1 00:00:02,759 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,960 --> 00:00:21,080 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,120 Speaker 1: or watch us live on YouTube. 6 00:00:24,280 --> 00:00:28,080 Speaker 2: And the big I think news that probably really surprised 7 00:00:28,120 --> 00:00:30,840 Speaker 2: people to the upside was this news on an Advanced 8 00:00:30,840 --> 00:00:35,120 Speaker 2: micro Devices signing that deal with open AI and AMD 9 00:00:35,240 --> 00:00:38,440 Speaker 2: just ripping, adding one hundred million dollars in market cap 10 00:00:38,840 --> 00:00:41,680 Speaker 2: today on that news. The numbers around these AI stories 11 00:00:41,720 --> 00:00:44,680 Speaker 2: are just bigger and bigger every single time. I think 12 00:00:44,720 --> 00:00:47,000 Speaker 2: it makes me feel uncomfortable. Some of the numbers that 13 00:00:47,040 --> 00:00:49,559 Speaker 2: are being thrown around makes me think about I woke 14 00:00:49,600 --> 00:00:51,320 Speaker 2: up this morning looking at this news and I felt like, man, 15 00:00:51,360 --> 00:00:52,600 Speaker 2: it just feels toppy to me. 16 00:00:52,720 --> 00:00:54,200 Speaker 3: This whole AI. 17 00:00:54,000 --> 00:00:57,440 Speaker 4: Story topy as in early two thousand seven, or like 18 00:00:57,720 --> 00:00:59,960 Speaker 4: mid two thousand and seven or eight two thousand, don't know. 19 00:01:00,120 --> 00:01:02,080 Speaker 2: It just feels like there's this too many big numbers 20 00:01:02,080 --> 00:01:04,160 Speaker 2: being thrown around too quickly. I'm not sure where the 21 00:01:04,280 --> 00:01:06,120 Speaker 2: returns are. It's one of those types of things. But 22 00:01:06,240 --> 00:01:08,920 Speaker 2: Ed Ludlow, this is his Bailely Wick. He's a Bloomberg 23 00:01:09,160 --> 00:01:13,240 Speaker 2: Tech co host. He is out there in Silicon Valley supposedly. 24 00:01:13,440 --> 00:01:15,760 Speaker 2: Who knows where this guy is all the time? And 25 00:01:15,880 --> 00:01:17,960 Speaker 2: what do you make of this news? These are some big. 26 00:01:17,840 --> 00:01:21,320 Speaker 3: Names Open Ai AMD, Yeah. 27 00:01:21,520 --> 00:01:24,440 Speaker 5: I mean the deal, the specifics of the deal are 28 00:01:24,480 --> 00:01:28,840 Speaker 5: really important. What is opening going to use AMD's technology for. 29 00:01:29,080 --> 00:01:31,400 Speaker 5: It's going to use it for inference, in other words, 30 00:01:31,520 --> 00:01:35,360 Speaker 5: running the models that already exist, not training them. It 31 00:01:35,440 --> 00:01:40,080 Speaker 5: is six gigawatts of capacity. The reason that that figure 32 00:01:40,160 --> 00:01:43,279 Speaker 5: is critical is that equates to the peak collectricity demand 33 00:01:43,360 --> 00:01:47,000 Speaker 5: of most major US cities. Like these are huge numbers, 34 00:01:47,000 --> 00:01:50,800 Speaker 5: as you say, but it just speaks to what's happening 35 00:01:51,120 --> 00:01:53,880 Speaker 5: to the mind of the participants in the industry, which 36 00:01:53,920 --> 00:01:58,640 Speaker 5: is they will need this capacity. You guys are using 37 00:01:58,840 --> 00:02:02,600 Speaker 5: words like top and bubble, and I think that's completely fair. 38 00:02:02,640 --> 00:02:04,560 Speaker 5: Maybe you saw my column this morning on the debt 39 00:02:05,040 --> 00:02:09,200 Speaker 5: role that in what's happening. But I would say that 40 00:02:09,400 --> 00:02:13,440 Speaker 5: AMD has done something interesting here which is different to 41 00:02:13,440 --> 00:02:18,079 Speaker 5: what Nvidia did, which is they will issue stock to 42 00:02:18,360 --> 00:02:22,720 Speaker 5: open Ai. AMD shares going to open Ai, but only 43 00:02:22,840 --> 00:02:26,200 Speaker 5: once open Ai is spent some money and actually built 44 00:02:26,240 --> 00:02:28,919 Speaker 5: some stuff. So where's open ai going to get the money? 45 00:02:30,040 --> 00:02:32,520 Speaker 4: Well, that's why Sam Allman has been traveling the world 46 00:02:32,680 --> 00:02:36,280 Speaker 4: meeting with all kinds of investors trying to get some funding. 47 00:02:36,600 --> 00:02:39,320 Speaker 4: You said the specifics matter ed, but we don't know 48 00:02:39,919 --> 00:02:43,640 Speaker 4: how much this partnership, this deal is worth beyond the 49 00:02:43,800 --> 00:02:46,240 Speaker 4: very generic tens of billions of dollars, right, that could 50 00:02:46,240 --> 00:02:48,640 Speaker 4: be ten billion dollars, that could be ninety nine billion dollars. 51 00:02:48,800 --> 00:02:52,239 Speaker 5: Yes, that's correct. I mean AMDCFO framed it as being 52 00:02:52,320 --> 00:02:55,839 Speaker 5: tens of billion dollars of revenue opportunity. But that's why 53 00:02:56,200 --> 00:02:58,360 Speaker 5: I think the specifics of the terms I've made a 54 00:02:58,400 --> 00:03:03,120 Speaker 5: careful examination of them are really important understand versus what 55 00:03:03,280 --> 00:03:06,440 Speaker 5: Nvidia did with open Ai. So Nvidia said it was 56 00:03:06,440 --> 00:03:09,799 Speaker 5: going to invest one hundred billion dollars into open Ai. 57 00:03:10,360 --> 00:03:12,800 Speaker 5: We don't even know if that was cash or chips 58 00:03:12,800 --> 00:03:16,720 Speaker 5: in lieu of cash, but basically in video would get 59 00:03:16,760 --> 00:03:19,760 Speaker 5: some equity in open Ai in return. In this instance 60 00:03:19,840 --> 00:03:23,800 Speaker 5: AMD and open Ai. Open ai is getting AMD shares, 61 00:03:24,200 --> 00:03:28,440 Speaker 5: but they are deliverable in tranches against milestones, which relate 62 00:03:28,480 --> 00:03:31,360 Speaker 5: to literally building the data centers. So for each gig 63 00:03:31,360 --> 00:03:33,960 Speaker 5: of what of capacity that comes online in video would 64 00:03:33,960 --> 00:03:36,640 Speaker 5: then say Okay, I'm sorry. AMD would then say, here 65 00:03:36,720 --> 00:03:39,360 Speaker 5: is this tranch of stock, and that's why I'm saying 66 00:03:39,600 --> 00:03:43,560 Speaker 5: focus on the open AI obligation here. They need actual 67 00:03:43,680 --> 00:03:46,800 Speaker 5: money to dig up the dirt, put the foundations in, 68 00:03:46,840 --> 00:03:48,880 Speaker 5: get the data center up, and put the servers in 69 00:03:49,160 --> 00:03:51,800 Speaker 5: before any of this stock comes into play. 70 00:03:52,960 --> 00:03:56,120 Speaker 3: Stay with us more from Bloomberg Intelligence coming up every this. 71 00:04:00,040 --> 00:04:03,960 Speaker 1: Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays 72 00:04:04,000 --> 00:04:06,880 Speaker 1: at ten am Eastern on Apple, Coarclay, and Android Auto 73 00:04:07,000 --> 00:04:10,040 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 74 00:04:10,080 --> 00:04:13,480 Speaker 1: get your podcasts, or watch us live on YouTube. 75 00:04:14,400 --> 00:04:17,279 Speaker 3: Got an M and A trade in the regional bank business. 76 00:04:17,320 --> 00:04:18,360 Speaker 3: I think it's kind of a big one. 77 00:04:18,440 --> 00:04:21,159 Speaker 2: I like this one fifth Third Bank Corporate buying Co 78 00:04:21,160 --> 00:04:24,320 Speaker 2: America for about ten point nine billion dollars in stock 79 00:04:24,920 --> 00:04:27,159 Speaker 2: JP Morgan, Goldman Sachs and Keith Rutton Woods. 80 00:04:27,160 --> 00:04:28,400 Speaker 3: Those are the bankers getting paid. 81 00:04:28,400 --> 00:04:30,200 Speaker 2: And I always take a look at that first and foremost. 82 00:04:30,240 --> 00:04:33,000 Speaker 2: I go to the last paragraph of every column, every 83 00:04:33,040 --> 00:04:33,560 Speaker 2: story about it. 84 00:04:33,680 --> 00:04:34,120 Speaker 4: M A trade. 85 00:04:34,200 --> 00:04:36,400 Speaker 3: So who gets paid? Herman Chan Joints is here. 86 00:04:36,440 --> 00:04:40,120 Speaker 2: He covers the regional banks for Bloomberg Intelligence you like 87 00:04:40,120 --> 00:04:40,839 Speaker 2: to steal herman. 88 00:04:41,000 --> 00:04:43,080 Speaker 6: Yeah. I think it's a win win, okay for both. 89 00:04:43,680 --> 00:04:45,720 Speaker 6: Comerica has been sort of in the doldrums over the 90 00:04:45,760 --> 00:04:49,599 Speaker 6: past couple of years after the SVB debacle. It's taken 91 00:04:49,640 --> 00:04:51,760 Speaker 6: on some long time to get it under its own 92 00:04:51,880 --> 00:04:58,120 Speaker 6: footing and they've gotten a lot of agitated investors and 93 00:04:58,240 --> 00:05:01,599 Speaker 6: activists pushing for a sale and this was a great outcome. 94 00:05:01,880 --> 00:05:04,280 Speaker 6: On the other hand, for Fifth Third, it's a great deal. 95 00:05:04,320 --> 00:05:09,000 Speaker 6: It moves them into growth, growthier markets in Texas and California, 96 00:05:09,200 --> 00:05:14,359 Speaker 6: supplements their Michigan presence, and really builds out their branching 97 00:05:14,480 --> 00:05:16,880 Speaker 6: presence across the southeast and Southwest. 98 00:05:17,480 --> 00:05:20,800 Speaker 4: So within the regional banking space, what does this deal 99 00:05:20,800 --> 00:05:23,240 Speaker 4: put pressure on? Who does this deal put pressure on 100 00:05:23,320 --> 00:05:24,520 Speaker 4: to make a move of their own? 101 00:05:24,680 --> 00:05:27,680 Speaker 6: Yeah, So that's a question, the follow on question like 102 00:05:27,680 --> 00:05:31,839 Speaker 6: who's next. So there are other banks that are operating 103 00:05:31,880 --> 00:05:34,880 Speaker 6: within the size of a Fifth Third that have also 104 00:05:35,000 --> 00:05:38,560 Speaker 6: done deals, like a PNC and Huntington, and the others 105 00:05:38,600 --> 00:05:41,599 Speaker 6: that are still on the sidelines are banks like Regions 106 00:05:41,760 --> 00:05:45,599 Speaker 6: in the Southeast, Key Corp in Ohio as well, and 107 00:05:45,800 --> 00:05:48,360 Speaker 6: M and T and Citizens in the northeast, So those 108 00:05:48,400 --> 00:05:50,680 Speaker 6: are the ones that probably are going to get asked. 109 00:05:50,720 --> 00:05:52,320 Speaker 6: A lot of questions on the three to two earnings 110 00:05:52,320 --> 00:05:53,000 Speaker 6: go about M and A. 111 00:05:53,440 --> 00:05:55,920 Speaker 2: So what do we know about the Trumpet administration and 112 00:05:55,960 --> 00:05:57,880 Speaker 2: its view towards bank consolidation? 113 00:05:57,960 --> 00:05:59,240 Speaker 3: Are they a pined on this at all? 114 00:05:59,320 --> 00:06:02,880 Speaker 6: Yeah, and see that these bank deals are getting approved 115 00:06:02,880 --> 00:06:06,400 Speaker 6: at much faster clips. So I mentioned Huntingdon earlier. They're 116 00:06:06,400 --> 00:06:10,200 Speaker 6: buying a bank in Texas named Vera tex And it's 117 00:06:10,240 --> 00:06:13,320 Speaker 6: going to take them about ninety eight days from deal 118 00:06:13,360 --> 00:06:18,919 Speaker 6: closed from merger announcements. And that contrasts with under Biden administration, 119 00:06:19,040 --> 00:06:21,480 Speaker 6: it's taken four hundred to six hundred days for a 120 00:06:21,520 --> 00:06:22,480 Speaker 6: large banker may deal. 121 00:06:22,600 --> 00:06:24,479 Speaker 3: So these deals under. 122 00:06:24,320 --> 00:06:27,560 Speaker 6: Trump are being fast tracked, and it's really encouraging the 123 00:06:27,600 --> 00:06:30,839 Speaker 6: management teams to really go out there and search for deals. 124 00:06:31,720 --> 00:06:33,920 Speaker 4: So for so long, a lot of people had commented 125 00:06:33,960 --> 00:06:37,400 Speaker 4: that the US is overbanked. By one count there's almost 126 00:06:37,600 --> 00:06:41,479 Speaker 4: forty five hundred FDI and see insured banking institutions here. 127 00:06:41,680 --> 00:06:43,679 Speaker 4: Are we still over banked? Herman I would. 128 00:06:43,520 --> 00:06:47,560 Speaker 6: Say, so, there's a lot of competition, and that's the 129 00:06:47,600 --> 00:06:50,680 Speaker 6: reason why COO America is looking to sell because they 130 00:06:51,200 --> 00:06:56,120 Speaker 6: were lacking in the retail branch presence. They mostly bank 131 00:06:57,040 --> 00:07:02,479 Speaker 6: middle market commercial customers are grades, but it doesn't create 132 00:07:02,520 --> 00:07:06,159 Speaker 6: the diversity that they needed during time to stress like 133 00:07:06,200 --> 00:07:09,600 Speaker 6: the SVB environments. And so that was a lesson learned 134 00:07:10,080 --> 00:07:12,040 Speaker 6: for a lot of the banking industry that you need 135 00:07:12,080 --> 00:07:16,720 Speaker 6: to diversify your deposit base. And one way to diversify 136 00:07:16,720 --> 00:07:18,840 Speaker 6: as the cell to a larger organization. 137 00:07:18,600 --> 00:07:22,880 Speaker 4: Which segment of the banking industry is bloated, needs to 138 00:07:22,960 --> 00:07:23,800 Speaker 4: streamline the most. 139 00:07:24,040 --> 00:07:24,280 Speaker 7: Yeah. 140 00:07:24,360 --> 00:07:28,640 Speaker 6: So there you mentioned forty five hundred banks. Does there 141 00:07:28,760 --> 00:07:31,400 Speaker 6: need to be that many banks within the United States? 142 00:07:31,400 --> 00:07:34,320 Speaker 6: Probably not. They don't have to scale to operate a 143 00:07:34,360 --> 00:07:37,960 Speaker 6: retail branch presence. They don't have the capabilities on the 144 00:07:37,960 --> 00:07:40,920 Speaker 6: fee side and the advisory side to really help their 145 00:07:40,920 --> 00:07:45,400 Speaker 6: customers on the commercial side. And you see so much 146 00:07:45,440 --> 00:07:49,040 Speaker 6: competition from not only larger banks, but also the FinTechs 147 00:07:49,040 --> 00:07:53,680 Speaker 6: that are just binding at the heels on the consumer side. 148 00:07:53,720 --> 00:07:58,040 Speaker 6: So it's a really tough operating environment and we'd expect 149 00:07:58,120 --> 00:08:00,239 Speaker 6: more consolidation over the next several years. 150 00:08:00,280 --> 00:08:03,000 Speaker 2: All right, riddle me this year, why do banks even 151 00:08:03,040 --> 00:08:07,440 Speaker 2: have branches? I hear adding branches. I've been into a branch. 152 00:08:07,120 --> 00:08:10,800 Speaker 4: In years across the street from Bloomberg Headcutters, City Groups. 153 00:08:11,080 --> 00:08:14,480 Speaker 6: City Branch right across. A lot of it is marketing 154 00:08:15,040 --> 00:08:18,280 Speaker 6: because and a lot of it is scale. So for 155 00:08:18,440 --> 00:08:22,560 Speaker 6: a bank like Fifth Third, they're growing organically in the 156 00:08:22,600 --> 00:08:25,360 Speaker 6: Southeast and that's been a major growth driver for them. 157 00:08:25,440 --> 00:08:28,560 Speaker 8: If you need a branch, you you don't need a branch, 158 00:08:28,640 --> 00:08:31,240 Speaker 8: but you need the branch for a marketing aspect, so 159 00:08:31,280 --> 00:08:34,160 Speaker 8: you need to have ability, right It's a big billboards, 160 00:08:34,320 --> 00:08:37,000 Speaker 8: expensive billboard in markets where. 161 00:08:36,840 --> 00:08:39,560 Speaker 6: You have a lot of foot traffic and higher growth markets, 162 00:08:39,559 --> 00:08:42,840 Speaker 6: so it's a big billboard and it's been a proven 163 00:08:42,920 --> 00:08:45,680 Speaker 6: growth driver for banks. But on the other hand, branches 164 00:08:45,679 --> 00:08:49,360 Speaker 6: are declining. So if you have critical mass and scale 165 00:08:49,480 --> 00:08:53,079 Speaker 6: in your existing markets, you can trim your branch presence 166 00:08:53,120 --> 00:08:57,360 Speaker 6: and not affect your depositors. But if you're entering new markets, 167 00:08:57,360 --> 00:08:59,360 Speaker 6: then opening new branches is the way. 168 00:08:59,280 --> 00:09:00,960 Speaker 2: Do you think I could find my checkbook? 169 00:09:02,000 --> 00:09:04,400 Speaker 4: That raises a question does a fintech that wants to 170 00:09:04,400 --> 00:09:06,840 Speaker 4: be a bank need to therefore have a retail presence? 171 00:09:06,840 --> 00:09:08,920 Speaker 4: Do they need to open up a branch also across 172 00:09:09,000 --> 00:09:09,960 Speaker 4: the street from our office. 173 00:09:10,160 --> 00:09:12,960 Speaker 6: So that's that's the beauty of the fintech models that 174 00:09:13,000 --> 00:09:16,840 Speaker 6: they're issuing the branches. It's not a requirement. It's a 175 00:09:16,880 --> 00:09:19,320 Speaker 6: lower cost to serve because you don't have the physical 176 00:09:19,400 --> 00:09:24,240 Speaker 6: retail presence. And uh it's one way to to really 177 00:09:24,280 --> 00:09:29,800 Speaker 6: compete effectively with these with these legacy banks where you 178 00:09:29,880 --> 00:09:33,000 Speaker 6: have a really easy to use app and you you 179 00:09:33,720 --> 00:09:37,480 Speaker 6: aren't burden by this cost basis of owning the physical presence. 180 00:09:37,880 --> 00:09:38,199 Speaker 7: All right. 181 00:09:38,240 --> 00:09:40,120 Speaker 3: So when we had a couple of little blow ups 182 00:09:40,120 --> 00:09:41,840 Speaker 3: in your world a couple of years ago, I did. 183 00:09:42,000 --> 00:09:44,680 Speaker 2: I found this k r E the spider S and 184 00:09:44,679 --> 00:09:46,160 Speaker 2: P Regional Banking ETF. 185 00:09:46,320 --> 00:09:49,120 Speaker 3: That's right. How are you? How are the regional banks 186 00:09:49,120 --> 00:09:52,680 Speaker 3: training these days? Yeah, so they're they're really doing all right. 187 00:09:53,040 --> 00:09:57,199 Speaker 6: We're talking about price the tangibles around one point five 188 00:09:57,280 --> 00:10:00,840 Speaker 6: to one points uh times is during the height of 189 00:10:00,880 --> 00:10:05,120 Speaker 6: the weakest point during the SBB debacle, it was less 190 00:10:05,160 --> 00:10:09,160 Speaker 6: than one time. So they've rebounded really nicely despite some 191 00:10:09,240 --> 00:10:12,040 Speaker 6: of the uncertainty on the economy and what's hariffs, and 192 00:10:12,720 --> 00:10:14,720 Speaker 6: so we've seen some growth from them, especially on the 193 00:10:14,720 --> 00:10:18,679 Speaker 6: commercial lending side. That's really helped grow their top line. 194 00:10:19,480 --> 00:10:22,640 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 195 00:10:26,520 --> 00:10:30,240 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 196 00:10:30,320 --> 00:10:33,400 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 197 00:10:33,400 --> 00:10:36,720 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 198 00:10:36,760 --> 00:10:39,880 Speaker 1: you get your podcasts, or watch us live on YouTube. 199 00:10:40,760 --> 00:10:43,880 Speaker 2: We've had a management change in the telecom space. Verizon 200 00:10:43,920 --> 00:10:48,800 Speaker 2: Communications named Dan Shulman chief executive Officer, replacing Hans Wesberg. 201 00:10:49,120 --> 00:10:49,840 Speaker 3: That's effective. 202 00:10:49,960 --> 00:10:53,120 Speaker 2: Immediately looking over at the stock for Verizon down four 203 00:10:53,200 --> 00:10:56,920 Speaker 2: percent today, although it's up about four percent year today. 204 00:10:57,000 --> 00:10:58,959 Speaker 2: Let's see what this means for Verizon. 205 00:10:58,600 --> 00:10:59,880 Speaker 3: In for the telecom space. 206 00:11:00,520 --> 00:11:03,920 Speaker 2: We're joined by John Butler, senior telecomanals for Bloomberg Intelligencies 207 00:11:04,240 --> 00:11:07,080 Speaker 2: down there in our Princeton office. Hey, John, so a 208 00:11:07,200 --> 00:11:10,840 Speaker 2: change at the top four of Verizon. Was this expected 209 00:11:10,920 --> 00:11:12,640 Speaker 2: or is this something new for the company? 210 00:11:13,880 --> 00:11:14,839 Speaker 3: Not at all, Paul. 211 00:11:14,960 --> 00:11:17,480 Speaker 9: I mean, you know, when you think merger Monday. I've 212 00:11:17,520 --> 00:11:21,920 Speaker 9: had a lot of busy Mondays lately. But the last 213 00:11:21,960 --> 00:11:25,400 Speaker 9: piece of news I expected was this change in leadership 214 00:11:25,440 --> 00:11:30,320 Speaker 9: at Verizon. The company had really been sort of I 215 00:11:30,320 --> 00:11:33,680 Speaker 9: guess prepping the head of the consumer business or grooming 216 00:11:33,800 --> 00:11:37,800 Speaker 9: is a better word, summer. Ryan sam Path who is 217 00:11:38,080 --> 00:11:42,280 Speaker 9: just a phenomenal talent in my opinion, and he's been 218 00:11:42,400 --> 00:11:45,400 Speaker 9: sort of pushed out there doing a lot of investor 219 00:11:45,520 --> 00:11:49,880 Speaker 9: conferences and giving the investment community the impression that he 220 00:11:50,080 --> 00:11:52,880 Speaker 9: was the next in line. So when the news broke 221 00:11:52,960 --> 00:11:55,920 Speaker 9: this morning that Dan is taking over as CEO, it 222 00:11:56,040 --> 00:11:58,400 Speaker 9: really surprised a lot of people, including me. 223 00:11:59,160 --> 00:12:00,959 Speaker 3: So, what's what a company saying here? 224 00:12:01,000 --> 00:12:03,800 Speaker 2: Why do you think they chose this outsider versus somebody that, 225 00:12:03,920 --> 00:12:06,840 Speaker 2: again an insider that maybe the street thought was going 226 00:12:06,920 --> 00:12:08,360 Speaker 2: to be the next to line. 227 00:12:08,920 --> 00:12:12,319 Speaker 9: You know, I think for telecoms, all three of the majors, 228 00:12:12,400 --> 00:12:17,440 Speaker 9: the wireless business is slowing very rapidly on them. We're 229 00:12:17,480 --> 00:12:21,080 Speaker 9: seeing subscriber growth down a lot this year. There's a 230 00:12:21,120 --> 00:12:23,600 Speaker 9: lot of pressure on pricing, and I think the thought 231 00:12:23,760 --> 00:12:28,040 Speaker 9: is Dan Shulman used to be CEO of PayPal. He's 232 00:12:28,040 --> 00:12:32,320 Speaker 9: got experience at amex in the consumer finance business. 233 00:12:33,040 --> 00:12:34,960 Speaker 3: So they're thinking in terms of. 234 00:12:34,920 --> 00:12:38,160 Speaker 9: How to monetize the one hundred and fifty million consumer 235 00:12:38,280 --> 00:12:43,760 Speaker 9: relationships they have to move into adjacencies. The naming of Shulman, 236 00:12:43,880 --> 00:12:46,320 Speaker 9: in my mind, tells me they're looking to tap the 237 00:12:46,320 --> 00:12:50,040 Speaker 9: consumer finance market. You know, they've already got a credit 238 00:12:50,080 --> 00:12:54,200 Speaker 9: card business. I think it's probably doing pretty well. But 239 00:12:54,240 --> 00:12:57,480 Speaker 9: they're not actually in the loan business there, but they're 240 00:12:57,520 --> 00:13:01,000 Speaker 9: doing a lot of device finance, and so I think 241 00:13:01,040 --> 00:13:05,600 Speaker 9: the hope, maybe this is my speculation, maybe that they 242 00:13:05,640 --> 00:13:09,439 Speaker 9: can take that perhaps a step deeper into the consumer 243 00:13:09,559 --> 00:13:13,400 Speaker 9: finance market and maybe other adjacencies to be able to 244 00:13:13,520 --> 00:13:17,680 Speaker 9: monetize that base a little bit more and diversify away 245 00:13:17,720 --> 00:13:20,040 Speaker 9: from the slowdown and wireless. 246 00:13:19,920 --> 00:13:23,280 Speaker 2: And Verizon they've kind of dabbled over the years, and 247 00:13:23,360 --> 00:13:25,599 Speaker 2: other businesses, purchasing. 248 00:13:25,280 --> 00:13:30,400 Speaker 3: AOL and Yahoo. So what's the focus going forward here? 249 00:13:30,480 --> 00:13:33,600 Speaker 2: Is it to try to just manage the wireless business 250 00:13:33,679 --> 00:13:36,800 Speaker 2: as the decline in the wireless business as best they can. 251 00:13:38,200 --> 00:13:41,720 Speaker 9: So again it's the strategy here, Paul, I think, is 252 00:13:41,760 --> 00:13:44,240 Speaker 9: to sort of build off that base that they have. 253 00:13:44,360 --> 00:13:49,080 Speaker 9: The wireless business is stable, it's not going anywhere. It's 254 00:13:49,960 --> 00:13:54,280 Speaker 9: typically a GDP plus business. Again, we're seeing a slowdown now, 255 00:13:54,880 --> 00:13:58,400 Speaker 9: so it could move down to a GDP like growth rate. 256 00:13:59,120 --> 00:14:02,280 Speaker 9: But again it's all about extensions. So all three of 257 00:14:02,320 --> 00:14:07,160 Speaker 9: the majors here are pushing hard into consumer broadband. They're 258 00:14:07,200 --> 00:14:10,480 Speaker 9: doing very well there, both in the fiber and the 259 00:14:10,520 --> 00:14:15,280 Speaker 9: fixed wireless access business. But even that business is starting 260 00:14:15,320 --> 00:14:18,240 Speaker 9: to mature a bit as it saturates here in the US. 261 00:14:18,280 --> 00:14:21,920 Speaker 9: So the question becomes what's next, And maybe the what's 262 00:14:22,000 --> 00:14:26,320 Speaker 9: next could be consumer finance. If you look at T Mobile, 263 00:14:26,360 --> 00:14:31,000 Speaker 9: they've tapped the outdoor advertising market, which actually is growing 264 00:14:31,040 --> 00:14:36,240 Speaker 9: double digit. I never would have guessed, but the thought is, hey, 265 00:14:36,360 --> 00:14:39,960 Speaker 9: is people carry around these phones, we know where they are. 266 00:14:40,080 --> 00:14:43,960 Speaker 9: Perhaps we can leverage that and come up with very 267 00:14:44,000 --> 00:14:50,080 Speaker 9: innovative ways of increasing eyeballs on our outdoor advertising. So 268 00:14:50,160 --> 00:14:53,440 Speaker 9: I think they're looking for that type of creative thinking 269 00:14:54,120 --> 00:14:57,480 Speaker 9: to come up with new ways of generating growth. And again, 270 00:14:57,560 --> 00:15:00,600 Speaker 9: you're trying to leverage that huge core or base of 271 00:15:00,640 --> 00:15:02,080 Speaker 9: wireless subs that you have. 272 00:15:02,640 --> 00:15:04,720 Speaker 2: Just been at their balance sheet, John, this is a 273 00:15:05,240 --> 00:15:07,600 Speaker 2: this is company Verizon. It's got one hundred and seventy 274 00:15:07,640 --> 00:15:11,440 Speaker 2: billion dollars of total debt. There, how's the How does 275 00:15:11,480 --> 00:15:12,880 Speaker 2: the market feel about their balance sheet? 276 00:15:14,000 --> 00:15:18,720 Speaker 9: So I think of the big three, Verizon is probably 277 00:15:19,200 --> 00:15:21,600 Speaker 9: at a point where they want to be in terms 278 00:15:21,680 --> 00:15:25,560 Speaker 9: of financing the business. Can they load on a bunch 279 00:15:25,640 --> 00:15:29,440 Speaker 9: more debt? It's it's hard to say. I'm going to 280 00:15:29,520 --> 00:15:33,320 Speaker 9: defer to our credit as for that, Steve Flynn, But 281 00:15:34,200 --> 00:15:38,360 Speaker 9: I don't view their ability to finance new ventures as 282 00:15:38,400 --> 00:15:42,480 Speaker 9: an issue here at all. It's a very cash rich business, 283 00:15:42,600 --> 00:15:46,160 Speaker 9: wireless that is, and you know, I think that will 284 00:15:46,200 --> 00:15:50,320 Speaker 9: allow Verizon to bankroll any of the new ventures they 285 00:15:50,360 --> 00:15:52,280 Speaker 9: plan to push into from here. 286 00:15:53,120 --> 00:15:55,680 Speaker 2: And one thing I certainly pro shareholders is six point 287 00:15:55,680 --> 00:15:56,800 Speaker 2: six percent dividend yield? 288 00:15:56,880 --> 00:15:58,080 Speaker 3: Is that safe? 289 00:15:58,880 --> 00:16:01,480 Speaker 9: I think it is safe. That's a good question. I 290 00:16:01,560 --> 00:16:05,840 Speaker 9: think Verizon, of the big three, really sort of gets 291 00:16:05,880 --> 00:16:08,680 Speaker 9: it when it comes to the importance of the dividend 292 00:16:08,760 --> 00:16:12,640 Speaker 9: to the investment community. There's a lot of telecoms out 293 00:16:12,680 --> 00:16:15,560 Speaker 9: there at and T included that have cut the dividend 294 00:16:15,680 --> 00:16:18,680 Speaker 9: in the past and learned the hard way that that 295 00:16:18,840 --> 00:16:21,720 Speaker 9: really I call it the third rail of telecom. I mean, 296 00:16:21,760 --> 00:16:24,880 Speaker 9: you do not want to cut the dividend yep. So 297 00:16:25,120 --> 00:16:28,080 Speaker 9: my call here is that I think the dividend is safe. 298 00:16:28,200 --> 00:16:31,800 Speaker 3: Yes, stay with us. More from Bloomberg Intelligence coming up 299 00:16:32,000 --> 00:16:32,400 Speaker 3: after this. 300 00:16:35,920 --> 00:16:39,600 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 301 00:16:39,680 --> 00:16:43,160 Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto 302 00:16:43,200 --> 00:16:46,240 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 303 00:16:46,280 --> 00:16:49,480 Speaker 1: get your podcasts or watch us live on YouTube. 304 00:16:50,160 --> 00:16:51,760 Speaker 2: Let's get an update on what's going on in the 305 00:16:51,800 --> 00:16:58,840 Speaker 2: auto industry, particularly transition from internal combustion engines to electric vehicles. 306 00:16:58,840 --> 00:17:00,000 Speaker 3: I'm not sure where we are. 307 00:17:00,040 --> 00:17:01,600 Speaker 2: In the process now if we've kind of lost some 308 00:17:01,640 --> 00:17:02,960 Speaker 2: momentum of what's. 309 00:17:02,760 --> 00:17:03,280 Speaker 3: Going on there. 310 00:17:03,320 --> 00:17:05,159 Speaker 2: But let's check out with our next guest. There's some 311 00:17:05,200 --> 00:17:08,439 Speaker 2: thoughts here, agent Balfour. He's a founder and chairman of 312 00:17:08,560 --> 00:17:13,120 Speaker 2: and Vorso joining us. And Vorso is a consulting firm 313 00:17:13,160 --> 00:17:17,040 Speaker 2: specializing in digital transformation, AI and software driven innovation, with 314 00:17:17,119 --> 00:17:20,119 Speaker 2: a focus in part on the auto industry. 315 00:17:20,160 --> 00:17:21,800 Speaker 3: Adrian, thanks so much for joining us here. 316 00:17:22,440 --> 00:17:24,440 Speaker 2: Give us a sense of kind of where you think 317 00:17:24,480 --> 00:17:26,520 Speaker 2: we are here in this country, and then we can 318 00:17:26,560 --> 00:17:29,720 Speaker 2: go globally if you want on this. I guess transition 319 00:17:29,840 --> 00:17:30,960 Speaker 2: to electric vehicles. 320 00:17:33,200 --> 00:17:34,960 Speaker 7: Yeah, now, thanks for having me. I think you know 321 00:17:35,040 --> 00:17:37,399 Speaker 7: you take a look at it. We are transitioning to 322 00:17:38,080 --> 00:17:41,359 Speaker 7: an electric vehicle sort of infrastructure and a future going 323 00:17:41,400 --> 00:17:46,240 Speaker 7: forward with software defined vehicles. Various sort of like companies 324 00:17:46,280 --> 00:17:51,080 Speaker 7: have got certain advantages over others. Companies like stillant Us 325 00:17:51,119 --> 00:17:53,159 Speaker 7: have pulled back a little bit. I think some of 326 00:17:53,200 --> 00:17:55,879 Speaker 7: the traditional autos have spent too much money on it 327 00:17:56,520 --> 00:17:59,520 Speaker 7: and have achieved less than stellar results, and they tend 328 00:17:59,520 --> 00:18:03,160 Speaker 7: to be pulling back a little bit, whereas companies like Tesla, Lucid, 329 00:18:03,359 --> 00:18:07,520 Speaker 7: Rivian or kind of pushing forward. I think overall the 330 00:18:07,560 --> 00:18:10,200 Speaker 7: next sort of twenty twenty six twenty twenty seven, you're 331 00:18:10,200 --> 00:18:14,480 Speaker 7: going to see an increasing acceptance of the electrical vehicle 332 00:18:14,520 --> 00:18:16,119 Speaker 7: market as we go forward in the marketplace. 333 00:18:16,880 --> 00:18:20,560 Speaker 4: Yeah, your former employer Ford among those legacy automakers that 334 00:18:20,720 --> 00:18:23,399 Speaker 4: have perhaps spent too much and maybe aren't seeing enough return. 335 00:18:23,480 --> 00:18:27,439 Speaker 4: In the meantime, where are we, Adrian, now that the 336 00:18:27,520 --> 00:18:30,399 Speaker 4: seventy five hundred dollars us EN tax credit is gone. 337 00:18:30,480 --> 00:18:32,600 Speaker 4: How much momentum did that halt? 338 00:18:34,280 --> 00:18:35,879 Speaker 7: And I think you know, you saw like a seven 339 00:18:35,880 --> 00:18:38,800 Speaker 7: percent seven point four percent, I think increase in quarter 340 00:18:38,840 --> 00:18:42,560 Speaker 7: to quarter revenues for Tesla. I think that's going to 341 00:18:42,600 --> 00:18:45,240 Speaker 7: be hard to stay in going into Q four, So 342 00:18:45,280 --> 00:18:47,399 Speaker 7: that will be difficult, primarily because it was a bit 343 00:18:47,400 --> 00:18:49,520 Speaker 7: of a pull ahead. But as you look going into 344 00:18:49,560 --> 00:18:52,840 Speaker 7: twenty twenty six, you're going to see in particularly with Tesla, 345 00:18:52,920 --> 00:18:56,000 Speaker 7: with the advances of a sort of sub thirty thousand 346 00:18:56,040 --> 00:18:58,560 Speaker 7: dollars model. Ford are working hard to come out with 347 00:18:58,600 --> 00:19:00,680 Speaker 7: a sub thirty thousand dollars model as well, So I 348 00:19:00,680 --> 00:19:04,960 Speaker 7: think there's a big shift to apply software defined vehicles. 349 00:19:05,440 --> 00:19:08,960 Speaker 7: But the major issues is that the costs went too high. 350 00:19:09,240 --> 00:19:12,360 Speaker 7: So a lot of the automotive makers are now focusing 351 00:19:12,400 --> 00:19:15,159 Speaker 7: on the sub thirty thousand dollars category to try and 352 00:19:15,200 --> 00:19:17,320 Speaker 7: get something in there, to try and get a sort 353 00:19:17,320 --> 00:19:20,520 Speaker 7: of market presence. In particular, I'm interested in seeing how 354 00:19:20,560 --> 00:19:23,600 Speaker 7: test those launch goes with the model too, and I 355 00:19:23,600 --> 00:19:26,160 Speaker 7: think if that goes well, and if you can get 356 00:19:26,200 --> 00:19:32,880 Speaker 7: some of the ROBOTAXI legislation SLASH provides pilots to improve, 357 00:19:33,600 --> 00:19:35,639 Speaker 7: I think you're going to see a really big uptick 358 00:19:35,720 --> 00:19:37,280 Speaker 7: because the technology is pretty cool. 359 00:19:37,600 --> 00:19:40,200 Speaker 4: Right Well, you mentioned a couple of times a sub 360 00:19:40,240 --> 00:19:43,160 Speaker 4: thirty thousand EV, and of course we're not there yet, 361 00:19:43,560 --> 00:19:46,440 Speaker 4: but you do see that around the world. Chinese evs 362 00:19:46,800 --> 00:19:51,639 Speaker 4: are cheap and incredibly technologically advanced, and they're available everywhere 363 00:19:51,640 --> 00:19:54,200 Speaker 4: except the United States. Do we get to a point 364 00:19:54,240 --> 00:19:56,560 Speaker 4: where we might one day see Chinese main evs in 365 00:19:56,560 --> 00:19:58,120 Speaker 4: the US. 366 00:19:59,160 --> 00:20:02,679 Speaker 7: I think that's that's that's an ecumenical decision up to 367 00:20:02,840 --> 00:20:06,240 Speaker 7: the Congress. So I think right now there's very serious 368 00:20:06,280 --> 00:20:10,520 Speaker 7: sort of tariffs on the Chinese vehicles coming into the US, 369 00:20:10,800 --> 00:20:13,399 Speaker 7: and I think the idea there is to give the 370 00:20:13,520 --> 00:20:16,720 Speaker 7: US automakers a chance to play catch up. I mean, 371 00:20:16,720 --> 00:20:18,639 Speaker 7: if you go to Europe, you will see some thirty 372 00:20:19,080 --> 00:20:23,359 Speaker 7: dollars Chinese evs that are really high quality, and I 373 00:20:23,400 --> 00:20:26,879 Speaker 7: think it's really in the US we're really sort of 374 00:20:26,920 --> 00:20:28,760 Speaker 7: like playing catch up a little bit. So I think 375 00:20:28,800 --> 00:20:31,080 Speaker 7: the tariffs there are there designed to give us a 376 00:20:31,119 --> 00:20:33,960 Speaker 7: head start, or to give us, well not a head start, 377 00:20:33,960 --> 00:20:34,880 Speaker 7: but catch up time. 378 00:20:34,960 --> 00:20:35,520 Speaker 4: Play catch up. 379 00:20:35,560 --> 00:20:37,160 Speaker 7: Yeah, yeah. 380 00:20:37,680 --> 00:20:41,080 Speaker 2: What does this mean for the automakers forwards, the gms, 381 00:20:41,119 --> 00:20:44,199 Speaker 2: the Volkswagens. I mean it's a tough game for them 382 00:20:44,200 --> 00:20:47,360 Speaker 2: because I got to wean themselves off of these ice cars, 383 00:20:47,440 --> 00:20:49,679 Speaker 2: vehicles that make a lot of money for them, F 384 00:20:49,720 --> 00:20:52,240 Speaker 2: one fifty trucks and whatnot. How do you think they're 385 00:20:52,240 --> 00:20:53,520 Speaker 2: going to work this out? 386 00:20:54,440 --> 00:20:56,440 Speaker 7: Well, it's like it's like every sort of transition in 387 00:20:56,480 --> 00:21:00,320 Speaker 7: the economy, you know. The traditional automakers come from a 388 00:21:00,359 --> 00:21:04,000 Speaker 7: sort of modular basis where they buy modules from multiple suppliers. 389 00:21:04,000 --> 00:21:06,720 Speaker 7: So you may have one hundred modules in the particular 390 00:21:06,840 --> 00:21:09,240 Speaker 7: vehicles or one hundred plus modules in a particular vehicle 391 00:21:09,480 --> 00:21:12,320 Speaker 7: and they have to integrate that together. That's a very 392 00:21:12,320 --> 00:21:16,400 Speaker 7: complex sort of scenario versus something like a Chinese YV 393 00:21:16,920 --> 00:21:19,800 Speaker 7: that's a startup or a Tesla where they have two 394 00:21:19,880 --> 00:21:22,480 Speaker 7: to three modules in the vehicle that they have to integrate. 395 00:21:22,760 --> 00:21:25,800 Speaker 7: So it's a different framework from where you're coming from. 396 00:21:26,040 --> 00:21:29,560 Speaker 7: And so the automakers in the US have got the capital, 397 00:21:29,600 --> 00:21:31,919 Speaker 7: they've got the experience, and they've got the knowledge. They 398 00:21:31,920 --> 00:21:34,639 Speaker 7: will pull it off. They just need time to get there. 399 00:21:34,760 --> 00:21:36,880 Speaker 7: They have to move from over one hundred modules down 400 00:21:36,960 --> 00:21:39,320 Speaker 7: to less than ten, and they've got to do that 401 00:21:39,359 --> 00:21:42,080 Speaker 7: within three to four years. It's a difficult challenge. 402 00:21:42,160 --> 00:21:44,400 Speaker 4: It's a difficult challenge. I know you're in the business 403 00:21:44,600 --> 00:21:48,280 Speaker 4: of vehicles and auto suppliers. I want to get your 404 00:21:48,320 --> 00:21:51,720 Speaker 4: take on the financial troubles of First Brands and Tricolor, 405 00:21:51,720 --> 00:21:54,960 Speaker 4: which are of course tangentially linked to the auto industry. 406 00:21:55,440 --> 00:21:58,040 Speaker 4: What does it say about the strength of the auto 407 00:21:58,040 --> 00:22:01,639 Speaker 4: industry that these two companies have fallen into financial disfavor 408 00:22:02,040 --> 00:22:04,600 Speaker 4: so quickly and taken so many people by surprise. I 409 00:22:04,680 --> 00:22:07,119 Speaker 4: know there are some idiosyncratic reasons behind them, but it 410 00:22:07,160 --> 00:22:10,359 Speaker 4: does speak volumes about a certain segment of the US 411 00:22:10,400 --> 00:22:13,720 Speaker 4: consumer that is having trouble keeping up in this economy. 412 00:22:14,960 --> 00:22:17,800 Speaker 7: Yeah, I think US consumer is sort of like I think, 413 00:22:17,840 --> 00:22:20,159 Speaker 7: it was sort of pushed towards evs, and there's been 414 00:22:20,200 --> 00:22:23,159 Speaker 7: a negative reaction as part of that. But as people 415 00:22:23,240 --> 00:22:27,080 Speaker 7: buy evs and become more stealth mode, I think people 416 00:22:27,119 --> 00:22:29,760 Speaker 7: are going to start adopting them them faster and faster. 417 00:22:29,880 --> 00:22:32,280 Speaker 7: I know the people that I am familiar with that 418 00:22:32,320 --> 00:22:35,080 Speaker 7: have been very skeptical of evs, once they get an 419 00:22:35,080 --> 00:22:38,080 Speaker 7: EV they start to really like it. The difficulty still 420 00:22:38,200 --> 00:22:42,760 Speaker 7: becomes down to fear of you long long trips, travel, 421 00:22:42,960 --> 00:22:45,720 Speaker 7: charging networks, that sort of thing. But I think as 422 00:22:45,800 --> 00:22:49,239 Speaker 7: the consumer becomes more confident, and that is only going 423 00:22:49,280 --> 00:22:51,800 Speaker 7: to happen by stealth, that's only going to happen incrementally. 424 00:22:52,119 --> 00:22:55,440 Speaker 7: But as they do so it will be it will 425 00:22:55,520 --> 00:22:58,679 Speaker 7: be positive. The key thing is the getting Tesla to 426 00:22:58,680 --> 00:23:01,399 Speaker 7: get out there, because they are the market leader and 427 00:23:01,440 --> 00:23:03,880 Speaker 7: they are setting the tone for the rest of the industry. 428 00:23:04,119 --> 00:23:06,480 Speaker 7: If they continue to do that and then GMS the 429 00:23:06,560 --> 00:23:08,960 Speaker 7: Lantas and Ford Ribble to follow suit, then I think 430 00:23:09,000 --> 00:23:11,840 Speaker 7: the future is bright for the automotive world in the US, 431 00:23:12,160 --> 00:23:15,280 Speaker 7: provided the tires keep the Chinese out for the next 432 00:23:15,280 --> 00:23:16,600 Speaker 7: sort of profercable future. 433 00:23:17,480 --> 00:23:22,159 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 434 00:23:22,359 --> 00:23:25,840 Speaker 1: and anywhere else you get your podcasts. Listen live each 435 00:23:25,840 --> 00:23:29,600 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 436 00:23:29,720 --> 00:23:33,280 Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app. 437 00:23:33,680 --> 00:23:36,600 Speaker 1: You can also watch us live every weekday on YouTube 438 00:23:37,000 --> 00:23:40,080 Speaker 1: and always on the Bloomberg terminal.