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Speaker 2: Let's bring in Steve Man, Bloomberg Intelligence Global Autos and
Speaker 2: Industrials research analysts to recap Tesla earnings, help us look
Speaker 2: ahead for this company.
Speaker 3: Steve record quarter vehicle sales.
Speaker 2: Which we knew, but operating profit plunged forty percent, and
Speaker 2: we're now looking at a fourth straight quarters of following
Speaker 2: earnings and no real sign that that's going to turn
Speaker 2: around anytime soon either.
Speaker 4: Yeah, it was quite a surprise. Given the volume of production.
Speaker 5: You would think that, you know, the fixed costs absorption
Speaker 5: would be higher this quarter than in the past, but
Speaker 5: it didn't happen.
Speaker 4: Looks like, you know, looks like.
Speaker 5: The appreciation costs increase for them, looks like the tariff
Speaker 5: costs impact is greater than expected. And then even below
Speaker 5: the gross margin line, the R and D costs went
Speaker 5: out quite a bit. That you know, that could be
Speaker 5: viewed as a good thing, because that's the You know,
Speaker 5: that's a sign they're pivoting to you know, the ROBOTAXI,
Speaker 5: the FSD and you know the optimist robots.
Speaker 6: And Elon Musk, I guess towards the end of the call,
Speaker 6: made a plea for investors to approve this one trillion
Speaker 6: dollar pay package. Quote this is from Elon. There needs
Speaker 6: to be enough voting control to give a strong influence,
Speaker 6: but not so much that I can't be fired if
Speaker 6: I go insane. Mister Musk said, how did that go
Speaker 6: over on the call here? And what's the thinking among
Speaker 6: investor community about what may be a one trillion dollar
Speaker 6: pay package?
Speaker 4: Yeah, I'm not sure if money is important to him.
Speaker 5: He does have a lot already, so I do believe
Speaker 5: that it's more about the control of the company. Look,
Speaker 5: Tesla doesn't have the dual class share like some of
Speaker 5: the tech companies have.
Speaker 4: Uh, so there.
Speaker 5: Is he he does have that fear of getting uh
Speaker 5: pushed out. And you know he had that experience right
Speaker 5: with the open Ai. You know, he's one of the
Speaker 5: initial investors uh in open Ai and he he got.
Speaker 4: Pushed out, So he he does have the concern. Uh
Speaker 4: it is his baby.
Speaker 5: Look, the stocks, you know, the other thing is that
Speaker 5: the stock hasn't reacted, you know, too negatively to the
Speaker 5: weak earnings that we saw in the last quarter. Right,
Speaker 5: there's there's a battle happening between the the the bulls
Speaker 5: and the bears, the long the long guys versus the
Speaker 5: near term uh investors.
Speaker 4: And you know, there are a lot of people believe it.
Speaker 5: Who believes that the you know, he can achieve you know,
Speaker 5: the the getting the Optimist robot up and running, uh,
Speaker 5: you know, getting art physical AI going.
Speaker 4: So there's a lot of believers out there.
Speaker 2: There's a lot of believers in you know, what the
Speaker 2: company actually reports, especially when it comes to his vehicle sales,
Speaker 2: almost doesn't matter based on this idea that Elon Musk
Speaker 2: will steered the company in the right direction eventually maybe
Speaker 2: because you know, the robotaxis, which are you know, in operation,
Speaker 2: but the self driving vehicles, the humanoid robots, those are
Speaker 2: going to take a couple of years.
Speaker 3: To pan out. If that we don't have any details
Speaker 3: on it.
Speaker 2: So in the.
Speaker 3: Meantime, what is the growth driver for this company?
Speaker 5: Well, you know, he definitely in the call, he you know,
Speaker 5: he doesn't talk about cars a lot anymore other than
Speaker 5: robotaxing and FSD.
Speaker 4: He's very focused on physical AI. But at the end
Speaker 4: of the day, right, and I think.
Speaker 5: That's why the stock is still down a little bit,
Speaker 5: is that, you know, they he needs to sell cars.
Speaker 5: He needs to continued to sell cars to actually generate
Speaker 5: the cash to support his endeavors. Now he has launched
Speaker 5: cheaper vehicles, it'll be better. It would have been better
Speaker 5: if he is offering even a cheaper model, like something
Speaker 5: under thirty thousand that you know he we talked about
Speaker 5: in the past. He is expanding overseas, right, he had
Speaker 5: you know, record sales in countries like Japan and South Korea.
Speaker 5: Now he's going into India, big market, big market.
Speaker 4: So you know, maybe you know cars is still going
Speaker 4: to be important.
Speaker 5: I think a lot of you know, the other habited
Speaker 5: investor knows, and that's why the stock is down today.
Speaker 6: One could argue that they should produce less cars, fewer cars.
Speaker 6: I mean, why produce something if you're not making money
Speaker 6: on it when in the end of the day, this
Speaker 6: is effectively one could say, just a holding company for
Speaker 6: R and D for the other businesses.
Speaker 4: That's an interesting question.
Speaker 5: I think, you know, if we step back and think
Speaker 5: about Tesla, it's almost when you listen to Elon Musk,
Speaker 5: it's almost like he's resetting the company to make it
Speaker 5: look like a startup.
Speaker 4: Right.
Speaker 5: But the big difference is, the big difference between now
Speaker 5: and ten years ago is that he has a huge
Speaker 5: cash generator which is selling cars. Right, So I think
Speaker 5: that's something and also on the both of the investor
Speaker 5: investor's mind on the bull side that hey, you know,
Speaker 5: we're investing on this company for the long term, this
Speaker 5: physical ai that nob is really doing uh to the
Speaker 5: extent they are uh. And now the big difference is
Speaker 5: is that you know, there's very low risk of it
Speaker 5: going bankrupt like it did you know when he was
Speaker 5: starting the car business?
Speaker 2: Yeah, it's far from a startup. Now you mentioned how
Speaker 2: Elon Musk, you know, spend some time talking about his
Speaker 2: pay package is one trillion dollar pay package which is
Speaker 2: over the long term and involves him meeting a lot
Speaker 2: of ambitious targets. ISS institutional shareholder services as well as
Speaker 2: glass lists. These proxy advisors have recommended that investors reject
Speaker 2: this payout.
Speaker 3: Does that matter?
Speaker 2: I mean, are their votes are binding in any way
Speaker 2: or is this going to end up in the courts
Speaker 2: and MUSC is going to get his way.
Speaker 5: It does It does matter because you know a lot
Speaker 5: of the funds out there are are index funds, so
Speaker 5: uh so it does matter what they say, and that's
Speaker 5: why he needed to address that, uh in the call.
Speaker 5: But it's gonna be tight. I mean it's gonna be
Speaker 5: up in the air tight because there are a lot
Speaker 5: of individual investors as well, retail investors as well. Uh
Speaker 5: and you know those people are focused on you know,
Speaker 5: the hope three or five years from now.
Speaker 4: Uh, they he will able to kind of meet those targets.
Speaker 5: Have a viable optimist robot and a lot of robo
Speaker 5: taxis you know, running around its own across the country.
Speaker 6: What is the what is Elon and the company saying
Speaker 6: about China both as an end market and as a
Speaker 6: competitor globally.
Speaker 5: Yeah, China is uh is a challenging market. I think
Speaker 5: that a lot of the policy over there, I do
Speaker 5: favor the local automakers. Look, uh, the Tesla brand is
Speaker 5: still uh highly regarded over there, not just by the consumer, uh,
Speaker 5: but the you know, their competitors, the buy d s,
Speaker 5: the x punk right, a lot of those companies, you
Speaker 5: know when they're looking at autonomous vehicles, autonomous technology. They
Speaker 5: are benchmarking Tesla, so uh in Tesla, you know, I
Speaker 5: think is being nimble as well.
Speaker 4: They launch the longer.
Speaker 5: Version of model Y that works over there, because if
Speaker 5: you look at you know, the other formum kids like BMW, Mercedes,
Speaker 5: GM and and the likes, they have introduced extended version
Speaker 5: of their vehicles that they sold that they sell over there. Uh,
Speaker 5: and it resonates with the consumer there, So you know,
Speaker 5: it's they're they're still kind of work in progress over there.
Speaker 5: They're watching the market is changing very rapidly. They're still
Speaker 5: and they're still waiting for official approval of the FSD,
Speaker 5: which I think it will resonate well with the consumers
Speaker 5: and it has so far from beta testers.
Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 2: Broadband Thank you, Internet Broadband. Company to report is T Mobile.
Speaker 2: So we got to bring in our own John Butler,
Speaker 2: who covers telecom companies for us to get us his analysis, John,
Speaker 2: what's the verdict her on T Mobile?
Speaker 8: So the verdict her Scarlett is it was a little
Speaker 8: bit of a mixed quarter for them. If you look
Speaker 8: at what AT and T reported yesterday, the trendsit T
Speaker 8: Mobile really mirrored what we saw out of AT and T,
Speaker 8: which is subscriber growth was up, that was strong, and
Speaker 8: pardon me, but pricing was a little bit weak. And
Speaker 8: so that tells everyone it's a promotional environment right now.
Speaker 8: I think probably the iPhone seventeen had something to do
Speaker 8: with it. It's actually turning out to be a pretty
Speaker 8: strong cycle for that upgrade. And of course when you
Speaker 8: go out to buy a new phone, people always think
Speaker 8: about switching carriers. So a boost switching activity, the carriers
Speaker 8: all promote to protect their base. And Verizon hasn't reported yet.
Speaker 8: Well we can talk about that a little bit more,
Speaker 8: but they have a new CEO, and so the grand
Speaker 8: concern in telecom Land right now is that the new
Speaker 8: CEO of Verizon, if they lose share to AT and
Speaker 8: TEAM and T Mobile, they're going to get their dukes
Speaker 8: up and start to promote. For the first time in
Speaker 8: a while, and that's bad overall for the indus.
Speaker 6: So what's the T Mobile marketing positioning right now for
Speaker 6: it within a very competitive wireless business, John.
Speaker 8: So, good question, Paul. They are you know, for years
Speaker 8: they sort of leaned into this consumer friendly brand, you know,
Speaker 8: where the guys that were the uncarrier, that is their tagline,
Speaker 8: and you know, they've done a very good job promoting
Speaker 8: a very strong brand image. They're now a lot larger,
Speaker 8: and I think what they're doing is starting to lean
Speaker 8: a lot more in their network quality. They've done a
Speaker 8: great job over the past three to five years of
Speaker 8: really upgrading that network. Since they bought Sprint. They got
Speaker 8: a ton of midvand spectrum, which is terrific for download speeds,
Speaker 8: and so they're laying in coverage with that and they're
Speaker 8: getting as that coverage expands, they're getting a great high
Speaker 8: capacity footprint, and so network performance has improved a lot,
Speaker 8: and I think they're leaning heavily into that now to
Speaker 8: promote the brand you mentioned.
Speaker 2: Verizon has a new CEO. T Mobile also has a
Speaker 2: new CEO coming up soon. A CEO, Mike Sievert, is
Speaker 2: stepping down on November one, so in a week and
Speaker 2: the Ceooh, Sheney Goblin will take over. How is he
Speaker 2: going to put his mark on this company?
Speaker 8: I'll tell you, Mike is a tough act to follow.
Speaker 8: People were all listening for any sort of a change
Speaker 8: in strategy this morning because Schreeney ran the call, which
Speaker 8: I think was wise. Mike Sievert was on the call
Speaker 8: as well, because he's still on that seat until November first,
Speaker 8: as you said, But Schareny ran the call, and I
Speaker 8: really didn't hear anything different from him. I think they've
Speaker 8: got a winning formula going right now, and I think
Speaker 8: they're going to lean into that. One thing, Scarlett that
Speaker 8: you mentioned at the beginning in the intro is broad
Speaker 8: bay and I think that's an area where T Mobile
Speaker 8: has been lacking a little bit, specifically on the fiber side.
Speaker 8: And on the call they mentioned the potential for further
Speaker 8: M and A and I think if they were to
Speaker 8: buy any companies going forward, it would be in the
Speaker 8: realm of fiber broadband. So if Streeney does anything different,
Speaker 8: it'll be to step up M and A on the
Speaker 8: fiber front.
Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch US live on YouTube.
Speaker 2: Let's talk about airlines, because two more airlines just reported results,
Speaker 2: American Airlines Flying High and then LUV Southwest.
Speaker 7: Do you know why the tickers LUV No?
Speaker 6: I don't because initially there flew out of love Field
Speaker 6: in Dallas.
Speaker 2: Makes sense, Yes, they are based there. Well, let's bring
Speaker 2: in our own George Ferguson. He is Bloomberg Intelligence aviation analysts,
Speaker 2: and of course he also covers the defense sector and
Speaker 2: the aerospace sector to give us a little more insight
Speaker 2: onto what he sees. American is different from Delta and
Speaker 2: United in that it is much more domestically focused, so
Speaker 2: we get a better read of how much people are
Speaker 2: spending to fly inside the US, whether it's for leisure
Speaker 2: travel or business travel.
Speaker 9: Yeah, and so from American, you know, what we saw
Speaker 9: actually in the third quarter was pretty similar, to be honest,
Speaker 9: to what United showed us. And I'm talking about sort
Speaker 9: of yields price paid for mileflown by their customers. Americans
Speaker 9: very important domestic you know provider of travel, So you know,
Speaker 9: I would say that I wasn't super impressed with what
Speaker 9: I saw in three Q. I think the flying high
Speaker 9: is about all about what American is guiding to in
Speaker 9: four Q, a sizeable bump. And you know, when we
Speaker 9: look at some of the domestic capacity trends for four Q,
Speaker 9: we see a market that's probably going to see seat
Speaker 9: growth of around one and a half percent or so,
Speaker 9: which seems for the first time in a while, roughly
Speaker 9: in balance with where the economy is growing.
Speaker 4: So something like.
Speaker 9: That should support Americans earnings in four Q. I mean,
Speaker 9: it's still some of their guidance seems a little aggressive
Speaker 9: to me, but I guess sort of given the backdrop
Speaker 9: of supply and maybe some of the Americans initiatives as
Speaker 9: they try to retake some of the market share that
Speaker 9: they had previously, maybe seems more feasible than other guidance
Speaker 9: we've seen.
Speaker 6: How about Southwest Georgia's They're starting to charge for lots
Speaker 6: of stuff like bags and different seats and all that
Speaker 6: kind of stuff which they had not done previously, that
Speaker 6: had kind of been in their core marketing strategy. We're
Speaker 6: the kind of the bare bones guys, what are they
Speaker 6: just seeing in their business?
Speaker 10: Yeah, you know, I just got off the Southwest car
Speaker 10: in my head hurt. So there's a lot of initiatives
Speaker 10: going on here, right, And like you said, we're you know,
Speaker 10: we're going from an airline here that was bare bones,
Speaker 10: bags fly free, blah blah blah. You know, you keep
Speaker 10: you know, there's no breakage in your I think, you know,
Speaker 10: frequent flyer miles and if you buy a ticket, you
Speaker 10: can't use it, there's no expiration of your credit. Now
Speaker 10: we're going to change everything, right, And so the call's
Speaker 10: full of a lot of discussion about how the initiatives
Speaker 10: in twenty twenty six are going to add a billion here,
Speaker 10: you know from premium seating and seven hundred million there.
Speaker 10: So there's a lot of big numbers being thrown around.
Speaker 5: You know.
Speaker 4: I think the I.
Speaker 9: Think the marketplace is a bit challenged to get its
Speaker 9: its head around, you know, whether or not all of
Speaker 9: these really roll through the bottom line for Southwest. But
Speaker 9: what I will say is, I think there's some pretty
Speaker 9: strong opportunity out Southwest, given I think they have a
Speaker 9: pretty loyal brand following, and as they roll out some
Speaker 9: of the initiatives you're seeing at the full service carriers
Speaker 9: like United American and Delta, as they roll out initiatives
Speaker 9: like branded credit cards, improving the loyalty program. They even
Speaker 9: talking on this call a little bit about hub cities
Speaker 9: and lounges, which you know, just kind of again through
Speaker 9: through my mind, there is I think an opportunity for
Speaker 9: them to monetize all of that as they turn into
Speaker 9: something that looks a lot more like a full service carrier.
Speaker 9: The question is on timeline. My guess is there's there's
Speaker 9: a decent timeline as they sort of retrain their customers.
Speaker 9: But I think you know, in Fort they have some
Speaker 9: pretty aggressive bounce back inside their guidance as well, and
Speaker 9: I think the it's just kind of trying to get
Speaker 9: its head around, really how much of these initiatives are
Speaker 9: going to come to fruition and four Q.
Speaker 2: So when it comes to Southwest, the activist investors really
Speaker 2: pushed it to change its business model from this one
Speaker 2: size fits all kind of offering. There was no checked
Speaker 2: bag fees, no prepaid seat assignments. Does this set of
Speaker 2: results kind of get that pressure off its back?
Speaker 9: No, So I would say three Q results would not
Speaker 9: I thought three Q. They did okay. You know, their
Speaker 9: expenses came in a bit better than we expected. Their
Speaker 9: revenue was pretty similar. I think nothing impressive. Three Q
Speaker 9: is generally kind of I think blah across most of
Speaker 9: the airlines. It wasn't that exciting. There's a lot more
Speaker 9: sort of built into four Q and beyond. So no,
Speaker 9: I don't know that this necessarily gets Elliott sort of
Speaker 9: off their back, right. I think they've got a lot
Speaker 9: of initiatives to perform on to keep Elliott happy.
Speaker 7: Show, we say, stay with us. More from Bloomberg Intelligence
Speaker 7: coming up after this.
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Speaker 6: We'll take a look at what's happening in the cloud.
Speaker 6: We'll get some more cloud slash tech news coming. AI
Speaker 6: adoption in video games can push Microsoft, Sony and Nvidia
Speaker 6: to kill the console.
Speaker 7: How about headline like that? Nathan Nadeu joins us here.
Speaker 6: He is the Bloomberg Intelligence technology research analyst. Talk to
Speaker 6: us about the cloud and what that means for the
Speaker 6: gaming business. I'm not gonna have to go out and
Speaker 6: buy any more gaming consoles, well not.
Speaker 11: For the long term. Thanks for the lead, Paul. Like
Speaker 11: I feel like I owe everybody explanation when I use
Speaker 11: word like kill because really in the tenures that could
Speaker 11: actually happens. Like what I meant if I were to
Speaker 11: unpack that comment a little bit, that headline consoles will
Speaker 11: decline gradually and that's what I mean, and you know,
Speaker 11: kind of remaining over the long term as a need
Speaker 11: device for loyal fans, the really hardcore gamers. As advancement
Speaker 11: in cloud infrastructure, and we see what's happening with data
Speaker 11: centers as well as a wider spread of mobile gaming
Speaker 11: playing games or mobile devices, whether smartphones or tablets. As
Speaker 11: that game wider spread and people become less interested, you know,
Speaker 11: in playing games at an unportable gaming hardware that's stuck
Speaker 11: at home or living room. If they can do so
Speaker 11: and have the same experience on ale momil device, why not.
Speaker 4: Right?
Speaker 6: So, where are we in kind of that evolution in
Speaker 6: terms of really putting more and more of the content
Speaker 6: of the technology, of the capabilities in the cloud. How's
Speaker 6: that changing the gaming experien into the gaming business.
Speaker 11: Yeah, So the key pain point to cloud gaming is
Speaker 11: network latency because that literally depends on the distance between
Speaker 11: the user's hardware, whether a mobile device or console, to
Speaker 11: the nearest cell tower. And we know that five G
Speaker 11: network coverage are improving not just in emerging markets, but
Speaker 11: also becoming better in even developed markets including China and
Speaker 11: the US and so as that infrastructure and also cloud
Speaker 11: improved because this proximity to data centers also is a
Speaker 11: factor in determining the experience of cloud So far, you know,
Speaker 11: in emerging market there is a pain point, but we're
Speaker 11: seeing really huge uptick in coverage footprint whether five G
Speaker 11: or four GLT in markets like India and Middle East
Speaker 11: and Latin America. So that just support our conclusion that
Speaker 11: you know, in the next ten years, the experience that
Speaker 11: pain point would become better. And also let's not forget
Speaker 11: that you know, mobile phones, mobile screens capture you know,
Speaker 11: a lot of our attention economy. Actually, there's a study
Speaker 11: according to Harmony Harmony Healthcare, it that it captures more
Speaker 11: than five hours of our time every day, at about
Speaker 11: twenty percent of those times actually go to gaming. Among
Speaker 11: Generation Alpha and Generation Z and the other bulk of
Speaker 11: the gamers. And also, these gamers don't really care about
Speaker 11: playing games at home anymore if they can play on mobile,
Speaker 11: because what they care about is access and also being
Speaker 11: able to do things on their mobile devices. So I
Speaker 11: feel like with this generation coming up and entering into
Speaker 11: the workforce, and they're the one who would see spending
Speaker 11: power increasing, and I feel like there's a lot less
Speaker 11: inclination to actually play games on a console. If down
Speaker 11: ten years downline, you can have the same experience playing
Speaker 11: games on a mobile on a mobile device.
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