1 00:00:02,920 --> 00:00:10,799 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,840 --> 00:00:15,840 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern. 3 00:00:15,520 --> 00:00:18,040 Speaker 2: On FO card Playing and broud Otto with the Bloomberg 4 00:00:18,079 --> 00:00:18,760 Speaker 2: Business app. 5 00:00:18,760 --> 00:00:22,000 Speaker 1: Listen on demand wherever you get your podcasts, or watch 6 00:00:22,079 --> 00:00:24,000 Speaker 1: us live on YouTube. 7 00:00:24,880 --> 00:00:26,120 Speaker 3: We're just talking about Peloton. 8 00:00:26,400 --> 00:00:28,600 Speaker 4: A lot of news there switching out to CEO and 9 00:00:28,720 --> 00:00:30,920 Speaker 4: that's never good. It's checking with Mark German. He is 10 00:00:31,120 --> 00:00:34,720 Speaker 4: a Bloomberg News reporter based in Los Angeles. 11 00:00:34,880 --> 00:00:37,040 Speaker 3: Mark, I know you did the reporting on this story. 12 00:00:37,479 --> 00:00:38,440 Speaker 3: What's up with the CEO? 13 00:00:39,880 --> 00:00:44,120 Speaker 5: Yeah, Barry McCarthy two years he's out. I'm honestly surprised 14 00:00:44,159 --> 00:00:47,519 Speaker 5: that he stayed this long. Nothing really to do with 15 00:00:47,560 --> 00:00:49,519 Speaker 5: his age. He's in his seventies. He came out of 16 00:00:49,520 --> 00:00:51,680 Speaker 5: retirement for this job. He used to be the CFO 17 00:00:51,720 --> 00:00:55,960 Speaker 5: of Netflix and Spotify, but this was a tough turnaround job. 18 00:00:56,000 --> 00:00:59,200 Speaker 5: His predecessor, John Foley, really left them in a hole. 19 00:00:59,280 --> 00:01:02,440 Speaker 5: For those who don't remember, at the height of the pandemic, 20 00:01:02,480 --> 00:01:06,560 Speaker 5: Peloton exploded. Everyone was buying bikes in order to work 21 00:01:06,600 --> 00:01:09,319 Speaker 5: out at home when gyms were closed and fully and 22 00:01:09,560 --> 00:01:13,080 Speaker 5: Peloton made this bet, which obviously in hindsight, we know 23 00:01:13,240 --> 00:01:16,480 Speaker 5: was a terrible bet that gyms would continue to be closed, 24 00:01:16,760 --> 00:01:19,640 Speaker 5: COVID would last forever, the pandemic would never end, nobody 25 00:01:19,680 --> 00:01:22,440 Speaker 5: would leave their homes and apartments ever. Again, they built 26 00:01:22,440 --> 00:01:25,919 Speaker 5: a bunch of bikes. That's the bet they made, because 27 00:01:25,959 --> 00:01:29,399 Speaker 5: they built. They started building a facility in Ohio to 28 00:01:29,480 --> 00:01:32,600 Speaker 5: build many more bikes. They invested and grew the company 29 00:01:32,680 --> 00:01:35,600 Speaker 5: so quickly, right, and then when things started to reopen, 30 00:01:35,680 --> 00:01:38,240 Speaker 5: Peloton fell flat on its face. They've had to lay 31 00:01:38,240 --> 00:01:41,240 Speaker 5: off thousands of thousands of people. They had to restructure 32 00:01:41,280 --> 00:01:43,560 Speaker 5: the whole company, and it was a hole that you 33 00:01:43,600 --> 00:01:46,920 Speaker 5: couldn't really dig yourself out of. McCarthy was able to 34 00:01:46,920 --> 00:01:50,560 Speaker 5: get Apple to sorry, Peloton to free cash flow. But 35 00:01:50,640 --> 00:01:52,960 Speaker 5: at this point, their share price is about three dollars 36 00:01:53,000 --> 00:01:56,720 Speaker 5: a share, sales are down, they continue to miss their estimates. 37 00:01:56,760 --> 00:01:59,680 Speaker 5: They continued to miss their own forecasts. Time for him 38 00:01:59,680 --> 00:02:01,520 Speaker 5: to move on, And I think he made the prudent 39 00:02:01,560 --> 00:02:04,680 Speaker 5: decision for himself. And I'm surprised it took this long. 40 00:02:05,080 --> 00:02:07,560 Speaker 6: So he was you mentioned CEO of Netflix and Spotify, right, 41 00:02:07,600 --> 00:02:11,440 Speaker 6: So he is this subscription based guy, so right, see 42 00:02:11,480 --> 00:02:14,240 Speaker 6: if I'm sorry, So he's a subscription guy. So are 43 00:02:14,240 --> 00:02:18,040 Speaker 6: we learning anything about what Peloton will do and how 44 00:02:18,080 --> 00:02:19,400 Speaker 6: their business model will evolve. 45 00:02:20,480 --> 00:02:22,560 Speaker 5: Well, he's you know, he was the he's the outgoing 46 00:02:22,600 --> 00:02:25,720 Speaker 5: CEO Peloton, of course, and he did implement lots of 47 00:02:25,760 --> 00:02:28,920 Speaker 5: subscription based features into the company. One of the first 48 00:02:28,919 --> 00:02:31,880 Speaker 5: things he did was a subscription model for Peloton hardware, 49 00:02:32,120 --> 00:02:35,040 Speaker 5: so you could actually lease a Peloton versus paying one 50 00:02:35,040 --> 00:02:37,480 Speaker 5: thousand and fifteen hundred dollars outright for it. So that 51 00:02:37,600 --> 00:02:39,280 Speaker 5: was a big thing he did. The other thing is 52 00:02:39,320 --> 00:02:43,080 Speaker 5: they've expanded their content offerings, They've expanded their digital app tremendously, 53 00:02:43,320 --> 00:02:45,720 Speaker 5: and these are all subscription based products. So he's sort 54 00:02:45,760 --> 00:02:48,600 Speaker 5: of turned it into a subscription. Now, you didn't ask 55 00:02:48,639 --> 00:02:50,960 Speaker 5: me this, but I will make my projection of my own. 56 00:02:51,720 --> 00:02:53,760 Speaker 5: I think that they're going to try to sell this 57 00:02:53,760 --> 00:02:55,760 Speaker 5: thing now, right, laying off more people, doing a two 58 00:02:55,840 --> 00:02:59,359 Speaker 5: hundred million dollars restructuring. They have no CEO in place now, 59 00:02:59,440 --> 00:03:01,560 Speaker 5: two of their board members are you know, taking over 60 00:03:01,600 --> 00:03:04,080 Speaker 5: a new board member or one of their old board 61 00:03:04,120 --> 00:03:07,520 Speaker 5: members is becoming their new chairman. This would make a 62 00:03:07,560 --> 00:03:10,440 Speaker 5: good fit for something like Amazon Prime or for Netflix, 63 00:03:10,600 --> 00:03:12,600 Speaker 5: right your Netflix or prime description get a little bit 64 00:03:12,600 --> 00:03:15,440 Speaker 5: more valuable because it comes with fitness content. Maybe one 65 00:03:15,480 --> 00:03:17,200 Speaker 5: of these companies can pull in all that content for 66 00:03:17,280 --> 00:03:20,040 Speaker 5: under a billion dollars. I think that's the smart move 67 00:03:20,040 --> 00:03:22,200 Speaker 5: for Peloton's board at this point. Try to get rid 68 00:03:22,240 --> 00:03:22,639 Speaker 5: of this thing. 69 00:03:22,840 --> 00:03:25,240 Speaker 4: Wow, all right, Mark, great stuff, great reporting. Really appreciate 70 00:03:25,320 --> 00:03:28,840 Speaker 4: you taking a few minutes of your time, Mark Herman, you're. 71 00:03:28,680 --> 00:03:32,920 Speaker 1: Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays 72 00:03:32,960 --> 00:03:35,560 Speaker 1: at ten am Eastern on applecard. 73 00:03:34,960 --> 00:03:37,720 Speaker 2: Play and Android Auto with the Bloomberg Business app. 74 00:03:37,840 --> 00:03:40,680 Speaker 1: You can also listen live on Amazon Alexa from our 75 00:03:40,680 --> 00:03:44,680 Speaker 1: flagship New York station, Just say Alexa Play Bloomberg eleven 76 00:03:44,800 --> 00:03:47,000 Speaker 1: thirty s. 77 00:03:46,920 --> 00:03:49,880 Speaker 3: Break down a little bit more on Quacom. 78 00:03:49,920 --> 00:03:52,920 Speaker 4: Angela Zino joins as vice president and senior equity analyst 79 00:03:52,960 --> 00:03:56,680 Speaker 4: for c fr A Research in New York. 80 00:03:56,840 --> 00:03:59,840 Speaker 3: Angela, what's your takeaway here? The market certainly likes what 81 00:04:00,120 --> 00:04:02,480 Speaker 3: soft from Qualcom. What's your takeaways? 82 00:04:02,840 --> 00:04:03,000 Speaker 6: Yeah? 83 00:04:03,080 --> 00:04:03,960 Speaker 7: No, we we love it. 84 00:04:04,480 --> 00:04:04,640 Speaker 4: You know. 85 00:04:04,680 --> 00:04:07,440 Speaker 7: We we upgraded the stock to a buy actually on 86 00:04:07,480 --> 00:04:10,560 Speaker 7: the news. I mean, typically we hate upgrading near near 87 00:04:10,600 --> 00:04:14,320 Speaker 7: the highs for a stock like this, but it's warranted 88 00:04:14,480 --> 00:04:17,240 Speaker 7: and I think kind of The biggest takeaway on our 89 00:04:17,400 --> 00:04:20,240 Speaker 7: end is this is a company that is clearly going 90 00:04:20,240 --> 00:04:23,920 Speaker 7: to see some significant different diversification away from smartphones over 91 00:04:23,960 --> 00:04:25,719 Speaker 7: the next couple of years. I think a big concern 92 00:04:25,760 --> 00:04:29,279 Speaker 7: of hours was eventually Qualcom would lose that Apple business, 93 00:04:29,360 --> 00:04:32,960 Speaker 7: right as Apple kind of starts, you know, internally designing 94 00:04:32,960 --> 00:04:34,719 Speaker 7: their motives at some point in time might be a 95 00:04:34,760 --> 00:04:36,760 Speaker 7: twenty six, twenty seven to twenty eight things, but it 96 00:04:36,800 --> 00:04:38,800 Speaker 7: would happen at some point in time. But that's that 97 00:04:39,200 --> 00:04:41,080 Speaker 7: you kind of look at what they just did here. 98 00:04:42,000 --> 00:04:45,240 Speaker 7: Android ecosystem is definitely coming back, specifically in China, grew 99 00:04:45,279 --> 00:04:47,960 Speaker 7: north of forty percent. More importantly, I think the numbers 100 00:04:47,960 --> 00:04:52,120 Speaker 7: that they gave out for that automotive pipeline extremely impressive, 101 00:04:52,200 --> 00:04:55,200 Speaker 7: kind of growing from thirty billion eighteen months ago to 102 00:04:55,320 --> 00:04:59,080 Speaker 7: about forty five billion now. That provides some really nice 103 00:04:59,160 --> 00:05:01,080 Speaker 7: visibility as you go. I went to twenty twenty sixth 104 00:05:01,080 --> 00:05:05,720 Speaker 7: and beyond, and then you guys highlighted the ai PC opportunity, 105 00:05:05,960 --> 00:05:08,320 Speaker 7: and I think that's a really undappreciated story. They didn't 106 00:05:08,360 --> 00:05:11,040 Speaker 7: throw any numbers out as far as aipcs are concerned 107 00:05:11,040 --> 00:05:13,400 Speaker 7: in their opportunity there this quarter, but they did say 108 00:05:13,400 --> 00:05:15,599 Speaker 7: that they were going to start throwing those that type 109 00:05:15,600 --> 00:05:18,080 Speaker 7: of numbers, those type of numbers out next quarter, So 110 00:05:18,120 --> 00:05:20,120 Speaker 7: I think that also is a potential catalyst that we 111 00:05:20,160 --> 00:05:22,200 Speaker 7: can kind of see as they kind of go into 112 00:05:22,240 --> 00:05:24,320 Speaker 7: their June quarter results in July. 113 00:05:24,440 --> 00:05:26,320 Speaker 6: All right, a lot to break through breakdown on that, 114 00:05:26,440 --> 00:05:27,919 Speaker 6: And we'll get to Apple in this a second. But 115 00:05:28,279 --> 00:05:30,480 Speaker 6: where do we learn from Qualcomm of where we are 116 00:05:30,560 --> 00:05:31,760 Speaker 6: in the smartphone cycle? 117 00:05:33,360 --> 00:05:35,719 Speaker 7: Yeah, I mean, as far as the smart phone cycle 118 00:05:35,800 --> 00:05:37,880 Speaker 7: is concerned, Hey, listen, this is this is a market 119 00:05:37,960 --> 00:05:40,039 Speaker 7: that we think is still you know, peaked out in 120 00:05:40,080 --> 00:05:42,719 Speaker 7: twenty sixteen. We don't see it getting back to those 121 00:05:42,800 --> 00:05:45,719 Speaker 7: levels anytime in the near future. But that said, I 122 00:05:45,720 --> 00:05:49,240 Speaker 7: think what the real key takeaway here for Qualcom is 123 00:05:49,279 --> 00:05:52,200 Speaker 7: concern is we were looking for low single digit growth 124 00:05:52,200 --> 00:05:55,600 Speaker 7: as far as the smartphone market is concerned. But more importantly, 125 00:05:56,200 --> 00:05:59,240 Speaker 7: the mix, especially on the Android side of things, will 126 00:05:59,279 --> 00:06:02,839 Speaker 7: continue to kind of to shift towards more premium end devices. 127 00:06:02,880 --> 00:06:06,080 Speaker 7: That's something that Apple has clearly benefited from over the 128 00:06:06,200 --> 00:06:09,760 Speaker 7: years from a broader smartphone market, but as we kind 129 00:06:09,760 --> 00:06:12,640 Speaker 7: of see that increasingly take place on the Android side, 130 00:06:12,640 --> 00:06:17,560 Speaker 7: I think specifically from AI related smart smartphones. That provides 131 00:06:17,600 --> 00:06:20,880 Speaker 7: greater content growth for Qualcom. So Qualcom will be able 132 00:06:20,920 --> 00:06:24,200 Speaker 7: to outgrow the smartphone market here over the next couple 133 00:06:24,240 --> 00:06:26,760 Speaker 7: of years. We think because of that, you know, the 134 00:06:26,800 --> 00:06:29,280 Speaker 7: content games that they're seeing, unlike what you're seeing from 135 00:06:29,279 --> 00:06:32,680 Speaker 7: the likes of you know, Corvo and Skyworks, which just 136 00:06:32,720 --> 00:06:35,640 Speaker 7: you know, the last two nights, you know, reported results 137 00:06:35,640 --> 00:06:36,599 Speaker 7: that were pretty abysmal. 138 00:06:37,000 --> 00:06:39,400 Speaker 4: Hey, Angel, just a naive question for me. I just 139 00:06:39,480 --> 00:06:41,760 Speaker 4: don't know the answer, but I do know there they 140 00:06:41,800 --> 00:06:44,320 Speaker 4: sell a lot of chips into China. 141 00:06:44,520 --> 00:06:46,520 Speaker 3: Is that a risk for them? And if so, how 142 00:06:46,520 --> 00:06:47,280 Speaker 3: do they mitigate it? 143 00:06:48,360 --> 00:06:51,240 Speaker 7: Yeah, I mean that's a great point. I mean, geopolitical 144 00:06:51,360 --> 00:06:54,680 Speaker 7: risks are always out there, and you know, I think 145 00:06:54,720 --> 00:06:57,359 Speaker 7: you know, it's been an issue that kind of Qualcom 146 00:06:57,400 --> 00:06:59,520 Speaker 7: has had to contend with. I mean, they were more 147 00:07:00,200 --> 00:07:02,080 Speaker 7: you know, relevant, and let's say, you know, Huawei is 148 00:07:02,160 --> 00:07:04,920 Speaker 7: ecosystem here years ago and you kind of look at 149 00:07:04,920 --> 00:07:07,320 Speaker 7: what they did last night, and they're sincely going to 150 00:07:07,360 --> 00:07:10,800 Speaker 7: be completely gone from Huawei phones by the end of 151 00:07:10,800 --> 00:07:14,160 Speaker 7: this calendar year. So I think in some respects they're 152 00:07:14,160 --> 00:07:17,760 Speaker 7: going to be forced out, you know, in certain instances 153 00:07:17,960 --> 00:07:21,360 Speaker 7: of you know, certain devices out there. But yeah, I 154 00:07:21,640 --> 00:07:23,840 Speaker 7: think that's a great question. I don't know if there's 155 00:07:24,360 --> 00:07:29,400 Speaker 7: a way of necessarily mitigating that risk out there. But 156 00:07:29,560 --> 00:07:31,600 Speaker 7: you know, in the same respect, a lot of kind 157 00:07:31,640 --> 00:07:34,800 Speaker 7: of the the the chips that they sell into China 158 00:07:34,880 --> 00:07:38,040 Speaker 7: are also not necessarily getting sold into the China market. 159 00:07:38,520 --> 00:07:40,520 Speaker 7: They're getting kind of pushed out in kind of getting 160 00:07:40,520 --> 00:07:42,800 Speaker 7: sold across the rest of the world, even if they 161 00:07:42,840 --> 00:07:45,840 Speaker 7: are China related phones. But it is a Listen, it's 162 00:07:45,880 --> 00:07:48,360 Speaker 7: a it's a risk out there over time. Absolutely. 163 00:07:48,800 --> 00:07:52,760 Speaker 6: You mentioned the AIPC cycle, which leads us to some 164 00:07:52,880 --> 00:07:55,320 Speaker 6: sort of the AI smartphone cycle, which leads us to 165 00:07:55,320 --> 00:07:57,320 Speaker 6: Apple trying to connect all those jobs for us. I'm 166 00:07:57,320 --> 00:07:59,800 Speaker 6: trying I do if that work. But what kind of 167 00:08:00,080 --> 00:08:03,920 Speaker 6: AI computer AI phone cycle do you think we could 168 00:08:03,960 --> 00:08:05,760 Speaker 6: be under and when does that kind of hit. 169 00:08:07,800 --> 00:08:10,720 Speaker 7: So, you know, as far as Apple is concerned, I 170 00:08:10,760 --> 00:08:14,480 Speaker 7: think this is an absolutely massive opportunity for them. Hearing 171 00:08:14,480 --> 00:08:18,000 Speaker 7: and Calendar twenty twenty four, and you know, the way 172 00:08:18,000 --> 00:08:19,920 Speaker 7: we would look at it is, listen, the results here 173 00:08:19,960 --> 00:08:21,640 Speaker 7: are going to be tonight are going to be what 174 00:08:21,680 --> 00:08:24,080 Speaker 7: they are going to be. We don't expect anything good. 175 00:08:24,320 --> 00:08:26,040 Speaker 7: But as as soon as next week, you're going to 176 00:08:26,080 --> 00:08:29,640 Speaker 7: start going into a refresh cycle of iPad announcements. You're 177 00:08:29,680 --> 00:08:32,360 Speaker 7: going to see Developers Conference in June, and then you're 178 00:08:32,480 --> 00:08:34,600 Speaker 7: later this year. We do think you're going to get 179 00:08:34,800 --> 00:08:37,760 Speaker 7: you know, on device AI smartphones on the you know, 180 00:08:37,840 --> 00:08:40,840 Speaker 7: the iPhone side of things, as well as another upgrade 181 00:08:40,840 --> 00:08:43,120 Speaker 7: cycle opportunity on the Mac side of things. So this 182 00:08:43,200 --> 00:08:45,920 Speaker 7: is a really interesting opportunity because we expect them a 183 00:08:45,920 --> 00:08:49,440 Speaker 7: refreshed essentially their entire hardware ecosystem here over the next 184 00:08:49,520 --> 00:08:51,319 Speaker 7: kind of eight to nine months, and we do think 185 00:08:51,320 --> 00:08:54,160 Speaker 7: that is underappreciated to an extent. Whether or not kind 186 00:08:54,160 --> 00:08:55,960 Speaker 7: of consumers are going to go up you know, go 187 00:08:56,080 --> 00:08:59,600 Speaker 7: out there and actually you know, upgrade their devices to 188 00:08:59,760 --> 00:09:03,880 Speaker 7: these kind of AI enabled you know devices, remains to 189 00:09:03,920 --> 00:09:07,040 Speaker 7: be seen. It all depends on what exactly Apple kind 190 00:09:07,040 --> 00:09:09,079 Speaker 7: of rolls out, but we know they're going to put 191 00:09:09,080 --> 00:09:12,200 Speaker 7: some crazy marketing power behind all of this, right, and 192 00:09:12,240 --> 00:09:14,280 Speaker 7: we do think that there is potential for them to 193 00:09:14,360 --> 00:09:17,440 Speaker 7: kind of at least increase pricing across certain aspects of 194 00:09:17,480 --> 00:09:20,480 Speaker 7: their ecosystem. So that should also kind of help support 195 00:09:21,320 --> 00:09:24,040 Speaker 7: you know, an improving revenue trajectory as we get at 196 00:09:24,120 --> 00:09:27,320 Speaker 7: least into the iPhone sixteen cycle later this year. 197 00:09:28,440 --> 00:09:32,840 Speaker 4: So in reality, though, Angel, what can the company say 198 00:09:33,040 --> 00:09:34,280 Speaker 4: today about China? 199 00:09:34,400 --> 00:09:35,120 Speaker 3: Can they say? 200 00:09:35,720 --> 00:09:39,240 Speaker 4: I mean, because I think it's unclear whether their challenges 201 00:09:39,280 --> 00:09:44,640 Speaker 4: in China are from competition from you know, changing consumer 202 00:09:45,160 --> 00:09:49,000 Speaker 4: behaviors relates to buying Chinese products or anti American products. 203 00:09:49,520 --> 00:09:51,520 Speaker 4: I don't know how to kind of phrase that out 204 00:09:51,600 --> 00:09:52,480 Speaker 4: or parse that out. 205 00:09:52,559 --> 00:09:54,920 Speaker 3: What can they say? What's the market hoping to hear? 206 00:09:56,240 --> 00:09:58,640 Speaker 7: Well, I'll tell you what I'm hoping to hear. That 207 00:09:58,679 --> 00:10:01,760 Speaker 7: would help me in terms of the China story. The 208 00:10:01,840 --> 00:10:04,520 Speaker 7: China we think China revenue declines are probably going to 209 00:10:04,559 --> 00:10:07,080 Speaker 7: be closer to fifteen to twenty percent, which is worse 210 00:10:07,360 --> 00:10:10,880 Speaker 7: than expectations out there. But more importantly, I think is 211 00:10:10,960 --> 00:10:14,319 Speaker 7: going to be exactly what they have to say about 212 00:10:14,360 --> 00:10:18,559 Speaker 7: the China ecosystem out there, and kind of what they 213 00:10:18,600 --> 00:10:20,560 Speaker 7: have to say about the installed base. If they can 214 00:10:20,640 --> 00:10:22,880 Speaker 7: kind of come out and say, hey, listen, the you know, 215 00:10:22,960 --> 00:10:26,920 Speaker 7: we're seeing significant declines out there, and you know, maybe 216 00:10:26,960 --> 00:10:29,520 Speaker 7: part of it is because, hey listen, you've got some 217 00:10:29,600 --> 00:10:31,640 Speaker 7: tough comps out there. Maybe part of it is they 218 00:10:31,640 --> 00:10:34,480 Speaker 7: don't have an AI enabled device out there where. You know, 219 00:10:34,600 --> 00:10:38,280 Speaker 7: other China you know, OEMs out there are kind of 220 00:10:38,360 --> 00:10:41,760 Speaker 7: rolling out their AI enable devices out already, and then 221 00:10:41,840 --> 00:10:44,160 Speaker 7: of course the Huawei Play but they can come out 222 00:10:44,200 --> 00:10:48,280 Speaker 7: and say, hey, listen, the installed base continues to remain 223 00:10:48,360 --> 00:10:51,400 Speaker 7: either the same or incrementally grow out in China. I 224 00:10:51,400 --> 00:10:54,920 Speaker 7: think that would alleviate some of the concerns out there 225 00:10:54,960 --> 00:10:59,320 Speaker 7: about the China ecosystem, at least for US, and would 226 00:10:59,320 --> 00:11:01,120 Speaker 7: also support view that this might be more of a 227 00:11:01,120 --> 00:11:03,199 Speaker 7: cyclical thing than a circular structural thing. 228 00:11:03,720 --> 00:11:06,559 Speaker 6: Okay, here's my question. I have an AI smartphone. What 229 00:11:06,840 --> 00:11:08,040 Speaker 6: is that going to do for me that my phone 230 00:11:08,040 --> 00:11:08,400 Speaker 6: doesn't do? 231 00:11:08,480 --> 00:11:08,680 Speaker 3: Now? 232 00:11:08,800 --> 00:11:09,960 Speaker 6: Do we know the answer to that? 233 00:11:10,679 --> 00:11:11,079 Speaker 8: Angela? 234 00:11:11,160 --> 00:11:11,600 Speaker 3: Do we know that? 235 00:11:13,320 --> 00:11:15,319 Speaker 7: I mean, listen, I think when you kind of look 236 00:11:15,320 --> 00:11:17,679 Speaker 7: at the and you know, you look at what the 237 00:11:17,760 --> 00:11:21,240 Speaker 7: S twenty I think, you know, the most notable kind 238 00:11:21,280 --> 00:11:23,480 Speaker 7: of AI enabled phone that's out there right now, at 239 00:11:23,520 --> 00:11:26,520 Speaker 7: least from minuder saying, is the S twenty four with Samsung. 240 00:11:26,760 --> 00:11:31,040 Speaker 7: And they've got some kind of incremental you know, you know, 241 00:11:31,160 --> 00:11:33,960 Speaker 7: changes out there in terms of you know, supporting multi 242 00:11:33,960 --> 00:11:37,760 Speaker 7: modal capabilities, translation, all that kind of stuff. It's not 243 00:11:37,800 --> 00:11:42,040 Speaker 7: necessarily anything groundbreaking in nature, right. I think what's going 244 00:11:42,080 --> 00:11:44,760 Speaker 7: to be more important, at least from from Apple's perspective, 245 00:11:44,840 --> 00:11:46,840 Speaker 7: is what they can kind of do in terms of 246 00:11:46,880 --> 00:11:49,920 Speaker 7: things like you know, content creation, imaging, all that kind 247 00:11:49,960 --> 00:11:52,320 Speaker 7: of stuff. Will it kind of get some of the 248 00:11:52,360 --> 00:11:54,880 Speaker 7: gen Z population out there. I'm a little bit more 249 00:11:54,920 --> 00:11:59,400 Speaker 7: interested in potentially upgrading towards these devices. But to your point, 250 00:11:59,480 --> 00:12:01,679 Speaker 7: you know, is there anything kind of earth shattering right now, 251 00:12:01,760 --> 00:12:04,560 Speaker 7: some kind of killer opportunity out there on the AI side? 252 00:12:04,600 --> 00:12:06,800 Speaker 7: I thinks I think that remains to be seen. It 253 00:12:06,800 --> 00:12:08,679 Speaker 7: all depends on what some of these OEMs kind of 254 00:12:08,720 --> 00:12:11,240 Speaker 7: come out with and showcase that the consumers. 255 00:12:11,679 --> 00:12:13,160 Speaker 6: Is it gonna like do my laundry for me? 256 00:12:13,480 --> 00:12:13,560 Speaker 9: Like? 257 00:12:13,920 --> 00:12:16,400 Speaker 6: I mean, there's you guys think about these things, right? 258 00:12:16,559 --> 00:12:18,120 Speaker 8: Oh man? Do my taxes? All right? 259 00:12:18,120 --> 00:12:20,720 Speaker 6: Angela, thanks a lot. Angela Zio, vice President, senior equity 260 00:12:20,720 --> 00:12:22,680 Speaker 6: analyst at cfr A Research. 261 00:12:22,720 --> 00:12:28,600 Speaker 1: Joining us there, you're listening to the Bloomberg Intelligence Podcast. 262 00:12:28,800 --> 00:12:31,400 Speaker 1: Catch us live weekdays at ten am Eastern on. 263 00:12:31,360 --> 00:12:34,440 Speaker 2: Apple car Playing and broyd Outo with the Bloomberg Business App. 264 00:12:34,480 --> 00:12:37,720 Speaker 1: Listen on demand wherever you get your podcasts, or watch 265 00:12:37,760 --> 00:12:40,880 Speaker 1: us live on YouTube. 266 00:12:40,400 --> 00:12:43,480 Speaker 6: Lexd alongside Paul Seenia and John Tucker. This is Bloomberg 267 00:12:43,559 --> 00:12:46,680 Speaker 6: Intelligence Radio. We're live from Interactive Broker Studio right here 268 00:12:46,679 --> 00:12:48,199 Speaker 6: in midtown Manhattan. 269 00:12:48,320 --> 00:12:49,679 Speaker 8: We're also live on YouTube, so. 270 00:12:49,640 --> 00:12:52,760 Speaker 6: Go ahead and check us out. Okay, so the market's 271 00:12:52,800 --> 00:12:54,360 Speaker 6: kind of rolling over a little bit here. We got 272 00:12:54,360 --> 00:12:56,560 Speaker 6: through some earnings. We do have Apple after the bell, 273 00:12:56,679 --> 00:13:00,200 Speaker 6: we get jobs tomorrow dot dot dot. Then what like, 274 00:13:00,240 --> 00:13:02,760 Speaker 6: what's your big takeaway? What's going to be the next catalyst? 275 00:13:02,800 --> 00:13:06,160 Speaker 6: Joining us in studio to discuss is carol'sh life. 276 00:13:06,240 --> 00:13:06,760 Speaker 9: She is? 277 00:13:07,880 --> 00:13:11,000 Speaker 6: Where's the thing there? We go cio at BEMO Family Office. 278 00:13:11,000 --> 00:13:12,960 Speaker 6: I knew it was there, Carol. I don't think I've 279 00:13:12,960 --> 00:13:14,520 Speaker 6: ever seen you in person. 280 00:13:16,600 --> 00:13:18,079 Speaker 10: Hiding out in the Midwest a lot. 281 00:13:18,200 --> 00:13:19,480 Speaker 8: No, this is very exciting. 282 00:13:19,559 --> 00:13:22,200 Speaker 10: Yeah, it's very exciting for me. I love being in studio. 283 00:13:22,320 --> 00:13:24,760 Speaker 6: Okay, great, well, Carol, it's great to see you in person. 284 00:13:25,679 --> 00:13:27,800 Speaker 6: What is going to be your next catalyst that you're 285 00:13:27,800 --> 00:13:29,719 Speaker 6: looking for within the market. We keep getting through these 286 00:13:29,720 --> 00:13:33,280 Speaker 6: big events. It's a little or no fanfare. So what's next? 287 00:13:33,400 --> 00:13:35,720 Speaker 10: Well, and I think the most interesting thing is is 288 00:13:35,760 --> 00:13:38,000 Speaker 10: to take it up a level and instead of focusing 289 00:13:38,040 --> 00:13:40,200 Speaker 10: on every piece of data, because the FED has kept 290 00:13:40,320 --> 00:13:43,720 Speaker 10: us really data dependent for a very long time. Is 291 00:13:43,760 --> 00:13:46,320 Speaker 10: to focus on the overarching trend and there's lots of 292 00:13:46,400 --> 00:13:50,800 Speaker 10: really interesting things going on intermediate and longer term, especially this, 293 00:13:51,720 --> 00:13:56,480 Speaker 10: even though it's talked about, it's largely underappreciated, the secular 294 00:13:57,040 --> 00:14:01,040 Speaker 10: trends we've got going on in infrastructure built not just infrastructure, 295 00:14:01,040 --> 00:14:04,920 Speaker 10: but also that implies that we have to build data centers, 296 00:14:04,960 --> 00:14:06,800 Speaker 10: which means we have to hook them to the grid, 297 00:14:06,840 --> 00:14:09,600 Speaker 10: which the grid, you know, is difficult getting them hooked. 298 00:14:09,640 --> 00:14:14,040 Speaker 10: So the energy play utilities. There's lots of different ways 299 00:14:14,080 --> 00:14:16,880 Speaker 10: to play this, and you can make an argument that 300 00:14:16,920 --> 00:14:22,840 Speaker 10: this is the biggest infrastructure spend or the biggest productivity 301 00:14:23,080 --> 00:14:26,280 Speaker 10: potential boost we've had since we put the interstates in 302 00:14:26,280 --> 00:14:29,440 Speaker 10: in the fifties and completely changed the complexion of the 303 00:14:29,560 --> 00:14:32,400 Speaker 10: United States. And so there's lots of stuff going on there. 304 00:14:32,480 --> 00:14:35,240 Speaker 10: It can be easy to get caught in the in 305 00:14:35,280 --> 00:14:38,040 Speaker 10: the near term, we've got an election coming up, we've 306 00:14:38,080 --> 00:14:40,920 Speaker 10: got more FED meetings, more data, but it's important to 307 00:14:40,960 --> 00:14:43,400 Speaker 10: pull out of that and keep a longer term perspective. 308 00:14:44,040 --> 00:14:47,080 Speaker 3: William Woods University, Ulton, Missouri Awesome. 309 00:14:47,160 --> 00:14:49,800 Speaker 10: I was an equestrian science major. I thought I was 310 00:14:49,880 --> 00:14:51,960 Speaker 10: going to horse trainer. 311 00:14:52,080 --> 00:14:55,720 Speaker 3: Yep, running money. 312 00:14:57,080 --> 00:14:58,720 Speaker 10: I did get a business degree while I. 313 00:15:00,600 --> 00:15:04,120 Speaker 6: So was the science in relation to equestrian stuff or 314 00:15:04,200 --> 00:15:04,360 Speaker 6: was it. 315 00:15:04,400 --> 00:15:05,880 Speaker 8: Like it was? 316 00:15:06,120 --> 00:15:08,320 Speaker 10: It was I wanted to run the bar, not just 317 00:15:08,400 --> 00:15:10,800 Speaker 10: train the horses, and so there was. And then I 318 00:15:10,840 --> 00:15:14,520 Speaker 10: found I loved my business classes and I loved being 319 00:15:14,720 --> 00:15:17,240 Speaker 10: based in the Midwest, because I do know who SOE. 320 00:15:17,480 --> 00:15:19,200 Speaker 10: Robinson is, and I know who a lot of those 321 00:15:19,240 --> 00:15:21,400 Speaker 10: other companies are there. Are you based in the mid 322 00:15:22,000 --> 00:15:24,000 Speaker 10: based in Minneapolis, based in Minneapolis? 323 00:15:24,040 --> 00:15:24,120 Speaker 11: Yes? 324 00:15:24,360 --> 00:15:26,640 Speaker 4: Nice, Okay, what do we Okay, let's say we want 325 00:15:26,640 --> 00:15:30,000 Speaker 4: to play infrastructure. Let's say some of those great Midwestern industries. 326 00:15:30,760 --> 00:15:32,400 Speaker 3: How are you guys playing it? How are you getting 327 00:15:32,400 --> 00:15:33,120 Speaker 3: exposure here? 328 00:15:33,240 --> 00:15:38,920 Speaker 10: We've got and we've had an important uh specifically called 329 00:15:38,960 --> 00:15:44,240 Speaker 10: out in an ETF and actively managed ETF pave Yeah 330 00:15:44,400 --> 00:15:47,880 Speaker 10: like that, which is and then we actually another iteration 331 00:15:48,160 --> 00:15:51,840 Speaker 10: is another actively managed ETF. The ai Q and X 332 00:15:52,040 --> 00:15:54,240 Speaker 10: is one of the ways we've been doing it. There's 333 00:15:54,280 --> 00:15:56,680 Speaker 10: a lot you can own the ETF, you can own 334 00:15:56,680 --> 00:15:59,600 Speaker 10: the individual securities. We do have a lot of clients 335 00:15:59,600 --> 00:16:02,280 Speaker 10: that own it individual securities. Lots of ways to play it. 336 00:16:02,680 --> 00:16:05,280 Speaker 10: There's also the structure around it. One of the other 337 00:16:05,760 --> 00:16:08,560 Speaker 10: things we're focusing on from a global standpoint is trying 338 00:16:08,600 --> 00:16:11,000 Speaker 10: to get to even a neutral weight in Japan when 339 00:16:11,000 --> 00:16:13,360 Speaker 10: most of the world is underweight, because when you look 340 00:16:13,360 --> 00:16:16,880 Speaker 10: at the Japanese indexes, they're much more technology heavy than 341 00:16:16,960 --> 00:16:21,560 Speaker 10: the European the other developed markets which are more industrial 342 00:16:21,000 --> 00:16:24,760 Speaker 10: or utility or old schools. So there's lots of different 343 00:16:24,760 --> 00:16:27,680 Speaker 10: ways to play it, both individually as well as just 344 00:16:27,760 --> 00:16:30,560 Speaker 10: leaning into those those sectors. 345 00:16:30,200 --> 00:16:31,040 Speaker 8: And so paved. 346 00:16:31,440 --> 00:16:34,800 Speaker 6: If you look on your Bloomberg terminal, it is Eaten, 347 00:16:35,000 --> 00:16:44,280 Speaker 6: it is parkerhannafin Rentals Emerson. I love these guys. 348 00:16:41,520 --> 00:16:43,880 Speaker 10: Well, and when we were looking for a way to 349 00:16:43,960 --> 00:16:46,840 Speaker 10: play it, we specifically searched out who are the ones 350 00:16:46,880 --> 00:16:49,560 Speaker 10: that are going to be based on that rebuilding in 351 00:16:49,560 --> 00:16:52,880 Speaker 10: the United States, And it's interesting. One of the it 352 00:16:53,080 --> 00:16:56,680 Speaker 10: was watching h Robinson's Earnings actually where I first learned 353 00:16:56,720 --> 00:16:59,920 Speaker 10: that Mexico is our biggest trading partner before the news 354 00:17:00,200 --> 00:17:02,760 Speaker 10: was announcing it, because they were putting five hundred million 355 00:17:02,800 --> 00:17:05,359 Speaker 10: dollar facility on this side of the border in Texas 356 00:17:05,760 --> 00:17:07,919 Speaker 10: to help move that stuff. 357 00:17:08,359 --> 00:17:10,600 Speaker 6: Something we have heard though in a lot of these 358 00:17:10,640 --> 00:17:14,280 Speaker 6: conference calls. Is that there's no doubt a structural shift 359 00:17:14,359 --> 00:17:17,240 Speaker 6: underway for these industrial guys as they take advantage of 360 00:17:17,240 --> 00:17:21,320 Speaker 6: the Chips Act and the Infrastructure Act and in etc. 361 00:17:22,200 --> 00:17:25,040 Speaker 6: But it's still a cyclical industry and so a lot 362 00:17:25,119 --> 00:17:28,320 Speaker 6: of these companies wind up having say a strong backlog, 363 00:17:28,400 --> 00:17:30,560 Speaker 6: but they're not like booking the orders right away, like 364 00:17:30,560 --> 00:17:32,359 Speaker 6: they're not making the kind of money now that we 365 00:17:32,400 --> 00:17:35,399 Speaker 6: thought they necessarily would. How do you think about. 366 00:17:35,119 --> 00:17:38,000 Speaker 10: That, Well, I think it's important to you get that 367 00:17:38,040 --> 00:17:40,840 Speaker 10: same sort of push and pull in the artificial intelligence 368 00:17:41,240 --> 00:17:43,400 Speaker 10: because on the one hand, three years from now, we're 369 00:17:43,400 --> 00:17:46,639 Speaker 10: going to be really happy that these big, deep pocketed 370 00:17:46,720 --> 00:17:50,080 Speaker 10: companies are spending on infrastructure. But in the last earnings 371 00:17:50,160 --> 00:17:53,240 Speaker 10: round we nailed some of them because they're spending on infrastructure. 372 00:17:53,280 --> 00:17:56,879 Speaker 10: To put that in, so it is the advantage we 373 00:17:56,920 --> 00:17:59,879 Speaker 10: have is that we're investing very long term money, and 374 00:18:00,640 --> 00:18:03,560 Speaker 10: so part of it is managing the expectations in the 375 00:18:03,600 --> 00:18:06,520 Speaker 10: short run with clients that you know, here's what we're 376 00:18:06,560 --> 00:18:09,040 Speaker 10: building for the long run. We know it might be 377 00:18:09,119 --> 00:18:12,200 Speaker 10: ballatle on the short run, and so will dollar cost 378 00:18:12,240 --> 00:18:14,959 Speaker 10: average into some of these positions take advantage if they 379 00:18:14,960 --> 00:18:18,280 Speaker 10: blow up on an earnings report or something like that, 380 00:18:18,400 --> 00:18:22,960 Speaker 10: But it really is you have to stay out of 381 00:18:22,960 --> 00:18:25,399 Speaker 10: the day to day frenzy, if you will, and focus. 382 00:18:25,440 --> 00:18:27,960 Speaker 4: So at BIMO Family Office for those who don't know, 383 00:18:28,000 --> 00:18:31,320 Speaker 4: Bemo's Bank of Montreal. So I'm guessing by the name 384 00:18:31,359 --> 00:18:33,520 Speaker 4: you have a lot of Canadian clients. 385 00:18:33,640 --> 00:18:38,199 Speaker 10: We actually we're the US of the Family Office and 386 00:18:38,280 --> 00:18:43,160 Speaker 10: it was BIMO in the US has had Harris Bank 387 00:18:43,200 --> 00:18:45,480 Speaker 10: from Chicago, so there's a lot of team mentioned. 388 00:18:46,160 --> 00:18:48,920 Speaker 4: Is there a difference between risk tolerance for a Canadian 389 00:18:48,960 --> 00:18:50,399 Speaker 4: investor versus a US vestor? 390 00:18:50,440 --> 00:18:53,879 Speaker 3: Do you look at them differently? Stock spawns, alternatives, that 391 00:18:53,920 --> 00:18:54,280 Speaker 3: kind of thing. 392 00:18:54,520 --> 00:18:59,360 Speaker 10: Interesting question. Canada tends to be very resource based, as 393 00:18:59,400 --> 00:19:03,280 Speaker 10: you can, and so there's a lot of emphasis there. 394 00:19:03,680 --> 00:19:08,240 Speaker 10: There is a difference to in the individual space somewhat, 395 00:19:08,280 --> 00:19:12,000 Speaker 10: but you know, it's no different than any couple that 396 00:19:12,080 --> 00:19:14,120 Speaker 10: sits down across from US. There might be different risk 397 00:19:14,160 --> 00:19:16,480 Speaker 10: tolerance there where one wants to be a longer term 398 00:19:16,520 --> 00:19:20,440 Speaker 10: investor and one wants to trade on the lightest. Would 399 00:19:20,440 --> 00:19:26,080 Speaker 10: you like energy looking for a friend? Yeah, Energy is 400 00:19:26,480 --> 00:19:29,359 Speaker 10: definitely an interesting play and there's some of the you know, 401 00:19:29,359 --> 00:19:34,640 Speaker 10: we've got really good energy and commodity analysis, where we've 402 00:19:34,680 --> 00:19:36,879 Speaker 10: been having a lot of conversation for copper for a 403 00:19:37,000 --> 00:19:40,200 Speaker 10: very long time about overcapacity under capacity. And it's hard 404 00:19:40,240 --> 00:19:43,840 Speaker 10: because to your point earlier, they are cyclical industries. There's 405 00:19:43,880 --> 00:19:49,600 Speaker 10: going to be those cyclical flows. But having cyclical operations 406 00:19:49,680 --> 00:19:53,160 Speaker 10: inside a secular trend is more positive if that secular 407 00:19:53,200 --> 00:19:56,080 Speaker 10: trend is bringing everybody up. So the backlogs are building. 408 00:19:56,840 --> 00:20:00,720 Speaker 10: Energy is tough because it's politically charged for a lot 409 00:20:00,720 --> 00:20:03,760 Speaker 10: of Where do they invest, do they get back to shareholders? 410 00:20:03,800 --> 00:20:07,679 Speaker 10: How do they participate in the transition of the grid. 411 00:20:07,880 --> 00:20:09,479 Speaker 3: So how about healthcare? 412 00:20:09,520 --> 00:20:11,359 Speaker 4: I see that in your notes here you kind of 413 00:20:11,400 --> 00:20:14,879 Speaker 4: highlight biotechnology, and I always said, well, biotechnology, that's a 414 00:20:14,880 --> 00:20:17,720 Speaker 4: tough place because it feels like it's binary. It either 415 00:20:18,000 --> 00:20:20,200 Speaker 4: passes in the stock goes ripping, or it doesn't pass 416 00:20:20,200 --> 00:20:21,000 Speaker 4: and it goes to zero. 417 00:20:21,359 --> 00:20:23,000 Speaker 3: How do you guys get exposure there? 418 00:20:23,160 --> 00:20:29,680 Speaker 10: Well, I think over arkingly, biotechnology is interesting as are 419 00:20:30,240 --> 00:20:34,160 Speaker 10: for the artificial intelligence implications that you've got in drug 420 00:20:34,200 --> 00:20:38,480 Speaker 10: delivery and drug discovery and med tech discovery and things 421 00:20:38,520 --> 00:20:42,840 Speaker 10: like that. There are again, actively managed or passively managed 422 00:20:42,880 --> 00:20:46,120 Speaker 10: ETFs or ways to play it. We don't necessarily call 423 00:20:46,160 --> 00:20:49,000 Speaker 10: it out as a secular theme in our portfolios, but 424 00:20:49,119 --> 00:20:52,439 Speaker 10: healthcare in general, especially when you start thinking about the 425 00:20:52,440 --> 00:20:54,879 Speaker 10: long term implications and the second and third knock on 426 00:20:54,960 --> 00:21:00,119 Speaker 10: effects of the GLP one drugs in terms of do 427 00:21:00,160 --> 00:21:02,680 Speaker 10: we need less diabetes drugs? Do we need fewer knat 428 00:21:02,760 --> 00:21:07,119 Speaker 10: and plant replacements and surgery there as we move forward? 429 00:21:07,240 --> 00:21:10,520 Speaker 10: So it's really fun to think about those long term trends. 430 00:21:10,560 --> 00:21:12,720 Speaker 6: Really, yeah, that's it's great. It's like that you get 431 00:21:12,760 --> 00:21:14,919 Speaker 6: the opportunity to think of all the derivatives that are 432 00:21:14,920 --> 00:21:16,439 Speaker 6: going to come after, which is really really. 433 00:21:16,320 --> 00:21:19,960 Speaker 5: Great, most importantly English or Western saddle Western? 434 00:21:20,280 --> 00:21:22,600 Speaker 8: Okay, what's the is there a dividing line. 435 00:21:22,440 --> 00:21:25,800 Speaker 10: Between There actually is four seats. There's hunt seat, saddle 436 00:21:25,840 --> 00:21:28,520 Speaker 10: seat Western, and then dressage. 437 00:21:28,840 --> 00:21:30,720 Speaker 1: Okay, so is one of. 438 00:21:30,720 --> 00:21:35,359 Speaker 6: Them running backwards? Katie, Katie Grifell. They could you a 439 00:21:35,359 --> 00:21:41,000 Speaker 6: whole equestrian podcasts. I've been on the horse like a 440 00:21:41,000 --> 00:21:43,719 Speaker 6: couple of times. All I got, Carol, it was so 441 00:21:43,760 --> 00:21:45,480 Speaker 6: great to see you. Thank you so much to come back. 442 00:21:45,520 --> 00:21:48,520 Speaker 6: Really wonderful talking to your life a chief investment officer 443 00:21:48,640 --> 00:21:51,320 Speaker 6: over at BEMO Family Office. 444 00:21:51,800 --> 00:21:55,680 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 445 00:21:55,760 --> 00:21:58,680 Speaker 1: weekdays at ten am Eastern on Apple car Play and 446 00:21:59,080 --> 00:22:02,040 Speaker 1: Right OUTO with Them Business Act. You can also listen 447 00:22:02,200 --> 00:22:05,280 Speaker 1: live on Amazon Alexa from our flagship New York station, 448 00:22:05,680 --> 00:22:08,440 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 449 00:22:09,560 --> 00:22:13,000 Speaker 6: I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 450 00:22:13,240 --> 00:22:15,000 Speaker 6: We bring you all the news you need to know 451 00:22:15,040 --> 00:22:17,360 Speaker 6: with great insight from a Bloomberg Intelligence team that cover 452 00:22:17,359 --> 00:22:20,960 Speaker 6: about two thousand companies and one hundred and thirty industries worldwide. 453 00:22:21,040 --> 00:22:24,080 Speaker 6: We also do something really special on Bloomberg called the 454 00:22:24,080 --> 00:22:27,359 Speaker 6: Big Take, and sort of daily we put out something 455 00:22:27,400 --> 00:22:31,359 Speaker 6: that's really in depth, also very timely, with great reporting. 456 00:22:31,640 --> 00:22:34,919 Speaker 6: And this Big Take also coincides with the lead in 457 00:22:34,960 --> 00:22:38,639 Speaker 6: Bloomberg BusinessWeek, and it has to do with Intel committing 458 00:22:38,720 --> 00:22:42,200 Speaker 6: some serious money into building a factory in Ohio. Joining 459 00:22:42,280 --> 00:22:46,000 Speaker 6: us now is Max Chafkin. He's a senior reporter for 460 00:22:46,040 --> 00:22:48,359 Speaker 6: Bloomberg BusinessWeek, and he co authored this piece with Ian 461 00:22:48,440 --> 00:22:51,040 Speaker 6: King on Intel committing all of this money in Ohio. 462 00:22:51,160 --> 00:22:52,840 Speaker 6: And you can read all of this at Bloomberg and 463 00:22:52,840 --> 00:22:56,080 Speaker 6: on Bloomberg dot com slash Big Take. All Right, Max, 464 00:22:56,160 --> 00:22:59,199 Speaker 6: what walk us through the piece, what it's about and 465 00:22:59,240 --> 00:22:59,879 Speaker 6: what you learned. 466 00:23:00,040 --> 00:23:00,320 Speaker 8: All right. 467 00:23:00,400 --> 00:23:03,560 Speaker 11: So, Intel, you know, at one time was one of 468 00:23:03,600 --> 00:23:06,399 Speaker 11: the world's largest companies. It is essentially the one of 469 00:23:06,440 --> 00:23:09,480 Speaker 11: the founding parts of Silicon Valley. 470 00:23:09,480 --> 00:23:11,560 Speaker 8: It's the reason it's called Silicon Valley in fact. 471 00:23:12,160 --> 00:23:16,000 Speaker 11: But over the last decade, Intel has really suffered, you know, 472 00:23:16,040 --> 00:23:20,320 Speaker 11: they've they've sort of fallen behind both the big chip 473 00:23:20,320 --> 00:23:23,320 Speaker 11: makers in the US, Nvidia, a MD, and they've fallen 474 00:23:23,720 --> 00:23:28,400 Speaker 11: way behind on manufacturing, behind TSMC and Samsung. And that's 475 00:23:28,440 --> 00:23:32,600 Speaker 11: a big problem for Intel, this you know, large important 476 00:23:32,640 --> 00:23:34,240 Speaker 11: American company, but of course it is also a problem 477 00:23:34,280 --> 00:23:37,320 Speaker 11: for the United States because Intel at this point is 478 00:23:37,359 --> 00:23:39,680 Speaker 11: the only company making state of the art ships or 479 00:23:39,680 --> 00:23:41,560 Speaker 11: even trying to make state of the arch ships in 480 00:23:41,600 --> 00:23:45,000 Speaker 11: the US. And over the last few years they've pursued 481 00:23:45,080 --> 00:23:50,040 Speaker 11: basically a turnaround, and that turnaround is betting entirely on manufacturing. 482 00:23:50,240 --> 00:23:51,800 Speaker 8: You mentioned the project in Ohio. 483 00:23:52,640 --> 00:23:55,399 Speaker 11: President Bien has talked about that a fair number of times, 484 00:23:56,240 --> 00:23:58,119 Speaker 11: including bringing it up in the State of the Union address. 485 00:23:58,119 --> 00:24:00,400 Speaker 8: They're also major, you. 486 00:24:00,320 --> 00:24:03,880 Speaker 11: Know, tens of billions of dollars projects in Arizona and Oregon. 487 00:24:04,400 --> 00:24:07,679 Speaker 11: And this this these this work is being backed with 488 00:24:07,720 --> 00:24:10,000 Speaker 11: a lot of money from Washington, uh nineteen point five 489 00:24:10,040 --> 00:24:13,280 Speaker 11: billion in grants and loans from the Biden administration. So 490 00:24:13,320 --> 00:24:16,840 Speaker 11: it's this big, ambitious attempt to turn around, you know, 491 00:24:17,040 --> 00:24:19,240 Speaker 11: a really important company that's fallen on some hard times. 492 00:24:19,400 --> 00:24:23,000 Speaker 11: It's also a big part of the White House's geopolitical strategy. 493 00:24:23,800 --> 00:24:27,120 Speaker 4: They're gonna build a megafab. What is a megafab? And 494 00:24:27,160 --> 00:24:29,679 Speaker 4: can they actually is there? Are they gonna get it 495 00:24:29,680 --> 00:24:31,040 Speaker 4: done here? Because this is big numbers. 496 00:24:31,359 --> 00:24:34,359 Speaker 11: Uh yeah, So the Intel's put twenty eight billion into 497 00:24:34,400 --> 00:24:36,040 Speaker 11: this Ohio. 498 00:24:35,640 --> 00:24:36,200 Speaker 8: Site so far. 499 00:24:36,440 --> 00:24:40,000 Speaker 11: The site is it's about forty five minutes north of Columbus. 500 00:24:40,160 --> 00:24:42,480 Speaker 8: You know, it's in a bunch of farmland. It's really muddy. 501 00:24:42,520 --> 00:24:44,919 Speaker 11: You go there now and what you really see is 502 00:24:44,960 --> 00:24:48,639 Speaker 11: just a ton of construction. What this The idea of 503 00:24:48,640 --> 00:24:52,840 Speaker 11: a megafab would be to have multiple chip factories, each 504 00:24:52,880 --> 00:24:55,040 Speaker 11: one of these things. You know, you're talking on the 505 00:24:55,200 --> 00:24:58,080 Speaker 11: order of ten billion dollars. They're gonna build two to start, 506 00:24:58,960 --> 00:25:01,439 Speaker 11: and it sounds like a crazy amount of money, but 507 00:25:01,520 --> 00:25:03,320 Speaker 11: at this point, that is what you need if you 508 00:25:03,359 --> 00:25:05,680 Speaker 11: want to be able to compete to make chips, say 509 00:25:05,720 --> 00:25:09,159 Speaker 11: for the iPhone or for AI chips, you know, to 510 00:25:09,480 --> 00:25:12,200 Speaker 11: try to compete with Nvidia, which Intel you know, really 511 00:25:12,240 --> 00:25:15,159 Speaker 11: desperately would like to do, but it just isn't quite 512 00:25:15,160 --> 00:25:15,600 Speaker 11: there yet. 513 00:25:15,600 --> 00:25:17,399 Speaker 8: On the manufacturing side yet. 514 00:25:17,600 --> 00:25:20,040 Speaker 6: We have heard though of a lot of companies announcing 515 00:25:20,119 --> 00:25:22,960 Speaker 6: projects and manufacturing facilities that don't get done, or the 516 00:25:23,000 --> 00:25:25,240 Speaker 6: timeline's pushed out, or it gets paired back. 517 00:25:25,960 --> 00:25:28,720 Speaker 11: Where's inteling, Yeah, yeah, we saw this of course during 518 00:25:28,720 --> 00:25:30,840 Speaker 11: the Trump administration. You know, there has been like a 519 00:25:30,960 --> 00:25:34,360 Speaker 11: political shift over the last i'd say decade where there's 520 00:25:34,359 --> 00:25:37,919 Speaker 11: a lot more enthusiasm both from Republicans and Democrats for 521 00:25:38,040 --> 00:25:40,480 Speaker 11: sort of state backed industrial projects. 522 00:25:40,880 --> 00:25:42,040 Speaker 8: Not all those have gone great. 523 00:25:42,200 --> 00:25:44,199 Speaker 11: You know, I mentioned this story that one of the 524 00:25:44,240 --> 00:25:47,840 Speaker 11: sites that Intel was looking at was this Wisconsin sight 525 00:25:47,880 --> 00:25:50,960 Speaker 11: outside of Racine. People will remember that because Donald Trump 526 00:25:50,960 --> 00:25:53,760 Speaker 11: called it the eighth Wonder of the World these eight 527 00:25:53,880 --> 00:25:56,560 Speaker 11: or nine years ago talking about fox Con. You know, 528 00:25:56,600 --> 00:25:59,040 Speaker 11: fox Hunt opened there, but it hasn't proven to be 529 00:25:59,119 --> 00:26:01,320 Speaker 11: the job creator they on and there's there's a. 530 00:26:01,359 --> 00:26:02,720 Speaker 8: Risk with this project as well. 531 00:26:02,920 --> 00:26:07,600 Speaker 11: I will say these semiconductor factories, they are like some 532 00:26:07,720 --> 00:26:10,359 Speaker 11: of the biggest and most ambitious kinds of factories you 533 00:26:10,400 --> 00:26:13,080 Speaker 11: can build there are already. It's like I said, it's 534 00:26:13,160 --> 00:26:15,280 Speaker 11: it's muddy. There's not a lot going on there right now, 535 00:26:15,520 --> 00:26:20,159 Speaker 11: and there are already, you know, fourteen hundred construction workers 536 00:26:20,200 --> 00:26:23,720 Speaker 11: working on that site today. Long run, they're saying it's 537 00:26:23,760 --> 00:26:26,080 Speaker 11: going to employ something like seven thousand. And you hear that, 538 00:26:26,119 --> 00:26:29,480 Speaker 11: you think, okay, seven thousand construction workers like that. 539 00:26:29,480 --> 00:26:31,720 Speaker 8: That's not as a temporary job, not a full time job. 540 00:26:31,760 --> 00:26:34,760 Speaker 11: But the thing is with these sites, construction could go 541 00:26:34,840 --> 00:26:35,680 Speaker 11: on for decades. 542 00:26:35,720 --> 00:26:37,760 Speaker 8: You know, it's conceivable if. 543 00:26:37,640 --> 00:26:39,720 Speaker 11: They really built this thing out, that many of these 544 00:26:39,720 --> 00:26:43,440 Speaker 11: construction workers could work like their entire career building these things. 545 00:26:43,480 --> 00:26:45,359 Speaker 11: Because the nature of the business is you have to 546 00:26:45,440 --> 00:26:48,760 Speaker 11: keep reinvesting and you have to keep building new fabs. 547 00:26:49,160 --> 00:26:51,760 Speaker 11: And the way that you know, analysts and so on 548 00:26:51,840 --> 00:26:53,880 Speaker 11: are looking at this industry, there's gonna be a lot 549 00:26:53,920 --> 00:26:56,439 Speaker 11: more demand for chips, you know, in the coming decades. 550 00:26:56,480 --> 00:26:58,800 Speaker 4: And avoid reading your story and in king story here, 551 00:27:00,080 --> 00:27:02,760 Speaker 4: you know this is a great example or just certainly 552 00:27:02,760 --> 00:27:06,399 Speaker 4: an expensive example of onshoing the money for Intel in Ohio. 553 00:27:06,440 --> 00:27:09,000 Speaker 4: But then you guys also report twelve billion dollars for 554 00:27:09,200 --> 00:27:13,280 Speaker 4: plant being built in Arizona by Taiwan. Semiconductor six billion 555 00:27:13,280 --> 00:27:15,480 Speaker 4: dollars for one in Texas being built by South Korea 556 00:27:15,560 --> 00:27:18,760 Speaker 4: Samsung Electronics. So the money and is coming into the 557 00:27:18,840 --> 00:27:21,040 Speaker 4: US for to ensure this ship business. 558 00:27:21,119 --> 00:27:21,879 Speaker 8: Yeah, I think this. 559 00:27:21,800 --> 00:27:23,919 Speaker 11: May turn out to be, you know, a thing that 560 00:27:24,040 --> 00:27:26,440 Speaker 11: people are talking about in the next few months as 561 00:27:26,440 --> 00:27:28,719 Speaker 11: we get closer to November. You know, this has been 562 00:27:28,760 --> 00:27:32,360 Speaker 11: a big part of the Biden administration's industrial policy. It 563 00:27:32,440 --> 00:27:34,840 Speaker 11: has components of sort of a jobs program because like 564 00:27:34,880 --> 00:27:37,080 Speaker 11: as I was saying, you know, these are construction sites, 565 00:27:37,119 --> 00:27:40,760 Speaker 11: you know, potential good jobs for people. Even even in 566 00:27:40,800 --> 00:27:43,200 Speaker 11: these plants which are run by robots, the people still 567 00:27:43,240 --> 00:27:46,240 Speaker 11: work there. And the other thing you have is this 568 00:27:46,560 --> 00:27:50,720 Speaker 11: kind of competition with China, and the Biden administration really seeing, 569 00:27:51,080 --> 00:27:55,000 Speaker 11: you know, post COVID, post chips shortage that the United 570 00:27:55,080 --> 00:27:58,240 Speaker 11: States needs to sort of be able to produce at 571 00:27:58,320 --> 00:28:00,760 Speaker 11: least some of its own high end and chips because 572 00:28:00,800 --> 00:28:02,480 Speaker 11: because right now that is not the case. 573 00:28:02,920 --> 00:28:03,160 Speaker 8: Now. 574 00:28:03,240 --> 00:28:06,280 Speaker 11: The interesting thing is that idea, the sort of China 575 00:28:06,280 --> 00:28:10,160 Speaker 11: competition idea has devotees in both parties. You know, in Ohio, 576 00:28:10,200 --> 00:28:13,199 Speaker 11: Ohio is a state dominated by Republicans. The Republicans have 577 00:28:13,200 --> 00:28:16,199 Speaker 11: been touting this as well, however, you know, it's not 578 00:28:16,280 --> 00:28:19,240 Speaker 11: clear if if Biden doesn't win, it's not totally clear 579 00:28:19,400 --> 00:28:22,560 Speaker 11: like how things might change with Trump. But but right 580 00:28:22,600 --> 00:28:25,800 Speaker 11: now it really seems like, you know, the US is 581 00:28:25,920 --> 00:28:29,360 Speaker 11: all in on investing in chip factories. There's even talk 582 00:28:29,400 --> 00:28:31,600 Speaker 11: of a second chip sack, you know, the idea that 583 00:28:31,640 --> 00:28:33,560 Speaker 11: we might even appropriate more money for this stuff. 584 00:28:34,280 --> 00:28:36,439 Speaker 6: Not to talk about energy, but let's talk about energy. 585 00:28:36,600 --> 00:28:39,240 Speaker 6: How are they going to power these this kind of fab? 586 00:28:40,040 --> 00:28:42,520 Speaker 11: Yeah, I mean that is a huge issue, and talking 587 00:28:42,560 --> 00:28:46,040 Speaker 11: to Intel, that is like one of the main issues 588 00:28:46,040 --> 00:28:47,640 Speaker 11: in terms of where where you're going to cite one 589 00:28:47,640 --> 00:28:49,760 Speaker 11: of these things. So when you're talking about building a fab, 590 00:28:49,840 --> 00:28:51,800 Speaker 11: you're talking about essentially you need a lot of space, 591 00:28:52,200 --> 00:28:56,560 Speaker 11: you need energy, and you also need water. Semiconductors use 592 00:28:56,920 --> 00:28:59,840 Speaker 11: tons and tons of water. Now, Intel, what they say 593 00:28:59,920 --> 00:29:03,120 Speaker 11: is they are really mindful of their environmental stuff. They're 594 00:29:03,160 --> 00:29:05,520 Speaker 11: you know, you know, all in on sustainability and so 595 00:29:05,560 --> 00:29:07,760 Speaker 11: on a lot of the stuff that many companies say. 596 00:29:07,840 --> 00:29:09,160 Speaker 8: Although I have to say, they. 597 00:29:09,000 --> 00:29:13,280 Speaker 11: Are already recycling a huge amount of water at these plants, 598 00:29:13,400 --> 00:29:15,800 Speaker 11: and and you know, for this industry to have a future, 599 00:29:15,840 --> 00:29:18,520 Speaker 11: it does have to you know, continue you know improving 600 00:29:18,560 --> 00:29:19,400 Speaker 11: on sustainability. 601 00:29:20,080 --> 00:29:21,680 Speaker 3: Let me just put a plug in for this story. 602 00:29:21,680 --> 00:29:22,680 Speaker 3: I'm reading it right now. 603 00:29:22,880 --> 00:29:24,960 Speaker 4: First of all, great reporting, as always some Max and 604 00:29:25,000 --> 00:29:28,240 Speaker 4: Ian Kig, but great like audio and graphics and stuff 605 00:29:28,240 --> 00:29:28,440 Speaker 4: like that. 606 00:29:28,480 --> 00:29:30,560 Speaker 3: It shows you. The audio shows I feel like a 607 00:29:30,600 --> 00:29:31,959 Speaker 3: shop by a drone or something. 608 00:29:32,080 --> 00:29:36,360 Speaker 4: It shows you how big this facility in Ohio. 609 00:29:36,000 --> 00:29:37,600 Speaker 3: Is going to be. So it's great stuff. 610 00:29:37,680 --> 00:29:41,000 Speaker 4: Check it out on Bloomberg dot com slash Big Take, 611 00:29:41,120 --> 00:29:43,840 Speaker 4: or you can find it on the Bloomberg terminal. Max Chafkin, 612 00:29:44,080 --> 00:29:47,160 Speaker 4: Senior Reporter Bloomberg BusinessWeek, joining us here in a Bloomberg 613 00:29:47,200 --> 00:29:48,200 Speaker 4: Interactive Brooker Studio. 614 00:29:48,320 --> 00:29:49,200 Speaker 3: Great great story. 615 00:29:49,200 --> 00:29:53,080 Speaker 4: He and Ian King wrote on Intel that's twenty eight 616 00:29:53,080 --> 00:29:56,280 Speaker 4: billion to make Ohio or, as Matt Miller would say, 617 00:29:56,360 --> 00:29:59,440 Speaker 4: the great state of Ohio a global chips hub. 618 00:30:01,920 --> 00:30:05,800 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 619 00:30:05,880 --> 00:30:08,920 Speaker 1: weekdays at ten am Eastern on Apple car Play and 620 00:30:08,920 --> 00:30:11,880 Speaker 1: Android Auto with the Bloomberg Business app. You can also 621 00:30:11,920 --> 00:30:15,440 Speaker 1: listen live on Amazon Alexa from our flagship New York station, 622 00:30:15,800 --> 00:30:18,840 Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty. 623 00:30:20,040 --> 00:30:22,760 Speaker 4: In our C Suite segment Today, a really unique story 624 00:30:22,800 --> 00:30:26,800 Speaker 4: the company His name is Zoetis Health Animal Healthcare, and 625 00:30:26,840 --> 00:30:30,080 Speaker 4: we talked about animal healthcare and therapeutics. We're talking in 626 00:30:30,120 --> 00:30:36,280 Speaker 4: companion animals like dogs, cats, and horses, but also livestock, cattle, hogs, 627 00:30:36,320 --> 00:30:37,600 Speaker 4: all that kind of good stuff. You got to get 628 00:30:37,680 --> 00:30:40,280 Speaker 4: medicine to these animals. 629 00:30:39,920 --> 00:30:40,920 Speaker 3: And Zoetis does it. 630 00:30:41,000 --> 00:30:44,200 Speaker 4: Joining us today is Wetney Joseph, chief financial officer of 631 00:30:44,280 --> 00:30:47,560 Speaker 4: Zoetis z ts is the ticker similar to load into 632 00:30:47,560 --> 00:30:50,120 Speaker 4: your Bloomberg terminal. The good news is they're up seven 633 00:30:50,160 --> 00:30:53,560 Speaker 4: percent today on some good earnings. Company's got a market 634 00:30:53,600 --> 00:30:56,760 Speaker 4: kappas seventy seven point five billion dollars, so a significant 635 00:30:56,760 --> 00:30:59,880 Speaker 4: global player in the world of healthcare for animals. 636 00:31:00,200 --> 00:31:01,680 Speaker 3: Ny, thanks so much for joining us here. 637 00:31:02,240 --> 00:31:04,480 Speaker 4: Just give us a little bit greater flavor about what 638 00:31:04,520 --> 00:31:07,280 Speaker 4: you guys do a Zoetis. What's the story and what's 639 00:31:07,360 --> 00:31:09,240 Speaker 4: kind of the growth outlook for you guys. 640 00:31:10,240 --> 00:31:13,120 Speaker 9: Thanks for having me, Paul, great to be with you today. Yes, 641 00:31:13,200 --> 00:31:16,520 Speaker 9: Zoetis is the leading animal health company in the world, 642 00:31:16,640 --> 00:31:19,760 Speaker 9: and we lead our industry and innovation. Have demonstrate and 643 00:31:19,840 --> 00:31:24,520 Speaker 9: ability through our diverse and durable portfolio of products as 644 00:31:24,560 --> 00:31:28,000 Speaker 9: well as our market leading innovation to actually grow faster 645 00:31:28,600 --> 00:31:31,240 Speaker 9: than the market. And as you described, we have a 646 00:31:31,240 --> 00:31:32,840 Speaker 9: part of our business, which is about two thirds of 647 00:31:32,880 --> 00:31:38,480 Speaker 9: our businesses really advancing care for pets, so cats and 648 00:31:38,520 --> 00:31:41,600 Speaker 9: dogs and horses also are comparing animals. And then our 649 00:31:41,640 --> 00:31:46,520 Speaker 9: livestock business is really production animals around the world. And 650 00:31:46,560 --> 00:31:49,840 Speaker 9: we just delivered an outstanding quarter. We grew our top 651 00:31:49,880 --> 00:31:53,440 Speaker 9: line twelve percent operationally and grew justin then income fifteen 652 00:31:53,480 --> 00:31:57,480 Speaker 9: percent operation only on the back of this really resilient 653 00:31:57,520 --> 00:32:00,920 Speaker 9: industry that we operate in and the innovation that we 654 00:32:01,040 --> 00:32:01,400 Speaker 9: lead with. 655 00:32:02,440 --> 00:32:05,320 Speaker 6: Typically people tend to say, hey, you know what, anything 656 00:32:05,320 --> 00:32:07,960 Speaker 6: to do with pets is recession proof, right, because like 657 00:32:08,040 --> 00:32:11,120 Speaker 6: I won't eat, but my pet will. Is that the 658 00:32:11,120 --> 00:32:12,160 Speaker 6: same in your business? 659 00:32:12,200 --> 00:32:12,600 Speaker 10: You laugh? 660 00:32:12,680 --> 00:32:13,520 Speaker 3: But true, I know. 661 00:32:15,040 --> 00:32:18,520 Speaker 9: You know ped owners would agree with you. Actually, we 662 00:32:18,600 --> 00:32:21,000 Speaker 9: actually have survey after survey, and we see it in 663 00:32:21,000 --> 00:32:23,080 Speaker 9: our numbers, in our results as well, but we have 664 00:32:23,120 --> 00:32:26,760 Speaker 9: survey after survey that proves this, and about eighty six 665 00:32:26,840 --> 00:32:29,960 Speaker 9: percent of pet owners in a very broad survey, indicated 666 00:32:30,120 --> 00:32:32,440 Speaker 9: that they would spend whatever it takes if their pet 667 00:32:32,480 --> 00:32:35,680 Speaker 9: needed extensive veterinary care. And we did a market study 668 00:32:35,760 --> 00:32:37,880 Speaker 9: also where we gave a hypothetical to pet owners and 669 00:32:37,920 --> 00:32:40,560 Speaker 9: we said, look, if you had a twenty percent reduction 670 00:32:41,160 --> 00:32:43,000 Speaker 9: in your budget, what would that do to how much 671 00:32:43,000 --> 00:32:45,320 Speaker 9: you spend on your pet health? And the answer is nothing, 672 00:32:45,360 --> 00:32:47,920 Speaker 9: They would not reduce it. So ped owners at large 673 00:32:48,440 --> 00:32:50,360 Speaker 9: see this. And you know, I've been in the industry 674 00:32:50,400 --> 00:32:53,280 Speaker 9: now for about three years and what's been really interesting 675 00:32:53,360 --> 00:32:55,440 Speaker 9: is this is not just a phenomenon in the US 676 00:32:55,560 --> 00:32:58,080 Speaker 9: or in European markets. We see it across emerging markets 677 00:32:58,080 --> 00:32:59,320 Speaker 9: as well, So it's really phenomenal. 678 00:33:00,000 --> 00:33:03,400 Speaker 4: So I'm looking at Wall Street forecasts on the Bloomberg 679 00:33:03,440 --> 00:33:05,760 Speaker 4: terminal here for your company. Look, that's six to seven 680 00:33:05,760 --> 00:33:08,600 Speaker 4: percent revenue growth in each of the next three four years. 681 00:33:08,800 --> 00:33:11,880 Speaker 4: What are the components of the top line revenue growth 682 00:33:11,920 --> 00:33:12,800 Speaker 4: for your company? 683 00:33:13,720 --> 00:33:16,520 Speaker 9: Yeah, Look, we have really multiple sources of growth. We 684 00:33:16,560 --> 00:33:19,840 Speaker 9: have our companion animal portfolio he continues to grow, which 685 00:33:19,840 --> 00:33:22,840 Speaker 9: are innovative products like we do in dermatology. So our 686 00:33:22,880 --> 00:33:27,920 Speaker 9: key DRM franchise is actually one point four billion dollars 687 00:33:27,520 --> 00:33:31,920 Speaker 9: and we essentially really shaped that market over the last decade. 688 00:33:32,160 --> 00:33:35,360 Speaker 9: We have parasiticized which is the biggest segment of the market. 689 00:33:35,720 --> 00:33:38,080 Speaker 9: It's north of six billion dollars in terms of market 690 00:33:38,560 --> 00:33:41,840 Speaker 9: and that segment is really growing for US, and we 691 00:33:41,880 --> 00:33:44,959 Speaker 9: are the market leader in terms of triple combination products 692 00:33:45,000 --> 00:33:48,600 Speaker 9: that tackle flee sticks and heartworm, and we posted growth 693 00:33:48,640 --> 00:33:52,280 Speaker 9: in that segment today, really outstanding growth, including our Trio 694 00:33:52,400 --> 00:33:55,600 Speaker 9: product which was sixty one percent. And so those two 695 00:33:55,640 --> 00:33:58,880 Speaker 9: areas are two billion dollar franchises that we have and 696 00:33:58,920 --> 00:34:02,200 Speaker 9: the third billion dollars for franchise that we are launching. 697 00:34:02,720 --> 00:34:04,960 Speaker 9: We launched actually three years ago in Europe and just 698 00:34:05,040 --> 00:34:08,239 Speaker 9: recently launched in the US is Austria. Threat Is Pain, 699 00:34:08,280 --> 00:34:12,960 Speaker 9: which we believe is a market that is poised for 700 00:34:13,000 --> 00:34:16,160 Speaker 9: our innovation that we've launched, and we believe those products, 701 00:34:16,360 --> 00:34:18,440 Speaker 9: both for cats and dogs, will be north of a 702 00:34:18,480 --> 00:34:21,280 Speaker 9: billion dollars in peak sales for US, which is essentially 703 00:34:21,320 --> 00:34:24,040 Speaker 9: within the first three to five years after launch. And 704 00:34:24,520 --> 00:34:28,960 Speaker 9: in that segment also we saw tremendous growth in this quarter. 705 00:34:29,480 --> 00:34:32,520 Speaker 6: What's competition like, who are your main competitors? 706 00:34:33,520 --> 00:34:36,440 Speaker 9: So our main competitors are other animal health companies. So 707 00:34:36,480 --> 00:34:40,960 Speaker 9: for example, borringeror Engelheim is a private company that has 708 00:34:41,080 --> 00:34:45,280 Speaker 9: human health as well as animal health business. Mirk Animal 709 00:34:45,280 --> 00:34:47,360 Speaker 9: Health is another one that I'm sure all of you 710 00:34:47,400 --> 00:34:50,360 Speaker 9: a very familiar with they have an animal health business 711 00:34:50,360 --> 00:34:53,320 Speaker 9: as well, and then in Lanco is also a publicly 712 00:34:53,360 --> 00:34:59,080 Speaker 9: traded company that has animal health offerings. We are the 713 00:34:59,160 --> 00:35:02,719 Speaker 9: largest among our competitors, and we also lead with innovation 714 00:35:03,560 --> 00:35:05,359 Speaker 9: in terms of the products that we come out with. 715 00:35:05,400 --> 00:35:08,040 Speaker 9: I mentioned dermatology for example. I just mentioned au seria, 716 00:35:08,080 --> 00:35:11,719 Speaker 9: thrise pain. These are areas of significant unmet need that 717 00:35:11,760 --> 00:35:16,040 Speaker 9: we really take our purpose driven colleagues and our capabilities 718 00:35:16,080 --> 00:35:20,760 Speaker 9: around innovation to really look for meaningful innovation that changes 719 00:35:21,239 --> 00:35:23,400 Speaker 9: the standard of care for animals, and we tend to 720 00:35:23,480 --> 00:35:26,160 Speaker 9: lead and be first in market and that tends to 721 00:35:26,239 --> 00:35:28,600 Speaker 9: drive the rest of our industry as well. So those 722 00:35:28,640 --> 00:35:31,080 Speaker 9: are the main competitors that we have, but we're by far, 723 00:35:32,040 --> 00:35:34,720 Speaker 9: you know, the leader in terms of innovation in our space. 724 00:35:34,960 --> 00:35:36,480 Speaker 4: And Alex you'll be happy to know that this is 725 00:35:36,520 --> 00:35:38,880 Speaker 4: another New Jersey success story. 726 00:35:38,920 --> 00:35:41,400 Speaker 3: Parsipony, New Jersey. How about that, Wetney. 727 00:35:41,400 --> 00:35:44,640 Speaker 4: I look at your business, Well, you guys are truly global. 728 00:35:44,960 --> 00:35:48,160 Speaker 4: Forty five about fifty three percent of your revenue comes 729 00:35:48,760 --> 00:35:50,640 Speaker 4: the US and about you know, I don't know, forty 730 00:35:50,640 --> 00:35:54,239 Speaker 4: five forty six percent comes international. Talk to us about 731 00:35:54,280 --> 00:35:57,719 Speaker 4: the growth outlook for the US versus non US. 732 00:35:58,600 --> 00:36:03,160 Speaker 9: So we actually see really great balance growth across our business. 733 00:36:03,200 --> 00:36:05,000 Speaker 9: We are in one hundred countries. So if you look 734 00:36:05,040 --> 00:36:08,480 Speaker 9: at our international segment, for example, it grew eight percent 735 00:36:08,520 --> 00:36:12,919 Speaker 9: operationally in the quarter, while the US led the way, 736 00:36:13,080 --> 00:36:16,520 Speaker 9: particularly with Companion Animal growing globally twenty percent. The US 737 00:36:16,520 --> 00:36:20,040 Speaker 9: grew about sixteen percent on the quarter, but we saw 738 00:36:20,480 --> 00:36:24,680 Speaker 9: eight percent growth in our international segment as well. So 739 00:36:24,760 --> 00:36:27,840 Speaker 9: as we look out, if you look at the market globally, 740 00:36:28,960 --> 00:36:33,880 Speaker 9: we are in Brazil, We're in Australia, We're in China, 741 00:36:34,600 --> 00:36:38,560 Speaker 9: We're of course across Europe, and so very very global 742 00:36:38,600 --> 00:36:41,799 Speaker 9: in nature, and we are introducing our innovation across all 743 00:36:41,840 --> 00:36:44,600 Speaker 9: of those markets, so that tends to drive it. And 744 00:36:45,239 --> 00:36:48,040 Speaker 9: really the US is our largest as you mentioned, fifty 745 00:36:48,120 --> 00:36:50,440 Speaker 9: three percent, tends to be a little bit more Companion 746 00:36:50,440 --> 00:36:53,240 Speaker 9: Animal heavy. So the US is about seventy five percent 747 00:36:53,880 --> 00:36:57,279 Speaker 9: Companion Animal, give or take, whereas Companion Animal globally is 748 00:36:57,280 --> 00:36:59,399 Speaker 9: about two thirds of the company with the other third 749 00:36:59,400 --> 00:37:02,160 Speaker 9: being production animals. Outside the US, it tends to be 750 00:37:02,239 --> 00:37:04,760 Speaker 9: almost balanced. So a little bit, I would say, Companion 751 00:37:04,760 --> 00:37:07,080 Speaker 9: Animal is just slightly over fifty percent, with the recing 752 00:37:07,840 --> 00:37:10,680 Speaker 9: being live stock and we do see growth across our 753 00:37:10,680 --> 00:37:12,640 Speaker 9: emerging markets as well. And we're also in a lot 754 00:37:12,680 --> 00:37:15,480 Speaker 9: of different species, so I talk about companion animal across 755 00:37:15,840 --> 00:37:19,280 Speaker 9: live stock. We are of course in cattle, we're in poultry, 756 00:37:19,320 --> 00:37:23,000 Speaker 9: we're in swine. When aqua also fish, particularly in markets 757 00:37:23,040 --> 00:37:24,959 Speaker 9: like Chile and Norway, et cetera. 758 00:37:25,239 --> 00:37:27,120 Speaker 4: I didn't even think about it. I mean, yeah, great stuff, 759 00:37:27,120 --> 00:37:29,080 Speaker 4: Wetney Joseph, great story. Thanks for taking the time to 760 00:37:29,200 --> 00:37:32,160 Speaker 4: joining us, Wetney Joseph. He's a chief and anfangel officer. 761 00:37:32,520 --> 00:37:36,399 Speaker 4: Zoatist is the name of the company located in Parsippany, 762 00:37:36,680 --> 00:37:37,280 Speaker 4: New Jersey. 763 00:37:37,400 --> 00:37:39,719 Speaker 3: Fascinating story. Seventy five billion dollar market cap. 764 00:37:39,760 --> 00:37:42,040 Speaker 4: I mean it's a huge company, you know, about eight 765 00:37:42,040 --> 00:37:43,560 Speaker 4: and a half billion dollars in revenue. It's one of 766 00:37:43,600 --> 00:37:47,439 Speaker 4: those companies you never heard of until you're like, oh, yeah, 767 00:37:47,600 --> 00:37:49,760 Speaker 4: I mean there's got to be somebody doing this stuff. Yeah, 768 00:37:49,800 --> 00:37:51,680 Speaker 4: you know, and sure enough there is. And it's a 769 00:37:52,040 --> 00:37:53,600 Speaker 4: totally truly a global business. 770 00:37:53,640 --> 00:37:56,480 Speaker 6: Well, especially as we need more protein to feed the 771 00:37:56,480 --> 00:37:58,480 Speaker 6: rest of the world, as the world keeps growing, right, 772 00:37:58,480 --> 00:38:00,719 Speaker 6: and it won't all be like in poss Burgers. You 773 00:38:00,760 --> 00:38:03,040 Speaker 6: actually need the fish, you need the cows. You need 774 00:38:03,080 --> 00:38:05,239 Speaker 6: the pigs, like, how do you keep them healthy? How 775 00:38:05,239 --> 00:38:07,560 Speaker 6: do you advance that? So we're not running on any 776 00:38:07,640 --> 00:38:09,160 Speaker 6: kind of shortage. I thought it was very interesting. 777 00:38:09,160 --> 00:38:11,759 Speaker 3: Also, total ecosystem play there pet. 778 00:38:12,280 --> 00:38:12,879 Speaker 6: Do you have a pet? 779 00:38:13,080 --> 00:38:14,399 Speaker 3: No, never had a pet? 780 00:38:14,560 --> 00:38:15,279 Speaker 6: I can see that about that. 781 00:38:15,360 --> 00:38:16,239 Speaker 3: Yeah, I know, I can. 782 00:38:16,280 --> 00:38:17,839 Speaker 6: I tell you you get four kids though, so there's 783 00:38:18,239 --> 00:38:18,920 Speaker 6: off set of down. 784 00:38:19,280 --> 00:38:23,799 Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 785 00:38:24,000 --> 00:38:27,200 Speaker 1: and anywhere else you get your podcasts. Listen live each 786 00:38:27,200 --> 00:38:30,560 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 787 00:38:30,680 --> 00:38:34,120 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 788 00:38:34,200 --> 00:38:37,320 Speaker 1: You can also watch us live every weekday on YouTube 789 00:38:37,440 --> 00:38:39,320 Speaker 1: and always on the Bloomberg terminal