WEBVTT - BI Weekend: T-Mobile Earnings, DeepSeek "Panic" 0:00:02.759 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.440 --> 0:00:13.360 This is Bloomberg Intelligence with Alex Steele and Paul Sweeney. 0:00:13.480 --> 0:00:16.680 The real our performance has been the US corporate high yield. 0:00:16.840 --> 0:00:19.200 Are the companies lean enough? Have they trimmed all the fats? 0:00:19.280 --> 0:00:22.440 The semiconductor business is a really cyclical. 0:00:22.040 --> 0:00:26.079 Business, breaking market headlines and corporate news from across the globe. 0:00:26.160 --> 0:00:28.720 Do investors like the M and A that we've seen? 0:00:28.960 --> 0:00:32.040 These are two big time blue chip companies. 0:00:32.320 --> 0:00:35.680 Window between the peak and cut changing super. 0:00:35.400 --> 0:00:39.760 Fast Bloomberg Intelligence with Alex Steele and Paul Sweeney. 0:00:39.560 --> 0:00:40.720 On Bloomberg Radio. 0:00:41.159 --> 0:00:43.760 On Today's Bloomberg Intelligent Show, We're going to dig inside 0:00:43.800 --> 0:00:46.640 the big business stories impacting Wall Street and the global markets. 0:00:47.040 --> 0:00:49.400 Each week we provide in depth research and data on 0:00:49.440 --> 0:00:51.159 some of the two thousand companies and one hundred and 0:00:51.159 --> 0:00:54.640 thirty industries our analysts cover worldwide. Today, we're going to 0:00:54.680 --> 0:00:58.320 discuss how Chinese AI startup Deep Seek challenge Silicon Valley's 0:00:58.320 --> 0:01:02.480 assumptions about the cost of artificial intelligence, plus why shares 0:01:02.520 --> 0:01:05.080 of jeff Blue Airways took a hit last week. But first, 0:01:05.319 --> 0:01:07.680 a look into corporate earnings from one of the largest 0:01:07.680 --> 0:01:11.000 wireless carriers in the US. TEA Mobile reported fourth quarter 0:01:11.040 --> 0:01:13.600 results that beat analyst projections, and the results were driven 0:01:13.640 --> 0:01:17.759 by growth and wireless subscriptions and home internet customers. For more, 0:01:17.880 --> 0:01:20.080 guest host John Tucker and Paul Sweeney were joined by 0:01:20.160 --> 0:01:23.360 t Mobile CEO Mike Sievert, and they first asked Mike 0:01:23.440 --> 0:01:25.600 for his take on the company's most recent earnings. 0:01:25.680 --> 0:01:29.919 We're just consistently outperforming expectations, and that's what the market 0:01:29.920 --> 0:01:32.520 looks for in a business like ours. We're taking share, 0:01:32.720 --> 0:01:35.720 we're growing, and then across the board we beat expectations. 0:01:36.280 --> 0:01:39.959 We just finished the strongest growth here ever in our history. 0:01:40.000 --> 0:01:42.039 And that's saying something because we have a story to 0:01:42.080 --> 0:01:44.040 growth history in this company and a lot of people 0:01:44.080 --> 0:01:47.080 wonder is the big growth run behind us, and we 0:01:47.160 --> 0:01:49.440 just demonstrated yet again, No, it's not. 0:01:50.200 --> 0:01:52.360 It's hard for me to get really excited about my 0:01:52.560 --> 0:01:57.920 mobile service provider. But your customers, it's like they were 0:01:57.920 --> 0:02:01.360 in a cult. What's the secret sauce? That's my softball question. 0:02:01.720 --> 0:02:04.000 You know, our value, our corporate values start with this 0:02:04.080 --> 0:02:07.360 basic idea. Love our customers, you know, give them more, 0:02:07.560 --> 0:02:08.800 ask less of them. 0:02:08.840 --> 0:02:11.280 And they notice. That's it's just a huge part. 0:02:11.120 --> 0:02:12.840 Of our brand, and we have this thing we do 0:02:12.919 --> 0:02:17.240 called T Mobile Tuesdays where every week customers come to 0:02:17.360 --> 0:02:21.040 our Tea Life app, which has fifty million users, and 0:02:21.080 --> 0:02:23.600 they engage to find out how are we rewarding them 0:02:23.639 --> 0:02:24.000 this week? 0:02:24.080 --> 0:02:25.040 Do you know what this week's was? 0:02:25.200 --> 0:02:28.400 We gave away a shack Burger like the world's best 0:02:28.400 --> 0:02:32.320 burger for free to every single teams Reflix. 0:02:33.280 --> 0:02:36.200 Absolutely so, Mike, this is you're in a competitive business. 0:02:36.200 --> 0:02:38.800 I think about the wireless business, the barriers to change 0:02:38.800 --> 0:02:43.079 are pretty minimal. Churn is always an issue. Your competitors 0:02:43.080 --> 0:02:47.320 are depocketed, they're good competitors. Is it just you guys 0:02:47.320 --> 0:02:50.400 switching customers all the time just for deals. Talk to 0:02:50.440 --> 0:02:52.200 us about the churn for your company. 0:02:52.200 --> 0:02:55.400 Your business well churns at historic lows across the industry, 0:02:55.440 --> 0:02:57.560 not just T Mobile. We just had our best churn 0:02:57.600 --> 0:03:00.680 year ever, So people aren't switching a lot when they 0:03:00.720 --> 0:03:03.040 are switching the net share takers tea Mobiles. 0:03:03.080 --> 0:03:04.480 This is a great trend. You know. 0:03:04.760 --> 0:03:06.840 I don't need for others to fail in order for 0:03:06.919 --> 0:03:09.360 us to succeed in our business. This is a great neighborhood. 0:03:09.560 --> 0:03:11.840 We just happen to be the best house in the neighborhood, 0:03:12.040 --> 0:03:14.760 and so we're out growing everyone. But this is a healthy, 0:03:14.919 --> 0:03:18.359 vibrant sector. Everyone's you know, growing and making money. I 0:03:18.360 --> 0:03:20.520 think that's great. Part of it is people can't get 0:03:20.639 --> 0:03:23.120 enough of the service that we all offer at T Mobile. 0:03:23.440 --> 0:03:25.600 You know, we just guide it again to a big 0:03:26.000 --> 0:03:30.079 year of revenue gains per customer. And that's not because 0:03:30.080 --> 0:03:33.480 of pricing. It's because customers are self selecting up our 0:03:33.560 --> 0:03:36.520 rate card to our higher priced offers because they see 0:03:36.560 --> 0:03:39.240 the superior value and they want what we have to sell. 0:03:39.280 --> 0:03:41.520 That's a great dynamic, not just for T Mobile, but 0:03:41.560 --> 0:03:42.240 for the industry. 0:03:42.360 --> 0:03:45.520 The growth strategy is organic or M and A or what. 0:03:46.080 --> 0:03:47.320 It's organic principally. 0:03:47.320 --> 0:03:48.640 I mean, we do have a number of M and 0:03:48.680 --> 0:03:51.640 A deals in the pipeline that we're intending to close 0:03:51.680 --> 0:03:55.920 this year, centered around fiber, centered around you know, other 0:03:56.040 --> 0:04:00.920 add ons. We're also in, you know, acquiring a cellular company, 0:04:01.000 --> 0:04:01.680 US Cellular. 0:04:02.000 --> 0:04:04.120 So but by far, the. 0:04:04.080 --> 0:04:07.680 Growth is an organic growth story focused on taking share, 0:04:08.120 --> 0:04:12.440 adding revenues, deepening relationships with the existing customers that now 0:04:12.760 --> 0:04:14.600 number well past one hundred million. 0:04:15.400 --> 0:04:18.159 I don't understand like outdoor advertising, what does that have 0:04:18.200 --> 0:04:19.120 to do with your business. 0:04:19.279 --> 0:04:22.800 Yeah, we just announced the acquisition of a company called Vistar, 0:04:23.240 --> 0:04:25.719 and you know we are in We're a billion dollar 0:04:25.800 --> 0:04:29.240 advertising support company already, so it's a significant business for us. 0:04:29.680 --> 0:04:33.120 We call it marketing services for marketers buy marketers. T 0:04:33.279 --> 0:04:36.680 Mobile is a very famous marketer, and marketers want services 0:04:36.680 --> 0:04:40.719 from us, so we provide that already. But our Tea 0:04:40.760 --> 0:04:42.799 Life app part of what it does is it asks 0:04:42.920 --> 0:04:46.880 customers buy the millions whether they would like to opt in. 0:04:47.279 --> 0:04:50.160 Opt in to make their digital life better and their 0:04:50.200 --> 0:04:51.560 advertising more relevant. 0:04:51.680 --> 0:04:53.520 And then we can use. 0:04:53.600 --> 0:04:57.520 Data to provide marketers with an ability to put advertising 0:04:57.560 --> 0:05:00.000 in front of customers that they will actually appreciate. 0:05:00.440 --> 0:05:02.120 And our dream with place. 0:05:01.880 --> 0:05:05.160 Based marketing, outdoor marketing, that's the Vistaar acquisition is to 0:05:05.200 --> 0:05:09.200 do that for the first time ever in outdoor advertising, 0:05:09.440 --> 0:05:12.799 so that for the first time outdoor advertising, place based 0:05:12.800 --> 0:05:15.440 advertising can become an addressable market. 0:05:15.600 --> 0:05:18.680 Yeah, it's interesting. I love the outdoor business. You can't 0:05:18.720 --> 0:05:19.560 switch channels on that. 0:05:19.880 --> 0:05:22.480 I took all those companies public back in the day. Apple, 0:05:22.680 --> 0:05:26.599 Mark German Bloomberg News. Apple has been working with SpaceX. 0:05:26.080 --> 0:05:29.159 And T Mobile on starlink. What is starlink? 0:05:29.480 --> 0:05:32.799 Okay, So this is the ability to connect your mobile 0:05:32.880 --> 0:05:37.600 phone directly to satellite service. This is a huge breakthrough. 0:05:37.640 --> 0:05:40.680 We announced our intention to partner with SpaceX over two 0:05:40.720 --> 0:05:43.440 years ago, and now finally it's coming to market. With 0:05:43.960 --> 0:05:46.360 opening of our beta a couple of weeks ago. We're 0:05:46.360 --> 0:05:49.599 bringing on thousands of users and soon way more than that. 0:05:49.640 --> 0:05:51.440 We're going to throw the doors open on this thing. 0:05:51.640 --> 0:05:54.479 If you can see the sky, you're connected. 0:05:54.640 --> 0:05:56.400 That's our visual the iPhone app. 0:05:57.400 --> 0:05:57.960 That's correct. 0:05:58.080 --> 0:06:00.880 These are lower th orbit satellites, easier for your phone 0:06:00.920 --> 0:06:03.919 to find and vice versa. But this country, you guys, 0:06:03.960 --> 0:06:09.960 has five hundred thousand square miles uncovered by any cellular network, 0:06:10.279 --> 0:06:13.160 and it's a massive part of our land mass, and 0:06:13.160 --> 0:06:15.279 we're about to close that coverage. 0:06:15.279 --> 0:06:17.640 Okay, So if I uh on my bucket list is 0:06:17.839 --> 0:06:22.200 a trip to the South Pole, I don't need cellular 0:06:22.240 --> 0:06:24.360 service down there. I could just use a T mobile 0:06:24.520 --> 0:06:26.000 iPhone Starling. 0:06:26.200 --> 0:06:27.840 Well, I'm gonna have to check on how good the 0:06:28.000 --> 0:06:30.000 l EO coverage is. But one of the things you 0:06:30.000 --> 0:06:33.159 point out and very quickly to follow our terrestrial coverage 0:06:33.200 --> 0:06:36.120 across the continental US and big parts of Alaska is 0:06:36.160 --> 0:06:39.560 the world's oceans that. That's a big piece of this 0:06:39.680 --> 0:06:42.280 because you know now you'll be able to not right away, 0:06:42.279 --> 0:06:43.719 but as soon as we are able to turn it on, 0:06:43.839 --> 0:06:46.839 you'll be able to get your service across the US 0:06:47.440 --> 0:06:50.520 and as you travel around the oceans outside the reach 0:06:50.560 --> 0:06:51.640 of any cellular See. 0:06:51.520 --> 0:06:55.040 It's in beta testing right now. It's just confined to messaging. 0:06:55.200 --> 0:06:58.400 Hundreds of satellites are in the air where we have 0:06:58.440 --> 0:07:00.920 a free beta service going on. We're starting to let 0:07:00.920 --> 0:07:04.760 people into it. Right now it's text messaging only, but 0:07:05.400 --> 0:07:09.240 fast to follow will be light data services and eventually voice. 0:07:08.880 --> 0:07:11.120 So I can get rid of my satellite phone. We 0:07:11.160 --> 0:07:12.200 don't need that anymore. 0:07:12.640 --> 0:07:14.920 I think the time will come when that's the case. 0:07:15.680 --> 0:07:18.400 Top line growth four to five percent for you guys, 0:07:18.400 --> 0:07:21.200 that's how I think about the wireless business. Is that 0:07:21.320 --> 0:07:24.640 all pricing? If so, how do you think about the 0:07:24.640 --> 0:07:25.560 pricing environment out there? 0:07:25.600 --> 0:07:29.200 It's sharetaking and self selecting up our rate card, you know, 0:07:29.320 --> 0:07:32.440 very little pricing. And so those are the big dynamics. 0:07:32.640 --> 0:07:35.720 Postpaid service revenue growth eight percent, more than double the 0:07:35.800 --> 0:07:38.120 rate of our peers. And so this is you know, 0:07:38.160 --> 0:07:41.200 a dynamic that makes t mobiles so different in this 0:07:41.320 --> 0:07:44.440 space because we're not only growing the top line, but 0:07:44.520 --> 0:07:47.960 we're translating it into financial growth on the bottom line. 0:07:48.160 --> 0:07:52.000 Twenty five percent year over year growth and cash flows 0:07:52.080 --> 0:07:54.040 seventeen billion dollars are highest ever. 0:07:54.360 --> 0:07:56.720 Now, how do you raise prices? You sort of touched 0:07:56.720 --> 0:07:58.800 on this just briefly before, but how do you raise 0:07:58.840 --> 0:08:01.160 prices without scaring away your cult members? 0:08:02.360 --> 0:08:05.280 Cult members? Well, one thing is people. You know, we 0:08:05.320 --> 0:08:07.520 have a rate card with a variety of options, and 0:08:07.600 --> 0:08:12.320 people choose at an increasing rate the prices that are 0:08:12.400 --> 0:08:14.600 higher up because they want what we have to sell. 0:08:14.720 --> 0:08:17.480 Do you know that sixty percent of our new customers 0:08:17.520 --> 0:08:19.600 coming in the front door choose one of our two 0:08:19.720 --> 0:08:22.800 most premium plans because those are the ones that are 0:08:22.840 --> 0:08:25.600 most packed with value. And they you know, they're here 0:08:25.600 --> 0:08:28.400 for a reason. They want more data, they want the 0:08:28.480 --> 0:08:31.560 experience that T Mobile can provide with the world's best 0:08:31.600 --> 0:08:32.599 five G network. 0:08:33.120 --> 0:08:36.160 Subscriber acquisition costs have how are they trending for you 0:08:36.200 --> 0:08:36.840 guys these days? 0:08:36.880 --> 0:08:40.080 They're pretty flat, and that's good. We're very comfortable with 0:08:40.080 --> 0:08:43.760 this business model. It's a high CLV, you know, value exchange. 0:08:44.000 --> 0:08:47.600 One of the things about this business it's reliable, it's predictable. 0:08:47.840 --> 0:08:50.360 We do what we say, we try to exceed what 0:08:50.400 --> 0:08:53.400 we say, and it's growing and that's one of the 0:08:53.440 --> 0:08:56.560 things that really distinguishes us in a group of peers, 0:08:56.559 --> 0:08:58.640 not just in the US, but around the world. 0:08:59.160 --> 0:09:01.600 There is a fed meat today. Can you tell me 0:09:02.080 --> 0:09:04.720 how if it all rates affect your business? 0:09:05.160 --> 0:09:09.040 Well, we're a big debt issuer, so obviously it's relevant 0:09:09.080 --> 0:09:09.760 in the long haul. 0:09:09.880 --> 0:09:10.920 What's the debt right now? 0:09:12.040 --> 0:09:15.640 With two point five leverage against debit, so it's you know, 0:09:15.679 --> 0:09:18.680 it's very significant eve as in the thirty one, you know, 0:09:19.280 --> 0:09:23.880 very significant debt, but it's also a stack that's you know, 0:09:23.960 --> 0:09:27.679 investment grade, it's long term, it's you know, spread out, 0:09:28.040 --> 0:09:30.240 so it doesn't affect us in an immediate way, but 0:09:30.320 --> 0:09:32.080 in the long taul of course, as a debt. 0:09:31.960 --> 0:09:33.680 It what would you like that leverage ratio to be 0:09:33.920 --> 0:09:34.600 right where it is? 0:09:34.679 --> 0:09:35.000 Okay? 0:09:36.520 --> 0:09:39.760 Market structure in the wireless business three main players? Okay, 0:09:40.080 --> 0:09:43.000 is there room for fourth? And I think about my 0:09:43.040 --> 0:09:45.360 old friend Charlie Oregon. I have for the last fifteen years, 0:09:45.400 --> 0:09:47.440 I had no idea what he's doing with a spectrum, 0:09:47.520 --> 0:09:48.680 and I don't think the market knows either. 0:09:48.760 --> 0:09:53.240 Well, he's operating you know, a major brand and Boost Mobile. 0:09:53.360 --> 0:09:56.560 And the other thing is the cable companies, Charter and 0:09:56.640 --> 0:10:00.200 Comcasts taken together, who don't overlap, kind of constant to 0:10:00.320 --> 0:10:03.480 an additional carrier ass going well, and you know, they 0:10:03.520 --> 0:10:07.199 are really growing their mobile service at a significant pace, 0:10:07.440 --> 0:10:09.840 not as significant as us. We're the growth leaders, but 0:10:09.920 --> 0:10:12.400 it's you know, it shows that this is a vibrant market. 0:10:12.520 --> 0:10:14.920 Yeah, with a lot of competition in the smaller market. 0:10:14.960 --> 0:10:16.600 So that's a big deal for you too, right. 0:10:16.640 --> 0:10:19.600 Yeah, forty percent of the country everything that's not the 0:10:19.640 --> 0:10:23.080 top one hundred markets we call smaller markets in rural areas. 0:10:23.200 --> 0:10:25.120 It's a huge source of our growth right. 0:10:25.040 --> 0:10:28.240 Now, thanks to Tea Mobile CEO Mike Sivert. We move 0:10:28.360 --> 0:10:31.040 next to the auto sector. This week General Motors gave 0:10:31.040 --> 0:10:33.640 a better than expected outlook for profit in twenty twenty five, 0:10:33.679 --> 0:10:36.680 but President Trump's recent tear of threats have raised uncertainty 0:10:36.720 --> 0:10:40.000 about the automaker's business. As a result, GM shares dropped 0:10:40.040 --> 0:10:42.559 as much as ten percent on Tuesday, and for more. 0:10:42.600 --> 0:10:45.480 We were joined by Steve Mann, Bloomberg Intelligence, Global Autos 0:10:45.480 --> 0:10:47.040 and Industrials research analyst. 0:10:47.360 --> 0:10:49.480 Yeah, I think the you know, Scott had a nice 0:10:49.559 --> 0:10:51.959 run up last year. You know, the management team has 0:10:52.000 --> 0:10:54.920 done a great job and actually managing and investors and 0:10:54.960 --> 0:10:59.320 managing the challenges that's in the US market that the 0:10:59.360 --> 0:11:02.800 other company, Ford and stilentas have been facing. I think 0:11:02.800 --> 0:11:06.920 the expectation has actually ran up through last year, and 0:11:07.640 --> 0:11:10.600 you know, we got some negative news, mixed news in 0:11:10.679 --> 0:11:13.640 terms of the outlook. You know, the tone has changed. 0:11:14.160 --> 0:11:16.960 You know, this is the first time that GM actually 0:11:17.559 --> 0:11:20.600 is a little bit worried about the end market since COVID. 0:11:20.760 --> 0:11:21.720 Well, what have we learned. 0:11:21.600 --> 0:11:25.640 About GM and its actual EV units? Like, we're sales 0:11:25.679 --> 0:11:28.240 better than expected, Like is the trough passed? 0:11:28.679 --> 0:11:31.920 Yeah, it sales, especially in the fourth quarter, it did 0:11:32.440 --> 0:11:37.280 run up. Some of that may be some channel inventory 0:11:37.360 --> 0:11:41.840 stock building anticipation of better sales than twenty twenty five, 0:11:42.360 --> 0:11:44.880 and that's one of the key issues. I think the 0:11:44.880 --> 0:11:48.280 investors are concerned. There's a you know, there's going to 0:11:48.360 --> 0:11:52.720 be a mixed change. They think that EV sales increase 0:11:52.840 --> 0:11:56.880 EV sales will offset some of the more profitable truck 0:11:56.960 --> 0:12:00.920 sales in twenty twenty five. So, you know, based on 0:12:00.960 --> 0:12:06.080 our estimates, like it seems like even their adjusted EBIT 0:12:06.120 --> 0:12:09.760 margin of eight to ten percent, maybe a little bit 0:12:09.800 --> 0:12:12.560 too high, and they may fall actually at the low 0:12:12.679 --> 0:12:15.720 end of that range or maybe even below our. 0:12:15.600 --> 0:12:18.800 Thanks to Steve Mann, Bloomberg Intelligence Global Autos and Industrials 0:12:18.840 --> 0:12:21.280 Research channelist. Coming up, we're going to break down some 0:12:21.400 --> 0:12:24.680 key corporate earnings in the aerospace industry. You're listening to 0:12:24.720 --> 0:12:28.079 Bloomberg Intelligence on Bloomberg Radio, providing in depth research and 0:12:28.160 --> 0:12:30.840 data on two thousand companies and one hundred and thirty industries. 0:12:31.160 --> 0:12:34.199 You can access Bloomberg Intelligence through Bigo. I'm the Terminal, 0:12:34.360 --> 0:12:36.640 I'm Alex Steele, and this is Bloomberg. 0:12:42.280 --> 0:12:46.080 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:46.160 --> 0:12:49.120 weekdays at ten am Easter what Apple CarPlay and the 0:12:49.160 --> 0:12:52.200 Android Auto with the Bloomberg Business App. Listen on demand 0:12:52.200 --> 0:12:55.800 wherever you get your podcasts, or watch us live on YouTube. 0:12:56.679 --> 0:12:59.720 We move next to the aerospace industry. This week, Boeing 0:12:59.760 --> 0:13:02.319 report or did a four billion dollar operating loss in 0:13:02.360 --> 0:13:06.000 the fourth quarter. Boeing CEO Kelly Ordberg said he will 0:13:06.040 --> 0:13:09.400 realign the company around key business lines and cleave off 0:13:09.559 --> 0:13:13.880 fringe assets. Separately, Jet Blue shares had a record plunge 0:13:13.920 --> 0:13:17.000 after the carrier forecasted weaker than expected revenue and higher 0:13:17.040 --> 0:13:19.320 costs for twenty twenty five. For more, we were joined 0:13:19.320 --> 0:13:23.280 by George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines analyst. 0:13:23.640 --> 0:13:26.160 We began by asking George about Boeing and one of 0:13:26.160 --> 0:13:27.880 the worst was over for the company. 0:13:28.080 --> 0:13:31.360 Look, it seems like it's always hard to say the 0:13:31.400 --> 0:13:34.120 worst is over. It seems like the trend is definitely 0:13:34.160 --> 0:13:36.440 going the right direction. It seems like twenty twenty five 0:13:37.000 --> 0:13:39.120 could be the year they thought twenty twenty four was 0:13:39.200 --> 0:13:42.000 going to be. Look, you know, I heard a lot 0:13:42.000 --> 0:13:45.560 of positive things about the manufacturing process in the call. 0:13:45.640 --> 0:13:47.599 I think that's why Boeing pre announced. They wanted to 0:13:47.640 --> 0:13:50.679 get some of the you know, the forward chargers out 0:13:50.720 --> 0:13:53.480 of the way so people could focus on the message. 0:13:53.520 --> 0:13:56.360 And I think the message was the factory, especially for 0:13:56.400 --> 0:13:59.640 the seven thirty seven, has restarted in the new year. 0:14:00.040 --> 0:14:04.280 It's building in the mid twenties range going to thirty eight. 0:14:04.280 --> 0:14:07.320 It sounded like somewhere near midyear, which is probably before 0:14:07.360 --> 0:14:10.320 where most of consensus thought it would get. I'm gonna 0:14:10.679 --> 0:14:13.320 and the year close to forty two is what I 0:14:13.360 --> 0:14:15.560 think I heard. I mean, management kept trying to solve 0:14:15.600 --> 0:14:17.640 pedal it to a degree, and what I heard is 0:14:17.760 --> 0:14:21.640 quality as spirit aerosystems improving. They're happy with it. They 0:14:21.640 --> 0:14:24.680 don't think it's a liminar. I mean, all that's positive 0:14:24.680 --> 0:14:27.600 for profitability and cash flow. Boeing should make this year 0:14:27.680 --> 0:14:30.680 a lot better than last year if it all comes true. 0:14:31.160 --> 0:14:34.240 Where should that seven three seven build number be in 0:14:34.280 --> 0:14:36.840 a perfect world, Georgia, I'm trying to gauge the thirty 0:14:36.880 --> 0:14:39.600 eight number, the forty number, the forty two number, versus 0:14:39.720 --> 0:14:42.360 where it should be, maybe versus where Airbus is with 0:14:42.440 --> 0:14:43.400 their product. 0:14:43.800 --> 0:14:45.480 Well, I guess I would say if you were at 0:14:45.480 --> 0:14:48.040 the Boeing board level, would you not say it should 0:14:48.080 --> 0:14:52.720 be in the sixties, somewhere well above Airbus. Look Boeing 0:14:52.920 --> 0:14:57.520 ended the last decade before the pandemic sort of driving 0:14:57.600 --> 0:15:01.040 closer to sixty builds a month. They have plenty of 0:15:01.080 --> 0:15:03.880 back laws. I don't think it should be at sixty 0:15:03.920 --> 0:15:06.720 a month now, but I would expect they should be 0:15:06.800 --> 0:15:10.200 driving hard towards sixty a month as we go into 0:15:10.200 --> 0:15:13.000 the middle of the back half of this decade. That's 0:15:13.000 --> 0:15:15.200 a little complex, Sorry about that, but you know the 0:15:15.240 --> 0:15:20.120 twenty seven's twenty eighths. I think that sixties ought to 0:15:20.160 --> 0:15:22.680 be a number they'd be looking at given the backlog, 0:15:23.480 --> 0:15:25.640 And look, where should they be right now? Maybe they 0:15:25.640 --> 0:15:30.520 should be, you know, close to fifty. So they're I mean, 0:15:30.520 --> 0:15:32.920 they're what, they're halfway to that level they probably should 0:15:32.960 --> 0:15:35.120 be at right now. This is the money maker, this 0:15:35.160 --> 0:15:37.320 is the one they want to really optimize. 0:15:37.360 --> 0:15:38.960 And no, no, I was going to say, I mean, 0:15:39.280 --> 0:15:41.160 it's always like at least it could be worse. I 0:15:41.200 --> 0:15:43.680 guess right, because it has been worse, So there's something there. 0:15:44.560 --> 0:15:46.400 I do want to switch and talk about Jet Blue 0:15:46.440 --> 0:15:48.160 for a second, because Paul and I are just really 0:15:48.160 --> 0:15:51.200 confused to the extent to which Jet Blue is getting 0:15:51.200 --> 0:15:53.880 beaten down. We know the costs will higher than estimated, 0:15:53.920 --> 0:15:55.480 but what do you make of that price action? 0:15:55.960 --> 0:15:59.840 Yeah, so, I mean I think they're Look, the big 0:16:00.160 --> 0:16:03.880 service carriers, I think showed slightly better results than we 0:16:03.920 --> 0:16:06.640 had expected, right, And so I think if you were 0:16:06.760 --> 0:16:10.160 looking at the entire airline space, you could be confused 0:16:10.160 --> 0:16:15.400 that those better numbers would carry through to the economy carriers, 0:16:15.400 --> 0:16:17.920 to the more basic economy carriers. And I think what 0:16:18.000 --> 0:16:21.280 Jet Blue told us it didn't right. Jet Blue lives 0:16:21.280 --> 0:16:22.560 in a really difficult part. 0:16:22.360 --> 0:16:23.000 Of the market. 0:16:23.560 --> 0:16:26.320 They are you know, they're low cost plus they have 0:16:26.360 --> 0:16:29.920 some premium seating and I say low costs, but they're not. 0:16:30.080 --> 0:16:32.920 Their costs are not as low as like a Frontier, 0:16:33.440 --> 0:16:36.840 a spirit an Allegiance. And so we think at the 0:16:36.840 --> 0:16:40.280 bottom of that market and the basic economy world, your 0:16:40.640 --> 0:16:43.960 best advantage is to be able to deliver seat miles 0:16:44.000 --> 0:16:47.760 as cheap as possible because you're getting customers on price, 0:16:48.360 --> 0:16:53.880 where if you're up in the United American right delta 0:16:54.040 --> 0:16:58.000 world you get people on loyalty programs and premium seating 0:16:58.040 --> 0:17:00.640 and things like that. We know the back end of 0:17:00.640 --> 0:17:04.000 this business is really competitive, and it's hard for like 0:17:04.000 --> 0:17:06.880 the Jet Blues in Southwest to survive in a world 0:17:06.920 --> 0:17:09.879 where you've got to just deliver the really cheapest seat price. 0:17:10.240 --> 0:17:13.199 And they're having a hard time doing that given the upstarts. 0:17:13.520 --> 0:17:16.240 And when they show us an eight percent increase in 0:17:16.320 --> 0:17:20.639 cost per available seat mile in one queue, no operating 0:17:20.680 --> 0:17:24.160 profit that gets concerning that the worst isn't behind us 0:17:24.200 --> 0:17:27.359 on excess budget seats in the marketplace. 0:17:27.760 --> 0:17:29.800 Can we get some consolidation in that lower end of 0:17:29.800 --> 0:17:32.480 the market now with this new administration, George. 0:17:32.359 --> 0:17:35.560 Look, we could. I think the bigger ones could. I 0:17:35.560 --> 0:17:39.960 think Jet Blue could consolidate somebody underneath them or somebody 0:17:40.000 --> 0:17:43.520 about the same size. I don't think they'd allow Southwest 0:17:43.920 --> 0:17:46.040 to go out and buy somebody, but I think you 0:17:46.119 --> 0:17:48.919 could at the bottom end. Plus, you have some that 0:17:49.000 --> 0:17:52.120 are hurting, right, you have Spirit airlines. Question is can 0:17:52.160 --> 0:17:55.440 they survive. That could take some capacity out of the marketplace. 0:17:55.760 --> 0:17:59.360 The challenges the planes don't go away. They're built, they're aluminum, 0:17:59.400 --> 0:18:02.960 they last third years. Someone gets the airplanes. Where do 0:18:03.000 --> 0:18:04.840 those airplanes go? Do they go out of market? They 0:18:04.880 --> 0:18:07.920 go in market. But you could get some consolidation too. 0:18:08.480 --> 0:18:11.040 Thirty seconds RTX you cover some of the defense guys. 0:18:11.119 --> 0:18:11.920 RTX doing well. 0:18:12.119 --> 0:18:15.280 Yeah, they showed some nice numbers. The guidance for next 0:18:15.359 --> 0:18:19.760 year was nice as well. Look, they have a lower 0:18:20.200 --> 0:18:23.840 I think view on how much original equipment deliveries they'll 0:18:23.880 --> 0:18:27.720 make next year. That I think is probably practical, especially 0:18:27.720 --> 0:18:30.199 given what Boeing said. So they kind of looked for 0:18:31.000 --> 0:18:36.040 mid single digits growth in that original equipment deliveries. I 0:18:36.080 --> 0:18:38.960 think Boeing and Airbus alone with narrow body deliveries are 0:18:38.960 --> 0:18:41.879 going to be twelve ish percent. It'll be interesting to 0:18:41.880 --> 0:18:43.520 see how that plays out, because the more that original 0:18:43.560 --> 0:18:46.360 equipment they deliver, the more PRESSUREUS margins. 0:18:46.560 --> 0:18:49.560 All right, thanks to George ferguson Bloomberg Intelligence and your Aerospace, 0:18:49.600 --> 0:18:52.399 Defense and Airlines analyst. This week we focus on a 0:18:52.400 --> 0:18:56.200 Bloomberg Big Take story titled deep Seek Challenges Silicon Valley's 0:18:56.240 --> 0:18:59.760 assumptions about AI costs. You can find it on Bloomberg 0:18:59.760 --> 0:19:02.520 dot Com and the Terminal. The story looks at how 0:19:02.600 --> 0:19:05.800 Chinese AI startup called deep Seek released a new open 0:19:05.840 --> 0:19:09.960 source AI model called r one that can mimic human reasoning, 0:19:10.480 --> 0:19:13.400 and the release sent shock waves to the US tech industry, 0:19:13.440 --> 0:19:16.640 with tech companies analyzing how deep Seek built its chatbot 0:19:16.720 --> 0:19:19.640 and whether it did as cheaply as it claimed. For more, 0:19:19.680 --> 0:19:22.679 we were joined by Rachel Metz, Bloomberry AI reporter, and 0:19:22.760 --> 0:19:25.480 we first asked Rachel what the feeling is in Silicon 0:19:25.600 --> 0:19:26.840 Valley after the latest news. 0:19:27.080 --> 0:19:28.640 We're hearing a bunch of different things. 0:19:28.640 --> 0:19:31.320 I mean, I think some people are a little alarmed, 0:19:31.320 --> 0:19:33.520 a little bit surprised, but I think there's also a 0:19:33.520 --> 0:19:37.120 lot of excitement. Frankly, I mean some of it may 0:19:37.119 --> 0:19:39.719 boil down to sort of what your goals are what 0:19:39.800 --> 0:19:42.119 your job is. I think you're seeing a lot of 0:19:42.440 --> 0:19:46.880 interest and excitement, such as from companies that sell these 0:19:46.920 --> 0:19:49.960 AI models to other people, like sell the usage of them, 0:19:50.240 --> 0:19:53.560 a company like Data Bricks or cohere. I think they're 0:19:53.680 --> 0:19:56.800 really interested in seeing where this goes. Data Bricks CEO 0:19:57.040 --> 0:19:59.680 told me that they have a ton of customer interest 0:19:59.720 --> 0:20:02.359 in us Deep seeks, so that's really interesting to them 0:20:02.480 --> 0:20:05.120 from a customer perspective. But you could also see how 0:20:05.119 --> 0:20:07.320 companies that are making these models might be like wait 0:20:07.359 --> 0:20:09.760 a minute, yeah. 0:20:09.359 --> 0:20:12.000 Well, and I guess the question is how soon can 0:20:12.320 --> 0:20:17.120