WEBVTT - Charter Shares Fall on Internet Customer Losses, Profit Miss 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:18.560 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.640 --> 0:00:21.920 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.120 us live on YouTube. 0:00:23.480 --> 0:00:28.640 One of those thoughts under pressure is actually Charter. Oh no, oh, 0:00:28.640 --> 0:00:30.640 we're not going into that. Yes, are we going to? 0:00:30.920 --> 0:00:31.080 Oh? 0:00:31.120 --> 0:00:34.320 We both are, okay, So Keitha, there we go. We 0:00:34.360 --> 0:00:37.360 are going to Githa. Keetha wrong an Avis. She's Bloomberg 0:00:37.400 --> 0:00:40.520 Intelligence analysts on the latest in the media space. So getha. 0:00:40.560 --> 0:00:42.720 We were talking about Charter. So shared's really taken a 0:00:42.800 --> 0:00:46.360 hit lost more Internet subscribers. If you can explain to us, 0:00:46.400 --> 0:00:48.479 is it just a lot of pressure from these mobile 0:00:48.680 --> 0:00:51.640 phone companies? Is that what it is? 0:00:51.360 --> 0:00:52.519 It is exactly that. 0:00:52.600 --> 0:00:57.160 So remember, you know, Charter controls about twenty eight percent 0:00:57.280 --> 0:01:02.200 of the fixed broadband market. They have roughly nine million subscribers. 0:01:02.480 --> 0:01:05.240 But what has happened over the past few years is 0:01:05.760 --> 0:01:08.360 you know, the telecoms, so think about you know, AT 0:01:08.440 --> 0:01:12.000 and T, Verizon, T Mobile. They've gotten really aggressive. So 0:01:12.040 --> 0:01:15.560 of course we know that they are the top wireless providers. 0:01:15.880 --> 0:01:18.560 But where they're competing now with the cable operators is 0:01:18.560 --> 0:01:21.720 in fixed broadband, so your home internet connection for instance. Right, 0:01:22.200 --> 0:01:25.160 So what they're doing is they're offering something called five 0:01:25.240 --> 0:01:28.440 G home Internet, which is really cheap. It's just very 0:01:28.480 --> 0:01:31.280 easy to hook up. It costs about fifty dollars a month, 0:01:31.720 --> 0:01:34.280 and it's much cheaper than cable. And so people are 0:01:34.319 --> 0:01:37.199 really saying, you know what, this is great. I don't 0:01:37.200 --> 0:01:40.320 have to deal with, you know, the endless heartache that 0:01:40.720 --> 0:01:43.880 everybody usually has with their cable company. Plus it's cheaper. 0:01:44.360 --> 0:01:46.080 And so that's where we're seeing a lot of the 0:01:46.120 --> 0:01:49.880 competitive pressure for the cable operators, both Charter and Comcast, 0:01:50.800 --> 0:01:53.600 and they are losing subscribers, and they're losing subscribers at 0:01:53.600 --> 0:01:56.720 an accelerating pace, and that is what is really spooking 0:01:56.720 --> 0:01:57.520 investors today. 0:01:58.360 --> 0:02:01.120 So we have Charter CEO Chris Winfrey saying that the 0:02:01.160 --> 0:02:04.120 company has been fighting back with streaming service editions and 0:02:04.200 --> 0:02:06.880 noted that the new tax legislation will save the company 0:02:07.120 --> 0:02:09.920 several billion dollars in cash taxes in the next five 0:02:10.000 --> 0:02:12.200 or so years. Do you think that's their next lifefest? 0:02:14.040 --> 0:02:16.720 So one thing, yes, I think that definitely helps on 0:02:16.800 --> 0:02:19.040 the margin, but it's really not doing a whole lot 0:02:19.080 --> 0:02:22.400 for you know, the stock today. But yes, bonus depreciation, 0:02:22.680 --> 0:02:25.400 you know, one hundred percent bonus depreciation is something that 0:02:25.480 --> 0:02:29.600 will help boost cash taxes and ultimately help boost capital spending. 0:02:29.639 --> 0:02:32.520 And I think that is the whole you know, idea 0:02:32.600 --> 0:02:35.600 behind having this this tax incentive to kind of boost 0:02:35.800 --> 0:02:38.520 capital spending all across. So yes, we will see some 0:02:38.639 --> 0:02:41.520 uplift from there. But as of right now, I think 0:02:41.560 --> 0:02:43.560 what Chotter is really going to have to focus on 0:02:43.760 --> 0:02:46.480 is about a month ago, or maybe just over two 0:02:46.520 --> 0:02:50.640 months ago, they announced a deal with Cox Communications. It's 0:02:50.639 --> 0:02:53.320 a thirty five billion dollar deal which actually will make 0:02:53.400 --> 0:02:56.919 them the largest broadband operator. And so I think what's 0:02:56.960 --> 0:02:58.519 going to happen at this point is a lot of 0:02:58.560 --> 0:03:01.160 focus is going to shift to that deal and how 0:03:01.200 --> 0:03:04.639 that can potentially help them stem losses a little bit, 0:03:04.760 --> 0:03:07.800 kind of regain their footing a little bit financially. But 0:03:07.880 --> 0:03:10.480 as it stands right now, you know, things are looking 0:03:10.520 --> 0:03:14.440 pretty bleak for all of the cable operators and Charter also. 0:03:14.760 --> 0:03:17.880 So that was with Charter, what about their their mobile 0:03:18.360 --> 0:03:20.600 Charter mobile offerings, Because I say that that got a 0:03:20.639 --> 0:03:22.960 little bit of a bump because there, I guess agreeing 0:03:22.960 --> 0:03:25.880 with Verizon for certain things. How is that working out 0:03:25.880 --> 0:03:26.160 for them? 0:03:27.080 --> 0:03:27.280 Yeah? 0:03:27.320 --> 0:03:29.720 So, you know, just like you know, you had the 0:03:29.720 --> 0:03:32.360 telecoms that that really are the incumbents, and wireless and 0:03:32.400 --> 0:03:35.080 cable that are the incumbents in broadband, we have both 0:03:35.120 --> 0:03:37.360 of them kind of crossing over into each other's territories. 0:03:37.600 --> 0:03:39.680 So you have Telecom now kind of crossing over into 0:03:39.720 --> 0:03:43.120 Cable's territory and kind of offering broadband service. And similarly, 0:03:43.160 --> 0:03:45.720 you have Cable kind of crossing over into telecom space 0:03:45.760 --> 0:03:49.320 and offering wireless and mobile services. And they've actually made 0:03:49.440 --> 0:03:52.640 a pretty decent foray, I would say, into the wireless world. 0:03:53.000 --> 0:03:55.400 Charter actually has been extremely aggressive. So the one of 0:03:55.400 --> 0:03:58.600 the strategies that they're following is they're bundling their mobile 0:03:58.640 --> 0:04:01.720 service along with their broad in order to actually stem 0:04:01.720 --> 0:04:04.080 the subscriber laws. So as long as we're within the 0:04:04.120 --> 0:04:06.240 Charter footprint, you can get a mobile line at a 0:04:06.280 --> 0:04:09.440 significant discount. It is helping on the margin, but again, 0:04:09.440 --> 0:04:12.320 as we are seeing today, not really enough to move 0:04:12.400 --> 0:04:12.880 the needle. 0:04:13.600 --> 0:04:15.720 I want to talk about another big development happening in 0:04:15.720 --> 0:04:18.479 the media space. We have FCC Chair Brendan Carr saying 0:04:18.480 --> 0:04:21.640 that he was pleased by Skydance commitments when it comes 0:04:21.680 --> 0:04:26.400 to the concessions, How significant are these concessions for regulatory 0:04:26.480 --> 0:04:29.520 president when it comes to future media mergers, and I'm 0:04:29.520 --> 0:04:31.480 talking about this Guidance and Paramount deal. 0:04:33.240 --> 0:04:36.200 Yeah, So I think the FCC, this FCC was definitely 0:04:36.320 --> 0:04:39.360 expected to be much more you know, m and a friendly. 0:04:39.760 --> 0:04:42.240 So we're kind of expecting this whole wave of deregulation 0:04:42.360 --> 0:04:46.760 to happen with a broadcast. But for Skydance and Paramount 0:04:46.760 --> 0:04:50.000 in particular, you know, you had that big CBS News 0:04:50.120 --> 0:04:52.479 lawsuit that was kind of pending. There were the DEI 0:04:52.640 --> 0:04:54.920 issues that you kind of just mentioned before the segment. 0:04:55.279 --> 0:04:57.560 So all of those concessions I think really kind of 0:04:57.760 --> 0:05:00.840 helped get the deal. We know that the Listen family 0:05:00.920 --> 0:05:03.840 also met with the FCC, they met with President Trump 0:05:04.120 --> 0:05:07.320 to kind of get the regulatory approval for you know, 0:05:07.400 --> 0:05:08.880 this deal, And I think at the end of the day, 0:05:09.240 --> 0:05:11.800 that kind of does signal that as long as you 0:05:11.839 --> 0:05:16.360 know you're willing to work with the FCC and the administration, 0:05:16.680 --> 0:05:19.400 I think a lot of the media deals can potentially 0:05:19.440 --> 0:05:20.120 get done. 0:05:20.279 --> 0:05:20.960 All right, keitha. 0:05:21.000 --> 0:05:22.480 Ron and Nathan, thank you so much for your time. 0:05:22.520 --> 0:05:26.080 She's Bloomberg Intelligence analyst. On US media. 0:05:27.640 --> 0:05:31.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:31.400 --> 0:05:34.520 weekdays at ten am Eastern on Apple, Cocklay and Android 0:05:34.520 --> 0:05:37.839 Auto with the Bloomberg Business App. Listen on demand wherever 0:05:37.880 --> 0:05:41.000 you get your podcasts, or watch us live on YouTube. 0:05:41.440 --> 0:05:44.200 All right, So the turnaround efforts Intel, his new CEO, 0:05:44.360 --> 0:05:47.920 they're under question the latest earnings report. That's the reason why. 0:05:48.040 --> 0:05:50.839 Here to explain more about it is Kun John Sabani. 0:05:51.240 --> 0:05:55.719 He's Bloomberg Intelligence Senior Semiconductor analyst, Kun John. If you 0:05:55.760 --> 0:05:57.880 can explain to us, there's some concern that the new 0:05:57.960 --> 0:06:00.839 CEO he's a little bit more focused on hutting costs 0:06:01.240 --> 0:06:04.479 than making the company more competitive. I mean, is he 0:06:04.960 --> 0:06:06.600 or what's leading to those thoughts? 0:06:08.040 --> 0:06:08.800 I don't think it's. 0:06:08.680 --> 0:06:11.600 As clear as we staid it. You know, the results 0:06:11.600 --> 0:06:14.719 were a missed bag. The new CEO is definitely taking 0:06:14.760 --> 0:06:18.040 some steps in the right direction, aka cutting costs, which 0:06:18.160 --> 0:06:22.359 was necessary for this company, turning around the culture, focusing 0:06:22.400 --> 0:06:25.479 on making things simpler, and focusing on the core assets 0:06:25.880 --> 0:06:28.880 as he's divesting the non core assets. The issue here 0:06:29.000 --> 0:06:32.120 is that we have investors had been promised a lot 0:06:32.160 --> 0:06:34.920 from the previous CEO, right which is still on their mind, 0:06:35.000 --> 0:06:38.359 namely that the foundry business, that the eighteen A was 0:06:38.400 --> 0:06:42.679 going to be the key node where Intel would get 0:06:42.800 --> 0:06:46.719 external customers and start getting a lot of external foundry revenues. 0:06:47.240 --> 0:06:49.840 From what we heard last night, it seems. 0:06:49.520 --> 0:06:52.320 That goalpost is sort of moving farther out now to 0:06:52.400 --> 0:06:56.000 fourteen A. So that was a disappointing fact that investors 0:06:56.000 --> 0:06:58.360 will now need to wait quite a few years before 0:06:58.400 --> 0:07:01.960 we can start seeing billions of dollars of external customers 0:07:02.000 --> 0:07:03.239 bringing in foundary revenue. 0:07:05.520 --> 0:07:08.880 Despite the turn to AI and foundry services, Intel continues 0:07:08.920 --> 0:07:11.920 to lag behind Nvidia in AMD. So what signs show 0:07:11.960 --> 0:07:16.120 that Intel is closing that gap in AI leadership or 0:07:16.200 --> 0:07:18.200 foundry relevance in the second half of the year. 0:07:19.720 --> 0:07:22.640 Well, there are no signs as of this point. Right. 0:07:22.680 --> 0:07:26.240 They are changing. It's clear they've lost out on the 0:07:26.280 --> 0:07:26.880 AI race. 0:07:27.440 --> 0:07:29.760 They are changing the way they think about AI under 0:07:29.800 --> 0:07:32.760 the new CEO, but that will take time. 0:07:32.880 --> 0:07:35.800 You cannot just close the three year gap suddenly in 0:07:35.840 --> 0:07:39.040 a second half. So we don't have any tackers right now. 0:07:39.040 --> 0:07:41.040 We have to wait I think sort of in the 0:07:41.080 --> 0:07:44.120 second year they might announce what their strategy is and 0:07:44.200 --> 0:07:46.560 it's not clear what the timing of that closing of 0:07:46.560 --> 0:07:47.200 the gap will be. 0:07:47.760 --> 0:07:50.080 And you mentioned the new CEO, so how is his 0:07:50.160 --> 0:07:53.000 approach different from former CEO Pat Gelsinger. 0:07:54.280 --> 0:07:56.400 Well, it's like two complete opposites, right. 0:07:56.760 --> 0:08:01.160 The priors was very aggressive, like to put you know, 0:08:01.360 --> 0:08:03.400 goalposts at the stars, so at least you get the 0:08:03.440 --> 0:08:07.080 moon and really promise and try to aggressively achieve it, 0:08:07.120 --> 0:08:11.040 which didn't happen on all metrics Limbutan is very practical 0:08:11.120 --> 0:08:13.680 and very conservative, right, so which we saw from the 0:08:13.720 --> 0:08:17.800 results last quarter. They had given a very conservative guide 0:08:17.800 --> 0:08:20.920 which helped them to get some breather and finally deliver 0:08:21.040 --> 0:08:23.600 a good beat both on the print and the guide. 0:08:23.640 --> 0:08:26.880 But that's a two very different approaches. A clear example 0:08:26.920 --> 0:08:28.280 here is you know, on. 0:08:28.280 --> 0:08:31.280 The LIBU they've decided that they're not going to aggressively 0:08:31.640 --> 0:08:34.560 promise that they are going to have external customers right 0:08:34.600 --> 0:08:37.400 away on eighteen A. They will first make that node 0:08:37.480 --> 0:08:40.839 work internally, get it to better heels, and then market 0:08:40.880 --> 0:08:43.240 it to customers, which, if you ask me, it's a 0:08:43.400 --> 0:08:45.200 very right and practical way to go. 0:08:45.320 --> 0:08:47.439 About this versus the prior CEO. 0:08:47.760 --> 0:08:51.160 It was like before even the process was ready, promising 0:08:51.240 --> 0:08:53.600 in the investors, promising the customers that this is what 0:08:53.679 --> 0:08:56.320 we are going to give to you and get external revenues. 0:08:56.600 --> 0:08:59.079 And we know that Intel has canceled or delayed major 0:08:59.120 --> 0:09:03.640 factory projects in Germany, Poland and even Ohio. What impact 0:09:03.720 --> 0:09:07.080 does that have when it comes to their ability to 0:09:07.080 --> 0:09:10.320 meet future AI chip demands or like how credible are 0:09:10.320 --> 0:09:11.720 the timelines for those as well? 0:09:13.280 --> 0:09:16.520 Yeah, given the timeline of the nodes that I spoke about, 0:09:16.720 --> 0:09:18.720 I don't we don't think. We think this is a 0:09:18.760 --> 0:09:21.680 good move because it helps them with near term liquidity 0:09:21.679 --> 0:09:25.240 and free cash flow and keeps them still it still 0:09:25.400 --> 0:09:29.680 makes them be flexible that if external customers do come 0:09:29.880 --> 0:09:32.280 suddenly to them and have a lot of demand for 0:09:32.360 --> 0:09:34.720 these nodes, they still have the flexibility to start ramping 0:09:34.800 --> 0:09:36.960 up in a given amount of time. So this is 0:09:37.000 --> 0:09:38.600 actually a good move in our regards. 0:09:39.280 --> 0:09:42.080 So they had a resurgence in the PC industry manufacturers 0:09:42.160 --> 0:09:45.120 kind of build up this inventory before the tariffs hit. 0:09:45.559 --> 0:09:47.040 Has that slowed just a bit? 0:09:48.800 --> 0:09:52.160 We definitely see that signs, you know, if you look 0:09:52.160 --> 0:09:55.760 at that typical seasonality the first half results that they're 0:09:55.800 --> 0:09:58.959 delivered in the PC where above seasonal. That suggests that 0:09:59.000 --> 0:10:02.160 there was some credit fear driven pull in and now 0:10:02.200 --> 0:10:04.920 that the terriff risks have sort of calmed down since 0:10:04.920 --> 0:10:08.360 the April first we are the guide that they provided 0:10:08.440 --> 0:10:12.480 implies a sub seasonal below seasonal second half, which suggests 0:10:12.480 --> 0:10:15.960 that the customers which bought those inventories are sort of 0:10:15.960 --> 0:10:18.520 now slowing down. So they did see the benefit of 0:10:18.520 --> 0:10:20.480 that in first half, but now they are going to 0:10:20.520 --> 0:10:22.600 see the opposite side of that in the second half. 0:10:23.160 --> 0:10:26.080 And Intelli's cutting around fifteen percent of its core workforce. 0:10:26.120 --> 0:10:28.719 We have reported that do you think that will have 0:10:28.960 --> 0:10:33.200 operational impacts? Because when you cut headford that will affect 0:10:33.520 --> 0:10:36.800 obviously some product developments and all that. 0:10:37.480 --> 0:10:40.440 It's a difficult situation to be in. You know, from 0:10:40.440 --> 0:10:45.040 an investor perspective, we like this move. You know, if 0:10:45.080 --> 0:10:47.000 you look at Intel and compare it to most of 0:10:47.040 --> 0:10:51.440 it others compute players, they definitely have significantly high head 0:10:51.480 --> 0:10:54.880 counter revenue that they're bringing in, so there was definitely 0:10:54.880 --> 0:10:58.520 a headcount reduction needed. The management layer had become one 0:10:58.559 --> 0:11:01.680 of the most bloated management hierarchy s. Tax when you 0:11:01.720 --> 0:11:04.600 compare this in the industry, so this was definitely needed. 0:11:04.760 --> 0:11:07.480 But yes, you're right, when you're going through headcom cuts, 0:11:07.520 --> 0:11:10.440 the morale does get impacted, right, And it's also difficult 0:11:10.720 --> 0:11:13.840 to now attract and keep the best talent that you have, 0:11:14.960 --> 0:11:17.000 which they are trying to do to sort of bring 0:11:17.080 --> 0:11:19.439 up their AI competence again and close that gap. 0:11:19.960 --> 0:11:24.080 Good Jenna, So how does Intel move forward from today's results? 0:11:25.440 --> 0:11:29.480 I think it will be a hard few years for them, 0:11:29.559 --> 0:11:32.480 but they need to keep doing what they have been 0:11:32.480 --> 0:11:35.440 doing in the last two quarters. We like the direction 0:11:35.559 --> 0:11:39.280 that Libu is taking, you know, slowly, if he continues 0:11:39.320 --> 0:11:43.920 to stay consistent on his communication, on his conservative path, 0:11:44.240 --> 0:11:47.160 slowly and surely and as the longest keep delivering on 0:11:47.200 --> 0:11:50.440 those eighteen A milestones and getting up the yields slowly 0:11:50.480 --> 0:11:53.200 and slowly, Investors will get used to this new way 0:11:53.200 --> 0:11:57.520 of looking at Intel, sort of underpromising and over delivering, 0:11:57.520 --> 0:11:59.360 and that should help them in the long run. 0:11:59.400 --> 0:12:02.320 But it's definitely going to be a long, hard path ahead. 0:12:02.559 --> 0:12:04.599 All right, we'll be watching. Thank you kuon John. That 0:12:04.679 --> 0:12:09.160 was Koon JOm So. Bonnie Bloomberg Intelligence senior semiconductor analyst. 0:12:11.160 --> 0:12:14.840 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:14.920 --> 0:12:18.040 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:18.040 --> 0:12:21.360 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:21.400 --> 0:12:24.520 you get your podcasts, or watch us live on YouTube. 0:12:25.120 --> 0:12:28.200 We want to go to stocks. We have Puma shares. 0:12:28.240 --> 0:12:31.480 They've really been taken a hit. The reason behind it, 0:12:31.480 --> 0:12:33.199 that's what we want to find out. So we want 0:12:33.200 --> 0:12:35.080 to go to someone who knows it. It's Poom Goyel. 0:12:35.200 --> 0:12:41.040 She's senior US e commerce and retail analysts at Bloomberg Intelligence. Poohum, So, 0:12:41.400 --> 0:12:44.320 explain the issue. I mean, is it just tariffs? Is 0:12:44.320 --> 0:12:46.560 that the issue for Puma. 0:12:46.720 --> 0:12:49.440 No, it's not just tariffs. It's a lot more than tariffs. 0:12:49.440 --> 0:12:52.800 So there's multiple things going on here. The first that 0:12:52.840 --> 0:12:55.560 probably applies to everyone, has four x issues, so there's 0:12:55.559 --> 0:12:58.560 four x pressure. The second ist tariffs, which is about 0:12:58.559 --> 0:13:02.520 a eighty five million dollars impact for twenty twenty five. 0:13:02.640 --> 0:13:07.000 And the third is wholesale weakness. And the wholesale weakness 0:13:07.080 --> 0:13:10.320 is a Puma specific issue, and I think that's really 0:13:10.360 --> 0:13:15.000 the biggest here. They've been challenged over the past few months. 0:13:15.000 --> 0:13:18.520 We've seen them, you know, sales kind of accelerate, especially 0:13:18.600 --> 0:13:22.559 in North America, and they have lost momentum and that 0:13:22.720 --> 0:13:27.160 just completely was evident in two Q results and the 0:13:27.240 --> 0:13:30.320 fact that they had to cut guidance. They were expecting 0:13:30.360 --> 0:13:32.800 a load to mid single digit increase in twenty twenty 0:13:32.800 --> 0:13:36.000 five four revenues that is now expected to be down 0:13:36.360 --> 0:13:40.200 low double digits. So a big, big shift here, and 0:13:40.240 --> 0:13:42.160 I think it's largely demand driven. 0:13:42.360 --> 0:13:45.719 Yes, and it's low double digit revenue drop as you 0:13:45.800 --> 0:13:48.400 pointed out. So then how credible is it proposed turnaround 0:13:48.440 --> 0:13:52.720 timeline given in twenty twenty six as they transition through 0:13:52.760 --> 0:13:53.120 the year. 0:13:54.320 --> 0:13:56.800 Yeah, so a turnaround, you know, we need to know 0:13:56.840 --> 0:13:59.200 what they'll do. They have a new CEO in place. 0:13:59.679 --> 0:14:04.640 He is expected to provide some direction on that at 0:14:04.640 --> 0:14:08.640 the end of October. So between now and October, he's learning, 0:14:08.679 --> 0:14:11.880 he's trying to figure out the turnaround. At best, twenty 0:14:11.920 --> 0:14:15.400 twenty five will be a reset year and twenty twenty 0:14:15.400 --> 0:14:18.320 six a transition year. So there's a lot to be 0:14:18.400 --> 0:14:20.560 done here. I think the one thing that they can 0:14:20.640 --> 0:14:24.480 work on in two ages inventories. Inventories on a constant 0:14:24.840 --> 0:14:30.000 currency basis, we're up about nineteen percent. That's clearly significantly 0:14:30.080 --> 0:14:32.440 higher than the two percent decline we saw in sales 0:14:32.720 --> 0:14:35.160 for the second quarter, So a big gap there. They 0:14:35.280 --> 0:14:38.160 need to work that down. That's probably priority number one 0:14:38.640 --> 0:14:41.680 and something they can tackle. As far as figuring out 0:14:41.800 --> 0:14:45.920 how to rebalance a portfolio between wholesale and digital and 0:14:46.000 --> 0:14:48.760 how to really reignite demand, I think that's a longer 0:14:48.880 --> 0:14:51.840 term push and we need to hear more on that, all. 0:14:51.800 --> 0:14:53.560 Right, Pam. I also want to ask you about Amazon, 0:14:53.600 --> 0:14:56.080 because they gave shoppers a little bit more time, right, 0:14:56.080 --> 0:14:59.240 it was four days instead of the two days, and 0:14:59.400 --> 0:15:02.440 a lot of Hello shoppers went to Walmart too, So 0:15:02.880 --> 0:15:05.360 did that actually help give Walmart a little bit of 0:15:05.360 --> 0:15:06.400 a boost at the same time. 0:15:07.200 --> 0:15:09.800 Yeah, So Amazon Prime Day went from two days to 0:15:09.880 --> 0:15:13.720 four days this year. Around Amazon Prime Day every year 0:15:13.760 --> 0:15:16.720 for the past two years, other retailers have added their 0:15:16.800 --> 0:15:21.240 own sales events that have been longer in duration. What 0:15:21.360 --> 0:15:24.680 we learned from alternative data at Bloomberg, which is some 0:15:24.760 --> 0:15:27.480 of the second measure data, there are two things. One, 0:15:27.640 --> 0:15:31.200 Amazon sales over Prime Day, when adjusted for the four 0:15:31.280 --> 0:15:34.640 day period for both years, were up four percent. That's 0:15:34.760 --> 0:15:38.000 relatively in line with where they have been in previous 0:15:38.080 --> 0:15:41.880 Prime Day years. Amid singlegic gain, Walmart sales in that 0:15:41.960 --> 0:15:44.800 same time period did grow more, but you have to 0:15:44.800 --> 0:15:48.960 remember that you're comparing apples and oranges here. Amazon has 0:15:49.160 --> 0:15:51.840 a GMB of over seven hundred billion dollars based on 0:15:51.880 --> 0:15:55.800 our estimates, Walmart's over one hundred billion dollars. Walmart's younger 0:15:55.880 --> 0:15:58.520 when it comes to the e commerce push and therefore 0:15:58.560 --> 0:16:02.480 growth rates are here. Did customers move to Walmart because 0:16:02.520 --> 0:16:07.280 Amazon gave them longer duration? Some? Yes, But the second 0:16:07.360 --> 0:16:10.960 measure data clearly shows that ninety one percent of shoppers 0:16:10.960 --> 0:16:15.720 that shopped Amazon shopped one retailer over Prime Day, so 0:16:15.760 --> 0:16:17.920 there was an increase to Walmart. I went from four 0:16:17.960 --> 0:16:20.960 percent to eight percent of Amazon shoppers are shopped Prime Day, 0:16:21.480 --> 0:16:24.600 but the bulk are still loyal to Amazon in our view. 0:16:25.120 --> 0:16:27.120 That's what I was thinking. Whether this is a shift 0:16:27.160 --> 0:16:30.600 in consumer sentiment or a shift in consumer loyalty, or 0:16:30.640 --> 0:16:34.040 just really better discount or timing on Walmart's part. But 0:16:34.080 --> 0:16:36.760 it did show that Walmart can be quite a formidable 0:16:36.840 --> 0:16:38.160 arrival to Prime Day. 0:16:38.280 --> 0:16:41.480 Yes, absolutely they can. They absolutely can be, and they 0:16:41.560 --> 0:16:44.920 are because the one retailer that can compete on price 0:16:45.440 --> 0:16:50.040 and also make investments to support their logistics platform. As Walmart, 0:16:50.120 --> 0:16:53.000 they have the deep pockets and they have the scale 0:16:53.040 --> 0:16:56.880 to compete with Amazon. But that said, Amazon's Prime members 0:16:56.960 --> 0:17:00.120 are very loyal. We saw that in the survey and 0:17:00.200 --> 0:17:03.120 ahead of Prime Day, where when asked where you're planning 0:17:03.120 --> 0:17:06.840 to shop, Amazon remain top of mind. People who wanted 0:17:06.880 --> 0:17:09.160 to shine up sign up for Amazon wanted to stick 0:17:09.200 --> 0:17:12.199 with the subscription even after the Prime Day deals. So 0:17:12.240 --> 0:17:14.360 we do think there is a lot of loyalty there too. 0:17:14.920 --> 0:17:18.560 Now the same a token Amazon going longer to four days, 0:17:18.560 --> 0:17:20.240 I mean in the last minut or so we have left. 0:17:20.840 --> 0:17:23.400 Was it because they could get more ad revenue out 0:17:23.400 --> 0:17:24.600 of it too? I mean, was that kind of the 0:17:24.640 --> 0:17:25.320 thought behind it? 0:17:26.200 --> 0:17:30.040 I mean, that's definitely a plus. Was it part of it? Sure? 0:17:30.359 --> 0:17:33.960 But I think it was really just to strategically implement 0:17:34.040 --> 0:17:38.600 deals by category through the days and the hours within 0:17:38.640 --> 0:17:41.359 the days, so others were doing it for a week. 0:17:41.480 --> 0:17:43.920 I mean, if Walmart goes from two to four days, 0:17:43.960 --> 0:17:46.200 it's you know, it's not that big of a deal. 0:17:46.920 --> 0:17:48.440 All right, Thank you so much putting on that. I 0:17:48.480 --> 0:17:50.840 was putt them Goyle, senior US e commerce and retail 0:17:50.840 --> 0:17:53.600 analysts at Bloomberg Intelligence. 0:17:56.119 --> 0:17:59.800 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:00.000 --> 0:18:02.600 week days at ten am Eastern on Apple, Cocklay and 0:18:02.600 --> 0:18:05.879 Android Auto with the Bloomberg Business App. Listen on demand 0:18:05.920 --> 0:18:09.480 wherever you get your podcasts, or watch us live on YouTube. 0:18:10.119 --> 0:18:12.600 So earnings, after two quarters losses in a row, we 0:18:12.640 --> 0:18:15.120 had Phillip sixty six report a beat on second quarter 0:18:15.160 --> 0:18:18.920 at just at EPs. We want to dig deeper into 0:18:18.960 --> 0:18:19.680 these details. 0:18:19.720 --> 0:18:21.000 So who better to do that. 0:18:21.080 --> 0:18:24.399 Let's bring in Brett Gibbs, these Bloomberg Intelligence Refining and 0:18:24.520 --> 0:18:28.479 renewable fuels analysts. Brett, thank you for joining us here 0:18:28.920 --> 0:18:33.360 from DC. Refining has been this noticeable laggard, I mean, 0:18:33.600 --> 0:18:34.640 was it in these results? 0:18:36.240 --> 0:18:39.159 Yeah, thanks for having me first off, and I think 0:18:39.520 --> 0:18:43.080 it's been a noticeable laggard for Philips sixty six specifically, 0:18:43.600 --> 0:18:46.520 and this was a clear quarter of strength for them. 0:18:47.359 --> 0:18:49.440 One of the things too, that stood out to us 0:18:49.600 --> 0:18:54.880 was just their refining utilization up about you know, kind 0:18:54.920 --> 0:18:58.640 of ninety eight percent, and then their capture of what 0:18:58.680 --> 0:19:01.320 we in the industry look at for benchmark margins for 0:19:01.640 --> 0:19:03.639 what you can see on your screen for gasoline and 0:19:03.680 --> 0:19:07.040 diesel prices was ninety eight percent. So this was very 0:19:07.119 --> 0:19:11.879 very strong, and similarly on the unit costs side, part 0:19:11.920 --> 0:19:15.879 because they ran so well, they fail below their operating 0:19:16.000 --> 0:19:19.280 cost target for you know, the first time they were 0:19:19.359 --> 0:19:22.080 under that five dollars and fifty cents a gallon of 0:19:22.560 --> 0:19:27.000 what they use as adjustable controllable costs, and so that 0:19:27.119 --> 0:19:29.639 led to the beat broadly, and now we're kind of 0:19:29.680 --> 0:19:34.399 looking to see if that strength persists here in three Q. Again, 0:19:34.520 --> 0:19:36.480 there's there's still a lot of work to be done 0:19:36.520 --> 0:19:39.600 on the refining side relative to where management set out 0:19:40.040 --> 0:19:44.000 kind of their mid cycle expectations of five billion dollars 0:19:44.000 --> 0:19:47.719 of annualized EBIDA. But again, this is a great start. 0:19:48.359 --> 0:19:51.840 How sustainable are these performance tailwinds moving forward? You said 0:19:51.840 --> 0:19:53.520 you're going to look at in the next quarters. I'm 0:19:53.520 --> 0:19:56.560 wondering if they are structural, one off or cyclical. 0:19:57.760 --> 0:20:01.080 Yeah, no, absolutely, I mean we're fining itself as cyclical industry. 0:20:01.119 --> 0:20:06.000 And typically two Q and three Q are the seasonal strengths. 0:20:06.119 --> 0:20:08.840 Just you have driving season here in the US, so 0:20:08.880 --> 0:20:12.360 that was something that obviously was a tailwind in two Q. 0:20:12.520 --> 0:20:15.880 We also have a developing diesel story globally that has 0:20:15.960 --> 0:20:18.600 been a little bit of a strength. We've seen it 0:20:18.680 --> 0:20:23.560 start with the Iran related disputes. We also see some 0:20:23.720 --> 0:20:29.199 European sanctions on Russian oil products and oil broadly, and 0:20:29.240 --> 0:20:32.760 that's tightened up the diesel side. That had led to 0:20:32.840 --> 0:20:35.879 a pretty strong export poll out of the Gulf Coast. 0:20:35.920 --> 0:20:38.679 We saw that in Phillip sixty six is results this morning. 0:20:39.000 --> 0:20:42.000 The Gulf Coast was a particular region of strength. I 0:20:42.040 --> 0:20:46.639 think there is some durability there, but again the thought 0:20:46.760 --> 0:20:49.280 is maybe some of that strength is behind us. The 0:20:49.320 --> 0:20:53.359 stock is down today. Fellow Pierre Valero again had a 0:20:53.359 --> 0:20:56.800 pretty strong set of results yesterday. The stock was down 0:20:56.960 --> 0:20:59.840 on that and I think that part of the story 0:21:00.080 --> 0:21:04.640 we're so is the gasoline strength is unwinding. We had 0:21:05.560 --> 0:21:10.320 recent US government data reports this past Wednesday gasoline demand 0:21:10.359 --> 0:21:14.240 is low seasonal levels in the US and that's something 0:21:14.280 --> 0:21:17.679 that might counter that diesel story, specifically if some of 0:21:17.720 --> 0:21:19.200 that recent strength on the lines. 0:21:20.160 --> 0:21:23.240