WEBVTT - Tesla’s Profit Tumbles as Costs Undermine Record EV Sales 

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

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<v Speaker 2>Let's bring in Steve Man, Bloomberg Intelligence Global Autos and

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<v Speaker 2>Industrials research analysts to recap Tesla earnings, help us look

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<v Speaker 2>ahead for this company.

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<v Speaker 3>Steve record quarter vehicle sales.

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<v Speaker 2>Which we knew, but operating profit plunged forty percent, and

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<v Speaker 2>we're now looking at a fourth straight quarters of following

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<v Speaker 2>earnings and no real sign that that's going to turn

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<v Speaker 2>around anytime soon either.

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<v Speaker 4>Yeah, it was quite a surprise. Given the volume of production.

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<v Speaker 5>You would think that, you know, the fixed costs absorption

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<v Speaker 5>would be higher this quarter than in the past, but

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<v Speaker 5>it didn't happen.

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<v Speaker 4>Looks like, you know, looks like.

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<v Speaker 5>The appreciation costs increase for them, looks like the tariff

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<v Speaker 5>costs impact is greater than expected. And then even below

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<v Speaker 5>the gross margin line, the R and D costs went

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<v Speaker 5>out quite a bit. That you know, that could be

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<v Speaker 5>viewed as a good thing, because that's the You know,

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<v Speaker 5>that's a sign they're pivoting to you know, the ROBOTAXI,

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<v Speaker 5>the FSD and you know the optimist robots.

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<v Speaker 6>And Elon Musk, I guess towards the end of the call,

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<v Speaker 6>made a plea for investors to approve this one trillion

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<v Speaker 6>dollar pay package. Quote this is from Elon. There needs

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<v Speaker 6>to be enough voting control to give a strong influence,

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<v Speaker 6>but not so much that I can't be fired if

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<v Speaker 6>I go insane. Mister Musk said, how did that go

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<v Speaker 6>over on the call here? And what's the thinking among

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<v Speaker 6>investor community about what may be a one trillion dollar

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<v Speaker 6>pay package?

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<v Speaker 4>Yeah, I'm not sure if money is important to him.

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<v Speaker 5>He does have a lot already, so I do believe

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<v Speaker 5>that it's more about the control of the company. Look,

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<v Speaker 5>Tesla doesn't have the dual class share like some of

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<v Speaker 5>the tech companies have.

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<v Speaker 4>Uh, so there.

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<v Speaker 5>Is he he does have that fear of getting uh

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<v Speaker 5>pushed out. And you know he had that experience right

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<v Speaker 5>with the open Ai. You know, he's one of the

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<v Speaker 5>initial investors uh in open Ai and he he got.

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<v Speaker 4>Pushed out, So he he does have the concern. Uh

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<v Speaker 4>it is his baby.

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<v Speaker 5>Look, the stocks, you know, the other thing is that

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<v Speaker 5>the stock hasn't reacted, you know, too negatively to the

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<v Speaker 5>weak earnings that we saw in the last quarter. Right,

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<v Speaker 5>there's there's a battle happening between the the the bulls

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<v Speaker 5>and the bears, the long the long guys versus the

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<v Speaker 5>near term uh investors.

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<v Speaker 4>And you know, there are a lot of people believe it.

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<v Speaker 5>Who believes that the you know, he can achieve you know,

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<v Speaker 5>the the getting the Optimist robot up and running, uh,

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<v Speaker 5>you know, getting art physical AI going.

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<v Speaker 4>So there's a lot of believers out there.

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<v Speaker 2>There's a lot of believers in you know, what the

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<v Speaker 2>company actually reports, especially when it comes to his vehicle sales,

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<v Speaker 2>almost doesn't matter based on this idea that Elon Musk

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<v Speaker 2>will steered the company in the right direction eventually maybe

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<v Speaker 2>because you know, the robotaxis, which are you know, in operation,

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<v Speaker 2>but the self driving vehicles, the humanoid robots, those are

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<v Speaker 2>going to take a couple of years.

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<v Speaker 3>To pan out. If that we don't have any details

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<v Speaker 3>on it.

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<v Speaker 2>So in the.

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<v Speaker 3>Meantime, what is the growth driver for this company?

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<v Speaker 5>Well, you know, he definitely in the call, he you know,

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<v Speaker 5>he doesn't talk about cars a lot anymore other than

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<v Speaker 5>robotaxing and FSD.

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<v Speaker 4>He's very focused on physical AI. But at the end

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<v Speaker 4>of the day, right, and I think.

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<v Speaker 5>That's why the stock is still down a little bit,

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<v Speaker 5>is that, you know, they he needs to sell cars.

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<v Speaker 5>He needs to continued to sell cars to actually generate

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<v Speaker 5>the cash to support his endeavors. Now he has launched

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<v Speaker 5>cheaper vehicles, it'll be better. It would have been better

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<v Speaker 5>if he is offering even a cheaper model, like something

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<v Speaker 5>under thirty thousand that you know he we talked about

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<v Speaker 5>in the past. He is expanding overseas, right, he had

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<v Speaker 5>you know, record sales in countries like Japan and South Korea.

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<v Speaker 5>Now he's going into India, big market, big market.

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<v Speaker 4>So you know, maybe you know cars is still going

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<v Speaker 4>to be important.

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<v Speaker 5>I think a lot of you know, the other habited

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<v Speaker 5>investor knows, and that's why the stock is down today.

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<v Speaker 6>One could argue that they should produce less cars, fewer cars.

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<v Speaker 6>I mean, why produce something if you're not making money

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<v Speaker 6>on it when in the end of the day, this

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<v Speaker 6>is effectively one could say, just a holding company for

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<v Speaker 6>R and D for the other businesses.

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<v Speaker 4>That's an interesting question.

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<v Speaker 5>I think, you know, if we step back and think

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<v Speaker 5>about Tesla, it's almost when you listen to Elon Musk,

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<v Speaker 5>it's almost like he's resetting the company to make it

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<v Speaker 5>look like a startup.

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<v Speaker 4>Right.

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<v Speaker 5>But the big difference is, the big difference between now

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<v Speaker 5>and ten years ago is that he has a huge

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<v Speaker 5>cash generator which is selling cars. Right, So I think

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<v Speaker 5>that's something and also on the both of the investor

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<v Speaker 5>investor's mind on the bull side that hey, you know,

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<v Speaker 5>we're investing on this company for the long term, this

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<v Speaker 5>physical ai that nob is really doing uh to the

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<v Speaker 5>extent they are uh. And now the big difference is

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<v Speaker 5>is that you know, there's very low risk of it

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<v Speaker 5>going bankrupt like it did you know when he was

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<v Speaker 5>starting the car business?

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<v Speaker 2>Yeah, it's far from a startup. Now you mentioned how

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<v Speaker 2>Elon Musk, you know, spend some time talking about his

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<v Speaker 2>pay package is one trillion dollar pay package which is

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<v Speaker 2>over the long term and involves him meeting a lot

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<v Speaker 2>of ambitious targets. ISS institutional shareholder services as well as

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<v Speaker 2>glass lists. These proxy advisors have recommended that investors reject

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<v Speaker 2>this payout.

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<v Speaker 3>Does that matter?

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<v Speaker 2>I mean, are their votes are binding in any way

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<v Speaker 2>or is this going to end up in the courts

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<v Speaker 2>and MUSC is going to get his way.

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<v Speaker 5>It does It does matter because you know a lot

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<v Speaker 5>of the funds out there are are index funds, so

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<v Speaker 5>uh so it does matter what they say, and that's

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<v Speaker 5>why he needed to address that, uh in the call.

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<v Speaker 5>But it's gonna be tight. I mean it's gonna be

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<v Speaker 5>up in the air tight because there are a lot

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<v Speaker 5>of individual investors as well, retail investors as well. Uh

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<v Speaker 5>and you know those people are focused on you know,

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<v Speaker 5>the hope three or five years from now.

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<v Speaker 4>Uh, they he will able to kind of meet those targets.

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<v Speaker 5>Have a viable optimist robot and a lot of robo

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<v Speaker 5>taxis you know, running around its own across the country.

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<v Speaker 6>What is the what is Elon and the company saying

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<v Speaker 6>about China both as an end market and as a

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<v Speaker 6>competitor globally.

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<v Speaker 5>Yeah, China is uh is a challenging market. I think

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<v Speaker 5>that a lot of the policy over there, I do

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<v Speaker 5>favor the local automakers. Look, uh, the Tesla brand is

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<v Speaker 5>still uh highly regarded over there, not just by the consumer, uh,

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<v Speaker 5>but the you know, their competitors, the buy d s,

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<v Speaker 5>the x punk right, a lot of those companies, you

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<v Speaker 5>know when they're looking at autonomous vehicles, autonomous technology. They

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<v Speaker 5>are benchmarking Tesla, so uh in Tesla, you know, I

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<v Speaker 5>think is being nimble as well.

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<v Speaker 4>They launch the longer.

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<v Speaker 5>Version of model Y that works over there, because if

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<v Speaker 5>you look at you know, the other formum kids like BMW, Mercedes,

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<v Speaker 5>GM and and the likes, they have introduced extended version

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<v Speaker 5>of their vehicles that they sold that they sell over there. Uh,

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<v Speaker 5>and it resonates with the consumer there, So you know,

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<v Speaker 5>it's they're they're still kind of work in progress over there.

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<v Speaker 5>They're watching the market is changing very rapidly. They're still

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<v Speaker 5>and they're still waiting for official approval of the FSD,

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<v Speaker 5>which I think it will resonate well with the consumers

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<v Speaker 5>and it has so far from beta testers.

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<v Speaker 7>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am Eastern on Apple Coplay and Android

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<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand wherever

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<v Speaker 2>Broadband Thank you, Internet Broadband. Company to report is T Mobile.

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<v Speaker 2>So we got to bring in our own John Butler,

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<v Speaker 2>who covers telecom companies for us to get us his analysis, John,

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<v Speaker 2>what's the verdict her on T Mobile?

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<v Speaker 8>So the verdict her Scarlett is it was a little

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<v Speaker 8>bit of a mixed quarter for them. If you look

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<v Speaker 8>at what AT and T reported yesterday, the trendsit T

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<v Speaker 8>Mobile really mirrored what we saw out of AT and T,

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<v Speaker 8>which is subscriber growth was up, that was strong, and

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<v Speaker 8>pardon me, but pricing was a little bit weak. And

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<v Speaker 8>so that tells everyone it's a promotional environment right now.

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<v Speaker 8>I think probably the iPhone seventeen had something to do

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<v Speaker 8>with it. It's actually turning out to be a pretty

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<v Speaker 8>strong cycle for that upgrade. And of course when you

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<v Speaker 8>go out to buy a new phone, people always think

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<v Speaker 8>about switching carriers. So a boost switching activity, the carriers

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<v Speaker 8>all promote to protect their base. And Verizon hasn't reported yet.

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<v Speaker 8>Well we can talk about that a little bit more,

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<v Speaker 8>but they have a new CEO, and so the grand

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<v Speaker 8>concern in telecom Land right now is that the new

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<v Speaker 8>CEO of Verizon, if they lose share to AT and

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<v Speaker 8>TEAM and T Mobile, they're going to get their dukes

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<v Speaker 8>up and start to promote. For the first time in

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<v Speaker 8>a while, and that's bad overall for the indus.

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<v Speaker 6>So what's the T Mobile marketing positioning right now for

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<v Speaker 6>it within a very competitive wireless business, John.

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<v Speaker 8>So, good question, Paul. They are you know, for years

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<v Speaker 8>they sort of leaned into this consumer friendly brand, you know,

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<v Speaker 8>where the guys that were the uncarrier, that is their tagline,

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<v Speaker 8>and you know, they've done a very good job promoting

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<v Speaker 8>a very strong brand image. They're now a lot larger,

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<v Speaker 8>and I think what they're doing is starting to lean

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<v Speaker 8>a lot more in their network quality. They've done a

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<v Speaker 8>great job over the past three to five years of

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<v Speaker 8>really upgrading that network. Since they bought Sprint. They got

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<v Speaker 8>a ton of midvand spectrum, which is terrific for download speeds,

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<v Speaker 8>and so they're laying in coverage with that and they're

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<v Speaker 8>getting as that coverage expands, they're getting a great high

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<v Speaker 8>capacity footprint, and so network performance has improved a lot,

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<v Speaker 8>and I think they're leaning heavily into that now to

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<v Speaker 8>promote the brand you mentioned.

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<v Speaker 2>Verizon has a new CEO. T Mobile also has a

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<v Speaker 2>new CEO coming up soon. A CEO, Mike Sievert, is

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<v Speaker 2>stepping down on November one, so in a week and

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<v Speaker 2>the Ceooh, Sheney Goblin will take over. How is he

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<v Speaker 2>going to put his mark on this company?

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<v Speaker 8>I'll tell you, Mike is a tough act to follow.

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<v Speaker 8>People were all listening for any sort of a change

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<v Speaker 8>in strategy this morning because Schreeney ran the call, which

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<v Speaker 8>I think was wise. Mike Sievert was on the call

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<v Speaker 8>as well, because he's still on that seat until November first,

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<v Speaker 8>as you said, But Schareny ran the call, and I

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<v Speaker 8>really didn't hear anything different from him. I think they've

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<v Speaker 8>got a winning formula going right now, and I think

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<v Speaker 8>they're going to lean into that. One thing, Scarlett that

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<v Speaker 8>you mentioned at the beginning in the intro is broad

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<v Speaker 8>bay and I think that's an area where T Mobile

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<v Speaker 8>has been lacking a little bit, specifically on the fiber side.

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<v Speaker 8>And on the call they mentioned the potential for further

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<v Speaker 8>M and A and I think if they were to

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<v Speaker 8>buy any companies going forward, it would be in the

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<v Speaker 8>realm of fiber broadband. So if Streeney does anything different,

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<v Speaker 8>it'll be to step up M and A on the

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<v Speaker 8>fiber front.

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<v Speaker 7>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch US live

0:12:37.360 --> 0:12:40.439
<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

0:12:40.480 --> 0:12:43.760
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:12:43.840 --> 0:12:47.360
<v Speaker 1>you get your podcasts, or watch US live on YouTube.

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<v Speaker 2>Let's talk about airlines, because two more airlines just reported results,

0:12:52.240 --> 0:12:56.240
<v Speaker 2>American Airlines Flying High and then LUV Southwest.

0:12:56.360 --> 0:12:58.360
<v Speaker 7>Do you know why the tickers LUV No?

0:12:58.440 --> 0:13:02.200
<v Speaker 6>I don't because initially there flew out of love Field

0:13:02.280 --> 0:13:02.720
<v Speaker 6>in Dallas.

0:13:03.400 --> 0:13:05.920
<v Speaker 2>Makes sense, Yes, they are based there. Well, let's bring

0:13:05.960 --> 0:13:09.839
<v Speaker 2>in our own George Ferguson. He is Bloomberg Intelligence aviation analysts,

0:13:10.280 --> 0:13:13.040
<v Speaker 2>and of course he also covers the defense sector and

0:13:13.160 --> 0:13:15.440
<v Speaker 2>the aerospace sector to give us a little more insight

0:13:15.520 --> 0:13:19.559
<v Speaker 2>onto what he sees. American is different from Delta and

0:13:19.640 --> 0:13:22.240
<v Speaker 2>United in that it is much more domestically focused, so

0:13:22.240 --> 0:13:24.360
<v Speaker 2>we get a better read of how much people are

0:13:24.679 --> 0:13:27.439
<v Speaker 2>spending to fly inside the US, whether it's for leisure

0:13:27.480 --> 0:13:28.840
<v Speaker 2>travel or business travel.

0:13:30.520 --> 0:13:33.839
<v Speaker 9>Yeah, and so from American, you know, what we saw

0:13:34.440 --> 0:13:38.079
<v Speaker 9>actually in the third quarter was pretty similar, to be honest,

0:13:38.240 --> 0:13:41.319
<v Speaker 9>to what United showed us. And I'm talking about sort

0:13:41.320 --> 0:13:45.440
<v Speaker 9>of yields price paid for mileflown by their customers. Americans

0:13:45.880 --> 0:13:51.960
<v Speaker 9>very important domestic you know provider of travel, So you know,

0:13:52.160 --> 0:13:55.800
<v Speaker 9>I would say that I wasn't super impressed with what

0:13:55.880 --> 0:13:58.480
<v Speaker 9>I saw in three Q. I think the flying high

0:13:58.559 --> 0:14:02.440
<v Speaker 9>is about all about what American is guiding to in

0:14:02.520 --> 0:14:06.480
<v Speaker 9>four Q, a sizeable bump. And you know, when we

0:14:06.480 --> 0:14:10.440
<v Speaker 9>look at some of the domestic capacity trends for four Q,

0:14:11.640 --> 0:14:14.720
<v Speaker 9>we see a market that's probably going to see seat

0:14:14.760 --> 0:14:18.280
<v Speaker 9>growth of around one and a half percent or so,

0:14:18.360 --> 0:14:21.880
<v Speaker 9>which seems for the first time in a while, roughly

0:14:21.960 --> 0:14:24.960
<v Speaker 9>in balance with where the economy is growing.

0:14:25.480 --> 0:14:26.200
<v Speaker 4>So something like.

0:14:26.160 --> 0:14:30.480
<v Speaker 9>That should support Americans earnings in four Q. I mean,

0:14:30.480 --> 0:14:33.520
<v Speaker 9>it's still some of their guidance seems a little aggressive

0:14:33.520 --> 0:14:36.280
<v Speaker 9>to me, but I guess sort of given the backdrop

0:14:36.320 --> 0:14:39.760
<v Speaker 9>of supply and maybe some of the Americans initiatives as

0:14:39.760 --> 0:14:42.120
<v Speaker 9>they try to retake some of the market share that

0:14:42.160 --> 0:14:46.800
<v Speaker 9>they had previously, maybe seems more feasible than other guidance

0:14:46.840 --> 0:14:47.280
<v Speaker 9>we've seen.

0:14:47.840 --> 0:14:51.920
<v Speaker 6>How about Southwest Georgia's They're starting to charge for lots

0:14:51.920 --> 0:14:54.400
<v Speaker 6>of stuff like bags and different seats and all that

0:14:54.480 --> 0:14:58.440
<v Speaker 6>kind of stuff which they had not done previously, that

0:14:58.480 --> 0:15:00.760
<v Speaker 6>had kind of been in their core marketing strategy. We're

0:15:00.760 --> 0:15:02.880
<v Speaker 6>the kind of the bare bones guys, what are they

0:15:02.920 --> 0:15:03.960
<v Speaker 6>just seeing in their business?

0:15:04.840 --> 0:15:07.600
<v Speaker 10>Yeah, you know, I just got off the Southwest car

0:15:07.720 --> 0:15:12.280
<v Speaker 10>in my head hurt. So there's a lot of initiatives

0:15:12.320 --> 0:15:14.440
<v Speaker 10>going on here, right, And like you said, we're you know,

0:15:14.440 --> 0:15:16.960
<v Speaker 10>we're going from an airline here that was bare bones,

0:15:17.640 --> 0:15:21.080
<v Speaker 10>bags fly free, blah blah blah. You know, you keep

0:15:22.000 --> 0:15:24.760
<v Speaker 10>you know, there's no breakage in your I think, you know,

0:15:24.800 --> 0:15:27.920
<v Speaker 10>frequent flyer miles and if you buy a ticket, you

0:15:27.960 --> 0:15:31.720
<v Speaker 10>can't use it, there's no expiration of your credit. Now

0:15:31.800 --> 0:15:34.600
<v Speaker 10>we're going to change everything, right, And so the call's

0:15:34.640 --> 0:15:38.040
<v Speaker 10>full of a lot of discussion about how the initiatives

0:15:38.400 --> 0:15:40.880
<v Speaker 10>in twenty twenty six are going to add a billion here,

0:15:41.600 --> 0:15:45.280
<v Speaker 10>you know from premium seating and seven hundred million there.

0:15:45.600 --> 0:15:47.880
<v Speaker 10>So there's a lot of big numbers being thrown around.

0:15:49.240 --> 0:15:49.440
<v Speaker 5>You know.

0:15:50.080 --> 0:15:50.880
<v Speaker 4>I think the I.

0:15:50.800 --> 0:15:53.120
<v Speaker 9>Think the marketplace is a bit challenged to get its

0:15:53.480 --> 0:15:55.360
<v Speaker 9>its head around, you know, whether or not all of

0:15:55.400 --> 0:16:00.200
<v Speaker 9>these really roll through the bottom line for Southwest. But

0:16:00.280 --> 0:16:03.160
<v Speaker 9>what I will say is, I think there's some pretty

0:16:03.160 --> 0:16:07.080
<v Speaker 9>strong opportunity out Southwest, given I think they have a

0:16:07.080 --> 0:16:10.680
<v Speaker 9>pretty loyal brand following, and as they roll out some

0:16:10.720 --> 0:16:13.200
<v Speaker 9>of the initiatives you're seeing at the full service carriers

0:16:13.680 --> 0:16:17.120
<v Speaker 9>like United American and Delta, as they roll out initiatives

0:16:17.200 --> 0:16:22.560
<v Speaker 9>like branded credit cards, improving the loyalty program. They even

0:16:22.600 --> 0:16:26.800
<v Speaker 9>talking on this call a little bit about hub cities

0:16:27.480 --> 0:16:30.880
<v Speaker 9>and lounges, which you know, just kind of again through

0:16:31.120 --> 0:16:34.800
<v Speaker 9>through my mind, there is I think an opportunity for

0:16:34.840 --> 0:16:39.040
<v Speaker 9>them to monetize all of that as they turn into

0:16:39.080 --> 0:16:43.240
<v Speaker 9>something that looks a lot more like a full service carrier.

0:16:43.680 --> 0:16:47.560
<v Speaker 9>The question is on timeline. My guess is there's there's

0:16:47.920 --> 0:16:51.800
<v Speaker 9>a decent timeline as they sort of retrain their customers.

0:16:52.920 --> 0:16:55.000
<v Speaker 9>But I think you know, in Fort they have some

0:16:55.000 --> 0:16:59.440
<v Speaker 9>pretty aggressive bounce back inside their guidance as well, and

0:16:59.480 --> 0:17:01.520
<v Speaker 9>I think the it's just kind of trying to get

0:17:01.520 --> 0:17:04.399
<v Speaker 9>its head around, really how much of these initiatives are

0:17:04.400 --> 0:17:05.840
<v Speaker 9>going to come to fruition and four Q.

0:17:07.080 --> 0:17:10.600
<v Speaker 2>So when it comes to Southwest, the activist investors really

0:17:10.640 --> 0:17:13.760
<v Speaker 2>pushed it to change its business model from this one

0:17:13.800 --> 0:17:16.960
<v Speaker 2>size fits all kind of offering. There was no checked

0:17:16.960 --> 0:17:21.080
<v Speaker 2>bag fees, no prepaid seat assignments. Does this set of

0:17:21.119 --> 0:17:24.040
<v Speaker 2>results kind of get that pressure off its back?

0:17:25.560 --> 0:17:28.000
<v Speaker 9>No, So I would say three Q results would not

0:17:28.200 --> 0:17:32.840
<v Speaker 9>I thought three Q. They did okay. You know, their

0:17:33.200 --> 0:17:36.760
<v Speaker 9>expenses came in a bit better than we expected. Their

0:17:36.800 --> 0:17:40.399
<v Speaker 9>revenue was pretty similar. I think nothing impressive. Three Q

0:17:40.600 --> 0:17:43.920
<v Speaker 9>is generally kind of I think blah across most of

0:17:43.960 --> 0:17:46.680
<v Speaker 9>the airlines. It wasn't that exciting. There's a lot more

0:17:46.680 --> 0:17:50.840
<v Speaker 9>sort of built into four Q and beyond. So no,

0:17:51.160 --> 0:17:54.600
<v Speaker 9>I don't know that this necessarily gets Elliott sort of

0:17:54.600 --> 0:17:56.439
<v Speaker 9>off their back, right. I think they've got a lot

0:17:56.440 --> 0:17:59.879
<v Speaker 9>of initiatives to perform on to keep Elliott happy.

0:18:00.080 --> 0:18:03.400
<v Speaker 7>Show, we say, stay with us. More from Bloomberg Intelligence

0:18:03.440 --> 0:18:04.520
<v Speaker 7>coming up after this.

0:18:08.000 --> 0:18:11.680
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:18:11.760 --> 0:18:14.880
<v Speaker 1>weekdays at ten am Eastern on Apple Coarclay, and Android

0:18:14.880 --> 0:18:18.200
<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand wherever

0:18:18.240 --> 0:18:21.760
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:18:22.800 --> 0:18:25.680
<v Speaker 6>We'll take a look at what's happening in the cloud.

0:18:26.240 --> 0:18:30.639
<v Speaker 6>We'll get some more cloud slash tech news coming. AI

0:18:30.720 --> 0:18:34.600
<v Speaker 6>adoption in video games can push Microsoft, Sony and Nvidia

0:18:34.760 --> 0:18:36.120
<v Speaker 6>to kill the console.

0:18:36.119 --> 0:18:39.880
<v Speaker 7>How about headline like that? Nathan Nadeu joins us here.

0:18:40.000 --> 0:18:43.840
<v Speaker 6>He is the Bloomberg Intelligence technology research analyst. Talk to

0:18:43.920 --> 0:18:48.439
<v Speaker 6>us about the cloud and what that means for the

0:18:48.560 --> 0:18:50.639
<v Speaker 6>gaming business. I'm not gonna have to go out and

0:18:50.640 --> 0:18:54.199
<v Speaker 6>buy any more gaming consoles, well not.

0:18:54.840 --> 0:18:58.159
<v Speaker 11>For the long term. Thanks for the lead, Paul. Like

0:18:58.480 --> 0:19:01.080
<v Speaker 11>I feel like I owe everybody explanation when I use

0:19:01.119 --> 0:19:04.440
<v Speaker 11>word like kill because really in the tenures that could

0:19:04.480 --> 0:19:07.080
<v Speaker 11>actually happens. Like what I meant if I were to

0:19:07.160 --> 0:19:10.600
<v Speaker 11>unpack that comment a little bit, that headline consoles will

0:19:10.640 --> 0:19:13.000
<v Speaker 11>decline gradually and that's what I mean, and you know,

0:19:13.200 --> 0:19:15.520
<v Speaker 11>kind of remaining over the long term as a need

0:19:16.000 --> 0:19:20.280
<v Speaker 11>device for loyal fans, the really hardcore gamers. As advancement

0:19:20.320 --> 0:19:23.399
<v Speaker 11>in cloud infrastructure, and we see what's happening with data

0:19:23.440 --> 0:19:26.800
<v Speaker 11>centers as well as a wider spread of mobile gaming

0:19:26.880 --> 0:19:31.080
<v Speaker 11>playing games or mobile devices, whether smartphones or tablets. As

0:19:31.160 --> 0:19:35.159
<v Speaker 11>that game wider spread and people become less interested, you know,

0:19:35.240 --> 0:19:39.480
<v Speaker 11>in playing games at an unportable gaming hardware that's stuck

0:19:39.600 --> 0:19:42.359
<v Speaker 11>at home or living room. If they can do so

0:19:42.640 --> 0:19:46.000
<v Speaker 11>and have the same experience on ale momil device, why not.

0:19:46.200 --> 0:19:46.360
<v Speaker 4>Right?

0:19:47.600 --> 0:19:50.879
<v Speaker 6>So, where are we in kind of that evolution in

0:19:50.960 --> 0:19:55.320
<v Speaker 6>terms of really putting more and more of the content

0:19:55.480 --> 0:19:58.240
<v Speaker 6>of the technology, of the capabilities in the cloud. How's

0:19:58.240 --> 0:20:01.400
<v Speaker 6>that changing the gaming experien into the gaming business.

0:20:02.119 --> 0:20:04.480
<v Speaker 11>Yeah, So the key pain point to cloud gaming is

0:20:04.560 --> 0:20:08.800
<v Speaker 11>network latency because that literally depends on the distance between

0:20:08.840 --> 0:20:12.040
<v Speaker 11>the user's hardware, whether a mobile device or console, to

0:20:12.119 --> 0:20:14.760
<v Speaker 11>the nearest cell tower. And we know that five G

0:20:14.920 --> 0:20:18.080
<v Speaker 11>network coverage are improving not just in emerging markets, but

0:20:18.119 --> 0:20:21.720
<v Speaker 11>also becoming better in even developed markets including China and

0:20:21.760 --> 0:20:26.359
<v Speaker 11>the US and so as that infrastructure and also cloud

0:20:26.440 --> 0:20:30.720
<v Speaker 11>improved because this proximity to data centers also is a

0:20:30.760 --> 0:20:35.040
<v Speaker 11>factor in determining the experience of cloud So far, you know,

0:20:35.080 --> 0:20:37.560
<v Speaker 11>in emerging market there is a pain point, but we're

0:20:37.600 --> 0:20:42.199
<v Speaker 11>seeing really huge uptick in coverage footprint whether five G

0:20:42.480 --> 0:20:47.000
<v Speaker 11>or four GLT in markets like India and Middle East

0:20:47.040 --> 0:20:51.320
<v Speaker 11>and Latin America. So that just support our conclusion that

0:20:51.400 --> 0:20:53.879
<v Speaker 11>you know, in the next ten years, the experience that

0:20:53.960 --> 0:20:56.639
<v Speaker 11>pain point would become better. And also let's not forget

0:20:56.680 --> 0:20:59.960
<v Speaker 11>that you know, mobile phones, mobile screens capture you know,

0:21:00.240 --> 0:21:03.280
<v Speaker 11>a lot of our attention economy. Actually, there's a study

0:21:03.800 --> 0:21:07.439
<v Speaker 11>according to Harmony Harmony Healthcare, it that it captures more

0:21:07.520 --> 0:21:11.399
<v Speaker 11>than five hours of our time every day, at about

0:21:11.400 --> 0:21:16.119
<v Speaker 11>twenty percent of those times actually go to gaming. Among

0:21:16.280 --> 0:21:19.679
<v Speaker 11>Generation Alpha and Generation Z and the other bulk of

0:21:19.720 --> 0:21:23.920
<v Speaker 11>the gamers. And also, these gamers don't really care about

0:21:23.960 --> 0:21:27.159
<v Speaker 11>playing games at home anymore if they can play on mobile,

0:21:27.160 --> 0:21:30.600
<v Speaker 11>because what they care about is access and also being

0:21:30.640 --> 0:21:33.639
<v Speaker 11>able to do things on their mobile devices. So I

0:21:33.640 --> 0:21:38.120
<v Speaker 11>feel like with this generation coming up and entering into

0:21:38.160 --> 0:21:41.760
<v Speaker 11>the workforce, and they're the one who would see spending

0:21:41.800 --> 0:21:45.160
<v Speaker 11>power increasing, and I feel like there's a lot less

0:21:45.200 --> 0:21:48.359
<v Speaker 11>inclination to actually play games on a console. If down

0:21:48.440 --> 0:21:51.639
<v Speaker 11>ten years downline, you can have the same experience playing

0:21:51.680 --> 0:21:54.160
<v Speaker 11>games on a mobile on a mobile device.

0:21:55.000 --> 0:21:59.679
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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