1 00:00:02,759 --> 00:00:11,520 Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,600 --> 00:00:13,680 Speaker 1: with Scarletfoo and Paul Sweeney. 3 00:00:13,760 --> 00:00:15,880 Speaker 2: How do you think the FED is looking at tariffs? 4 00:00:16,000 --> 00:00:17,800 Speaker 2: The uncertainty of terriffs. Let's take a. 5 00:00:17,720 --> 00:00:19,759 Speaker 3: Look at the sectors and how they performed. 6 00:00:19,800 --> 00:00:22,279 Speaker 2: A lot of investors getting whipsaled every day by news. 7 00:00:22,160 --> 00:00:26,280 Speaker 1: Events, breaking market headlines and corporate news from across the globe. 8 00:00:26,320 --> 00:00:28,920 Speaker 3: Could we see a market disruption of market events? 9 00:00:29,000 --> 00:00:31,000 Speaker 2: So people just too exuberant out there? 10 00:00:31,160 --> 00:00:33,680 Speaker 3: You see some so called low quality stocks driving this 11 00:00:33,800 --> 00:00:34,560 Speaker 3: short term rally. 12 00:00:34,600 --> 00:00:39,400 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 13 00:00:39,560 --> 00:00:41,480 Speaker 1: YouTube and Bloomberg Originals. 14 00:00:42,600 --> 00:00:44,879 Speaker 2: On today's Boomberg Intellligence Show, we dig inside the big 15 00:00:44,920 --> 00:00:47,160 Speaker 2: business stories impacting Wall Street and the global markets. 16 00:00:47,240 --> 00:00:49,320 Speaker 3: Each and every week, we provide in depth research and 17 00:00:49,400 --> 00:00:51,280 Speaker 3: data on some of the two thousand companies and one 18 00:00:51,360 --> 00:00:54,760 Speaker 3: hundred and thirty industries that our analysts cover worldwide. Today, 19 00:00:54,840 --> 00:00:57,200 Speaker 3: we'll look at how a heavy promotional campaign at at 20 00:00:57,240 --> 00:01:01,000 Speaker 3: and T impacted its quarterly earnings, plus breakdown how delayed 21 00:01:01,080 --> 00:01:04,679 Speaker 3: orders at US retailers impacted earnings for toymaker Mattel. But 22 00:01:04,800 --> 00:01:07,760 Speaker 3: first We began with earnings from the streaming giant Netflix, 23 00:01:08,160 --> 00:01:10,720 Speaker 3: Netflix chairs saw the most since April twenty twenty two, 24 00:01:10,800 --> 00:01:13,440 Speaker 3: after its third quarter earnings missed analyst estimates. 25 00:01:13,640 --> 00:01:15,760 Speaker 2: This comes after Netflix had to pay about six hundred 26 00:01:15,800 --> 00:01:18,440 Speaker 2: nineteen million dollars to settle multi year tax dispute with 27 00:01:18,520 --> 00:01:20,680 Speaker 2: Brazilian authorities going back to twenty twenty two. 28 00:01:21,200 --> 00:01:24,040 Speaker 3: The results may renew concerns about the sustainability of growth 29 00:01:24,080 --> 00:01:26,759 Speaker 3: going into twenty twenty six. So for more we brought 30 00:01:26,760 --> 00:01:29,920 Speaker 3: in Geita Rung Nathan and Bloomberg Intelligence analysts on US media. 31 00:01:30,200 --> 00:01:32,840 Speaker 2: We first asked Etha for her take on Netflix results. 32 00:01:33,160 --> 00:01:35,959 Speaker 4: Nobody saw this coming in terms of this transaction tax. 33 00:01:36,160 --> 00:01:37,920 Speaker 4: It's a little bit of a catch up charge that 34 00:01:38,000 --> 00:01:41,400 Speaker 4: Netflix took in the third quarter, and there will be 35 00:01:41,440 --> 00:01:44,680 Speaker 4: an ongoing charge as well, about forty million or soaper quarter, 36 00:01:44,720 --> 00:01:49,200 Speaker 4: but again nothing that will materially impact results. What that 37 00:01:49,360 --> 00:01:54,680 Speaker 4: tax charge did was that it definitely depressed the margin performance, 38 00:01:54,720 --> 00:01:57,600 Speaker 4: and this is something that everybody's been super focused on 39 00:01:57,960 --> 00:02:02,000 Speaker 4: operating margin numbers. Those came definitely much lighter than what 40 00:02:02,720 --> 00:02:05,480 Speaker 4: Netflix itself had rejected. But actually, if you just strip 41 00:02:05,520 --> 00:02:08,600 Speaker 4: out that Brazil tax impact, they would have had record 42 00:02:08,600 --> 00:02:11,120 Speaker 4: operating margins, so they guided for thirty one point five. 43 00:02:11,520 --> 00:02:13,960 Speaker 4: They would have come in at close to almost thirty 44 00:02:14,040 --> 00:02:17,359 Speaker 4: four percent if we didn't have that tax issue. I 45 00:02:17,360 --> 00:02:20,680 Speaker 4: think fundamentals are definitely strong. But I think what is 46 00:02:20,720 --> 00:02:22,760 Speaker 4: happening is apart from the tax issue, was that it 47 00:02:22,840 --> 00:02:26,280 Speaker 4: was just a very very ordinary quarter. You know, people 48 00:02:26,360 --> 00:02:30,120 Speaker 4: were definitely expecting something, you know, a much bigger beat 49 00:02:30,280 --> 00:02:32,680 Speaker 4: in terms of revenue, just given that, you know, the 50 00:02:32,680 --> 00:02:35,880 Speaker 4: second half content slate has absolutely been a monster slate. 51 00:02:35,919 --> 00:02:38,320 Speaker 4: I mean, we've seen some of their biggest hits ever 52 00:02:38,440 --> 00:02:40,680 Speaker 4: in the third quarter. We expect to see more coming 53 00:02:40,680 --> 00:02:43,519 Speaker 4: in four Q, but none of that was really reflected 54 00:02:43,560 --> 00:02:45,360 Speaker 4: in the numbers, and I think that's why you're seeing 55 00:02:45,400 --> 00:02:46,359 Speaker 4: so much of nervousness. 56 00:02:46,440 --> 00:02:49,440 Speaker 3: Okay, so ordinary results at Netflix is like the new bad. 57 00:02:49,960 --> 00:02:53,440 Speaker 3: Going back to the results, Gita, what was new I 58 00:02:53,480 --> 00:02:56,000 Speaker 3: thought in the earnings report was that they flagged the 59 00:02:56,040 --> 00:02:58,800 Speaker 3: possibility of M and A, which is not something you 60 00:02:58,880 --> 00:03:01,840 Speaker 3: hear from Netflix. Of course, there have been all these 61 00:03:01,880 --> 00:03:04,800 Speaker 3: reports that Netflix is interested in buying assets for Warner 62 00:03:04,800 --> 00:03:08,240 Speaker 3: Brothers Discovery. Do these latest results show that Netflix is 63 00:03:08,240 --> 00:03:10,359 Speaker 3: now in a position where it has to make a purchase. 64 00:03:10,400 --> 00:03:13,200 Speaker 3: It's a defensive buyer as opposed to an offensive buyer. 65 00:03:13,840 --> 00:03:16,120 Speaker 4: I don't know whether it has to make a purchase. 66 00:03:16,240 --> 00:03:19,840 Speaker 4: They definitely left the door open, which which suggests to 67 00:03:19,919 --> 00:03:22,240 Speaker 4: us that they will take, you know, a long and 68 00:03:22,400 --> 00:03:25,960 Speaker 4: hard look at the studio assets. Not the cable networks. 69 00:03:25,960 --> 00:03:29,040 Speaker 4: They made that extremely clear on the call, but the studio. 70 00:03:29,080 --> 00:03:30,880 Speaker 4: If you just think about it, Scarlett, I mean, this 71 00:03:30,960 --> 00:03:33,200 Speaker 4: is definitely and I mean we spoke about this yesterday 72 00:03:33,200 --> 00:03:36,320 Speaker 4: as well. This is a once in a generational opportunity 73 00:03:36,360 --> 00:03:38,680 Speaker 4: for anybody who wants to own this kind of a studio. 74 00:03:38,680 --> 00:03:40,520 Speaker 4: I mean, this is a top tier studio with a 75 00:03:40,560 --> 00:03:45,200 Speaker 4: lot of very very you know, beloved popular franchises across 76 00:03:45,200 --> 00:03:48,200 Speaker 4: the world. We know that these titles resonate. I mean 77 00:03:48,240 --> 00:03:51,160 Speaker 4: Netflix themselves has a lot of the Warner brother titles. 78 00:03:51,200 --> 00:03:53,920 Speaker 4: They perform extremely well on the platform. So yes, it 79 00:03:54,000 --> 00:03:57,520 Speaker 4: is a defensive move. But again, if Netflix doesn't, you know, 80 00:03:57,600 --> 00:04:00,800 Speaker 4: go ahead and doesn't make that purchase, I don't necessarily 81 00:04:00,840 --> 00:04:03,000 Speaker 4: think that they are going to be in a much 82 00:04:03,280 --> 00:04:06,160 Speaker 4: weaker position. It definitely complicates the strategy for them a 83 00:04:06,240 --> 00:04:09,080 Speaker 4: little bit, just because you might have another player, like 84 00:04:09,120 --> 00:04:12,560 Speaker 4: a paramount or a comcast that becomes much stronger, but 85 00:04:12,640 --> 00:04:16,840 Speaker 4: they still have a considerable lead versus all of their peers. 86 00:04:16,839 --> 00:04:19,360 Speaker 4: So I don't think it's do or die. 87 00:04:19,839 --> 00:04:22,960 Speaker 2: So what's the environment like out there in terms of 88 00:04:23,200 --> 00:04:27,560 Speaker 2: creating content movies and TV shows? Is Netflix still like 89 00:04:27,680 --> 00:04:30,200 Speaker 2: the first phone call you make if you're a producer 90 00:04:30,320 --> 00:04:32,200 Speaker 2: or you're a writer. I've got this project. I'm going 91 00:04:32,240 --> 00:04:33,720 Speaker 2: to go to Netflix and get it done. Is that 92 00:04:34,120 --> 00:04:35,960 Speaker 2: because they had the biggest and maybe still have the 93 00:04:35,960 --> 00:04:38,400 Speaker 2: biggest checkbook in Hollywood? 94 00:04:38,720 --> 00:04:41,680 Speaker 4: They do. They're spending close to about seventeen and a 95 00:04:41,680 --> 00:04:45,600 Speaker 4: half to eighteen billion dollars on content every year. And 96 00:04:45,839 --> 00:04:48,520 Speaker 4: you know, there's been a lot of concerns Paul in 97 00:04:48,560 --> 00:04:52,719 Speaker 4: general about the rise of AI, especially now that you 98 00:04:52,760 --> 00:04:55,279 Speaker 4: have Sora too, You have all of these new tools 99 00:04:55,279 --> 00:04:59,120 Speaker 4: from Google, from Meta. You know, is that going to 100 00:04:59,200 --> 00:05:02,360 Speaker 4: be a disruptive force for all of these streaming players 101 00:05:02,360 --> 00:05:05,840 Speaker 4: and Netflix? And it looks like it actually won't. You know, 102 00:05:05,920 --> 00:05:08,840 Speaker 4: We've run some numbers internally. We think that it should 103 00:05:08,920 --> 00:05:12,400 Speaker 4: help Netflix actually curb content costs by about five to 104 00:05:12,440 --> 00:05:15,560 Speaker 4: ten percent. That's substantial cost savings, you know for all 105 00:05:15,600 --> 00:05:18,640 Speaker 4: of these streaming players. Especially for Netflix, which typically has 106 00:05:18,839 --> 00:05:23,160 Speaker 4: used AI really really well. You're absolutely right. You know, 107 00:05:23,160 --> 00:05:25,640 Speaker 4: they've done a great job when it comes to content. 108 00:05:25,960 --> 00:05:27,800 Speaker 4: They're going to I think continue to do that. I mean, 109 00:05:28,240 --> 00:05:30,800 Speaker 4: not only do we have the second half slate for 110 00:05:30,920 --> 00:05:33,480 Speaker 4: this year which is extremely strong Scartledge just mentioned all 111 00:05:33,520 --> 00:05:36,159 Speaker 4: of those titles, but actually looking forward to twenty twenty 112 00:05:36,200 --> 00:05:39,680 Speaker 4: six again, you have a whole host of different titles 113 00:05:39,680 --> 00:05:42,720 Speaker 4: coming on the platform, you know, including Emily in Paris. 114 00:05:42,760 --> 00:05:44,880 Speaker 4: You have Bridgerton, which has been one of their biggest series, 115 00:05:44,880 --> 00:05:47,840 Speaker 4: and then you have the movie Narnia, which is supposed 116 00:05:47,880 --> 00:05:49,600 Speaker 4: to be like this huge event for them coming a 117 00:05:49,600 --> 00:05:53,000 Speaker 4: little bit later. So they have a steady, steady, steady 118 00:05:53,000 --> 00:05:57,040 Speaker 4: pipeline of titles that should help them, you know, drive 119 00:05:57,080 --> 00:05:59,360 Speaker 4: engagement and ultimately drive pricing. 120 00:05:59,680 --> 00:06:02,400 Speaker 3: Are they used to KEITHA. Rang Nathan Bloomberg, intelligence analysts 121 00:06:02,400 --> 00:06:03,159 Speaker 3: on US Media. 122 00:06:03,600 --> 00:06:05,720 Speaker 2: We move next to the luxury space. This week, the 123 00:06:05,760 --> 00:06:08,440 Speaker 2: luxury goods company Caring agreed to sell its beauty division 124 00:06:08,480 --> 00:06:11,200 Speaker 2: to the cosmetics and beauty company Laurel in a four 125 00:06:11,200 --> 00:06:12,719 Speaker 2: point seven billion dollar deal. 126 00:06:12,839 --> 00:06:15,679 Speaker 3: The transaction includes the sale of perfume maker House of Creed, 127 00:06:15,720 --> 00:06:18,040 Speaker 3: which carrying a bought only two years ago, and this 128 00:06:18,080 --> 00:06:21,359 Speaker 3: comes as Carrying's new CEO, Luca DeMeo, changes course in 129 00:06:21,360 --> 00:06:23,680 Speaker 3: a bid to turn around the French luxury giant's fortunes 130 00:06:24,000 --> 00:06:24,720 Speaker 3: for more guestos. 131 00:06:24,800 --> 00:06:27,640 Speaker 2: Lisa Matteo and I were joined by Andrea Felsted Bloomberg 132 00:06:27,680 --> 00:06:30,520 Speaker 2: Opinion Calmness. We first asked Andrea to break down what 133 00:06:30,600 --> 00:06:32,560 Speaker 2: exactly the Carring transaction shows. 134 00:06:33,000 --> 00:06:37,039 Speaker 5: Well, it's being dressed up as a partnership between Caring 135 00:06:37,080 --> 00:06:40,120 Speaker 5: and Loial, but what it really is is effectively the 136 00:06:40,160 --> 00:06:42,120 Speaker 5: sale of their beauty brands to. 137 00:06:43,720 --> 00:06:44,200 Speaker 6: Loreo. 138 00:06:44,720 --> 00:06:48,360 Speaker 5: They've got a new CEO, Luke to Mayo. He's come 139 00:06:48,400 --> 00:06:51,720 Speaker 5: in at a time when the balance sheet is very stretched. 140 00:06:51,720 --> 00:06:56,600 Speaker 5: His predecessor, who is now chairman, well bought a lot 141 00:06:56,680 --> 00:07:00,760 Speaker 5: of things, including Creed, this very very upmarket few business 142 00:07:01,320 --> 00:07:05,039 Speaker 5: as share in Valentino to try to make the group 143 00:07:05,160 --> 00:07:09,680 Speaker 5: less dependent on Gucci, but that really increased debt. At 144 00:07:09,680 --> 00:07:13,200 Speaker 5: the same time, Gucci's really slowed down and they're having 145 00:07:13,200 --> 00:07:16,280 Speaker 5: to revive it. So they're saying it for four billion 146 00:07:16,320 --> 00:07:19,680 Speaker 5: euros in cash. That gets some money in to deal 147 00:07:19,720 --> 00:07:22,720 Speaker 5: with the debt and gives the new CEO a bit 148 00:07:22,760 --> 00:07:24,440 Speaker 5: more time to turn around Gucci. 149 00:07:25,440 --> 00:07:28,120 Speaker 7: Isn't this a complete turnaround? I mean, didn't the company 150 00:07:28,320 --> 00:07:31,240 Speaker 7: want to bulk up the beauty and cosmetics division? 151 00:07:32,440 --> 00:07:33,040 Speaker 6: Exactly? 152 00:07:33,080 --> 00:07:35,280 Speaker 5: I mean they're saying, you know, this is built on 153 00:07:35,320 --> 00:07:37,120 Speaker 5: the potential that they created. 154 00:07:37,200 --> 00:07:39,240 Speaker 6: I mean, to be fair, they bought Creed. They paid 155 00:07:39,240 --> 00:07:42,520 Speaker 6: a lot for Creed three point five billion euros. 156 00:07:42,640 --> 00:07:45,160 Speaker 5: Try worked out to be about fourteen time sales, you know, 157 00:07:45,480 --> 00:07:46,120 Speaker 5: an awful lot. 158 00:07:46,480 --> 00:07:48,720 Speaker 6: But what they did it had a supply chain. 159 00:07:49,360 --> 00:07:52,360 Speaker 5: They did that as a platform to build for beauty. 160 00:07:52,560 --> 00:07:54,760 Speaker 5: And the argument is they have been able to do 161 00:07:54,840 --> 00:07:57,800 Speaker 5: this deal because of that platform. That's probably kind of 162 00:07:57,920 --> 00:08:01,120 Speaker 5: rather generous. Looked at my had a big decision to 163 00:08:01,160 --> 00:08:03,880 Speaker 5: make when he got him. He either had to stick 164 00:08:03,920 --> 00:08:07,200 Speaker 5: with beauty and invest in it. But with that day, 165 00:08:07,280 --> 00:08:10,080 Speaker 5: it's gone in awe and the need to reinvigorate Gucci. 166 00:08:10,120 --> 00:08:13,240 Speaker 5: It's got an awful lot more calls on its cash, 167 00:08:13,280 --> 00:08:16,680 Speaker 5: so he just decided beauty wasn't a priority. 168 00:08:17,280 --> 00:08:19,920 Speaker 2: I consider myself a Gucci expert. I read the book, 169 00:08:20,120 --> 00:08:23,480 Speaker 2: I saw the movie. On the movie, yes, exactly so, Andrew. 170 00:08:23,640 --> 00:08:26,600 Speaker 2: I mean, it's obviously an iconic brand. What are the 171 00:08:26,600 --> 00:08:28,840 Speaker 2: experts saying that needs to be done because it's such 172 00:08:28,880 --> 00:08:30,480 Speaker 2: an important part for caring. 173 00:08:30,520 --> 00:08:31,520 Speaker 6: It is it really is. 174 00:08:31,560 --> 00:08:34,000 Speaker 5: It would at its peak, and in sort of twenty 175 00:08:34,080 --> 00:08:37,640 Speaker 5: eighteen nineteen, around that time, it was sixty percent group sales. Now, 176 00:08:38,400 --> 00:08:41,720 Speaker 5: you know, Kerring had an amazing rum with Gucci. They 177 00:08:41,800 --> 00:08:45,760 Speaker 5: put in this quite unknown designer, Alessandro mckayley, and the 178 00:08:45,880 --> 00:08:48,640 Speaker 5: prevailing look had been very minimalist, and he came in 179 00:08:48,679 --> 00:08:53,280 Speaker 5: with these big logos, clashing print, granny sheek, and it 180 00:08:53,320 --> 00:08:55,920 Speaker 5: was just a bread of breath of fresh air and 181 00:08:56,040 --> 00:08:59,400 Speaker 5: it changed prevailing fashion. But that was in sort two 182 00:08:59,440 --> 00:09:03,040 Speaker 5: thousand and six, after the pandemic, when obviously nobody was 183 00:09:03,080 --> 00:09:07,520 Speaker 5: feeling terribly good Sarring inflation. It just felt very out 184 00:09:07,520 --> 00:09:10,720 Speaker 5: of sync with how people were feeling, and they tried 185 00:09:10,840 --> 00:09:14,160 Speaker 5: to turn it round and have a much more minimal 186 00:09:14,720 --> 00:09:18,080 Speaker 5: minimalist look, and it just wasn't Gucci. Gucci works best 187 00:09:18,120 --> 00:09:21,480 Speaker 5: when it's very fashionable, when it's over the top. So 188 00:09:21,480 --> 00:09:25,760 Speaker 5: they've brought in dumbnag Versalia, who was at Balenciaga, and 189 00:09:25,800 --> 00:09:30,080 Speaker 5: he is trying to, you know, really revive it. He's 190 00:09:30,120 --> 00:09:32,960 Speaker 5: gone back to the Tom four Days when it was 191 00:09:33,080 --> 00:09:36,000 Speaker 5: very successful. He's gone back to the Alessandro and Kaylee Days. 192 00:09:36,320 --> 00:09:38,960 Speaker 6: He did this crazy film in Fashion Week. 193 00:09:39,000 --> 00:09:42,760 Speaker 5: There was absolutely bonkers, but it got people talking about 194 00:09:42,760 --> 00:09:44,679 Speaker 5: Gucci again. I was in New York a couple of 195 00:09:44,720 --> 00:09:47,439 Speaker 5: weeks ago and I went to the store in Soho 196 00:09:47,559 --> 00:09:49,959 Speaker 5: and there was a big installation of all his things 197 00:09:50,000 --> 00:09:53,880 Speaker 5: and the capsule collection. It's trying to get people interested 198 00:09:53,920 --> 00:09:57,000 Speaker 5: in Gucci again, and he's sort of going back to 199 00:09:57,040 --> 00:09:59,760 Speaker 5: the future to try and revive its magic. 200 00:10:00,080 --> 00:10:01,480 Speaker 6: Though it's going to work, I'm not sure. 201 00:10:01,559 --> 00:10:04,360 Speaker 5: I thought he was the wrong person to be appointed, 202 00:10:04,720 --> 00:10:07,080 Speaker 5: but so far he seems to be doing all the 203 00:10:07,120 --> 00:10:08,079 Speaker 5: right things. 204 00:10:08,679 --> 00:10:11,120 Speaker 7: Andrew, can you tell us some of the challenges krig 205 00:10:11,160 --> 00:10:13,400 Speaker 7: has been facing. I mean, there's that slump in Chinese demand, 206 00:10:13,800 --> 00:10:15,320 Speaker 7: higher US tariffs as well. 207 00:10:15,320 --> 00:10:16,080 Speaker 2: What are they facing? 208 00:10:16,800 --> 00:10:20,200 Speaker 5: So what we what we've got at the moment is 209 00:10:20,360 --> 00:10:23,040 Speaker 5: the one percent of still doing very well. But they're 210 00:10:23,080 --> 00:10:27,160 Speaker 5: not buying Gucci. They're buying Hermes, they're buying Brunello, Cuccinelle, 211 00:10:28,120 --> 00:10:32,840 Speaker 5: Laura Piano. They want these very expensive upmarket things. Now, 212 00:10:33,240 --> 00:10:35,440 Speaker 5: the rest of the less rest of the luxury market, 213 00:10:35,559 --> 00:10:40,200 Speaker 5: that aspirational customers coming under pressure, and she had a 214 00:10:40,280 --> 00:10:43,720 Speaker 5: lot of those aspirational customers, particularly in the US. So 215 00:10:43,840 --> 00:10:46,800 Speaker 5: you've got the sort of esthetic going out of fashion 216 00:10:46,800 --> 00:10:51,040 Speaker 5: and you've got these aspirational customers coming under pressure. It's 217 00:10:51,120 --> 00:10:54,040 Speaker 5: really had a bit of a perfect storm and it 218 00:10:54,160 --> 00:10:58,000 Speaker 5: needs to really revive Guccini and it had the Takeo 219 00:10:58,040 --> 00:11:02,200 Speaker 5: Vannetta wasn't doing too bad and their designer went to Chanel. 220 00:11:02,360 --> 00:11:05,840 Speaker 5: So you know, every brand is sort of you know, 221 00:11:05,960 --> 00:11:07,000 Speaker 5: got its challenges. 222 00:11:07,480 --> 00:11:10,480 Speaker 3: Our thanks to Andrea Fause, said Bloomberg opinion columnist, coming 223 00:11:10,520 --> 00:11:12,560 Speaker 3: up a look at why third quarter profit at evie 224 00:11:12,640 --> 00:11:15,000 Speaker 3: Giant Tesla missed estimates on Wall Street. 225 00:11:15,120 --> 00:11:18,160 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing inp 226 00:11:18,240 --> 00:11:20,520 Speaker 2: research and data on two thousand companies and one hundred 227 00:11:20,520 --> 00:11:21,320 Speaker 2: and thirty industries. 228 00:11:21,400 --> 00:11:24,640 Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal. 229 00:11:24,720 --> 00:11:25,839 Speaker 3: I'm Scarlet Foo and. 230 00:11:25,800 --> 00:11:27,840 Speaker 2: I'm Paul Sweeney, and this is Bloomberg. 231 00:11:32,160 --> 00:11:36,680 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 232 00:11:37,000 --> 00:11:38,320 Speaker 1: on Bloomberg Radio. 233 00:11:39,120 --> 00:11:41,240 Speaker 2: We'll move next to earning from the ev Giant Tesla. 234 00:11:41,320 --> 00:11:44,480 Speaker 2: Tesla report at third quarter earnings that missed analysts expectations. 235 00:11:44,640 --> 00:11:47,360 Speaker 2: This comes despite record electric vehicle sales. 236 00:11:47,080 --> 00:11:49,400 Speaker 3: It's a sign of the pressure automakers are facing from 237 00:11:49,440 --> 00:11:53,400 Speaker 3: shifting federal policies and rising costs. Afterwards, CEO Elon Musk 238 00:11:53,440 --> 00:11:55,800 Speaker 3: also spent the end of Tesla's earnings called pleading with 239 00:11:55,880 --> 00:11:59,200 Speaker 3: investors to approve his one trillion dollar pay package and 240 00:11:59,240 --> 00:12:01,560 Speaker 3: blasted your whold the advisory firms that have come out 241 00:12:01,640 --> 00:12:02,880 Speaker 3: against that proposal. 242 00:12:03,160 --> 00:12:05,480 Speaker 2: For more. We were joined by Steve Man Bloomberg Intelligence, 243 00:12:05,480 --> 00:12:07,559 Speaker 2: Global Autos and Industrials research Channels. 244 00:12:07,679 --> 00:12:09,720 Speaker 3: We first asked Eeve for his reaction to the recent 245 00:12:09,760 --> 00:12:10,560 Speaker 3: Tessa news. 246 00:12:10,920 --> 00:12:14,480 Speaker 8: It was quite a surprise. Given the volume of production. 247 00:12:15,000 --> 00:12:18,080 Speaker 8: You would think that, you know, the fixed costs absorption 248 00:12:18,320 --> 00:12:21,440 Speaker 8: would be higher this quarter than in the past, but 249 00:12:21,480 --> 00:12:25,520 Speaker 8: it didn't happen. Looks like appreciation costs increase for them. 250 00:12:25,600 --> 00:12:29,240 Speaker 8: Looks like the tariff costs impact is greater than expected. 251 00:12:29,720 --> 00:12:32,480 Speaker 8: And then even below the gross margin line, the R 252 00:12:32,520 --> 00:12:36,160 Speaker 8: and D costs went up quite a bit. You know, 253 00:12:36,200 --> 00:12:37,960 Speaker 8: that could be viewed as a good thing, because that's 254 00:12:38,559 --> 00:12:41,280 Speaker 8: you know, that's a sign they're pivoting to you know, 255 00:12:41,320 --> 00:12:45,760 Speaker 8: the ROBOTAXI, the FSD and you know the optimist robots. 256 00:12:45,640 --> 00:12:48,880 Speaker 2: And Elon Musk, I guess towards the end of the call, 257 00:12:48,960 --> 00:12:52,320 Speaker 2: made a plea for investors to a previous one trillion 258 00:12:52,360 --> 00:12:55,959 Speaker 2: dollar pay package. Quote this is from Elon. There needs 259 00:12:56,000 --> 00:12:58,080 Speaker 2: to be enough voting control to give a strong influence, 260 00:12:58,080 --> 00:13:00,200 Speaker 2: but not so much that I can't be far if 261 00:13:00,240 --> 00:13:03,400 Speaker 2: I go insane. Mister Musk said, how did that go 262 00:13:03,520 --> 00:13:05,360 Speaker 2: over on the call here? And what's the thinking among 263 00:13:05,400 --> 00:13:09,199 Speaker 2: the investor community about what maybe a one trillion dollar 264 00:13:09,240 --> 00:13:10,080 Speaker 2: pay package? 265 00:13:10,400 --> 00:13:13,400 Speaker 8: Yeah, I'm not sure if money is important to him. 266 00:13:13,440 --> 00:13:16,520 Speaker 8: He does have a lot already, so I do believe 267 00:13:16,559 --> 00:13:18,760 Speaker 8: that it's more about the control of the company. Look, 268 00:13:18,840 --> 00:13:21,640 Speaker 8: Tesla doesn't have the dual class shares like some of 269 00:13:21,640 --> 00:13:25,600 Speaker 8: the tech companies have, so there is he he does 270 00:13:25,679 --> 00:13:29,280 Speaker 8: have that fear of getting pushed out, and you know, 271 00:13:29,320 --> 00:13:31,840 Speaker 8: he had that experience right with the open Ai. You know, 272 00:13:31,880 --> 00:13:35,360 Speaker 8: he's one of the initial investors in open Ai and 273 00:13:35,400 --> 00:13:38,840 Speaker 8: he got pushed out. So he does have the concern 274 00:13:39,679 --> 00:13:43,320 Speaker 8: it is his baby. Look, the stocks. You know, the 275 00:13:43,400 --> 00:13:46,040 Speaker 8: other thing is that the stock hasn't reacted, you know, 276 00:13:46,360 --> 00:13:49,800 Speaker 8: too negatively to the weak earnings that we saw in 277 00:13:49,880 --> 00:13:54,080 Speaker 8: the last quarter. Right, there's there's a battle happening between 278 00:13:54,360 --> 00:13:57,800 Speaker 8: the the bulls and the bears, the long the long 279 00:13:57,840 --> 00:14:02,680 Speaker 8: guys versus the near term investors. And you know, there 280 00:14:02,720 --> 00:14:04,880 Speaker 8: are a lot of people believe it, who believes that 281 00:14:05,000 --> 00:14:09,560 Speaker 8: the you know, he can achieve you know, the getting 282 00:14:09,600 --> 00:14:13,160 Speaker 8: the optimism robot up and running, uh, you know, getting 283 00:14:13,720 --> 00:14:17,880 Speaker 8: our physical AI going. So there's a lot of believers 284 00:14:17,880 --> 00:14:18,280 Speaker 8: out there. 285 00:14:19,080 --> 00:14:21,280 Speaker 3: There's a lot of believers in you know, what the 286 00:14:21,360 --> 00:14:24,200 Speaker 3: company actually reports, especially when it comes to his vehicle sales, 287 00:14:24,320 --> 00:14:27,480 Speaker 3: almost doesn't matter based on this idea that Elon Musk 288 00:14:27,480 --> 00:14:30,400 Speaker 3: will steered the company in the right direction eventually maybe 289 00:14:30,560 --> 00:14:35,200 Speaker 3: because you know, the robotaxis, which are you know, in operation, 290 00:14:35,440 --> 00:14:39,560 Speaker 3: but the self driving vehicles, the humanoid robots, those are 291 00:14:39,600 --> 00:14:41,360 Speaker 3: going to take a couple of years to pan out. 292 00:14:41,640 --> 00:14:43,720 Speaker 3: If that we don't have any details on it. 293 00:14:43,760 --> 00:14:44,200 Speaker 4: So in the. 294 00:14:44,160 --> 00:14:47,440 Speaker 3: Meantime, what is the growth driver for this company? 295 00:14:47,920 --> 00:14:51,320 Speaker 8: Well, you know, he definitely in the call, he you know, 296 00:14:51,360 --> 00:14:53,680 Speaker 8: he didn't talk about cars a lot anymore other than 297 00:14:53,760 --> 00:14:57,840 Speaker 8: robotax and FSD. He's very focused on physical AI. But 298 00:14:57,960 --> 00:15:00,520 Speaker 8: at the end of the day, he needs this out cars. 299 00:15:00,640 --> 00:15:03,520 Speaker 8: He needs to continue to sell cars to actually generate 300 00:15:03,560 --> 00:15:08,600 Speaker 8: the cash to support his endeavors. Now he has launched 301 00:15:08,680 --> 00:15:11,760 Speaker 8: cheaper vehicles. It would have been better if he is 302 00:15:11,840 --> 00:15:15,280 Speaker 8: offering even a cheaper model, like something under thirty thousand 303 00:15:15,320 --> 00:15:18,560 Speaker 8: that you know we talked about in the past. He 304 00:15:18,640 --> 00:15:21,920 Speaker 8: is expanding overseas, right he had, you know, record sales 305 00:15:21,920 --> 00:15:25,200 Speaker 8: in countries like Japan and South Korea. Now he's going 306 00:15:25,280 --> 00:15:29,480 Speaker 8: into India, big market, big market, So cars is still 307 00:15:29,480 --> 00:15:30,720 Speaker 8: going to be important. 308 00:15:30,560 --> 00:15:33,200 Speaker 2: Our Thanks to Steve Man Bloomberg Intelligence Global Autos and 309 00:15:33,240 --> 00:15:34,280 Speaker 2: Industrials Research. 310 00:15:34,040 --> 00:15:36,920 Speaker 3: Channelst we move next to earnings from the telecoms company 311 00:15:36,960 --> 00:15:37,400 Speaker 3: AT and T. 312 00:15:37,880 --> 00:15:40,480 Speaker 2: This week, AT and T reported revenue that fell slightly 313 00:15:40,520 --> 00:15:43,200 Speaker 2: short of analyst expectations in the third quarter. This was 314 00:15:43,240 --> 00:15:45,880 Speaker 2: the result of a heavy promotion campaign to move new 315 00:15:45,880 --> 00:15:48,480 Speaker 2: customers in a fiercely competitive mobile phone market. 316 00:15:48,600 --> 00:15:50,840 Speaker 3: A G and G CEO John Stanky also said the 317 00:15:50,840 --> 00:15:54,320 Speaker 3: carrier is up against quote increased marketplace activity that shows 318 00:15:54,360 --> 00:15:56,240 Speaker 3: no sign of slowing through the end of the year. 319 00:15:56,560 --> 00:15:58,960 Speaker 2: For more, we were joined by John Butler, Bloomberg Intelligence 320 00:15:59,040 --> 00:16:00,760 Speaker 2: Senior Telecom We. 321 00:16:00,720 --> 00:16:02,920 Speaker 3: First began by asking John to talk about H and 322 00:16:02,960 --> 00:16:06,040 Speaker 3: d's quarter that ended and just how competitive this wireless 323 00:16:06,040 --> 00:16:06,640 Speaker 3: business is. 324 00:16:07,080 --> 00:16:09,840 Speaker 9: It's a very mature market right now, you've had a 325 00:16:09,840 --> 00:16:14,280 Speaker 9: lot of movement and the management suite with new CEOs 326 00:16:14,360 --> 00:16:18,280 Speaker 9: at Verizon and T Mobiles. So the fear is that 327 00:16:18,840 --> 00:16:21,760 Speaker 9: promotional activity is going to pick up as these new 328 00:16:21,840 --> 00:16:24,040 Speaker 9: CEOs try and make their mark, and I think we 329 00:16:24,080 --> 00:16:27,120 Speaker 9: saw some evidence of that in three Q. You know, 330 00:16:27,160 --> 00:16:29,360 Speaker 9: if you look at AT and t's numbers, they were 331 00:16:29,400 --> 00:16:33,280 Speaker 9: truly mixed. I was really surprised at that. What we 332 00:16:33,360 --> 00:16:38,400 Speaker 9: saw was revenue growth across the board just missed estimates slightly. 333 00:16:38,480 --> 00:16:43,160 Speaker 9: It was a little bit slower than everyone expected. Subscriber growth, though, 334 00:16:43,360 --> 00:16:48,120 Speaker 9: was higher than expected, and that really to me that 335 00:16:49,240 --> 00:16:51,840 Speaker 9: those are the kind of financial metrics you see in 336 00:16:51,880 --> 00:16:56,520 Speaker 9: a highly promotional environment. Right you're promoting heavily, there's pressure 337 00:16:56,560 --> 00:17:00,080 Speaker 9: on pricing. Their average revenue per user actually fell in 338 00:17:00,080 --> 00:17:04,639 Speaker 9: the quarter on the wireless front, but subscribers rose, and 339 00:17:04,720 --> 00:17:07,800 Speaker 9: so you're out there trying to build up your roles, 340 00:17:08,000 --> 00:17:12,000 Speaker 9: your subscriber roles, at the expense of revenue in the 341 00:17:12,080 --> 00:17:15,240 Speaker 9: short term, on the promise that in the long term, 342 00:17:15,320 --> 00:17:18,560 Speaker 9: if you can keep those subscribers, it pays back. 343 00:17:18,800 --> 00:17:21,080 Speaker 3: I always pay special attention to AT and t's results 344 00:17:21,119 --> 00:17:23,920 Speaker 3: because I switched from AT and T after like I 345 00:17:23,960 --> 00:17:26,960 Speaker 3: don't know, fifteen years because of the original iPhone to 346 00:17:27,200 --> 00:17:29,439 Speaker 3: T Mobile because they had all these great deals, and 347 00:17:29,840 --> 00:17:31,560 Speaker 3: I don't know, it seems more fun in general. The 348 00:17:31,600 --> 00:17:33,399 Speaker 3: reason I bring this up is because now AT and 349 00:17:33,400 --> 00:17:36,960 Speaker 3: T is actually the smallest of the big three wireless providers, 350 00:17:37,000 --> 00:17:40,320 Speaker 3: behind Rise and behind T Mobile. Does being the underdog 351 00:17:40,440 --> 00:17:41,919 Speaker 3: work for it? 352 00:17:41,920 --> 00:17:44,840 Speaker 9: It's a good question, Scarlett. What they're really doing is 353 00:17:44,920 --> 00:17:49,600 Speaker 9: throwing their weight behind broadband John Stankey. He has really 354 00:17:49,760 --> 00:17:53,679 Speaker 9: pursued the broadband market in a big way, and I 355 00:17:53,720 --> 00:17:55,800 Speaker 9: think a lot of it has to do with the 356 00:17:55,840 --> 00:18:00,520 Speaker 9: fact that the broadband market is growing faster than why wireless. 357 00:18:01,240 --> 00:18:04,800 Speaker 9: It's still a mature market, it's still relatively saturated, but 358 00:18:04,880 --> 00:18:09,159 Speaker 9: there's room for more growth there. AT and T is 359 00:18:09,240 --> 00:18:13,800 Speaker 9: pursuing a fiber broadband strategy, and fiber is the single 360 00:18:13,840 --> 00:18:18,000 Speaker 9: best way to deliver Internet period, full stop. There's nothing 361 00:18:18,040 --> 00:18:20,480 Speaker 9: better out there, and AT and T is a real 362 00:18:20,560 --> 00:18:24,080 Speaker 9: leader there. So I think on the wireless run, I 363 00:18:24,080 --> 00:18:26,159 Speaker 9: don't want to say they have their eye off that 364 00:18:26,280 --> 00:18:29,720 Speaker 9: ball in any way whatsoever. They're going through a big 365 00:18:29,760 --> 00:18:33,639 Speaker 9: modernization of the wireless network right now, standing up a 366 00:18:33,640 --> 00:18:36,040 Speaker 9: lot of new spectrums, so you're going to see network 367 00:18:36,080 --> 00:18:40,760 Speaker 9: quality increase significantly over time, and that will drive more 368 00:18:40,800 --> 00:18:44,159 Speaker 9: net additions I think down the road. But if you 369 00:18:44,480 --> 00:18:47,919 Speaker 9: think about AT and T, don't just think wireless. I 370 00:18:47,920 --> 00:18:51,399 Speaker 9: think it's important to pay attention to what's happening in 371 00:18:51,440 --> 00:18:55,639 Speaker 9: that broadband business because that really is setting the foundation 372 00:18:55,880 --> 00:18:57,240 Speaker 9: for their future growth. 373 00:18:57,720 --> 00:19:01,119 Speaker 2: So John, in the broadband business, are they competing against 374 00:19:01,200 --> 00:19:04,120 Speaker 2: the cable companies because they've made that a key focus 375 00:19:04,200 --> 00:19:05,439 Speaker 2: over the last decade or so. 376 00:19:06,160 --> 00:19:09,680 Speaker 9: Yeah, I mean, the broadband market's getting really interesting right now. 377 00:19:09,760 --> 00:19:13,800 Speaker 9: What you've seen is the cable guys are losing a 378 00:19:13,920 --> 00:19:19,120 Speaker 9: lot of share to fiber, and particularly to fixed wireless access, 379 00:19:19,200 --> 00:19:23,879 Speaker 9: which is basically a wireless link of broadband into your home. 380 00:19:24,000 --> 00:19:29,359 Speaker 9: That's been a runaway hit with consumers, really popular. AT 381 00:19:29,480 --> 00:19:32,679 Speaker 9: and T was late to that game, but they're getting 382 00:19:32,720 --> 00:19:36,879 Speaker 9: a lot of growth in FWA right now, as it's called. 383 00:19:36,960 --> 00:19:40,880 Speaker 9: So it's interesting to see the dynamic where the cable 384 00:19:40,920 --> 00:19:44,600 Speaker 9: guys are losing share and the telcos are gaining share, 385 00:19:45,280 --> 00:19:47,399 Speaker 9: and soon you're going to have starlink in on the 386 00:19:47,440 --> 00:19:50,119 Speaker 9: market in a bigger way. They're right on the cosp 387 00:19:50,200 --> 00:19:55,440 Speaker 9: of upgrading the capacity of their constellation and so they're 388 00:19:55,480 --> 00:19:58,879 Speaker 9: going to go from a very high priced product, I think, 389 00:19:59,480 --> 00:20:03,920 Speaker 9: to a much more reasonably priced broadband offering. Once they 390 00:20:03,920 --> 00:20:06,280 Speaker 9: get more capacity up there, they're going to look to 391 00:20:06,359 --> 00:20:08,800 Speaker 9: fill that and the way to do that is to 392 00:20:08,840 --> 00:20:12,200 Speaker 9: cut your prices. And so suddenly you're going to have 393 00:20:12,359 --> 00:20:15,879 Speaker 9: another wireless option, which is going to be satellite. So 394 00:20:16,680 --> 00:20:20,399 Speaker 9: the competitive dynamics there are getting interesting. But for AT 395 00:20:20,520 --> 00:20:23,760 Speaker 9: and T and their dedication of fiber, I think they're 396 00:20:23,840 --> 00:20:27,000 Speaker 9: extremely well positioned and not only hold their own but 397 00:20:27,200 --> 00:20:28,040 Speaker 9: grow from here. 398 00:20:28,520 --> 00:20:31,840 Speaker 2: Our thanks to John Butler, Bloomberg Intelligence Senior Telecom analysts. 399 00:20:32,200 --> 00:20:34,280 Speaker 3: We move next to earnings from toymaker Mattel. 400 00:20:34,600 --> 00:20:37,159 Speaker 2: This week, Mattel reported third quarter sales and earnings that 401 00:20:37,240 --> 00:20:40,880 Speaker 2: missed analyst expectations, and this comes as US retailers delayed 402 00:20:41,000 --> 00:20:44,120 Speaker 2: orders due to uncertainty over President Donald Trump's tariff policies. 403 00:20:44,359 --> 00:20:47,640 Speaker 3: So we talked Lindsay Dutch, Bloomberg Intelligence Consumer hardline senior 404 00:20:47,680 --> 00:20:48,640 Speaker 3: analysts for her take. 405 00:20:49,200 --> 00:20:51,959 Speaker 2: First asked Lindsay to comment on Mattel's delayed orders. 406 00:20:52,400 --> 00:20:55,760 Speaker 10: We heard earlier, actually in the second quarter earnings, that 407 00:20:55,840 --> 00:21:01,000 Speaker 10: there were possibilities for delays and for the toymakers Walmart target. 408 00:21:01,040 --> 00:21:05,199 Speaker 10: Those retailers tend to take their holiday orders by July, 409 00:21:05,960 --> 00:21:08,360 Speaker 10: so there was already worry sort of heading into third 410 00:21:08,440 --> 00:21:10,800 Speaker 10: quarter earnings, and of course it was a negative surprise 411 00:21:10,840 --> 00:21:13,840 Speaker 10: on the top and the bottom line. Those orders were 412 00:21:13,840 --> 00:21:17,919 Speaker 10: delayed further than sort of everyone expected, and they're taking 413 00:21:17,960 --> 00:21:23,159 Speaker 10: smaller quantities than usual, you know, onto their shelves ahead 414 00:21:23,160 --> 00:21:26,240 Speaker 10: of the holiday season, which which was a real concern 415 00:21:26,480 --> 00:21:29,560 Speaker 10: for Mattel's fourth quarter earnings, which would be coming up. 416 00:21:30,320 --> 00:21:33,560 Speaker 2: So, lindsay, what's Mattel and some of the other companies 417 00:21:33,560 --> 00:21:37,360 Speaker 2: saying about, you know, when their products, you know, get 418 00:21:37,400 --> 00:21:40,040 Speaker 2: stamped with a tariff, Like how much do they try 419 00:21:40,080 --> 00:21:43,080 Speaker 2: to push back on the manufacture in whatever country comes from, 420 00:21:43,119 --> 00:21:46,439 Speaker 2: say China, how much the importer made taken his or 421 00:21:46,440 --> 00:21:48,560 Speaker 2: her p and l versus. You know, how are they 422 00:21:48,600 --> 00:21:50,199 Speaker 2: saying that they're navigating that? 423 00:21:51,440 --> 00:21:55,080 Speaker 10: So from the cost side, the toymakers actually have been 424 00:21:55,119 --> 00:21:59,000 Speaker 10: managing this pretty well. So Mattel is forecasting less than 425 00:21:59,000 --> 00:22:02,199 Speaker 10: one hundred million dollars hit on the cost side on 426 00:22:02,240 --> 00:22:06,600 Speaker 10: an annual basis. They're mitigating that in several different ways. 427 00:22:06,640 --> 00:22:09,800 Speaker 10: They're cutting costs in other areas. They did adjust sourcing 428 00:22:09,920 --> 00:22:13,560 Speaker 10: as much as they could, you know, selling more internationally 429 00:22:13,760 --> 00:22:16,320 Speaker 10: versus the US, you know, shifting that mix a little bit. 430 00:22:16,680 --> 00:22:19,399 Speaker 10: And they did roll out some price increases in the 431 00:22:19,440 --> 00:22:22,640 Speaker 10: second and the third quarter, which is ahead of holiday, 432 00:22:22,720 --> 00:22:25,480 Speaker 10: so that should help protect on the profit on the 433 00:22:25,480 --> 00:22:29,280 Speaker 10: margin side for that fourth quarter. It looks like those 434 00:22:29,320 --> 00:22:32,280 Speaker 10: toy makers are bearing the brunt of that cost rather 435 00:22:32,320 --> 00:22:34,920 Speaker 10: than sort of passing it through towards a retailer. 436 00:22:35,800 --> 00:22:39,399 Speaker 2: Lindsay, what are the trends impacting the toy business these days? 437 00:22:39,880 --> 00:22:42,240 Speaker 2: I mean, I guess a lot of electronics, but what 438 00:22:42,280 --> 00:22:45,399 Speaker 2: are some of the big trends that you're paying attention to. 439 00:22:46,040 --> 00:22:49,639 Speaker 10: So a big trend that we have seen growing momentum 440 00:22:49,680 --> 00:22:54,080 Speaker 10: on is really the adult trend, which is adults eighteen 441 00:22:54,119 --> 00:22:58,480 Speaker 10: plus playing with more toys, and Hasbro, Mattel, Lego they're 442 00:22:58,520 --> 00:23:02,119 Speaker 10: all playing into this. So those big black box legos 443 00:23:02,160 --> 00:23:05,280 Speaker 10: that are very high price points, you know, they've done 444 00:23:05,400 --> 00:23:08,119 Speaker 10: very well the past couple of years. But Mattel is 445 00:23:08,160 --> 00:23:10,840 Speaker 10: also leaning into that. A lot of their new products 446 00:23:10,840 --> 00:23:13,520 Speaker 10: coming out, even with Barbie or hot Wheels, are really 447 00:23:13,600 --> 00:23:17,960 Speaker 10: collector's items. They're really aiming at that adult and honestly, 448 00:23:18,760 --> 00:23:21,240 Speaker 10: the industry was up six percent in the first half 449 00:23:21,280 --> 00:23:23,960 Speaker 10: of high single digit in the third quarter, and that's 450 00:23:24,040 --> 00:23:26,080 Speaker 10: really being driven by this trend. 451 00:23:27,359 --> 00:23:29,600 Speaker 3: As we look ahead to the holiday season, I realized 452 00:23:29,640 --> 00:23:32,439 Speaker 3: for companies themselves, they are already knee deep in it, 453 00:23:32,520 --> 00:23:34,640 Speaker 3: but as consumers we're looking head to it. Are there 454 00:23:34,640 --> 00:23:38,040 Speaker 3: any must have items that the toymakers are really counting 455 00:23:38,080 --> 00:23:40,439 Speaker 3: on or these toy retailers are really counting on. 456 00:23:41,600 --> 00:23:44,159 Speaker 10: So I look through all the holiday lists and I 457 00:23:44,240 --> 00:23:46,560 Speaker 10: was a little bit disappointed. I didn't see any Wow 458 00:23:46,640 --> 00:23:49,400 Speaker 10: gifts or what I would call a Wow gift. One 459 00:23:49,560 --> 00:23:52,600 Speaker 10: cool collab that Mattel has, but it's really for twenty 460 00:23:52,680 --> 00:23:55,959 Speaker 10: twenty six. Pre Orders will be available in November as 461 00:23:56,000 --> 00:23:59,879 Speaker 10: they are doing a collab with Netflix the Kpop Demon Hunter, 462 00:24:00,240 --> 00:24:03,040 Speaker 10: So they are doing action figures and dolls for that 463 00:24:03,240 --> 00:24:05,879 Speaker 10: series and that should be coming out next year and 464 00:24:05,920 --> 00:24:07,359 Speaker 10: I do think that could be a big hit. 465 00:24:07,600 --> 00:24:11,040 Speaker 3: Our Thanks to Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines senior 466 00:24:11,080 --> 00:24:13,960 Speaker 3: analyst coming up a look at why the hospitality company 467 00:24:14,040 --> 00:24:16,840 Speaker 3: Hilton Worldwide has raised his full year profit outlook. 468 00:24:17,080 --> 00:24:19,919 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 469 00:24:19,920 --> 00:24:22,199 Speaker 2: depth research and data on two thousand companies and one 470 00:24:22,280 --> 00:24:23,400 Speaker 2: hundred and thirty industries. 471 00:24:23,640 --> 00:24:26,560 Speaker 3: You can access Bloomberg Intelligence via bi go on the terminal. 472 00:24:26,640 --> 00:24:27,880 Speaker 3: I'm Scarlet Foo and. 473 00:24:27,760 --> 00:24:29,760 Speaker 2: I'm Paul Sweeney, and this is Bloomberg. 474 00:24:37,240 --> 00:24:41,720 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 475 00:24:42,080 --> 00:24:43,560 Speaker 1: on Bloomberg Radio. 476 00:24:44,119 --> 00:24:46,040 Speaker 2: We move next to the hospitality industry. 477 00:24:46,240 --> 00:24:49,080 Speaker 3: This week, Hilton Worldwide reported third quarter earnings that beat 478 00:24:49,080 --> 00:24:52,040 Speaker 3: analyst estimates. Hilton also boosted the lower end of its 479 00:24:52,040 --> 00:24:54,400 Speaker 3: full year outlook for expanding its hotel network. 480 00:24:54,600 --> 00:24:56,680 Speaker 2: For more on this, I was joined by Jody Lourie, 481 00:24:56,720 --> 00:24:59,719 Speaker 2: Bloomberg Intelligence credit analyst. I first asked Jody what she 482 00:24:59,720 --> 00:25:01,600 Speaker 2: heard from Hilton in its earnings release. 483 00:25:02,240 --> 00:25:04,359 Speaker 11: So I think, Paul, you know what's interesting is that 484 00:25:04,400 --> 00:25:06,960 Speaker 11: Brian Egger, my equity counterpart, and I came up with 485 00:25:07,000 --> 00:25:09,120 Speaker 11: the same conclusion in that they are a little bit 486 00:25:09,119 --> 00:25:12,119 Speaker 11: too optimistic, it seems in general. I think what's so 487 00:25:12,200 --> 00:25:16,199 Speaker 11: funny is when you compare and actually taking a step back, 488 00:25:16,200 --> 00:25:18,280 Speaker 11: it's a little alarming when equity and credit analysts are 489 00:25:18,320 --> 00:25:22,000 Speaker 11: right just as a decide note, but when you compare 490 00:25:22,240 --> 00:25:27,280 Speaker 11: what their estimates were for RevPAR looking a year ago. 491 00:25:27,480 --> 00:25:30,119 Speaker 11: You know, fourth quarter of last year, you were talking 492 00:25:30,119 --> 00:25:32,320 Speaker 11: two to three percent positive two to three percent. Now 493 00:25:32,320 --> 00:25:34,960 Speaker 11: they're saying zero to one percent. Yet for some reason 494 00:25:35,000 --> 00:25:37,760 Speaker 11: they're able to reach an eb DA that's almost similar 495 00:25:37,760 --> 00:25:40,520 Speaker 11: to what they were projecting then. So it's a little 496 00:25:40,560 --> 00:25:42,359 Speaker 11: bit of a head scratcher. I guess a lot of 497 00:25:42,400 --> 00:25:44,800 Speaker 11: it's coming from the cost component of it. You know, 498 00:25:44,840 --> 00:25:48,000 Speaker 11: if your your revenue per available room isn't necessarily growing, 499 00:25:48,359 --> 00:25:50,800 Speaker 11: but then your EBDA is growing, you sort of say, okay, 500 00:25:50,840 --> 00:25:53,160 Speaker 11: where is that coming from and what does that mean? 501 00:25:53,359 --> 00:25:57,280 Speaker 2: Overall? So what is the company saying about kind of 502 00:25:57,320 --> 00:26:00,639 Speaker 2: theirs just the underlying book of business? How are their 503 00:26:00,640 --> 00:26:03,880 Speaker 2: bookings looking, and what are they saying about I guess 504 00:26:03,920 --> 00:26:05,560 Speaker 2: components of their customer base. 505 00:26:06,440 --> 00:26:08,760 Speaker 11: So if you break it out, the US is a 506 00:26:08,840 --> 00:26:12,640 Speaker 11: clear sort of underperformer at the moment. In terms of travel, 507 00:26:12,960 --> 00:26:16,159 Speaker 11: we're seeing some weakness, some more muted results on the 508 00:26:16,240 --> 00:26:19,679 Speaker 11: leisure side of things. For group and business, which was 509 00:26:19,720 --> 00:26:22,960 Speaker 11: supposed to be a tailwind this year, it's actually pulling back. 510 00:26:23,040 --> 00:26:25,040 Speaker 11: It's a little bit decreased. Now they're saying that group 511 00:26:25,080 --> 00:26:27,280 Speaker 11: going into next year is going to be positive. But 512 00:26:27,359 --> 00:26:30,520 Speaker 11: it is interesting to hear that this component where they're 513 00:26:30,560 --> 00:26:32,639 Speaker 11: hanging their hat on as the area of growth is 514 00:26:32,680 --> 00:26:36,919 Speaker 11: now not really performing. Now if you look across their brands, 515 00:26:37,240 --> 00:26:39,920 Speaker 11: what stood out for me, especially for the third quarter, 516 00:26:40,000 --> 00:26:43,200 Speaker 11: but also year to date, is that comparing their higher 517 00:26:43,280 --> 00:26:46,400 Speaker 11: end brands versus a year ago, it was very strong 518 00:26:46,520 --> 00:26:50,119 Speaker 11: in terms of growth from an occupancy standpoint, But then 519 00:26:50,119 --> 00:26:52,439 Speaker 11: if you look at the lower end brands, they're actually 520 00:26:52,480 --> 00:26:54,520 Speaker 11: a lot weaker. So the farther down you go in 521 00:26:54,600 --> 00:26:56,560 Speaker 11: terms of their quality of their brands, So if you're 522 00:26:56,600 --> 00:26:58,800 Speaker 11: talking the Conrad brand, which is one of their more 523 00:26:58,800 --> 00:27:01,280 Speaker 11: premier brands, Welder for Story, et cetera, those who have 524 00:27:01,320 --> 00:27:03,920 Speaker 11: been doing pretty well compared to last year. If you 525 00:27:04,000 --> 00:27:06,520 Speaker 11: go further down the line into some of their more 526 00:27:06,560 --> 00:27:09,680 Speaker 11: economy scale brands, that's where it's weakest. And that speaks 527 00:27:09,680 --> 00:27:12,600 Speaker 11: to that K shaped economy that everybody is talking about. 528 00:27:12,720 --> 00:27:14,760 Speaker 2: I noticed they get probably eighty percent of the revenue 529 00:27:14,920 --> 00:27:18,840 Speaker 2: is US based here. What's their international strategy these days? 530 00:27:19,560 --> 00:27:21,760 Speaker 11: So internationally they seem to be growing a lot. They're 531 00:27:21,920 --> 00:27:24,680 Speaker 11: they're focusing on new types of brands to get there. 532 00:27:25,040 --> 00:27:28,040 Speaker 11: They definitely see certain pockets of international doing well. I'm 533 00:27:28,040 --> 00:27:30,200 Speaker 11: in the Middle East and Africa actually did very well 534 00:27:30,240 --> 00:27:33,359 Speaker 11: this quarter, which was an interesting component to see. And 535 00:27:33,400 --> 00:27:35,160 Speaker 11: I think that they're looking at Asia and they're sort 536 00:27:35,160 --> 00:27:38,879 Speaker 11: of a little concerned to some extent, but they definitely 537 00:27:39,200 --> 00:27:41,720 Speaker 11: it was an interesting sort of dichotomy between what's going 538 00:27:41,720 --> 00:27:43,480 Speaker 11: on in the US and what's going on elsewhere. 539 00:27:43,160 --> 00:27:43,600 Speaker 2: In the world. 540 00:27:44,000 --> 00:27:48,920 Speaker 11: I think where we're sort of concerned is that they 541 00:27:48,960 --> 00:27:51,439 Speaker 11: are still giving back to shareholders the same level that 542 00:27:51,520 --> 00:27:54,160 Speaker 11: they were. You know, the three point three billion expected 543 00:27:54,240 --> 00:27:59,000 Speaker 11: for this year they have leveraged that's roughly within their 544 00:27:59,160 --> 00:28:01,800 Speaker 11: range of three three and a half times. But if 545 00:28:01,800 --> 00:28:04,440 Speaker 11: you're talking about in twenty twenty six, that's very uncertain. 546 00:28:04,480 --> 00:28:06,040 Speaker 11: You say, Okay, wouldn't you want to hold onto your 547 00:28:06,080 --> 00:28:08,920 Speaker 11: cash maybe just a little bit more than you're giving out. 548 00:28:09,200 --> 00:28:10,880 Speaker 2: What are the Hiltons of the world doing in terms 549 00:28:10,920 --> 00:28:14,320 Speaker 2: of capacities is the industry? Are they building new hotels, 550 00:28:14,359 --> 00:28:16,760 Speaker 2: are they taking hotels off the market? Are they building 551 00:28:17,480 --> 00:28:19,800 Speaker 2: higher end or lower end? Where's the kind of the 552 00:28:19,840 --> 00:28:20,480 Speaker 2: capital for this. 553 00:28:20,480 --> 00:28:24,960 Speaker 11: Industry going For Hilton specifically, they're still very much growing. 554 00:28:24,960 --> 00:28:27,240 Speaker 11: I mean, that was a lot of the conversation. You know, 555 00:28:27,600 --> 00:28:31,240 Speaker 11: the management team was very optimistic about growth coming from 556 00:28:31,400 --> 00:28:34,199 Speaker 11: these new properties and also from new brands. I mean, 557 00:28:34,240 --> 00:28:37,280 Speaker 11: they have a new lifestyle brand that they're introducing as 558 00:28:37,359 --> 00:28:39,400 Speaker 11: part of their growth strategy, and I think they're trying 559 00:28:39,440 --> 00:28:42,560 Speaker 11: to key into these younger consumers, getting them to go 560 00:28:42,680 --> 00:28:46,360 Speaker 11: into these lifestyle brands and more of these quick service 561 00:28:46,400 --> 00:28:49,840 Speaker 11: brands that might not necessarily be traditional hotels, maybe sort 562 00:28:49,840 --> 00:28:53,480 Speaker 11: of tapping into what they're seeing in airbnbs and verbos 563 00:28:53,480 --> 00:28:56,840 Speaker 11: and other sort of alternatives to your traditional hotels. Now, 564 00:28:56,880 --> 00:28:59,280 Speaker 11: what I will say, though, is something that was a 565 00:28:59,360 --> 00:29:02,880 Speaker 11: little bit jarring to me as a credit analyst and 566 00:29:02,960 --> 00:29:06,040 Speaker 11: as somebody who likes macroeconomics is they talked about how 567 00:29:06,040 --> 00:29:10,120 Speaker 11: inflation is actually reducing and with it our rates, and 568 00:29:10,320 --> 00:29:12,280 Speaker 11: I don't think that's quite the calculation I would do. 569 00:29:12,600 --> 00:29:15,680 Speaker 11: But I also am sort of curious as to if 570 00:29:15,720 --> 00:29:18,800 Speaker 11: the consumer is necessarily feeling that you layer that in. 571 00:29:18,840 --> 00:29:21,840 Speaker 11: They did mention a little bit about the government shutdown 572 00:29:21,960 --> 00:29:26,240 Speaker 11: affecting volumes and affecting the outlook, but I do sort 573 00:29:26,240 --> 00:29:28,480 Speaker 11: of wonder what that means for other companies in the space, 574 00:29:28,520 --> 00:29:32,880 Speaker 11: For example, choice that really depends on government in terms 575 00:29:32,880 --> 00:29:36,600 Speaker 11: of infrastructure spending and long term stays. At their properties 576 00:29:36,640 --> 00:29:37,440 Speaker 11: throughout the country. 577 00:29:37,800 --> 00:29:41,400 Speaker 3: Our thanks to Jody Lourie Bloomberg Intelligence Credit Analysts, we move. 578 00:29:41,320 --> 00:29:43,880 Speaker 2: Next to the aerospace industry. This week we received third 579 00:29:43,960 --> 00:29:47,120 Speaker 2: quarter earnings from General Electric Aerospace and RTX. 580 00:29:47,240 --> 00:29:50,560 Speaker 3: GE Aerospace reported results that beat analyst estimates, and the 581 00:29:50,560 --> 00:29:53,000 Speaker 3: company also raised its full year outlook due to strong 582 00:29:53,040 --> 00:29:53,920 Speaker 3: air travel demand. 583 00:29:54,200 --> 00:29:57,520 Speaker 2: Meantime, the aerospace and defense company RTX raced its four 584 00:29:57,600 --> 00:30:00,880 Speaker 2: year profit outlook and reported earnings at top all street estimates. 585 00:30:01,160 --> 00:30:04,200 Speaker 2: This came a sales and profit rose across rtx's commercial, 586 00:30:04,240 --> 00:30:06,440 Speaker 2: aerospace and military hardware businesses. 587 00:30:06,640 --> 00:30:09,040 Speaker 3: So for more we were joined by George Ferguson, Bloomberg 588 00:30:09,040 --> 00:30:12,080 Speaker 3: Intelligence Senior Aerospace, Defense and Airlines analysts. 589 00:30:12,160 --> 00:30:14,360 Speaker 2: The first asked George for his take on results from 590 00:30:14,400 --> 00:30:15,240 Speaker 2: GE Aerospace. 591 00:30:15,720 --> 00:30:19,320 Speaker 12: I think it's telling too that Larry Colp, the CEO 592 00:30:19,440 --> 00:30:21,960 Speaker 12: of the combined companies, broke them apart and went with 593 00:30:22,000 --> 00:30:27,200 Speaker 12: the aerospace business right that was the crown jewel. They're 594 00:30:27,240 --> 00:30:30,520 Speaker 12: the largest maker of jet engines globally. I think they 595 00:30:30,520 --> 00:30:35,040 Speaker 12: have probably the best technology for jet engines globally. And look, 596 00:30:35,160 --> 00:30:39,960 Speaker 12: this was a really nice quarter. Margins were even stronger 597 00:30:39,960 --> 00:30:42,760 Speaker 12: than we expected. I think they may be close to 598 00:30:42,840 --> 00:30:46,400 Speaker 12: plateauing though here there's just a heavy, heavy demand for 599 00:30:46,520 --> 00:30:49,920 Speaker 12: aircraft maintenance, even higher than sort of the amount of 600 00:30:50,520 --> 00:30:55,680 Speaker 12: the increase in airline traffic would indicate just a lot 601 00:30:55,720 --> 00:30:57,320 Speaker 12: of pent up demand. And then coming out of the 602 00:30:57,360 --> 00:31:00,640 Speaker 12: pandemic and some of the newer technology ends just aren't 603 00:31:00,680 --> 00:31:03,160 Speaker 12: as robust, so a lot of people flying the old 604 00:31:03,200 --> 00:31:06,200 Speaker 12: ones longer. And we heard a lot of good news 605 00:31:06,240 --> 00:31:09,320 Speaker 12: about supply chain. Supply chain sound like it was delivering. 606 00:31:09,320 --> 00:31:12,280 Speaker 12: For Larry, it's been generally been a challenge. It was delivering, 607 00:31:12,280 --> 00:31:14,800 Speaker 12: and he had parts to put on airplanes and those 608 00:31:14,800 --> 00:31:16,880 Speaker 12: were high margin parts and each showed it in the 609 00:31:16,920 --> 00:31:18,040 Speaker 12: financial statements. 610 00:31:18,560 --> 00:31:20,920 Speaker 7: Hey George, you mentioned maintenance and repairs. So does that 611 00:31:21,040 --> 00:31:23,800 Speaker 7: help the company offset those higher costs when you have 612 00:31:23,840 --> 00:31:25,600 Speaker 7: the rise in the new engine deliveries. 613 00:31:26,400 --> 00:31:29,400 Speaker 12: Yeah, So, like I said, I think we might be 614 00:31:29,440 --> 00:31:32,600 Speaker 12: seeing a plateau here in the margins we're gonna get 615 00:31:32,600 --> 00:31:36,160 Speaker 12: out of this company. So the air framers Boeing and 616 00:31:36,200 --> 00:31:39,640 Speaker 12: Airbus have been slow in ramping up deliveries because they're 617 00:31:39,680 --> 00:31:43,120 Speaker 12: working through their supply chain challenges. So we really see 618 00:31:43,200 --> 00:31:47,320 Speaker 12: Boeing an Airbus increasing deliveries of new aircraft all the 619 00:31:47,360 --> 00:31:50,040 Speaker 12: way to the back end of the decade, and that 620 00:31:50,120 --> 00:31:53,880 Speaker 12: increase in deliveries is gonna you know, we'll come with 621 00:31:53,920 --> 00:31:57,600 Speaker 12: those new engines from GE and RTX for that matter, 622 00:31:57,880 --> 00:32:01,360 Speaker 12: and those are diluted to margins, so you know, so 623 00:32:01,400 --> 00:32:05,520 Speaker 12: they're kind of in this sweet spot where the original equipment, 624 00:32:05,680 --> 00:32:09,000 Speaker 12: you know, shipments haven't taken off yet because Bowing and 625 00:32:09,040 --> 00:32:12,000 Speaker 12: Airbus are working on that supply chain and they're doing 626 00:32:12,000 --> 00:32:15,600 Speaker 12: a lot of spare parts deliveries and that's really juicing 627 00:32:15,680 --> 00:32:19,760 Speaker 12: profitability very strongly. So next year I think becomes more 628 00:32:19,840 --> 00:32:21,680 Speaker 12: challenging on the whole profitability front. 629 00:32:22,720 --> 00:32:26,240 Speaker 2: All right, George, rt X, the old wraitheon. That's kind 630 00:32:26,240 --> 00:32:28,280 Speaker 2: of how I know this company. Tell us like what's 631 00:32:28,680 --> 00:32:31,239 Speaker 2: the business of RTX, what are their specialties and what 632 00:32:31,280 --> 00:32:31,920 Speaker 2: did they report? 633 00:32:32,840 --> 00:32:36,640 Speaker 12: So they they make jet engines as well, right, competitor 634 00:32:36,680 --> 00:32:39,600 Speaker 12: to GE. They make the Pratt Wie gear turbo fan. 635 00:32:40,720 --> 00:32:45,280 Speaker 12: They have the Collins business, which is is all kinds 636 00:32:45,280 --> 00:32:47,720 Speaker 12: of parts for aircraft. You know, it could be breaks, 637 00:32:47,760 --> 00:32:50,960 Speaker 12: it could be landing gear. And then they've got the 638 00:32:51,040 --> 00:32:54,480 Speaker 12: Raytheon business, which is the old Raytheon that you know, 639 00:32:54,560 --> 00:32:59,840 Speaker 12: the defense contractor from up Boston area, and they make radar, 640 00:33:00,560 --> 00:33:04,600 Speaker 12: they make missiles, they make air defense kind of equipment, 641 00:33:05,160 --> 00:33:07,920 Speaker 12: and like all of the you know, all of those 642 00:33:07,960 --> 00:33:12,080 Speaker 12: businesses in that portfolio are really clicking right now. Look, 643 00:33:12,120 --> 00:33:15,040 Speaker 12: defense is going to grow slower. It takes time. That 644 00:33:15,600 --> 00:33:18,600 Speaker 12: backlog builds quickly, but it takes a lot longer to 645 00:33:18,640 --> 00:33:21,200 Speaker 12: build some of those products because they're not you know, 646 00:33:21,320 --> 00:33:23,760 Speaker 12: running down a line that are making you know, as 647 00:33:23,760 --> 00:33:27,000 Speaker 12: many like you know, seven thirty sevens or a three twenties, 648 00:33:27,120 --> 00:33:29,400 Speaker 12: you're doing five or six hundred a year. These are 649 00:33:29,400 --> 00:33:33,560 Speaker 12: a lot slower cadence. But we're seeing a lot of 650 00:33:33,560 --> 00:33:37,240 Speaker 12: demand from customers around the world for missiles and for 651 00:33:37,320 --> 00:33:40,680 Speaker 12: air defense, and so that backlog continues to build and 652 00:33:40,720 --> 00:33:43,560 Speaker 12: they're building margin in that business. There's still a kind 653 00:33:43,600 --> 00:33:46,400 Speaker 12: of eleven ish twelve ish percent margin that was quite 654 00:33:46,480 --> 00:33:50,440 Speaker 12: good in that defense business. And then at the same time, 655 00:33:50,520 --> 00:33:53,480 Speaker 12: like it has told you for Ge, the strength of 656 00:33:53,600 --> 00:33:57,840 Speaker 12: demand for aircraft maintenance right now and the high margin 657 00:33:57,920 --> 00:34:01,680 Speaker 12: parts that go into it drove that Collins business. Their 658 00:34:01,680 --> 00:34:05,920 Speaker 12: Collins business is a thirteen is fourteen percent ise operating 659 00:34:05,960 --> 00:34:10,360 Speaker 12: margin business really seeing strong growth. Their engine business is 660 00:34:10,400 --> 00:34:13,720 Speaker 12: not as strong as gees GE's returns in the twenty 661 00:34:13,719 --> 00:34:18,000 Speaker 12: plus percent margins. Pratt and Whitney's kind of an eight 662 00:34:18,040 --> 00:34:21,799 Speaker 12: to nine percent operating margin. They've had problems with their 663 00:34:21,880 --> 00:34:26,120 Speaker 12: latest narrow body engines, so they're managing some of those issues. 664 00:34:26,160 --> 00:34:29,400 Speaker 12: They just don't the volume that GE has, but they 665 00:34:29,440 --> 00:34:32,520 Speaker 12: continue to see margin growth in that business too as 666 00:34:32,560 --> 00:34:35,960 Speaker 12: they deliver spare parts of some of the older Legacy 667 00:34:36,600 --> 00:34:39,360 Speaker 12: V twenty five hundred engines we know them as that 668 00:34:39,480 --> 00:34:42,640 Speaker 12: power old A three twenties. Really did a nice job 669 00:34:42,640 --> 00:34:45,920 Speaker 12: in that business, and they raise guidance even more than GE. 670 00:34:46,040 --> 00:34:48,520 Speaker 12: Going into the back into the last quarter of the year. 671 00:34:48,760 --> 00:34:50,560 Speaker 12: I think they had some of that in their back pocket, 672 00:34:50,560 --> 00:34:51,720 Speaker 12: but it looked pretty nice. 673 00:34:52,120 --> 00:34:54,200 Speaker 7: Hey, Jeorg before you go about a minute left. One 674 00:34:54,239 --> 00:34:56,319 Speaker 7: of the they're one of the largest recipients of US 675 00:34:56,400 --> 00:34:59,719 Speaker 7: federal contract funding. We're talking about RTX. Can you name 676 00:34:59,760 --> 00:35:02,080 Speaker 7: some of the projects they're working on with the Trump administration? 677 00:35:02,160 --> 00:35:02,920 Speaker 7: What are they working on? 678 00:35:03,840 --> 00:35:06,160 Speaker 12: Yeah, So, I mean they're gonna do things like Patriot 679 00:35:06,239 --> 00:35:10,360 Speaker 12: missile systems. They're gonna do a bunch of sorry, Patriot 680 00:35:10,360 --> 00:35:13,320 Speaker 12: air defense systems. They're gonna do a bunch of missile systems. 681 00:35:13,360 --> 00:35:17,120 Speaker 12: Like GMT. All right, you can think of if you know, 682 00:35:17,280 --> 00:35:19,879 Speaker 12: in air defense, you use they make raiders as well. 683 00:35:20,000 --> 00:35:23,880 Speaker 12: You use a radar, you find a target, you you 684 00:35:24,000 --> 00:35:26,400 Speaker 12: sort all the targets you got coming at you at it, 685 00:35:26,640 --> 00:35:29,720 Speaker 12: and then you have to shoot a high value interceptor 686 00:35:30,200 --> 00:35:32,200 Speaker 12: at that target. And the reason that interceptor is so 687 00:35:32,320 --> 00:35:34,680 Speaker 12: high value is it's got to go and hit a 688 00:35:34,719 --> 00:35:39,000 Speaker 12: missile approaching you know, your position, your country, whatever, which 689 00:35:39,040 --> 00:35:40,879 Speaker 12: means you put a lot of value out in that 690 00:35:40,920 --> 00:35:44,359 Speaker 12: missile so it can go find another one and destroy it. 691 00:35:44,719 --> 00:35:48,280 Speaker 12: So that's part of what they're building. They'll also probably 692 00:35:48,280 --> 00:35:51,760 Speaker 12: be involved in the in the you know, the Global 693 00:35:51,800 --> 00:35:54,680 Speaker 12: Dome or whatever, you know, the our version of iron. 694 00:35:54,400 --> 00:35:55,480 Speaker 2: Dome, Golden dome. 695 00:35:55,600 --> 00:35:59,319 Speaker 12: Yeah, so there's just a lot of demand for the 696 00:35:59,360 --> 00:36:00,479 Speaker 12: products that they're to build. 697 00:36:00,920 --> 00:36:04,360 Speaker 3: Our thanks to George Ferguson Bloomberg Intelligence, Senior Aerospace, Defense 698 00:36:04,400 --> 00:36:05,400 Speaker 3: and Airlines analyst. 699 00:36:05,640 --> 00:36:08,399 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 700 00:36:08,480 --> 00:36:11,120 Speaker 2: providing in depth research and data on two thousand companies 701 00:36:11,200 --> 00:36:12,560 Speaker 2: in one hundred and thirty industries. 702 00:36:12,640 --> 00:36:15,960 Speaker 3: And remember you can access Bloomberg Intelligence via Big on 703 00:36:16,040 --> 00:36:16,600 Speaker 3: the terminal. 704 00:36:16,680 --> 00:36:18,520 Speaker 2: I'm Scarlett Foe and I'm Paul Sweeney.