaking of US China trade relations. Today, the Commerce

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Speaker 1: Department said it will begin gathering information on Chinese production

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Speaker 1: of legacy semiconductors. Now, this follows news on the Biden

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Speaker 1: administration possibly raising tariffs on Chinese electric vehicles and other goods.

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Speaker 1: Here's Bloomberg's Brendan Murray.

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Speaker 7: It's just a good reminder that these trade war of

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Speaker 7: skirmishes can flare up at any time, and particularly the

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Speaker 7: Biden administration is under a lot of pressure from Congress

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Speaker 7: right now to get tough on China, so they're playing

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Speaker 7: to that constituency as well. Heading into election year next year.

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Speaker 1: That is Bloomberg's Brendan Murray. Now, the Commerce Department is

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Speaker 1: trying to track just how deeply reliant American companies have

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Speaker 1: been on US chip technology from China. The Department will

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Speaker 1: survey more than one hundred corporations in auto, aerospace, defense,

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Speaker 1: and other industries on how they obtain and use these

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Speaker 1: legacy chips. By the way, that process will begin in

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Speaker 1: January right and in.

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Speaker 2: The meantime, China says it will halt exports of some

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Speaker 2: rare earth processing technology. That story from Bloomberg's Joan Wong

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Speaker 2: in Hong.

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Speaker 8: Kong, Beijia has put technology for making rare earth metals

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Speaker 8: and rare earth magnets on a list of items that

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Speaker 8: can be transferred overseas. This is according to a document

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Speaker 8: from China's Ministry of Commerce. Well, the new rules don't

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Speaker 8: affect shipments of rare earth products themselves, they may be

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Speaker 8: intended to frustrate efforts to develop the industry outside China.

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Speaker 8: Western producers could face more technical challenges in developing refining

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Speaker 8: processes that China has come to master, and US government

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Speaker 8: figures show China accounted for more than two thirds of

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Speaker 8: mind rare Earth. Last year in Hong Kong joined Wong

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Speaker 8: Bloomberg Radio.

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Speaker 1: And after sixteen years as a member of OPEK, and

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Speaker 1: Gola is leaving the cartel. The story from Bloomberg's Charlie Pellett.

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Speaker 4: It comes as OPEK is trying to boost global prices.

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Speaker 4: Luanda had rejected a reduced output limit imposed by the

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Speaker 4: leaders of the cartel to reflect the country's dwindling capacity.

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Speaker 4: While the superficial blow to OPEC's unity briefly weaken crude prices,

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Speaker 4: the split will not impact oil supplies from the country

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Speaker 4: or the organization as a whole. In New York, Charlie Pellette,

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Speaker 4: Bloomberg Radio.

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Speaker 2: All right, now it's time for global news. At least

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Speaker 2: fifteen people have been killed that Prague's famed Charles University,

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Speaker 2: and back to with that story and more from the

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Speaker 2: nine to sixty newsroom in San Francisco.

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Speaker 4: Yeah, that's right.

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Speaker 9: Brian officials and the Czech Republics say the worst carnage

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Speaker 9: of its kind in Czech history. Interior Minister vit Rakisson

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Speaker 9: says there's no evidence that the shooter has any links

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Speaker 9: to the international terrorism. He says the shooter killed himself

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Speaker 9: at the end of the rampage. No mode of announced

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Speaker 9: shootings in the country are rare because it limits access

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Speaker 9: to firearms by requiring gun owners to pass written and

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Speaker 9: practical test as well as psychological screenings. Former mayor of

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Speaker 9: New York turned faithful and dutiful Trump aid Rudy Giuliani

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Speaker 9: has filed for bankruptcy after being ordered to pay one

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Speaker 9: hundred and forty eight million dollars to two twenty twenty

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Speaker 9: Georgia election workers for promoting conspiracy theories. He has now

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Speaker 9: filed for protection. Bloomberg's Jeremy Hill says it stops all litigation.

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Speaker 10: A federal judge is brought in to oversee your situation,

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Speaker 10: and he'll get a chance to negotiation with his creditors

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Speaker 10: about the best way to divide up his assets.

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Speaker 9: And Jeremy says, his assets don't go that deep.

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Speaker 10: The first thing that jumped out is just the gulf

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Speaker 10: between his assets and his liabilities, right, He says, as

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Speaker 10: much as five hundred million dollars in debts and no

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Speaker 10: more than ten million dollars in assets, so there's just

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Speaker 10: no way that he's going to be able to repay

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Speaker 10: all the debts.

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Speaker 9: City ohs and debter's got to stand in line, and

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Speaker 9: this while Trump legal team prepares its filing for the

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Speaker 9: US Supreme Court to try to overturn the Colorado ballot decision.

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Speaker 9: There's an interesting question coming up tied to the ethic

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Speaker 9: issues of Justice Clarence Thomas. Will he recuse himself Bloomberg's

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Speaker 9: Daniel Flatley.

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Speaker 11: Some of the scrutiny that Justice Thomas has already come under,

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Speaker 11: plus the questions of how he would be potentially influenced

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Speaker 11: by his wife, who was very involved in the Stop

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Speaker 11: the Steel movement, texting with Chief of Staff Mark Meadows

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Speaker 11: and various things like that.

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Speaker 3: Yeah.

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Speaker 9: Now, Dan says, whether he will actually do it is

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Speaker 9: still a question. US Air Force says it is keeping

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Speaker 9: Taiwan's defense in mind, even with the Middle East and

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Speaker 9: Ukraine getting the bulk of the attention. Bloomberg's Nathan Hager

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Speaker 9: reports from Washington.

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Speaker 12: About two dozen House Republicans are raising concerns about Taiwan's

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Speaker 12: air readiness. They say a program to modernize the island's

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Speaker 12: fleet of F sixteen fighter jets is almost three years

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Speaker 12: behind schedule, while software issues have delayed deliveries of sixty

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Speaker 12: six new aircraft from Lockheed Martin by more than fifteen months.

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Speaker 12: This week, Assistant Air Force Secretary Andrew Hunter told the

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Speaker 12: lawmakers there are only three existing jets left to retrofit,

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Speaker 12: and those sixty six new planes should be delivered by

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Speaker 12: the end of twenty twenty six. In Washington, I'm Nathan Hager,

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Speaker 12: Bloomberg Radio.

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Speaker 9: Meanwhile, General Charles Brown, the Chairman of the Joint Chiefs

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Speaker 9: of Staff, has now spoken with his Chinese counterpart for

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Speaker 9: the first time. The Biden administration has built it as

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Speaker 9: a further sign the ties between the two countries. Militaries

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Speaker 9: may be getting back to normal, but China's Defense Minister

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Speaker 9: Low is saying that while better, US needs to respect

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Speaker 9: China's sovereignty and interest in the South China see in

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Speaker 9: order to safeguard regional peace. Global News twenty four hours

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Speaker 9: a day and whenever you want it with Bloomberg News

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Speaker 9: Now in San Francisco, I med Baxter and this is Bloomberg.

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Speaker 2: This is Bloomberg Daybreak Asia. I'm Brian Curtis along with

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Speaker 2: Paul Allen in Sydney, and we have now Punham Goyle

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Speaker 2: with US senior US e Commerce and retail analyst at

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Speaker 2: Bloomberg intelligence to take a closer look at Nike earnings.

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Speaker 2: So a number of items here, Nike looking for a

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Speaker 2: lot of savings, cost savings, dismissing workers something like two

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Speaker 2: billion dollars worth, and talking about expecting a little bit

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Speaker 2: weaker performance in the latter half of What is it

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Speaker 2: that's that's kind of got investors riled up here. This

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Speaker 2: stock is now down around eleven percent in late trading.

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Speaker 13: Punham Hi, Yes, I think the stock being down eleven

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Speaker 13: percent happened just as they issued guidance for the full

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Speaker 13: year and reduced it largely due to two age weakness

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Speaker 13: as you called it. I think the third quarter, you know,

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Speaker 13: where they expect guidance to be a weaker as a

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Speaker 13: function of tougher comparisons. We saw that in two Q

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Speaker 13: they are up against very tough comparisons. But it's really

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Speaker 13: for Q that was more of a concerns where comparisons

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Speaker 13: do get easier, but they're still only expecting revenues to

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Speaker 13: be up one percent. And that's a function of two things.

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Speaker 13: One an uncertain macro and two weaker China. So those

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Speaker 13: two things together is what's raising brows here. Because China,

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Speaker 13: as everyone knows, is a real area of growth for them,

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Speaker 13: and the consumers are out and about shopping there. So

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Speaker 13: why so much skepticism. Could they be conservative here? Could

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Speaker 13: they just be low balling perhaps, but still, you know,

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Speaker 13: it is cost for concern.

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Speaker 14: We've also had the CFO met friend talking about quote

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Speaker 14: disciplined cost management. Is that code for more cuts?

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Speaker 13: You know, they've been cutting for some time now. So

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Speaker 13: with this new cost cutting plan two billion dollars of

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Speaker 13: savings over the next three years cumulatively, I think they

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Speaker 13: probably have rounded out what they can cut. Should conditions

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Speaker 13: get weaker beyond what they're expecting, you know, should China

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Speaker 13: not be able to grow as fast as they have expected,

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Speaker 13: could there be more absolutely down the line, But I think,

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Speaker 13: you know, this new plan that they have in place

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Speaker 13: probably takes care of a lot of it.

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Speaker 2: What's the situation with inventory at the moment.

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Speaker 13: Inventories are actually in great shape. That's the one thing

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Speaker 13: that I think was a silver lining here where we

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Speaker 13: saw inventory being reduced significantly, in fact, down fourteen percent.

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Speaker 13: So that's the silver lining here. Gross margins as a

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Speaker 13: result could be healthier, and we saw that in the

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Speaker 13: second quarter. We saw that their gross margins were up

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Speaker 13: quite nicely, and that's really what helped on the operating side.

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Speaker 14: So you mentioned that lackluster demand in China and some

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Speaker 14: uncertainty about their outlook there. How about some of the

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Speaker 14: other markets, and we often talk about India as an

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Speaker 14: emerging market for consumer strength, a wealthier consumer. What are

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Speaker 14: some of the other markets that might be a brand

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Speaker 14: spot for Naik?

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Speaker 10: Yeah.

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Speaker 13: I think the Asia Pacific market outside of China is

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Speaker 13: doing well. We saw that in the results that they

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Speaker 13: reported today, and it is promising that market because there

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Speaker 13: is a rising middle income class, especially in India where

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Speaker 13: there is definitely a large population as well as income growth.

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Speaker 13: So that part of the market is doing well. Another

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Speaker 13: part of the market that isn't doing well is Amia.

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Speaker 13: We saw weakness in Amia. It's a country or a

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Speaker 13: region that they called out that could see further weakness,

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Speaker 13: which is part of the reason for their weaker guidance

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Speaker 13: into their fifcult age.

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Speaker 2: I wonder whether competition is affecting this to a certain

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Speaker 2: degree with Nike, particularly in light of geopolitical tensions between

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Speaker 2: the US and China, and you know there is a

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Speaker 2: streak of nationalism in China sometimes drives consumers to buy

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Speaker 2: local by national brands.

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Speaker 13: We had heard about this competition taking you know, basically

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Speaker 13: putting a lot of pressure on Nike and some of

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Speaker 13: the other US brands, let's say maybe a couple of

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Speaker 13: years ago. I don't think that's the case right now.

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Speaker 13: I haven't heard that being the problem for why results

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Speaker 13: could be weaker though. Could those tensions emerge once again

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Speaker 13: down the line, possibly, we have seen it. But I

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Speaker 13: do think when you think about Nike and you think

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Speaker 13: about the global sports for our industry, Nike has a

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Speaker 13: clear lead, especially in footwear, and we think that lead

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Speaker 13: is probably here to stay. Now. On the apparel side,

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Speaker 13: there's definitely growing competition. Nike talked a lot today about

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Speaker 13: the women's market and how they are aiming to gain

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Speaker 13: share there with innovation and fit and that's encouraging, But

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Speaker 13: so is everyone else. So is ADIDASO is under Armour,

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Speaker 13: so is a little Lemon. You know, there's a lot

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Speaker 13: of competition on the apparel side, so it's anyone's game there.

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Speaker 14: So what's spen Some of the analyst reaction to both

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Speaker 14: the results and the earnings call, Well, I.

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Speaker 13: Can tell you what my reaction is, which is your

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Speaker 13: term is definitely challenged. But I think the longer term,

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Speaker 13: as they put out this two billion dollar cost savings

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Speaker 13: plan and as macro conditions do normalize at some point

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Speaker 13: in the next twelve to twenty four months, Nike remains

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Speaker 13: a dominant player in the industry, and we think that

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Speaker 13: the long term potential for Nike is still very much intact.

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Speaker 2: I'm curious about the tone of the top executives, like

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Speaker 2: the CEO, John Donaho. Did he sound upbeat longer term?

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Speaker 2: Did he express anything that made you think, well, you know,

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Speaker 2: this is just a minor setback. These guys are ready

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Speaker 2: to play.

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Speaker 13: I think, you know what encouraged me the most on

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Speaker 13: the call was the fact that they continue to harp

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Speaker 13: on innovation. I think it is one of Nike's strengths,

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Speaker 13: especially in footwear and their partnerships with keyth celebrities or

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Speaker 13: key sports players where they do for example, whether it

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Speaker 13: comes to Jordan becoming the second largest sports for a brand,

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Speaker 13: or even you know, with Lebron and some of the

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Speaker 13: other athletes Sabrina Williams, et cetera. They do have the

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Speaker 13: top athlete sponsoring Nike and endorsing Nike, which has done

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Speaker 13: Nike well and serve Nike well, and we think we'll

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Speaker 13: continue to be a driving force for them into the

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Speaker 13: next decade.

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Speaker 2: All right, Punham, thanks so much for joining us. Punam Goyle,

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Speaker 2: Senior US e Commerce and retail analysts at Bloomberg Intelligence.

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