WEBVTT - Microsoft, Nvidia to Invest Up to $15 Billion in Anthropic 0:00:02.759 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence podcast. Catch us live weekdays at ten am. 0:00:14.640 --> 0:00:17.279 He's done on Apple, Cocklay and Android Auto with the 0:00:17.320 --> 0:00:21.080 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.560 or watch us live on YouTube. 0:00:24.400 --> 0:00:26.560 There's a lot of commitments going on out there in 0:00:26.600 --> 0:00:30.720 the technology world, Scarlett Nvidia is committed to investing up 0:00:30.760 --> 0:00:34.360 to ten billion dollars in Entropic. Microsoft is also committed 0:00:34.520 --> 0:00:37.120 to invest up to five billion dollars in Entropic and 0:00:37.240 --> 0:00:40.560 Anthropic for its silent, It's committed to buy thirty billion 0:00:40.600 --> 0:00:42.320 dollars of Azure compute capacity. 0:00:42.280 --> 0:00:44.320 So we just talking about these tens of billions of 0:00:44.360 --> 0:00:45.599 dollars like it's nothing, right. 0:00:45.920 --> 0:00:48.920 I don't get it. It's just the circular stuff we see. 0:00:49.000 --> 0:00:52.480 But people tell me not to worry. Coming up right here, 0:00:52.760 --> 0:00:55.400 the best dressed man on Wall Street, his turbine matches 0:00:55.520 --> 0:00:58.880 is tie every day, no accident. I mean, nice job. 0:00:58.920 --> 0:01:01.640 MANYEP saying he's a senior tech dude. It Bloomberg Intelligence 0:01:01.880 --> 0:01:04.600 and I have a lot of big companies making some 0:01:04.720 --> 0:01:08.720 big commitments in Anthropic. What is nthropic again? 0:01:09.560 --> 0:01:13.840 Well, Nthropic is one of the five frontier lms that 0:01:13.920 --> 0:01:16.720 are remaining I mean, and they are leading the charge 0:01:16.720 --> 0:01:18.959 when it comes to generative AI. So it's one of 0:01:19.000 --> 0:01:24.280 the five. The other one are Google, Open Ai, Meta 0:01:24.520 --> 0:01:29.600 and Xai. And so look, when it comes to these commitments, 0:01:29.680 --> 0:01:33.720 it's pretty obvious that OpenAI has raised the bar by 0:01:33.760 --> 0:01:37.320 announcing they're going to spend one point four trillion. So 0:01:37.360 --> 0:01:40.560 the question is what are the other LLM companies going 0:01:40.600 --> 0:01:44.200 to do? And Entropic is also a pure play LLM, 0:01:44.319 --> 0:01:47.440 and in their case, they don't have the funding, I mean, 0:01:47.480 --> 0:01:50.600 they don't have the balance sheet like Google or Meta have, 0:01:51.360 --> 0:01:53.600 so they have to raise the money either in the 0:01:53.640 --> 0:01:58.000 private markets or from someone like Nvidia, or get into 0:01:58.040 --> 0:02:01.760 an agreement with Microsoft, which also has an agreement with 0:02:01.840 --> 0:02:07.280 open Ai. So that's where you know LM's need compute. 0:02:07.400 --> 0:02:10.600 That's how you serve billion plus users, and that's where 0:02:10.639 --> 0:02:12.920 you know the numbers get bigger and bigger when it 0:02:12.960 --> 0:02:15.560 comes to the tie up with cloud provider. 0:02:15.680 --> 0:02:18.000 This is like the popular click in high school where 0:02:18.000 --> 0:02:20.919 everyone knows each other and everyone's messing around with each other. 0:02:22.960 --> 0:02:24.440 Just give us a little bit of background here on 0:02:24.560 --> 0:02:27.880 Anthropic because My understanding is that it was founded by 0:02:27.919 --> 0:02:30.640 folks who used to work at open ai and some 0:02:30.720 --> 0:02:34.840 of the early investors like big stakeholders include Alphabet and 0:02:34.880 --> 0:02:37.760 include Amazon, and now you've got Microsoft in there. I mean, 0:02:37.800 --> 0:02:40.480 is there anyone who's not part of Anthropic and not 0:02:40.600 --> 0:02:42.840 committed to investing in this company? 0:02:43.560 --> 0:02:47.600 Well, you could say Meta, they're doing things, We're doing 0:02:47.639 --> 0:02:49.440 their own thing. They are doing their own thing in 0:02:49.600 --> 0:02:53.440 terms of you know, using the computer internally, and they 0:02:53.520 --> 0:02:54.680 don't have a cloud business. 0:02:55.040 --> 0:02:57.560 Is that a problem for them that metas out there 0:02:57.600 --> 0:02:58.840 on its own. I know, it doesn't have its own 0:02:58.840 --> 0:03:02.400 cloud business, but it's not buying stakes or committed to 0:03:02.440 --> 0:03:04.720 invest up to five billion or ten billion in any 0:03:04.720 --> 0:03:07.200 of these AI companies. 0:03:07.320 --> 0:03:10.560 I mean, so far, just to go to Meta, it 0:03:10.600 --> 0:03:14.280 feels like, you know, investors were okay with them using 0:03:14.320 --> 0:03:17.520 the GPU compute for their own family of apps. But 0:03:17.639 --> 0:03:20.320 the fact that they're talking about one hundred billion plus 0:03:20.360 --> 0:03:24.760 in capex for next year without having a substantial ROI. 0:03:24.800 --> 0:03:27.320 And what I mean by rois in the case of Microsoft, 0:03:27.760 --> 0:03:30.919 yes they are raising their capex two hundred and twenty billion, 0:03:31.200 --> 0:03:33.800 but they're winning deals like the one with Nthropic thirty 0:03:33.840 --> 0:03:37.960 billion dollar in commitment from Entropic, so somebody is paying 0:03:38.040 --> 0:03:41.040 for that compute. In the case of Microsoft, you don't 0:03:41.080 --> 0:03:44.840 have that with a meta How are you generating ROI 0:03:44.960 --> 0:03:48.080 outside of your family of apps? And over there you 0:03:48.120 --> 0:03:51.800 have to show a really substantial increase in engagement to 0:03:51.880 --> 0:03:54.880 convince investors it's worth hundred billion plus in capex. 0:03:55.560 --> 0:03:59.160 Any of these open ais anthropics are they going to 0:03:59.320 --> 0:04:00.440 ever come public? Do you think? 0:04:01.320 --> 0:04:04.480 I mean, in the case of Entropic, look, I know 0:04:05.080 --> 0:04:08.120 the numbers are getting big, but their gross margins at 0:04:08.120 --> 0:04:11.440 this point are probably better than open ai, which is 0:04:11.480 --> 0:04:13.880 doing too many things. I mean, the biggest risk I 0:04:13.920 --> 0:04:17.240 see for open aiy is they feel they can get 0:04:17.279 --> 0:04:21.279 into any business, whether it's chip business, whether it's you know, 0:04:21.400 --> 0:04:24.800 obviously l M is their turf, any type of applications, 0:04:25.240 --> 0:04:28.039 and that's where there's a possibility of a misstep. You 0:04:28.040 --> 0:04:31.680 can end up wasting time because you just don't have, 0:04:32.360 --> 0:04:35.520 you know, the capability. Yeah, the focus there Entropic is 0:04:35.560 --> 0:04:36.240 more focused. 0:04:36.320 --> 0:04:38.880 Dumb question of the day. Yeah, these US companies, Entropic 0:04:39.040 --> 0:04:43.479 opening are they base? Where are they? Good question? Okay, 0:04:43.520 --> 0:04:45.840 So I'm going to go out there visit my son 0:04:45.880 --> 0:04:49.120 at Santa Clara. They're in the backyard right there. I 0:04:49.480 --> 0:04:51.239 can go knock on the door of Chatch. 0:04:51.320 --> 0:04:55.440 They're not incorporated in Dublin or you know, some some islands. 0:04:56.480 --> 0:05:00.720 Look, it's a nonprofit looking to have a profitable and 0:05:01.200 --> 0:05:03.000 so all that could happen. 0:05:03.080 --> 0:05:04.160 But look at the end of. 0:05:04.080 --> 0:05:08.680 The day, these llms are showing constant improvement, which is 0:05:08.720 --> 0:05:13.400 what's driving you know, companies like Microsoft to partner with Entropic. 0:05:13.760 --> 0:05:16.240 They have that exclusive partnership with Opening Eye, but now 0:05:16.240 --> 0:05:17.320 they are diversifying. 0:05:17.560 --> 0:05:20.640 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:24.279 --> 0:05:27.960 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:05:28.040 --> 0:05:31.159 weekdays at ten am Eastern on Apple, Cocklay and Android 0:05:31.160 --> 0:05:34.440 Auto with the Bloomberg Business app. Listen on demand wherever 0:05:34.520 --> 0:05:37.640 you get your podcasts, or watch us live on YouTube 0:05:38.560 --> 0:05:39.200 home depot. 0:05:39.240 --> 0:05:43.120 They cut their forecast on week remodeling demands off the 0:05:43.200 --> 0:05:44.760 check in with John Tucker to see if that is 0:05:44.800 --> 0:05:47.120 in fact the case, because he is like the do 0:05:47.200 --> 0:05:48.360 it yourself kind of guy. 0:05:48.480 --> 0:05:50.159 Really, what has he done in his house? 0:05:50.560 --> 0:05:53.039 It does everything, and like big jobs that take a 0:05:53.040 --> 0:05:55.240 long time, Like he doesn't ream out in the bathroom 0:05:55.279 --> 0:05:57.760 and he does plumbing, he does all this stuff. Oh, 0:05:58.040 --> 0:06:01.000 hes about lumber that he can't get quality the lumbers 0:06:01.000 --> 0:06:02.520 He's got to go to. He's got a guy. 0:06:02.640 --> 0:06:04.080 Then he's like their model customer. 0:06:04.240 --> 0:06:07.359 Yes, exactly right, he's the guy. So let's check in 0:06:07.400 --> 0:06:09.479 with that Drew reading. He covers all the homebuilders, he 0:06:09.520 --> 0:06:12.640 covers all the stores that cater to the homebowners, like 0:06:12.720 --> 0:06:15.240 home depot. Drew, thanks so much for joining us here. 0:06:15.240 --> 0:06:18.080 What did the home depots say about their customers? 0:06:19.400 --> 0:06:22.000 So they came in with the same store sales growth 0:06:22.040 --> 0:06:25.760 of about zero point two percent, which misconsensus this quarter. 0:06:25.839 --> 0:06:29.120 That was largely due to whether last year they had 0:06:29.160 --> 0:06:32.839 pretty significant gains from storms. This year that wasn't replicated, 0:06:33.320 --> 0:06:35.880 so that had about an eighty basis point impact on 0:06:35.920 --> 0:06:39.000 the comp And that's important because if you back that out, 0:06:39.040 --> 0:06:42.560 the underlying business has been relatively stable with about a 0:06:42.640 --> 0:06:47.560 one percent comp you know, so underlying trends still pretty stable. 0:06:47.640 --> 0:06:50.880 I think the bigger problem is that last quarter they 0:06:50.880 --> 0:06:53.400 said that they had expected to see an acceleration in 0:06:53.480 --> 0:06:56.960 demand in the second half, and that hasn't materialized. We 0:06:57.040 --> 0:06:59.600 have gotten the pullback in rates, but that hasn't translated 0:06:59.600 --> 0:07:00.960 into housing activity. 0:07:01.960 --> 0:07:05.920 Yeah, and the problem there is that customers are deferring 0:07:05.960 --> 0:07:09.159 their large purchases. Demand has remained steady, but it's definitely 0:07:09.200 --> 0:07:11.800 not picking up at the same time. So when people 0:07:11.840 --> 0:07:14.680 are undertaking some kind of home renovation projects, they're just 0:07:14.680 --> 0:07:17.480 doing it at a smaller scale. Does home depot still 0:07:17.520 --> 0:07:19.800 benefit from those customers. 0:07:21.200 --> 0:07:23.760 Sure, and that's what's driving a lot of the demand 0:07:23.760 --> 0:07:28.160 for the home improvement retailers. It's smaller ticket projects, you know, 0:07:28.360 --> 0:07:31.400 maintenance oriented type stuff, which is a huge part of 0:07:31.400 --> 0:07:34.120 their business. But to your point, to really see I 0:07:34.120 --> 0:07:36.240 guess the turn and growth, what you want to see 0:07:36.280 --> 0:07:40.040 as a resurgence in those big ticket categories. Now, big 0:07:40.040 --> 0:07:42.880 ticket spending was up two point three percent in the quarter, 0:07:42.960 --> 0:07:46.680 but that's morally more reflective of single item purchases to 0:07:46.760 --> 0:07:52.400 think about things like appliances, power tools, gypsum. They also 0:07:52.440 --> 0:07:56.280 are taking share in the larger pro market, which is 0:07:56.320 --> 0:07:58.200 aiding the mix a little bit, but it really doesn't 0:07:58.240 --> 0:08:01.520 reflect an increase as you mentioned, in big ticket projects 0:08:01.520 --> 0:08:04.520 such as kitchen and bath three models or flooring projects. 0:08:04.560 --> 0:08:06.480 And that's really what we want to see turn and 0:08:06.920 --> 0:08:09.280 will likely drive the next leg of growth next year. 0:08:09.600 --> 0:08:12.120 So I ask about that big ticket items versus smaller 0:08:12.120 --> 0:08:15.200 projects because I wonder what this means for competitor Lows. 0:08:15.680 --> 0:08:17.720 Low's shares are down today, but only by about one 0:08:17.760 --> 0:08:21.520 point three percent versus Home Depots four percent, and I 0:08:21.680 --> 0:08:24.960 wonder how much you can extrapolate from Home Depot to Lows, 0:08:24.960 --> 0:08:28.200 which will be reporting on the nineteenth before the market open, 0:08:28.200 --> 0:08:29.119 so that is tomorrow morning. 0:08:30.800 --> 0:08:34.160 Yeah, so for loaws, we're expecting to hear pretty similar 0:08:34.200 --> 0:08:37.760 commentary that we heard from Home Depot today. They're operating 0:08:37.920 --> 0:08:41.400 in the same environment with a weak housing backdrop, more 0:08:41.440 --> 0:08:44.960 cautious consumers. The main difference between the two businesses would 0:08:45.000 --> 0:08:49.000 be Home depots greater exposure to the professional contractor, which 0:08:49.040 --> 0:08:51.400 is fifty percent or more of sales compared to Lows 0:08:51.440 --> 0:08:54.680 at about thirty percent. So we have seen on a 0:08:54.720 --> 0:09:00.520 relative basis more weakness among the DIY category with particular 0:09:00.760 --> 0:09:03.680 strength and pros. Really that would be the only difference. 0:09:03.720 --> 0:09:06.320 But I think by and large, the sentiment is going 0:09:06.360 --> 0:09:09.920 to be that consumers are taking on more caution because 0:09:09.920 --> 0:09:12.640 they're increasingly worried about the outlook for the economy, the 0:09:12.640 --> 0:09:15.320 outlook for their job, and that's causing them to defer 0:09:15.760 --> 0:09:17.559 spending on discretionary categories. 0:09:18.040 --> 0:09:20.280 How about tariffs. What are the companies saying about tariffs 0:09:20.320 --> 0:09:23.960 at Low's and Home Depot like tariffs on wood hammers. 0:09:24.040 --> 0:09:24.960 I guess I don't know. 0:09:26.360 --> 0:09:28.679 Sure, so not a whole lot of discussion this quarter. 0:09:28.760 --> 0:09:31.280 I think, you know, given home Depot and low scale, 0:09:31.320 --> 0:09:33.760 I think they're relatively well positioned to kind of navigate 0:09:33.800 --> 0:09:37.000 this environment with their suppliers. That being said, they're certainly 0:09:37.040 --> 0:09:40.520 not entirely immune. They kind of shifted their stance on 0:09:40.559 --> 0:09:42.839 their pricing strategy. Earlier in the year, they said that 0:09:42.880 --> 0:09:45.560 they wouldn't be raising prices, but as a situation in 0:09:45.600 --> 0:09:48.520 the landscape continue to evolve, they said they would be 0:09:48.640 --> 0:09:52.079 raising prices selectively. We did see that, I think a 0:09:52.080 --> 0:09:55.280 little bit in the average ticket this quarter, the growth 0:09:55.280 --> 0:09:58.120 in that, but we don't really know at this point 0:09:58.200 --> 0:10:00.440 what the demand impact has been. There was a lot 0:10:00.440 --> 0:10:02.439 of noise in the quarter, as I mentioned, with the weather, 0:10:02.559 --> 0:10:06.120 so arish will certainly be something to watch, particularly since 0:10:06.160 --> 0:10:10.120 we just heard some new terraffs being introduced on lumber 0:10:10.280 --> 0:10:14.160 imports and as well as kitchen and bath cabinets, which 0:10:14.280 --> 0:10:17.240 increase significantly as we get into next year, so not 0:10:17.320 --> 0:10:19.400 a huge impact to this point, but certainly something to 0:10:19.440 --> 0:10:20.000 keep an eye on. 0:10:20.280 --> 0:10:24.400 Okay, definitely, I'm curious how much does Home Depot and 0:10:24.480 --> 0:10:27.079 Low's mirror what's happening in the housing market, because when 0:10:27.080 --> 0:10:30.240 it comes to housing, of course, the affordability crisis is 0:10:30.400 --> 0:10:33.600 you know, the big thing that's keeping it frozen. Mortgage 0:10:33.679 --> 0:10:36.840 rates have come down, but they're still really elevated compared 0:10:36.880 --> 0:10:40.280 to where they were during the pandemic. Inflation is capping 0:10:40.320 --> 0:10:44.640 spending on big projects, and overall home prices remain really 0:10:44.640 --> 0:10:47.760 really high, so people just can't move and they're stuck 0:10:47.800 --> 0:10:51.520 in place, and they don't necessarily want to spend more 0:10:51.559 --> 0:10:52.360 than they can afford. 0:10:54.120 --> 0:10:56.880 No, it's a great point, and housing is extremely important 0:10:56.920 --> 0:11:00.600 to Home depot and Lows as you would expect, you know, housing, 0:11:00.760 --> 0:11:03.160 the housing market has been stagnant. We're running about a 0:11:03.160 --> 0:11:06.880 four million annuallyzed sales pace that's about twenty five percent 0:11:07.040 --> 0:11:10.360 below normalized levels. We know that when people list a 0:11:10.400 --> 0:11:12.719 home for sale or when they purchase new home, there 0:11:12.760 --> 0:11:15.679 tends to be increased spending. Movers tend to spend a 0:11:15.720 --> 0:11:18.000 lot more than people who are already in their house, 0:11:18.400 --> 0:11:20.640 so they're certainly losing that piece of the business. I 0:11:20.640 --> 0:11:23.360 think one of the interesting things to keep an eye 0:11:23.400 --> 0:11:27.360 on looking forward is home prices. Home deep on Lows 0:11:27.360 --> 0:11:30.240 have historically told us that that's probably the most important 0:11:30.280 --> 0:11:33.200 aspect of the housing market to them, and you know, 0:11:33.520 --> 0:11:35.800 as we well know, since twenty twenty, home prices are 0:11:35.880 --> 0:11:38.960 up fifty percent or more depending on the market, so 0:11:39.000 --> 0:11:41.040 owners have up a lot of equity. But what we're 0:11:41.040 --> 0:11:43.280 starting to see now is prices rise at a much 0:11:43.320 --> 0:11:46.000 slower pace, and in a lot of key housing markets 0:11:46.000 --> 0:11:48.520 across the country, we're actually seeing year over year declines 0:11:48.559 --> 0:11:51.000 in home prices. So when you start to get declining 0:11:51.040 --> 0:11:53.480 home prices, that hits at that confidence aspect. If you 0:11:53.520 --> 0:11:56.200 think the value of your property is falling, you're less 0:11:56.200 --> 0:12:00.280 inclined to invest. So it's something they called out. It's 0:12:00.320 --> 0:12:02.800 not necessarily something we've seen at the national level, but 0:12:02.840 --> 0:12:04.880 if you look at particular markets around the country, it's 0:12:04.880 --> 0:12:05.959 something that's starting to happen. 0:12:06.640 --> 0:12:09.800 Stay with us more from Bloomberg Intelligence coming up after this. 0:12:13.720 --> 0:12:17.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:17.480 --> 0:12:20.880 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:20.960 --> 0:12:24.040 with the Bloomberg Business App. Listen on demand wherever you 0:12:24.080 --> 0:12:27.080 get your podcasts, or watch us live on YouTube. 0:12:27.800 --> 0:12:30.280 Way way back in the day at the Chase Manhattan 0:12:30.320 --> 0:12:35.320 Bank credit training program exhausted program. At the end of it, 0:12:35.360 --> 0:12:37.640 you had to do like a big project, pick a company, 0:12:37.640 --> 0:12:39.800 and do like a detailed credit report on it. My 0:12:39.920 --> 0:12:42.360 company was Medtronic. 0:12:42.080 --> 0:12:44.559 The device maker, the medical device maker, exactly right. 0:12:45.640 --> 0:12:47.320 So I knocked him dead. By the way, it was 0:12:47.480 --> 0:12:47.920 just a killer. 0:12:49.080 --> 0:12:49.520 AnyWho. 0:12:49.559 --> 0:12:52.040 It stocks up four percent today, some good numbs, fifty 0:12:52.080 --> 0:12:55.240 two week high. It's good to be in the medical 0:12:55.280 --> 0:12:58.160 device business. I guess. I don't know, so we'll check 0:12:58.200 --> 0:13:01.880 it out. Matt Hendrickson Hendrickson joints us here, senior medtech analyst. 0:13:02.640 --> 0:13:06.120 He's based in Jersey. But you're in the big town today. Yeah, 0:13:06.200 --> 0:13:08.440 commute in every day, you come in every day. 0:13:08.520 --> 0:13:08.960 Yeah. 0:13:09.080 --> 0:13:09.880 Nice, Good for you. 0:13:09.960 --> 0:13:12.800 That's what I'm driving too. What Oh yeah, you drive 0:13:12.840 --> 0:13:15.280 to where? Uh walking a lot right out. 0:13:15.200 --> 0:13:17.560 There, dude, and you do the congestion pricing. I have 0:13:17.640 --> 0:13:20.880 to Yeah, where do you drive from? Well, Ridgewood so 0:13:20.920 --> 0:13:23.920 we have trains, dude, I know. But the Secaucus junction 0:13:24.160 --> 0:13:25.240 it's always a mess. 0:13:25.400 --> 0:13:28.600 Oh my God, what a knuckle ahead. All right, Matt, 0:13:28.720 --> 0:13:31.680 thanks for joining us here. I as serious problems with 0:13:31.720 --> 0:13:34.679 your committing strategy. Talk to us about Metron. What's going 0:13:34.720 --> 0:13:35.120 on there? 0:13:35.520 --> 0:13:37.880 Well, you know, let's take a step back. 0:13:37.960 --> 0:13:40.959 Twelve months ago, they had a lot of promising products 0:13:40.960 --> 0:13:44.160 in the pipeline. The question was execution, and what we're 0:13:44.200 --> 0:13:46.840 seeing the last few quarters is you're starting to see 0:13:46.840 --> 0:13:50.280 some of that execution. So when they raise their organic 0:13:50.320 --> 0:13:53.559 revenue growth guidance by a fifty basis points today to 0:13:53.640 --> 0:13:56.080 five and a half percent, that was driven a lot 0:13:56.160 --> 0:13:59.720 by what they call is their cardiac ablation segment. This 0:13:59.840 --> 0:14:03.079 is new technology that's being used to treat atrial fibrillation. 0:14:03.720 --> 0:14:06.360 That segment alone grew seventy one percent year over year. 0:14:06.520 --> 0:14:10.240 So having that as off a billion dollar revenue run 0:14:10.320 --> 0:14:13.120 rate is what's driving that kind of growth, and is 0:14:13.160 --> 0:14:16.800 what is expecting to accelerate that growth going into fiscal 0:14:16.880 --> 0:14:17.520 twenty twenty. 0:14:17.760 --> 0:14:19.520 Seventy one percent is going to get bigger. 0:14:19.880 --> 0:14:22.000 Yes, they actually said that, and we actually in our 0:14:22.040 --> 0:14:26.040 follow up questions with them, we asked just to confirm, 0:14:26.080 --> 0:14:28.440 are you going to accelerate that seventy one percent growth 0:14:28.480 --> 0:14:31.000 in their fiscal third quarter, which is the one coming up, 0:14:31.200 --> 0:14:34.320 And they said yes, and it's basically the adoption of 0:14:34.760 --> 0:14:37.720 without game two technical. It's called pulse field ablation and 0:14:37.760 --> 0:14:41.320 it's a new way of ablating the heart to treat 0:14:41.360 --> 0:14:42.239 atrial fibrillation. 0:14:43.320 --> 0:14:45.320 Does it have a main competitor in this space? 0:14:45.600 --> 0:14:48.120 Yeah, so it's kind of turned into a duopoly right 0:14:48.160 --> 0:14:52.960 now between Metronic and Boston Scientific, the tickers BSX. And 0:14:53.000 --> 0:14:56.640 what you saw this quarter is Boston Scientific was in 0:14:56.720 --> 0:15:01.520 first and their growth in the quarter sixty percent. So 0:15:01.640 --> 0:15:04.480 Metronic is highlighting that it was actually growing faster in 0:15:04.520 --> 0:15:07.160 the quarter than Boston its main competitor. 0:15:07.360 --> 0:15:12.960 Was how's in these medical device companies like Metronic and 0:15:13.080 --> 0:15:15.720 how are they dealing with this administration in I don't know, 0:15:15.840 --> 0:15:19.600 terriffs regulations. What's the backdrop for this for the sector 0:15:19.640 --> 0:15:20.560 of the healthcare space. 0:15:20.760 --> 0:15:23.520 Yeah, so if you look at broadly, it should be 0:15:23.560 --> 0:15:26.640 more insulated than some of the other kind of import 0:15:26.640 --> 0:15:33.400 export type of businesses. Procedure volumes remain steady. Devices that 0:15:33.480 --> 0:15:35.720 are used in the US are mostly built in the US. 0:15:35.800 --> 0:15:40.760 There's some caveats here and there, so it's overall relative 0:15:40.800 --> 0:15:45.360 to the broader market minimal. Metronic highlighted that you know, 0:15:45.400 --> 0:15:46.960 the worst quarter is going to be coming up this 0:15:47.200 --> 0:15:50.920 their fiscal third quarter, which ends in January, a little 0:15:50.960 --> 0:15:53.200 bit worse in the fourth quarter that ends in April, 0:15:53.800 --> 0:15:55.600 and then you know, they haven't gotten too much into 0:15:55.640 --> 0:15:57.560 fiscal twenty twenty seven, but they said it should be 0:15:57.560 --> 0:15:59.200 incremental overall. 0:15:59.320 --> 0:16:00.720 It should be about. 0:16:00.480 --> 0:16:03.040 One hundred and eighty million to the overall net income 0:16:03.680 --> 0:16:06.200 that you so, but that's talking about a company that's 0:16:06.200 --> 0:16:08.320 making thirty billion plus in revenue per year. 0:16:08.800 --> 0:16:12.120 What I noticed as well is that Medtronic has as 0:16:12.160 --> 0:16:15.920 one of its biggest investors Elliott Investment Management, the activist investors, 0:16:15.960 --> 0:16:19.280 And yeah, they've become one of the biggest shareholders earlier 0:16:19.320 --> 0:16:23.240 this year, and they've made some changes, adding some folks 0:16:23.240 --> 0:16:27.560 to its board as independent directors, presumably ones that Elliott 0:16:28.160 --> 0:16:31.920 finds favorable. What does this mean for that relationship? Is 0:16:31.920 --> 0:16:34.320 this an antagonistic relationship or is it something that's a 0:16:34.320 --> 0:16:35.160 little bit friendlier. 0:16:35.920 --> 0:16:39.360 I would to say more it's a friendlier type of relationship. 0:16:39.360 --> 0:16:40.800 And I think it goes back to what I was 0:16:40.840 --> 0:16:42.920 talking about twelve months ago, when we were looking at 0:16:42.920 --> 0:16:46.440 a company that had all these massine developments in the 0:16:46.560 --> 0:16:49.760 pipeline and they just couldn't get that revenue growth from 0:16:49.760 --> 0:16:51.600 the four to five percent up to that five to 0:16:51.680 --> 0:16:55.040 six percent where we're seeing now. Now, the question is 0:16:55.040 --> 0:16:57.280 how much of that is behind the scenes Elliott is 0:16:57.280 --> 0:16:59.240 making a push or just the fact that the management 0:16:59.280 --> 0:17:03.080 team just needed that extra time to get that initial 0:17:03.560 --> 0:17:07.760 acceleration of the growth just internally. But yeah, they came 0:17:07.800 --> 0:17:10.600 in I mean honestly at the right time with kind 0:17:10.600 --> 0:17:13.360 of at the when it was down, you know, more 0:17:13.400 --> 0:17:14.160 than twenty percent. 0:17:14.600 --> 0:17:18.520 To seeing a potentially friendly relationship between Elliott and the 0:17:18.560 --> 0:17:19.880 target companies at Targets. 0:17:20.040 --> 0:17:22.560 Yeah, exactly good point. But maybe it's working this bit 0:17:22.600 --> 0:17:24.439 to the case. Matt thinks so much for joining us. 0:17:24.440 --> 0:17:27.879 Appreciated Matt Hendrickson. He's a senior medtech analyst Bloomberg Intelligence. 0:17:28.200 --> 0:17:31.199 He of the questionable commuting strategy. We'll discuss that at 0:17:31.200 --> 0:17:31.600 a little bit. 0:17:31.640 --> 0:17:32.840 What would you do if you were him? 0:17:33.240 --> 0:17:34.959 Oh, train, dude, I mean that's what I mean. Live 0:17:35.000 --> 0:17:36.240 in New Jersey for that reason. 0:17:36.480 --> 0:17:38.360 Is that New Jersey Transit or is that another one? 0:17:38.400 --> 0:17:41.159 But he lives in Ridgid, which is beat for no 0:17:41.320 --> 0:17:43.240 rail service, cause you got to you gotta go to. 0:17:43.680 --> 0:17:45.399 You're kind of only supporting my thesis there. 0:17:45.480 --> 0:17:47.800 Yeah, but you don't come into the city. 0:17:48.160 --> 0:17:50.480 I mean that there's a real proba is with the 0:17:50.600 --> 0:17:51.840 driving into midtown. 0:17:51.960 --> 0:17:54.200 Yes, you go to Secaucus, you hop on a train, 0:17:54.280 --> 0:17:55.520 you're in, and then you're done. 0:17:55.640 --> 0:17:56.560 Drive to se Caucus. 0:17:56.960 --> 0:17:59.520 No, or I do my five point thirty commute too. 0:18:00.320 --> 0:18:03.399 Stay with us. More from Bloomberg Intelligence coming up after this. 0:18:07.359 --> 0:18:11.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:11.119 --> 0:18:14.200 weekdays at ten am Eastern on Apple, Coarclay, and Android 0:18:14.240 --> 0:18:17.520 Auto with the Bloomberg Business App. Listen on demand wherever 0:18:17.600 --> 0:18:20.720 you get your podcasts, or watch us live on YouTube. 0:18:21.520 --> 0:18:26.560 Amer Sports. That's Solomon. They got the Solomon best binding company, right, 0:18:26.680 --> 0:18:28.520 best bindings in the world, I think I've had I've 0:18:28.520 --> 0:18:31.159 been skied on Solomon Bindings for like forty years. But 0:18:31.200 --> 0:18:32.919 they had lots of other stuff, Wilson's Sports and all 0:18:32.920 --> 0:18:34.960 that kind of stuff. They's some pretty good numbers today. 0:18:35.080 --> 0:18:37.400 I mean, you know, raising their guidance for the third 0:18:37.400 --> 0:18:40.080 time this year. So I don't know the consumers seam. 0:18:40.200 --> 0:18:42.919 I think in the shaped economy they serve the upper leg, 0:18:43.000 --> 0:18:43.480 upper part. 0:18:43.400 --> 0:18:43.639 Of the king. 0:18:43.760 --> 0:18:45.920 All right, that's the place to be. Abigail good Martin 0:18:46.000 --> 0:18:48.439 joins us here. She is a footwear and at leisure analyst. 0:18:48.440 --> 0:18:51.240 I don't know what ath leisure is for Bloomberg Intelligence. 0:18:51.240 --> 0:18:54.399 She is a proud spider University of Richmond spider. 0:18:54.520 --> 0:18:57.000 Oh that's how I didn't know that that was the mass. 0:18:57.040 --> 0:18:57.280 It is. 0:18:57.320 --> 0:18:58.800 It's very unique, isn't it. 0:18:58.920 --> 0:19:01.959 I ken't like most Sure looks like it's a big spider. 0:19:02.520 --> 0:19:04.320 Yeah, we'll get you the Yeah, get We'll get one 0:19:04.359 --> 0:19:07.159 for you. I got my fortieth anniversary, you know, rich 0:19:07.520 --> 0:19:09.399 Richmond coming up this year. This are you going to go? 0:19:09.560 --> 0:19:13.040 Damn right? I am going. I might actually joined forced 0:19:13.040 --> 0:19:15.600 me to kind of go on the committee. I'm in charge. 0:19:15.600 --> 0:19:17.720 I'll be dialing for dollars getting people to come. And 0:19:17.760 --> 0:19:20.240 Abba goes she's a spial So talk to us about 0:19:20.240 --> 0:19:21.879 a M E. R. Sports here. I don't think a 0:19:21.880 --> 0:19:22.919 lot of people know them too. 0:19:23.160 --> 0:19:26.320 Yeah no, because the brands underneath that. It is Arctics, 0:19:26.800 --> 0:19:29.560 which is their outdoor performance brand, as well as Solomon 0:19:29.560 --> 0:19:31.960 and Wilson are their three biggest so I think today 0:19:32.080 --> 0:19:34.560 was a big day for them. They did really well, 0:19:35.320 --> 0:19:38.800 you know, sales up thirty percent. Broad Based strength across regions, 0:19:38.920 --> 0:19:42.200 across channels, and across brands. I think the key thing 0:19:42.200 --> 0:19:46.400 people are looking for was China. Arcterics recently had some 0:19:46.920 --> 0:19:50.360 controversy in China with fireworks display in the Himalayas. 0:19:50.440 --> 0:19:53.360 That what fireworks display? 0:19:53.160 --> 0:19:55.040 He displayed fireworks in the Himalayans. 0:19:55.520 --> 0:20:02.280 Arctics for set off fireworks exactly. It was definitely missed 0:20:02.359 --> 0:20:05.159 up for an outdoor brand that's really focused on sustainability, 0:20:05.600 --> 0:20:07.600