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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: One of the names companies that reported numbers was Walmart

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Speaker 2: came out some pretty darn good numbers in a stock

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Speaker 2: market likes it.

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Speaker 3: Likes it.

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Speaker 2: Stock is up five point seven percent today, It's up

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Speaker 2: about eighteen percent a year today. Let's check in with

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Speaker 2: Jen Bartash as she covers all the retailers for Bloomberg Intelligence. So, Jen,

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Speaker 2: what did you hear from Walmart with their earnings release?

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Speaker 4: Yeah, it's you know, Walmart had another good quarter, and

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Speaker 4: I think that it's very easy to attribute a lot

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Speaker 4: of their success to just the value seeking behavior of

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Speaker 4: consumers in this environment. But I think that would also

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Speaker 4: be overlooking a lot of the investments they've made in

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Speaker 4: things like convenience that is really spurring the e commerce growth.

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Speaker 4: And that was really a notable takeaway from today's earnings release.

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Speaker 5: Yeah, that e commerce aspect helps draw on higher income shoppers,

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Speaker 5: So it's a larger pool of customers at Walmart now

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Speaker 5: has access to and in our Bloomberg News reporting we

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Speaker 5: indicate that the digital offerings now include luxury items like

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Speaker 5: pre owned to Chanel bags. I had no idea that

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Speaker 5: that kind of self was available on Walmart dot com.

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Speaker 4: Well, you know, Walmart has done a lot to really

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Speaker 4: expand its marketplace, and that includes bringing in items that

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Speaker 4: you know will appeal to that higher income consumer, you know.

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Speaker 4: And the tactic behind all of this is that the

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Speaker 4: more people are integrated with e commerce in going to stores,

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Speaker 4: they become sticky and they become loyal customers, so that

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Speaker 4: when the macroeconomic backdrop fades, it really increases Walmart's ability

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Speaker 4: to hang onto these customers going forward, and that just

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Speaker 4: drives future growth. So it's a really interesting play out

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Speaker 4: of how they're applying that tactic, Jen.

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Speaker 5: I also want to get your take on Walmart transferring

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Speaker 5: is listing to the NASAC that's going to happen on

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Speaker 5: December ninth, and that of course is to reflect as

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Speaker 5: focused on being a tech forward company. But I'm wondering,

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Speaker 5: I mean, how much of this is really just about

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Speaker 5: being included in the Nazak one hundred and therefore the

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Speaker 5: QQQ etl Oh.

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Speaker 4: Yeah, there's certainly part of that scarlet where you know,

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Speaker 4: that's that's probably part of the motivation. I think that

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Speaker 4: there is you know, obviously there's a perception with regards

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Speaker 4: to being perceived more as a tech company, which Walmart

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Speaker 4: in all truthfulness has evolved into a tech company, especially

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Speaker 4: amongst other retailers. By being listed at NASDAK, you know,

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Speaker 4: long term, maybe it helps the evaluation, you know, just

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Speaker 4: in terms of having that perception of being more in

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Speaker 4: you know, aligned with peers. You know, Amazon is listed

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Speaker 4: on NASDAK, things like that. So I think that there's

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Speaker 4: a lot of those components together combined, are really behind the.

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Speaker 2: Move Jen Nobody arguably has a better finger on the

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Speaker 2: pulse of the consumer than Walmart.

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Speaker 6: What are they saying these days?

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Speaker 4: Actually they seem relatively optimistic. You know, they talk about

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Speaker 4: you know, spending holding study for kind of that middle

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Speaker 4: income consumer, high end consumers seem to be spending pretty freely.

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Speaker 4: A little bit of concern about some of the lower

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Speaker 4: end consumer, but it does seem to be sort of

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Speaker 4: evening out. And so when they were looking forward to

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Speaker 4: the holiday season, which is you know, the most important

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Speaker 4: thing with regards to the retailers that I cover, they

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Speaker 4: seem cautiously optimistic that there will be a pretty good

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Speaker 4: holiday season this year. We do think that they're going

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Speaker 4: to people will prioritize spending on kids. That's usually what

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Speaker 4: happens first if they're holding back in other parts of

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Speaker 4: their of their budget. But all all, you know, all

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Speaker 4: indicators right now seem that we're headed towards a reasonably

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Speaker 4: solid holiday season.

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Speaker 5: You know, Jen, we tend to look at Walmart as

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Speaker 5: a shortcut for the consumer. But if this strong performance

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Speaker 5: is really more result of strategy and execution over the

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Speaker 5: longer term, how much of a read does it really

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Speaker 5: provide on the state of consumer spending beyond the fact

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Speaker 5: that Walmart has become this exceptionally well run, tech forward company.

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Speaker 5: I mean, you just look at Target, for instance, which

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Speaker 5: has a lower outlook.

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Speaker 4: No, it's a good point, Scarlet. I mean, I think

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Speaker 4: the thing is that nearly every household has some sort

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Speaker 4: of interaction with Walmart during the course of a year,

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Speaker 4: you know, whether it's in terms of frequency or not.

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Speaker 4: And so Walmart has really evolved their ability to capture

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Speaker 4: data about the customers that are spending in stores even

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Speaker 4: though they don't have a formal loyalty program, and so

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Speaker 4: they really do have that insight into sort of the

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Speaker 4: motivations behind customers where they stand. You know, I think

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Speaker 4: one of the interesting things with regards to just focus

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Speaker 4: and discipline. Walmart talked today about apparel sales and their

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Speaker 4: comparable sales for apparel was up five percent every month

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Speaker 4: of the third quarter, and when you could trust that

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Speaker 4: to Target, who reported yesterday they're still struggling with some

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Speaker 4: of their discretionary categories. So it seems to be a

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Speaker 4: story of execute and not only the consumer spending right

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Speaker 4: where they are.

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Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's get back to this Nvidia story. Certainly a big,

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Speaker 2: big player in this story in the market. Kun John

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Speaker 2: Sobani joins us. He's a senior analyst. He covers the

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Speaker 2: semi conductor companies for Bloomberg Intelligency Spased out there in

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Speaker 2: San Francisco, Kujo, and I'm sure you've had the opportunity

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Speaker 2: to a now only look at the numbers, listen to

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Speaker 2: the conference call, but talk to institutional investor clients. What's

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Speaker 2: the narrative coming out of this earnings release?

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Speaker 7: Yeah, I mean this was one of the more bullish

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Speaker 7: earnings we've seen from this name in a while, not

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Speaker 7: just on the numbers of the three Q four Q guide,

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Speaker 7: which they blew past even the lofty spyside targets, but

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Speaker 7: just beyond that, the long term the twenty six sort

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Speaker 7: of and going into twenty seven demands signals that they showed,

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Speaker 7: namely the half a trillion of the pipeline, which we

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Speaker 7: think now is a conservative number given the number of

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Speaker 7: deals they have announced. If supply keeps on coming up

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Speaker 7: as it has, and if their customers continue executing on

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Speaker 7: these bills without any missteps, we think they are a

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Speaker 7: significant upside to the current street numbers.

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Speaker 5: Yeah, just looking through the numbers, clearly a beaten race report,

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Speaker 5: but you know, the scale at which it can be

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Speaker 5: in race is impressive. Although within the third quarter numbers,

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Speaker 5: I did see that chips using gaming PCs missed analysts estimates,

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Speaker 5: and I know that that's a shrinking part of the business,

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Speaker 5: or at least it's not as big a part of

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Speaker 5: the business, given that the data center is where the

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Speaker 5: growth is really at. Are there any flaws in this

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Speaker 5: earning support con John?

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Speaker 7: Not really. I mean, look, the gaming is becoming so

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Speaker 7: unimportant for analysts that the reliability of the dedictability of

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Speaker 7: those numbers against which we're comparing the beat and miss

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Speaker 7: for gaming is no longer as reliable. So no real

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Speaker 7: face to really point out in this. We did see

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Speaker 7: their supply commitments go up quarter work quarter and inventory

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Speaker 7: is rising. I don't think that's a negative, while it

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Speaker 7: might seem on the face that's just them gearing up

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Speaker 7: and getting ready for that next wave to supply the

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Speaker 7: chips in the next year.

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Speaker 2: So Couldjohn what's the latest and gentsen Wong about how

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Speaker 2: he viewsed China going forward?

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Speaker 7: Nothing has changed on the China side. They still don't

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Speaker 7: assume any revenues when it comes to data center AI

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Speaker 7: China GPUs or the H twenty has been shipped into

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Speaker 7: They do have the clearance licenses, so they could, but

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Speaker 7: it seems because of the geopolitical issues China has basically

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Speaker 7: been shut down. For American GPU providers or AS providers

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Speaker 7: to be able to ship in the country, there is

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Speaker 7: to be honest, no demands. So it seems, you know,

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Speaker 7: because of geopolitical issues, the customers in China are not

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Speaker 7: just reading and getting up to buy Nvidia chips right now.

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Speaker 5: Jensenhang said that he from his vantage point, does not

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Speaker 5: see anything like an AI bubble. We see something very different,

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Speaker 5: and he says competitive pressures remain fairly low because this

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Speaker 5: is a company with more than ninety percent of the

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Speaker 5: market for those high end, super fast AI chips. Who

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Speaker 5: is the closest competitor if there is one to Nvidia.

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Speaker 7: Yeah, in terms of the size of the markets, the

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Speaker 7: next closest competitor would be the AIA six chips, So

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Speaker 7: Broadcom is one of the biggest providers of AI six chips,

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Speaker 7: namely the TPU that Google uses. Another example would be

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Speaker 7: Amazon'straanium chips, which are a differenti ACIC designer supplies. So

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Speaker 7: in terms of revenues or units. In terms of the market,

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Speaker 7: those are the next closest competitors. Within Nvidia's realm which

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Speaker 7: it sells merchant gipus, AMD would be the second closest

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Speaker 7: competitor in that.

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Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Company news out here Today, Verizon announce the layoffs that

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Speaker 2: will shrink the company by as much as twenty percent

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Speaker 2: of its non union workforce.

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Speaker 6: That's big and they have a big, big footprint in New.

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Speaker 2: Jersey from the old Bell Labs in Bell Core days

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Speaker 2: and so a lot of riz.

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Speaker 6: And employees in the state of New Jersey. So that'll

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Speaker 6: be a big issue for them.

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Speaker 2: John Butler joins us here senior telecom analysts for Bloomberg Intelligence. John,

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Speaker 2: What's what's this job cut announcement from Verizon? What does

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Speaker 2: this mean for the company? What are they trying to

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Speaker 2: do here?

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Speaker 3: So, Paul, as you may know, there's a new CEO

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Speaker 3: in town at dad Verizon named Dan Shalman. And I

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Speaker 3: believe Shallman is really he's been on the board for years.

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Speaker 3: I think he's looked at the organization and believes it's

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Speaker 3: a little too heavy, little too bureaucratic. He sees room

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Speaker 3: for ample cost cuts, and I think his whole message

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Speaker 3: to the employee base is we need to move faster,

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Speaker 3: and I think it's very tough to do that with

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Speaker 3: a large bureaucracy. I also think he's cutting costs in

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Speaker 3: order to free up funds and give them room to

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Speaker 3: promote more. I think one of the reasons that Verizon

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Speaker 3: has lagged its peers in subscriber growth is they're just

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Speaker 3: not matching price promotions out there in the marketplace. And

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Speaker 3: I think if they do that carefully wisely, I think

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Speaker 3: if they become a little less discipline than they've been

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Speaker 3: in promoting, they're going to find that they'll drive higher volumes.

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Speaker 3: And you know, I think at the end of the day,

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Speaker 3: Wall Street wants to see that that really is a

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Speaker 3: report card for the telcos. That's sort of quarterly net

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Speaker 3: editions number that all the telcods report.

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Speaker 5: And Wall Street is okay with a loss and margin

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Speaker 5: or an erosion of margin in order to get those numbers,

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Speaker 5: those subscriber numbers, because it sounds like Verizon is getting

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Speaker 5: ready to jump into participating in this price war in

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Speaker 5: a more robust way than it had been.

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Speaker 3: Yeah, good question, Scarlett. I think that's what these job

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Speaker 3: cuts are all about. You can maintain margins. If you're

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Speaker 3: cutting thirteen percent of the workforce, there's a big cost

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Speaker 3: savings there. So you're getting leaner on the expense line,

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Speaker 3: which gives you a little more room on the revenue

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Speaker 3: line to begin to promote more and really step up

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Speaker 3: and match competitors like T Mobile, which continue to be

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Speaker 3: aggressive on price. And then at the lower end, of course,

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Speaker 3: you've got the cable operators and their wireless brands. They

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Speaker 3: have been promoting very hard on price in order to

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Speaker 3: drive up their wireless installed base.

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Speaker 2: John, I'm guessing if a lot of Verizon Communications investors,

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Speaker 2: they're there for the dividend. It's got a yield of

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Speaker 2: six point seven percent here. That is a serious yield.

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Speaker 6: There.

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Speaker 2: Talk to us about their dividend strategy, their commitment to

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Speaker 2: the dividend going forward.

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Speaker 3: So Showman, when he first joined Verizon reiterated a commitment

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Speaker 3: to maintaining the dividend. I think with any carrier, as

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Speaker 3: their stock price drops and the effective yield goes up,

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Speaker 3: that dividend yield it becomes a target for potentially getting cut. Now,

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Speaker 3: the flip side of that is, any telcode that's cut

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Speaker 3: its dividend in the past will tell you there is

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Speaker 3: a very heavy price to pay for that. You typically

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Speaker 3: get a big price correction when you cut that dividend

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Speaker 3: because of course, at least with the AT and T

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Speaker 3: and Verizon, you're attracting a lot of investors to buying

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Speaker 3: this dock based on the yield. So if you cut

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Speaker 3: the yield, obviously you're going to lose some of those investors.

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Speaker 3: So he's got a tightrope to walk here. Again, you're

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Speaker 3: cutting thirteen percent of the organization as a first move.

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Speaker 3: I think there are other cost cuts down the road

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Speaker 3: and efficients to be efficiencies to be gained in not

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Speaker 3: only network operations, but customer care as well, particularly with

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Speaker 3: the advent of AI. So my hope is they're going

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Speaker 3: to be able to sustain free cash flow, which will

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Speaker 3: generate more than enough to sustain that dividend there.

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Speaker 5: Okay, So in Dan Schulman's drive to make Verizon a simpler, leaner,

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Speaker 5: and scrapier business, how do its competitors T Mobile and

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Speaker 5: AT and T respond? Do they respond?

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Speaker 3: They always respond Scorelet you know, it's it's it's that

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Speaker 3: kind of market. Wireless is a very mature business. It's

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Speaker 3: a saturated market. It's a zero sum game, and so

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Speaker 3: I think what we've seen from the BIT, all the

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Speaker 3: Big three recently is they are willing to promote heavily

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Speaker 3: to protect that. BABS for Rising again has been the

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Speaker 3: lagger there, but I think Shulman, who's very focused on

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Speaker 3: subscriber volumes, is probably going to step up and play

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Speaker 3: that game. So that's been the concern among investors that

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Speaker 3: it can get ugly very quickly, and frankly I share

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Speaker 3: that concern. So I'll have to see what the change

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Speaker 3: in direction is going to be at Verizon with regard

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Speaker 3: to promotion, But all indications so far is that they're

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Speaker 3: getting ready to promote more.

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Speaker 6: Say with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 5: Let's take a look at what's happening in the biotech

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Speaker 5: and pharmaceutical space. There's a big, big M and a deal,

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Speaker 5: Abbot Laboratories agreeing to buy the cancer screening company Exact Sciences,

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Speaker 5: with a total deal value of about twenty one billion dollars.

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Speaker 6: Yeah, pretty large.

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Speaker 5: Let's get some perspective now from Matt Hendrickson, Bloomberg Intelligence,

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Speaker 5: Senior medtech analyst. So, Matt, I guess this is this

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Speaker 5: is a surprise, given that we're looking at Exact Science's

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Speaker 5: shares moving quite a bit. This deal price represents a

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Speaker 5: fifty one percent premium to its last close.

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Speaker 8: Yeah, and you know this includes yesterday there Bloomberg News reported,

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Speaker 8: you know, some of the initial rumors that there was

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Speaker 8: this steel taking place. So the fact that it kind

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Speaker 8: of materialized so quickly and with that type of premium

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Speaker 8: is a little bit of a surprise, given kind of

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Speaker 8: that it started leaking yesterday. But when you look at

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Speaker 8: it from a multiple standpoint, you know it's trained. You know,

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Speaker 8: it's the sales about seven times Exact Sciences twenty twenty

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Speaker 8: five sales. Seems pretty reasonable for the growth that could

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Speaker 8: be incorporated into Abbot's overall portfolio.

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Speaker 2: And the banker's on the deal, Morgan Stanley, exclusive financial

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Speaker 2: advisor to Abbot, fully funding this deal, So that's good

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Speaker 2: for them. On the sales side, Centerview Partners and XS

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Speaker 2: Capital Partners advising the seller there, so again more M

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Speaker 2: and A fees there. I have no idea who Exact

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Speaker 2: Sciences is, and I think I speak for most of

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Speaker 2: our audience here. Who is Exact Sciences? Why what do

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Speaker 2: they do?

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Speaker 6: And why does Abbot want to pay such a big price.

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Speaker 8: Well, you actually might know of them because they have

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Speaker 8: been doing a lot of TV commercials for their cold

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Speaker 8: Guard there.

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Speaker 6: The Guard people. Yeah, so there we go.

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Speaker 8: We so yeah, So it's it's it's you know, it's

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Speaker 8: kind of one of those things where they're the ones

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Speaker 8: that have been the pioneers and driving the force around

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Speaker 8: that take home pre screening tests to kind of just

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Speaker 8: help you know the continuum of cancer screening and to

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Speaker 8: provide an easier access for that pre screening before you

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Speaker 8: have to go into kind of more of the invasive,

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Speaker 8: you know, colonoscopies to make sure you know you have

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Speaker 8: that a you know, coal rectals cancer risk.

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Speaker 1: Is there?

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Speaker 6: That thing sat in my closet for like a year, like.

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Speaker 5: Oh my god, I know it's one of those things

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Speaker 5: you have to do, but you don't want to do

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Speaker 5: I have to do it. So that what is there

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Speaker 5: any reason to think that regulators may you know, raise

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Speaker 5: their hand and say, hold on, let me just take

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Speaker 5: a closer look at this.

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Speaker 8: I mean, I'm sure they will, you know, cross their

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Speaker 8: t's and dot their eyes. But just in general, with

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Speaker 8: medtech acquisitions, it's usually a pretty straightforward unless there's a

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Speaker 8: clear you know, one of the market maybe going to

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Speaker 8: you know, one company, and in this case, the there's

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Speaker 8: enough competition where I don't think that should be a

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Speaker 8: hurdle for Abbot or Exact Sciences.

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Speaker 6: And for such a big deal.

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Speaker 2: I mean, Abbot stock is only down about one and

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Speaker 2: a half percent today on the news. So presumably is

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Speaker 2: this a deal you think is a good deal for Abbit?

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Speaker 8: Yes, I think it checks off a lot of boxes.

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Speaker 8: Potentially for Abbot one. It's once it becomes fully integrated

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Speaker 8: and starts contributing to organic growth, it should be a

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Speaker 8: creative to that organic growth that Abbot already has. I mean,

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Speaker 8: they're already for a company that is you know, forty

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Speaker 8: almost forty five billion in sales, they're generating seven and

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Speaker 8: a half percent organic sales growth. Exact Sciences comes in

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Speaker 8: with double digit sales growth, so that that's going to

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Speaker 8: be a creative for them in the long run. You

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Speaker 8: can also look at the gross margin profile. Abbott, you know,

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Speaker 8: is around a fifty six fifty seven percent gross margin profile.

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Speaker 8: Exact Sciences comes in at seventy two, improving to seventy

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Speaker 8: three percent based off of consensus in twenty twenty six.

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Speaker 8: And then lastly, you look at the expenses that Exact

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Speaker 8: Sciences has because you know there's still you know, whether

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Speaker 8: it's the merging growth story, so they're still investing a

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Speaker 8: lot in their SG and a kind of commercial profile

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Speaker 8: to help generate these growth We kind of expect Abbot

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Speaker 8: to come in and be able to slash some of

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Speaker 8: that SG and A costs to be able to make

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Speaker 8: it more profitable overall for the Abbot once it kind

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Speaker 8: of gets fully integrated.

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