WEBVTT - BI Weekend: Netflix, Tesla, AT&T Earnings 0:00:02.759 --> 0:00:11.520 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.600 --> 0:00:13.680 with Scarletfoo and Paul Sweeney. 0:00:13.760 --> 0:00:15.880 How do you think the FED is looking at tariffs? 0:00:16.000 --> 0:00:17.800 The uncertainty of terriffs. Let's take a. 0:00:17.720 --> 0:00:19.759 Look at the sectors and how they performed. 0:00:19.800 --> 0:00:22.279 A lot of investors getting whipsaled every day by news. 0:00:22.160 --> 0:00:26.280 Events, breaking market headlines and corporate news from across the globe. 0:00:26.320 --> 0:00:28.920 Could we see a market disruption of market events? 0:00:29.000 --> 0:00:31.000 So people just too exuberant out there? 0:00:31.160 --> 0:00:33.680 You see some so called low quality stocks driving this 0:00:33.800 --> 0:00:34.560 short term rally. 0:00:34.600 --> 0:00:39.400 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.560 --> 0:00:41.480 YouTube and Bloomberg Originals. 0:00:42.600 --> 0:00:44.879 On today's Boomberg Intellligence Show, we dig inside the big 0:00:44.920 --> 0:00:47.160 business stories impacting Wall Street and the global markets. 0:00:47.240 --> 0:00:49.320 Each and every week, we provide in depth research and 0:00:49.400 --> 0:00:51.280 data on some of the two thousand companies and one 0:00:51.360 --> 0:00:54.760 hundred and thirty industries that our analysts cover worldwide. Today, 0:00:54.840 --> 0:00:57.200 we'll look at how a heavy promotional campaign at at 0:00:57.240 --> 0:01:01.000 and T impacted its quarterly earnings, plus breakdown how delayed 0:01:01.080 --> 0:01:04.679 orders at US retailers impacted earnings for toymaker Mattel. But 0:01:04.800 --> 0:01:07.760 first We began with earnings from the streaming giant Netflix, 0:01:08.160 --> 0:01:10.720 Netflix chairs saw the most since April twenty twenty two, 0:01:10.800 --> 0:01:13.440 after its third quarter earnings missed analyst estimates. 0:01:13.640 --> 0:01:15.760 This comes after Netflix had to pay about six hundred 0:01:15.800 --> 0:01:18.440 nineteen million dollars to settle multi year tax dispute with 0:01:18.520 --> 0:01:20.680 Brazilian authorities going back to twenty twenty two. 0:01:21.200 --> 0:01:24.040 The results may renew concerns about the sustainability of growth 0:01:24.080 --> 0:01:26.759 going into twenty twenty six. So for more we brought 0:01:26.760 --> 0:01:29.920 in Geita Rung Nathan and Bloomberg Intelligence analysts on US media. 0:01:30.200 --> 0:01:32.840 We first asked Etha for her take on Netflix results. 0:01:33.160 --> 0:01:35.959 Nobody saw this coming in terms of this transaction tax. 0:01:36.160 --> 0:01:37.920 It's a little bit of a catch up charge that 0:01:38.000 --> 0:01:41.400 Netflix took in the third quarter, and there will be 0:01:41.440 --> 0:01:44.680 an ongoing charge as well, about forty million or soaper quarter, 0:01:44.720 --> 0:01:49.200 but again nothing that will materially impact results. What that 0:01:49.360 --> 0:01:54.680 tax charge did was that it definitely depressed the margin performance, 0:01:54.720 --> 0:01:57.600 and this is something that everybody's been super focused on 0:01:57.960 --> 0:02:02.000 operating margin numbers. Those came definitely much lighter than what 0:02:02.720 --> 0:02:05.480 Netflix itself had rejected. But actually, if you just strip 0:02:05.520 --> 0:02:08.600 out that Brazil tax impact, they would have had record 0:02:08.600 --> 0:02:11.120 operating margins, so they guided for thirty one point five. 0:02:11.520 --> 0:02:13.960 They would have come in at close to almost thirty 0:02:14.040 --> 0:02:17.359 four percent if we didn't have that tax issue. I 0:02:17.360 --> 0:02:20.680 think fundamentals are definitely strong. But I think what is 0:02:20.720 --> 0:02:22.760 happening is apart from the tax issue, was that it 0:02:22.840 --> 0:02:26.280 was just a very very ordinary quarter. You know, people 0:02:26.360 --> 0:02:30.120 were definitely expecting something, you know, a much bigger beat 0:02:30.280 --> 0:02:32.680 in terms of revenue, just given that, you know, the 0:02:32.680 --> 0:02:35.880 second half content slate has absolutely been a monster slate. 0:02:35.919 --> 0:02:38.320 I mean, we've seen some of their biggest hits ever 0:02:38.440 --> 0:02:40.680 in the third quarter. We expect to see more coming 0:02:40.680 --> 0:02:43.519 in four Q, but none of that was really reflected 0:02:43.560 --> 0:02:45.360 in the numbers, and I think that's why you're seeing 0:02:45.400 --> 0:02:46.359 so much of nervousness. 0:02:46.440 --> 0:02:49.440 Okay, so ordinary results at Netflix is like the new bad. 0:02:49.960 --> 0:02:53.440 Going back to the results, Gita, what was new I 0:02:53.480 --> 0:02:56.000 thought in the earnings report was that they flagged the 0:02:56.040 --> 0:02:58.800 possibility of M and A, which is not something you 0:02:58.880 --> 0:03:01.840 hear from Netflix. Of course, there have been all these 0:03:01.880 --> 0:03:04.800 reports that Netflix is interested in buying assets for Warner 0:03:04.800 --> 0:03:08.240 Brothers Discovery. Do these latest results show that Netflix is 0:03:08.240 --> 0:03:10.359 now in a position where it has to make a purchase. 0:03:10.400 --> 0:03:13.200 It's a defensive buyer as opposed to an offensive buyer. 0:03:13.840 --> 0:03:16.120 I don't know whether it has to make a purchase. 0:03:16.240 --> 0:03:19.840 They definitely left the door open, which which suggests to 0:03:19.919 --> 0:03:22.240 us that they will take, you know, a long and 0:03:22.400 --> 0:03:25.960 hard look at the studio assets. Not the cable networks. 0:03:25.960 --> 0:03:29.040 They made that extremely clear on the call, but the studio. 0:03:29.080 --> 0:03:30.880 If you just think about it, Scarlett, I mean, this 0:03:30.960 --> 0:03:33.200 is definitely and I mean we spoke about this yesterday 0:03:33.200 --> 0:03:36.320 as well. This is a once in a generational opportunity 0:03:36.360 --> 0:03:38.680 for anybody who wants to own this kind of a studio. 0:03:38.680 --> 0:03:40.520 I mean, this is a top tier studio with a 0:03:40.560 --> 0:03:45.200 lot of very very you know, beloved popular franchises across 0:03:45.200 --> 0:03:48.200 the world. We know that these titles resonate. I mean 0:03:48.240 --> 0:03:51.160 Netflix themselves has a lot of the Warner brother titles. 0:03:51.200 --> 0:03:53.920 They perform extremely well on the platform. So yes, it 0:03:54.000 --> 0:03:57.520 is a defensive move. But again, if Netflix doesn't, you know, 0:03:57.600 --> 0:04:00.800 go ahead and doesn't make that purchase, I don't necessarily 0:04:00.840 --> 0:04:03.000 think that they are going to be in a much 0:04:03.280 --> 0:04:06.160 weaker position. It definitely complicates the strategy for them a 0:04:06.240 --> 0:04:09.080 little bit, just because you might have another player, like 0:04:09.120 --> 0:04:12.560 a paramount or a comcast that becomes much stronger, but 0:04:12.640 --> 0:04:16.840 they still have a considerable lead versus all of their peers. 0:04:16.839 --> 0:04:19.360 So I don't think it's do or die. 0:04:19.839 --> 0:04:22.960 So what's the environment like out there in terms of 0:04:23.200 --> 0:04:27.560 creating content movies and TV shows? Is Netflix still like 0:04:27.680 --> 0:04:30.200 the first phone call you make if you're a producer 0:04:30.320 --> 0:04:32.200 or you're a writer. I've got this project. I'm going 0:04:32.240 --> 0:04:33.720 to go to Netflix and get it done. Is that 0:04:34.120 --> 0:04:35.960 because they had the biggest and maybe still have the 0:04:35.960 --> 0:04:38.400 biggest checkbook in Hollywood? 0:04:38.720 --> 0:04:41.680 They do. They're spending close to about seventeen and a 0:04:41.680 --> 0:04:45.600 half to eighteen billion dollars on content every year. And 0:04:45.839 --> 0:04:48.520 you know, there's been a lot of concerns Paul in 0:04:48.560 --> 0:04:52.719 general about the rise of AI, especially now that you 0:04:52.760 --> 0:04:55.279 have Sora too, You have all of these new tools 0:04:55.279 --> 0:04:59.120 from Google, from Meta. You know, is that going to 0:04:59.200 --> 0:05:02.360 be a disruptive force for all of these streaming players 0:05:02.360 --> 0:05:05.840 and Netflix? And it looks like it actually won't. You know, 0:05:05.920 --> 0:05:08.840 We've run some numbers internally. We think that it should 0:05:08.920 --> 0:05:12.400 help Netflix actually curb content costs by about five to 0:05:12.440 --> 0:05:15.560 ten percent. That's substantial cost savings, you know for all 0:05:15.600 --> 0:05:18.640 of these streaming players. Especially for Netflix, which typically has 0:05:18.839 --> 0:05:23.160 used AI really really well. You're absolutely right. You know, 0:05:23.160 --> 0:05:25.640 they've done a great job when it comes to content. 0:05:25.960 --> 0:05:27.800 They're going to I think continue to do that. I mean, 0:05:28.240 --> 0:05:30.800 not only do we have the second half slate for 0:05:30.920 --> 0:05:33.480 this year which is extremely strong Scartledge just mentioned all 0:05:33.520 --> 0:05:36.159 of those titles, but actually looking forward to twenty twenty 0:05:36.200 --> 0:05:39.680 six again, you have a whole host of different titles 0:05:39.680 --> 0:05:42.720 coming on the platform, you know, including Emily in Paris. 0:05:42.760 --> 0:05:44.880 You have Bridgerton, which has been one of their biggest series, 0:05:44.880 --> 0:05:47.840 and then you have the movie Narnia, which is supposed 0:05:47.880 --> 0:05:49.600 to be like this huge event for them coming a 0:05:49.600 --> 0:05:53.000 little bit later. So they have a steady, steady, steady 0:05:53.000 --> 0:05:57.040 pipeline of titles that should help them, you know, drive 0:05:57.080 --> 0:05:59.360 engagement and ultimately drive pricing. 0:05:59.680 --> 0:06:02.400 Are they used to KEITHA. Rang Nathan Bloomberg, intelligence analysts 0:06:02.400 --> 0:06:03.159 on US Media. 0:06:03.600 --> 0:06:05.720 We move next to the luxury space. This week, the 0:06:05.760 --> 0:06:08.440 luxury goods company Caring agreed to sell its beauty division 0:06:08.480 --> 0:06:11.200 to the cosmetics and beauty company Laurel in a four 0:06:11.200 --> 0:06:12.719 point seven billion dollar deal. 0:06:12.839 --> 0:06:15.679 The transaction includes the sale of perfume maker House of Creed, 0:06:15.720 --> 0:06:18.040 which carrying a bought only two years ago, and this 0:06:18.080 --> 0:06:21.359 comes as Carrying's new CEO, Luca DeMeo, changes course in 0:06:21.360 --> 0:06:23.680 a bid to turn around the French luxury giant's fortunes 0:06:24.000 --> 0:06:24.720 for more guestos. 0:06:24.800 --> 0:06:27.640 Lisa Matteo and I were joined by Andrea Felsted Bloomberg 0:06:27.680 --> 0:06:30.520 Opinion Calmness. We first asked Andrea to break down what 0:06:30.600 --> 0:06:32.560 exactly the Carring transaction shows. 0:06:33.000 --> 0:06:37.039 Well, it's being dressed up as a partnership between Caring 0:06:37.080 --> 0:06:40.120 and Loial, but what it really is is effectively the 0:06:40.160 --> 0:06:42.120 sale of their beauty brands to. 0:06:43.720 --> 0:06:44.200 Loreo. 0:06:44.720 --> 0:06:48.360 They've got a new CEO, Luke to Mayo. He's come 0:06:48.400 --> 0:06:51.720 in at a time when the balance sheet is very stretched. 0:06:51.720 --> 0:06:56.600 His predecessor, who is now chairman, well bought a lot 0:06:56.680 --> 0:07:00.760 of things, including Creed, this very very upmarket few business 0:07:01.320 --> 0:07:05.039 as share in Valentino to try to make the group 0:07:05.160 --> 0:07:09.680 less dependent on Gucci, but that really increased debt. At 0:07:09.680 --> 0:07:13.200 the same time, Gucci's really slowed down and they're having 0:07:13.200 --> 0:07:16.280 to revive it. So they're saying it for four billion 0:07:16.320 --> 0:07:19.680 euros in cash. That gets some money in to deal 0:07:19.720 --> 0:07:22.720 with the debt and gives the new CEO a bit 0:07:22.760 --> 0:07:24.440 more time to turn around Gucci. 0:07:25.440 --> 0:07:28.120 Isn't this a complete turnaround? I mean, didn't the company 0:07:28.320 --> 0:07:31.240 want to bulk up the beauty and cosmetics division? 0:07:32.440 --> 0:07:33.040 Exactly? 0:07:33.080 --> 0:07:35.280 I mean they're saying, you know, this is built on 0:07:35.320 --> 0:07:37.120 the potential that they created. 0:07:37.200 --> 0:07:39.240 I mean, to be fair, they bought Creed. They paid 0:07:39.240 --> 0:07:42.520 a lot for Creed three point five billion euros. 0:07:42.640 --> 0:07:45.160 Try worked out to be about fourteen time sales, you know, 0:07:45.480 --> 0:07:46.120 an awful lot. 0:07:46.480 --> 0:07:48.720 But what they did it had a supply chain. 0:07:49.360 --> 0:07:52.360 They did that as a platform to build for beauty. 0:07:52.560 --> 0:07:54.760 And the argument is they have been able to do 0:07:54.840 --> 0:07:57.800 this deal because of that platform. That's probably kind of 0:07:57.920 --> 0:08:01.120 rather generous. Looked at my had a big decision to 0:08:01.160 --> 0:08:03.880 make when he got him. He either had to stick 0:08:03.920 --> 0:08:07.200 with beauty and invest in it. But with that day, 0:08:07.280 --> 0:08:10.080 it's gone in awe and the need to reinvigorate Gucci. 0:08:10.120 --> 0:08:13.240 It's got an awful lot more calls on its cash, 0:08:13.280 --> 0:08:16.680 so he just decided beauty wasn't a priority. 0:08:17.280 --> 0:08:19.920 I consider myself a Gucci expert. I read the book, 0:08:20.120 --> 0:08:23.480 I saw the movie. On the movie, yes, exactly so, Andrew. 0:08:23.640 --> 0:08:26.600 I mean, it's obviously an iconic brand. What are the 0:08:26.600 --> 0:08:28.840 experts saying that needs to be done because it's such 0:08:28.880 --> 0:08:30.480 an important part for caring. 0:08:30.520 --> 0:08:31.520 It is it really is. 0:08:31.560 --> 0:08:34.000 It would at its peak, and in sort of twenty 0:08:34.080 --> 0:08:37.640 eighteen nineteen, around that time, it was sixty percent group sales. Now, 0:08:38.400 --> 0:08:41.720 you know, Kerring had an amazing rum with Gucci. They 0:08:41.800 --> 0:08:45.760 put in this quite unknown designer, Alessandro mckayley, and the 0:08:45.880 --> 0:08:48.640 prevailing look had been very minimalist, and he came in 0:08:48.679 --> 0:08:53.280 with these big logos, clashing print, granny sheek, and it 0:08:53.320 --> 0:08:55.920 was just a bread of breath of fresh air and 0:08:56.040 --> 0:08:59.400 it changed prevailing fashion. But that was in sort two 0:08:59.440 --> 0:09:03.040 thousand and six, after the pandemic, when obviously nobody was 0:09:03.080 --> 0:09:07.520 feeling terribly good Sarring inflation. It just felt very out 0:09:07.520 --> 0:09:10.720 of sync with how people were feeling, and they tried 0:09:10.840 --> 0:09:14.160 to turn it round and have a much more minimal 0:09:14.720 --> 0:09:18.080 minimalist look, and it just wasn't Gucci. Gucci works best 0:09:18.120 --> 0:09:21.480 when it's very fashionable, when it's over the top. So 0:09:21.480 --> 0:09:25.760 they've brought in dumbnag Versalia, who was at Balenciaga, and 0:09:25.800 --> 0:09:30.080 he is trying to, you know, really revive it. He's 0:09:30.120 --> 0:09:32.960 gone back to the Tom four Days when it was 0:09:33.080 --> 0:09:36.000 very successful. He's gone back to the Alessandro and Kaylee Days. 0:09:36.320 --> 0:09:38.960 He did this crazy film in Fashion Week. 0:09:39.000 --> 0:09:42.760 There was absolutely bonkers, but it got people talking about 0:09:42.760 --> 0:09:44.679 Gucci again. I was in New York a couple of 0:09:44.720 --> 0:09:47.439 weeks ago and I went to the store in Soho 0:09:47.559 --> 0:09:49.959 and there was a big installation of all his things 0:09:50.000 --> 0:09:53.880 and the capsule collection. It's trying to get people interested 0:09:53.920 --> 0:09:57.000 in Gucci again, and he's sort of going back to 0:09:57.040 --> 0:09:59.760 the future to try and revive its magic. 0:10:00.080 --> 0:10:01.480 Though it's going to work, I'm not sure. 0:10:01.559 --> 0:10:04.360 I thought he was the wrong person to be appointed, 0:10:04.720 --> 0:10:07.080 but so far he seems to be doing all the 0:10:07.120 --> 0:10:08.079 right things. 0:10:08.679 --> 0:10:11.120 Andrew, can you tell us some of the challenges krig 0:10:11.160 --> 0:10:13.400 has been facing. I mean, there's that slump in Chinese demand, 0:10:13.800 --> 0:10:15.320 higher US tariffs as well. 0:10:15.320 --> 0:10:16.080 What are they facing? 0:10:16.800 --> 0:10:20.200 So what we what we've got at the moment is 0:10:20.360 --> 0:10:23.040 the one percent of still doing very well. But they're 0:10:23.080 --> 0:10:27.160 not buying Gucci. They're buying Hermes, they're buying Brunello, Cuccinelle, 0:10:28.120 --> 0:10:32.840 Laura Piano. They want these very expensive upmarket things. Now, 0:10:33.240 --> 0:10:35.440 the rest of the less rest of the luxury market, 0:10:35.559 --> 0:10:40.200 that aspirational customers coming under pressure, and she had a 0:10:40.280 --> 0:10:43.720 lot of those aspirational customers, particularly in the US. So 0:10:43.840 --> 0:10:46.800 you've got the sort of esthetic going out of fashion 0:10:46.800 --> 0:10:51.040 and you've got these aspirational customers coming under pressure. It's 0:10:51.120 --> 0:10:54.040 really had a bit of a perfect storm and it 0:10:54.160 --> 0:10:58.000 needs to really revive Guccini and it had the Takeo 0:10:58.040 --> 0:11:02.200 Vannetta wasn't doing too bad and their designer went to Chanel. 0:11:02.360 --> 0:11:05.840 So you know, every brand is sort of you know, 0:11:05.960 --> 0:11:07.000 got its challenges. 0:11:07.480 --> 0:11:10.480 Our thanks to Andrea Fause, said Bloomberg opinion columnist, coming 0:11:10.520 --> 0:11:12.560 up a look at why third quarter profit at evie 0:11:12.640 --> 0:11:15.000 Giant Tesla missed estimates on Wall Street. 0:11:15.120 --> 0:11:18.160 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing inp 0:11:18.240 --> 0:11:20.520 research and data on two thousand companies and one hundred 0:11:20.520 --> 0:11:21.320 and thirty industries. 0:11:21.400 --> 0:11:24.640 You can access Bloomberg Intelligence via bi go on the terminal. 0:11:24.720 --> 0:11:25.839 I'm Scarlet Foo and. 0:11:25.800 --> 0:11:27.840 I'm Paul Sweeney, and this is Bloomberg. 0:11:32.160 --> 0:11:36.680 This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 0:11:37.000 --> 0:11:38.320 on Bloomberg Radio. 0:11:39.120 --> 0:11:41.240 We'll move next to earning from the ev Giant Tesla. 0:11:41.320 --> 0:11:44.480 Tesla report at third quarter earnings that missed analysts expectations. 0:11:44.640 --> 0:11:47.360 This comes despite record electric vehicle sales. 0:11:47.080 --> 0:11:49.400 It's a sign of the pressure automakers are facing from 0:11:49.440 --> 0:11:53.400 shifting federal policies and rising costs. Afterwards, CEO Elon Musk 0:11:53.440 --> 0:11:55.800 also spent the end of Tesla's earnings called pleading with 0:11:55.880 --> 0:11:59.200 investors to approve his one trillion dollar pay package and 0:11:59.240 --> 0:12:01.560 blasted your whold the advisory firms that have come out 0:12:01.640 --> 0:12:02.880 against that proposal. 0:12:03.160 --> 0:12:05.480 For more. We were joined by Steve Man Bloomberg Intelligence, 0:12:05.480 --> 0:12:07.559 Global Autos and Industrials research Channels. 0:12:07.679 --> 0:12:09.720 We first asked Eeve for his reaction to the recent 0:12:09.760 --> 0:12:10.560 Tessa news. 0:12:10.920 --> 0:12:14.480 It was quite a surprise. Given the volume of production. 0:12:15.000 --> 0:12:18.080 You would think that, you know, the fixed costs absorption 0:12:18.320 --> 0:12:21.440 would be higher this quarter than in the past, but 0:12:21.480 --> 0:12:25.520 it didn't happen. Looks like appreciation costs increase for them. 0:12:25.600 --> 0:12:29.240 Looks like the tariff costs impact is greater than expected. 0:12:29.720 --> 0:12:32.480 And then even below the gross margin line, the R 0:12:32.520 --> 0:12:36.160 and D costs went up quite a bit. You know, 0:12:36.200 --> 0:12:37.960 that could be viewed as a good thing, because that's 0:12:38.559 --> 0:12:41.280 you know, that's a sign they're pivoting to you know, 0:12:41.320 --> 0:12:45.760 the ROBOTAXI, the FSD and you know the optimist robots. 0:12:45.640 --> 0:12:48.880 And Elon Musk, I guess towards the end of the call, 0:12:48.960 --> 0:12:52.320 made a plea for investors to a previous one trillion 0:12:52.360 --> 0:12:55.959 dollar pay package. Quote this is from Elon. There needs 0:12:56.000 --> 0:12:58.080 to be enough voting control to give a strong influence, 0:12:58.080 --> 0:13:00.200 but not so much that I can't be far if 0:13:00.240 --> 0:13:03.400 I go insane. Mister Musk said, how did that go 0:13:03.520 --> 0:13:05.360 over on the call here? And what's the thinking among 0:13:05.400 --> 0:13:09.199 the investor community about what maybe a one trillion dollar 0:13:09.240 --> 0:13:10.080 pay package? 0:13:10.400 --> 0:13:13.400 Yeah, I'm not sure if money is important to him. 0:13:13.440 --> 0:13:16.520 He does have a lot already, so I do believe 0:13:16.559 --> 0:13:18.760 that it's more about the control of the company. Look, 0:13:18.840 --> 0:13:21.640 Tesla doesn't have the dual class shares like some of 0:13:21.640 --> 0:13:25.600 the tech companies have, so there is he he does 0:13:25.679 --> 0:13:29.280 have that fear of getting pushed out, and you know, 0:13:29.320 --> 0:13:31.840 he had that experience right with the open Ai. You know, 0:13:31.880 --> 0:13:35.360 he's one of the initial investors in open Ai and 0:13:35.400 --> 0:13:38.840 he got pushed out. So he does have the concern 0:13:39.679 --> 0:13:43.320 it is his baby. Look, the stocks. You know, the 0:13:43.400 --> 0:13:46.040 other thing is that the stock hasn't reacted, you know, 0:13:46.360 --> 0:13:49.800 too negatively to the weak earnings that we saw in 0:13:49.880 --> 0:13:54.080 the last quarter. Right, there's there's a battle happening between 0:13:54.360 --> 0:13:57.800 the the bulls and the bears, the long the long 0:13:57.840 --> 0:14:02.680 guys versus the near term investors. And you know, there 0:14:02.720 --> 0:14:04.880 are a lot of people believe it, who believes that 0:14:05.000 --> 0:14:09.560 the you know, he can achieve you know, the getting 0:14:09.600 --> 0:14:13.160 the optimism robot up and running, uh, you know, getting 0:14:13.720 --> 0:14:17.880 our physical AI going. So there's a lot of believers 0:14:17.880 --> 0:14:18.280 out there. 0:14:19.080 --> 0:14:21.280 There's a lot of believers in you know, what the 0:14:21.360 --> 0:14:24.200 company actually reports, especially when it comes to his vehicle sales, 0:14:24.320 --> 0:14:27.480 almost doesn't matter based on this idea that Elon Musk 0:14:27.480 --> 0:14:30.400 will steered the company in the right direction eventually maybe 0:14:30.560 --> 0:14:35.200 because you know, the robotaxis, which are you know, in operation, 0:14:35.440 --> 0:14:39.560 but the self driving vehicles, the humanoid robots, those are 0:14:39.600 --> 0:14:41.360 going to take a couple of years to pan out. 0:14:41.640 --> 0:14:43.720 If that we don't have any details on it. 0:14:43.760 --> 0:14:44.200 So in the. 0:14:44.160 --> 0:14:47.440 Meantime, what is the growth driver for this company? 0:14:47.920 --> 0:14:51.320 Well, you know, he definitely in the call, he you know, 0:14:51.360 --> 0:14:53.680 he didn't talk about cars a lot anymore other than 0:14:53.760 --> 0:14:57.840 robotax and FSD. He's very focused on physical AI. But 0:14:57.960 --> 0:15:00.520 at the end of the day, he needs this out cars. 0:15:00.640 --> 0:15:03.520 He needs to continue to sell cars to actually generate 0:15:03.560 --> 0:15:08.600 the cash to support his endeavors. Now he has launched 0:15:08.680 --> 0:15:11.760 cheaper vehicles. It would have been better if he is 0:15:11.840 --> 0:15:15.280 offering even a cheaper model, like something under thirty thousand 0:15:15.320 --> 0:15:18.560 that you know we talked about in the past. He 0:15:18.640 --> 0:15:21.920 is expanding overseas, right he had, you know, record sales 0:15:21.920 --> 0:15:25.200 in countries like Japan and South Korea. Now he's going 0:15:25.280 --> 0:15:29.480 into India, big market, big market, So cars is still 0:15:29.480 --> 0:15:30.720 going to be important. 0:15:30.560 --> 0:15:33.200 Our Thanks to Steve Man Bloomberg Intelligence Global Autos and 0:15:33.240 --> 0:15:34.280 Industrials Research. 0:15:34.040 --> 0:15:36.920 Channelst we move next to earnings from the telecoms company 0:15:36.960 --> 0:15:37.400 AT and T. 0:15:37.880 --> 0:15:40.480 This week, AT and T reported revenue that fell slightly 0:15:40.520 --> 0:15:43.200 short of analyst expectations in the third quarter. This was 0:15:43.240 --> 0:15:45.880 the result of a heavy promotion campaign to move new 0:15:45.880 --> 0:15:48.480 customers in a fiercely competitive mobile phone market. 0:15:48.600 --> 0:15:50.840 A G and G CEO John Stanky also said the 0:15:50.840 --> 0:15:54.320 carrier is up against quote increased marketplace activity that shows 0:15:54.360 --> 0:15:56.240 no sign of slowing through the end of the year. 0:15:56.560 --> 0:15:58.960 For more, we were joined by John Butler, Bloomberg Intelligence 0:15:59.040 --> 0:16:00.760 Senior Telecom We. 0:16:00.720 --> 0:16:02.920 First began by asking John to talk about H and 0:16:02.960 --> 0:16:06.040 d's quarter that ended and just how competitive this wireless 0:16:06.040 --> 0:16:06.640 business is. 0:16:07.080 --> 0:16:09.840 It's a very mature market right now, you've had a 0:16:09.840 --> 0:16:14.280 lot of movement and the management suite with new CEOs 0:16:14.360 --> 0:16:18.280 at Verizon and T Mobiles. So the fear is that 0:16:18.840 --> 0:16:21.760 promotional activity is going to pick up as these new 0:16:21.840 --> 0:16:24.040 CEOs try and make their mark, and I think we 0:16:24.080 --> 0:16:27.120 saw some evidence of that in three Q. You know, 0:16:27.160 --> 0:16:29.360 if you look at AT and t's numbers, they were 0:16:29.400 --> 0:16:33.280 truly mixed. I was really surprised at that. What we 0:16:33.360 --> 0:16:38.400 saw was revenue growth across the board just missed estimates slightly. 0:16:38.480 --> 0:16:43.160 It was a little bit slower than everyone expected. Subscriber growth, though, 0:16:43.360 --> 0:16:48.120 was higher than expected, and that really to me that 0:16:49.240 --> 0:16:51.840 those are the kind of financial metrics you see in 0:16:51.880 --> 0:16:56.520 a highly promotional environment. Right you're promoting heavily, there's pressure 0:16:56.560 --> 0:17:00.080 on pricing. Their average revenue per user actually fell in 0:17:00.080 --> 0:17:04.639 the quarter on the wireless front, but subscribers rose, and 0:17:04.720 --> 0:17:07.800 so you're out there trying to build up your roles, 0:17:08.000 --> 0:17:12.000 your subscriber roles, at the expense of revenue in the 0:17:12.080 --> 0:17:15.240 short term, on the promise that in the long term, 0:17:15.320 --> 0:17:18.560 if you can keep those subscribers, it pays back. 0:17:18.800 --> 0:17:21.080 I always pay special attention to AT and t's results 0:17:21.119 --> 0:17:23.920 because I switched from AT and T after like I 0:17:23.960 --> 0:17:26.960 don't know, fifteen years because of the original iPhone to 0:17:27.200 --> 0:17:29.439 T Mobile because they had all these great deals, and 0:17:29.840 --> 0:17:31.560 I don't know, it seems more fun in general. The 0:17:31.600 --> 0:17:33.399 reason I bring this up is because now AT and 0:17:33.400 --> 0:17:36.960 T is actually the smallest of the big three wireless providers, 0:17:37.000 --> 0:17:40.320 behind Rise and behind T Mobile. Does being the underdog 0:17:40.440 --> 0:17:41.919 work for it? 0:17:41.920 --> 0:17:44.840 It's a good question, Scarlett. What they're really doing is 0:17:44.920 --> 0:17:49.600 throwing their weight behind broadband John Stankey. He has really 0:17:49.760 --> 0:17:53.679 pursued the broadband market in a big way, and I 0:17:53.720 --> 0:17:55.800 think a lot of it has to do with the 0:17:55.840 --> 0:18:00.520 fact that the broadband market is growing faster than why wireless. 0:18:01.240 --> 0:18:04.800 It's still a mature market, it's still relatively saturated, but 0:18:04.880 --> 0:18:09.159 there's room for more growth there. AT and T is 0:18:09.240 --> 0:18:13.800 pursuing a fiber broadband strategy, and fiber is the single 0:18:13.840 --> 0:18:18.000 best way to deliver Internet period, full stop. There's nothing 0:18:18.040 --> 0:18:20.480 better out there, and AT and T is a real 0:18:20.560 --> 0:18:24.080 leader there. So I think on the wireless run, I 0:18:24.080 --> 0:18:26.159 don't want to say they have their eye off that 0:18:26.280 --> 0:18:29.720 ball in any way whatsoever. They're going through a big 0:18:29.760 --> 0:18:33.639 modernization of the wireless network right now, standing up a 0:18:33.640 --> 0:18:36.040 lot of new spectrums, so you're going to see network 0:18:36.080 --> 0:18:40.760 quality increase significantly over time, and that will drive more 0:18:40.800 --> 0:18:44.159 net additions I think down the road. But if you 0:18:44.480 --> 0:18:47.919 think about AT and T, don't just think wireless. I 0:18:47.920 --> 0:18:51.399 think it's important to pay attention to what's happening in 0:18:51.440 --> 0:18:55.639 that broadband business because that really is setting the foundation 0:18:55.880 --> 0:18:57.240 for their future growth. 0:18:57.720 --> 0:19:01.119 So John, in the broadband business, are they competing against 0:19:01.200 --> 0:19:04.120 the cable companies because they've made that a key focus 0:19:04.200 --> 0:19:05.439 over the last decade or so. 0:19:06.160 --> 0:19:09.680 Yeah, I mean, the broadband market's getting really interesting right now. 0:19:09.760 --> 0:19:13.800 What you've seen is the cable guys are losing a 0:19:13.920 --> 0:19:19.120 lot of share to fiber, and particularly to fixed wireless access, 0:19:19.200 --> 0:19:23.879 which is basically a wireless link of broadband into your home. 0:19:24.000 --> 0:19:29.359 That's been a runaway hit with consumers, really popular. AT 0:19:29.480 --> 0:19:32.679 and T was late to that game, but they're getting 0:19:32.720 --> 0:19:36.879 a lot of growth in FWA right now, as it's called. 0:19:36.960 --> 0:19:40.880 So it's interesting to see the dynamic where the cable 0:19:40.920 --> 0:19:44.600 guys are losing share and the telcos are gaining share, 0:19:45.280 --> 0:19:47.399 and soon you're going to have starlink in on the 0:19:47.440 --> 0:19:50.119 market in a bigger way. They're right on the cosp 0:19:50.200 --> 0:19:55.440 of upgrading the capacity of their constellation and so they're 0:19:55.480 --> 0:19:58.879 going to go from a very high priced product, I think, 0:19:59.480 --> 0:20:03.920 to a much more reasonably priced broadband offering. Once they 0:20:03.920 --> 0:20:06.280 get more capacity up there, they're going to look to 0:20:06.359 --> 0:20:08.800 fill that and the way to do that is to 0:20:08.840 --> 0:20:12.200 cut your prices. And so suddenly you're going to have 0:20:12.359 --> 0:20:15.879 another wireless option, which is going to be satellite. So 0:20:16.680 --> 0:20:20.399 the competitive dynamics there are getting interesting. But for AT 0:20:20.520 --> 0:20:23.760 and T and their dedication of fiber, I think they're 0:20:23.840 --> 0:20:27.000 extremely well positioned and not only hold their own but 0:20:27.200 --> 0:20:28.040 grow from here. 0:20:28.520 --> 0:20:31.840 Our thanks to John Butler, Bloomberg Intelligence Senior Telecom analysts. 0:20:32.200 --> 0:20:34.280 We move next to earnings from toymaker Mattel. 0:20:34.600 --> 0:20:37.159 This week, Mattel reported third quarter sales and earnings that 0:20:37.240 --> 0:20:40.880