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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: easterne on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: All right, there's been a lot of US CEO changes

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Speaker 2: in the telecom space lately, Paul, but now we're getting

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Speaker 2: one in the retail space. The biggest retailer, walmart announcing

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Speaker 2: CEO Doug McMillan will retire in February and he will

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Speaker 2: be replaced by the current head of walmart Us, Jen Bartash,

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Speaker 2: has covers retail, staples and packagews for us here at

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Speaker 2: Bloomberg Intelligence. Jen, was this a surprise or was this

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Speaker 2: a finely planned succession plan?

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Speaker 3: Good morning? So it's the surprise is really only in

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Speaker 3: the timing, not in the selection of who is actually

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Speaker 3: going to succeed Doug McMillan. So, well, you know, John

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Speaker 3: Ferner has been in a position for the last six

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Speaker 3: years as CEO of walmart Us. Everyone has presumed that

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Speaker 3: he would be the heir apparent to the CEO role,

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Speaker 3: So it's really just a matter of the timing of

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Speaker 3: it that has caught people a little bit by surprise.

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Speaker 4: Today I'm looking at this guy, the mister McMillan. He's

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Speaker 4: only fifty nine years old. Now what I mean is

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Speaker 4: this this isn't that's kind of young, right.

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Speaker 3: It is reasonably young. He's been at the Helm since

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Speaker 3: twenty fourteen, you know, and I will say to his credit,

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Speaker 3: you know, he's really implemented a cultural change at Walmart.

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Speaker 3: If you think back to you know, the the early knots,

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Speaker 3: you know, Walmart had a bit of a reputation as

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Speaker 3: maybe a bully with some of their suppliers and partners,

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Speaker 3: you know, and the culture has really evolved to where

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Speaker 3: it's much more of a technology led company. They're willing

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Speaker 3: to experiment. They try, they fail, they move on. They've

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Speaker 3: tried different strategez. They're not afraid to back away when

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Speaker 3: they're not panning out and to delve into something new.

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Speaker 3: And that cultural shift really is attributed to Doug McMillan.

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Speaker 3: And you know, as as for the timing, you know,

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Speaker 3: it just maybe he feels that it's his time to

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Speaker 3: have left his mark on the company and move on.

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Speaker 2: What does this mean for a company? Like Target or

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Speaker 2: anyone else that competes with Walmart. Does this present an

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Speaker 2: opportunity or are things just go exactly as they were

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Speaker 2: at Walmart, where the strategy remains consistent and there's no

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Speaker 2: real entry point for someone who has maybe been and

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Speaker 2: also ran to kind of close the gap.

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Speaker 3: I think that's a great question. And when it comes

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Speaker 3: to tactics, we're not expecting any major pivot and strategy

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Speaker 3: by John Ferner when he takes over as CEO. But

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Speaker 3: to be fair, I mean, Walmart is firing on all

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Speaker 3: cylinders at the moment, and they're gaining market share, they're

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Speaker 3: growing their top line, growing their profits, so they're doing

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Speaker 3: quite well. That said, you know, at TAR we also

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Speaker 3: had a new CEO announced not long ago, you know,

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Speaker 3: and for Michael Fidelke, who's who's moving into the CEO role,

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Speaker 3: it's much more about the focus on targets, transformation and

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Speaker 3: you know, and and a transfer a turnaround plan. Now,

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Speaker 3: whether that presents an opportunity with a change at Walmart

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Speaker 3: as well, that's a little hard to a little hard

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Speaker 3: to say, because you know, I think first, Target's got

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Speaker 3: to get their house in order before they go after

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Speaker 3: other people's other people's houses as well.

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Speaker 4: All Right, So stepping back here, what's the play for Walmart?

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Speaker 4: If you're an investor in Walmart today? Why are you

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Speaker 4: in an investor in Walmart today?

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Speaker 3: Well, you know, Walmart is is has done an admirable

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Speaker 3: job of you know, increasing the breadth of their business

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Speaker 3: while simultaneously becoming more focused. If you think over the

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Speaker 3: last several years, they've they've shed they've exited some of

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Speaker 3: their international markets where they weren't performing well. They've really

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Speaker 3: focused on technology, the implementation of things like AI to

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Speaker 3: support their business. Their digital sales growth is growing, the

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Speaker 3: marketplace for for for online sales is growing. So you know,

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Speaker 3: when you look at it from an investor perspective, there

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Speaker 3: are a lot of things that are happening at Walmart

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Speaker 3: that should lead to consistent future growth. And you know

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Speaker 3: that also includes, you know, a lot of the It

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Speaker 3: includes the efforts that they're making to bring higher income

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Speaker 3: households into their into their into their group and and

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Speaker 3: if they're able to successfully retain those households going forward,

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Speaker 3: that just sets up a whole new wave of potential

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Speaker 3: growth for for for Walmart in the long run. With

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Speaker 3: a much more robust or customer. And so those those

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Speaker 3: are the kinds of things where you look at them

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Speaker 3: and you look at them relative to competitors, and how

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Speaker 3: those those peers are valued. And although you know, from

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Speaker 3: a evaluation perspective, you know Walmart is, you know, more

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Speaker 3: expensive than it had been, there's still a lot of

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Speaker 3: opportunity to grow.

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Speaker 1: Stay with us.

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Speaker 4: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's move now to the pharmaceutical sector with a big

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Speaker 2: purchase here by Murk, a nine point two billion dollar

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Speaker 2: purchase of Sidara Therapeutics for twenty one excuse me, two

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Speaker 2: hundred and twenty one fifty a share in cash. Madison

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Speaker 2: Muller is our Bloomberg News healthcare reporter and she joins

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Speaker 2: us now and Madison this is all about filling the

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Speaker 2: pipeline because Murk is losing patent protection on one of

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Speaker 2: its blockbuster drugs.

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Speaker 5: Exactly, and this is sort of the perpetual problem for

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Speaker 5: pharmaceutical companies is that they face these patents for huge

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Speaker 5: blockbusters that end up accounting for a large majority of

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Speaker 5: their sales. I mean, in Merk's case, almost half the

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Speaker 5: company's revenue last year came from Katruda, which is facing

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Speaker 5: a patent expiration in twenty twenty eight. This is a

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Speaker 5: cancer drug, one of the best selling pharmaceutical products of

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Speaker 5: all time, and so Merk has been looking for other

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Speaker 5: products to replenish its pipeline. Like you said, this is

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Speaker 5: one of them. They did another deal earlier this year,

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Speaker 5: and so looking to flu treatments, which flu even though

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Speaker 5: we have vaccines, anti virals for the vaccines are effective,

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Speaker 5: but for a long time, scientists, researchers, drug makers have

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Speaker 5: been hunting for more effective and different products to help

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Speaker 5: prevent the flu, which lots of Americans die from still

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Speaker 5: each year.

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Speaker 4: So where would keep Where would Mark like to be

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Speaker 4: in terms of I mean, I guess when you're thinking back,

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Speaker 4: having half your sales tied to one drug, well, it's

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Speaker 4: a great drug and it's all good. That's probably not

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Speaker 4: what you want from a diversification standpoint. What does Merk

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Speaker 4: say about what they'd like to be?

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Speaker 5: Yeah, I mean It's interesting because a lot of pharma

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Speaker 5: companies end up facing this problem. I mean, we look

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Speaker 5: at Nova Nordisk, and they have they're facing a similar issue.

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Speaker 5: I mean, they're not necessarily looking at patent expirations, but

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Speaker 5: they're looking at government price negotiations and cuts for their

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Speaker 5: best selling drugs, Ozebic and Wagovi. The majority of their

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Speaker 5: sales come from those products, and so a lot of

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Speaker 5: times pharmaceutical companies end up in this situation where they

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Speaker 5: have one product accounting for the majority of sales. And so,

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Speaker 5: you know, Merk is not taking this approach to like

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Speaker 5: looking to just one company, you know, big deal one

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Speaker 5: company to get another blockbuster to replace ki Truda. They're

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Speaker 5: looking to have sort of one analyst, which we have

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Speaker 5: in the story called it a string of pearls M

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Speaker 5: and a approach you know, looking to more like bite

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Speaker 5: sized deals to sort of diversify that it's pipeline and

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Speaker 5: look to a couple different products to hopefully, you know,

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Speaker 5: replenish that. Abvi was in a similar situation with its

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Speaker 5: best selling drug human Era, and they now have and

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Speaker 5: that was an arthritis drug. They now have two arthritis

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Speaker 5: treatments that are sort of accounting for like half and

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Speaker 5: half of what Humaira was bringing in. So it's interesting

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Speaker 5: and all the pharmaceutical companies are sort of taking different

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Speaker 5: approaches to how they're doing but how they're doing it,

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Speaker 5: But it seems like sort of doing this string of

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Speaker 5: pearls approach, having a couple of different products is the

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Speaker 5: way that they're thinking about it right now.

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Speaker 2: I feel like I remember that once upon a time,

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Speaker 2: a lot of these companies that were losing patent protection

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Speaker 2: on their drugs would come out with like a tweak

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Speaker 2: to the drug. You know, maybe it's in gel capsule

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Speaker 2: form as opposed to tablet form, and that would you know,

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Speaker 2: extend the patent for a little bit longer. Is that

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Speaker 2: something that they still do?

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Speaker 5: Yeah, I mean it is. It's definitely something that they

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Speaker 5: still do. There are lots of ways to extend a patent,

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Speaker 5: you know, getting a new indication for pediatrics or different

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Speaker 5: formulations or combinations, but again, it sort of only gives

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Speaker 5: you a couple more years. It doesn't extend the product's

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Speaker 5: lifeline by like another ten years, which that's what we're

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Speaker 5: looking at, where these companies have to think decades, you know,

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Speaker 5: maybe a decade or more in advance about what's happening

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Speaker 5: in terms of their pipeline. So while that's somewhat of

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Speaker 5: a temporary solution or something that can be done earlier

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Speaker 5: in a product's lifeline, it's like, once you get to

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Speaker 5: this point where it's sort of crunch time, they need

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Speaker 5: to be thinking about what more can we bring in

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Speaker 5: to make up for this is.

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Speaker 4: The Trump administration and the regulators. Are they okay with

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Speaker 4: these deals? I mean, do they ever challenge any of

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Speaker 4: these deals or are they kind of under the radar.

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Speaker 5: So far it's sort of under the radar. I mean,

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Speaker 5: this one's interesting. Actually, there was another analyst note this

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Speaker 5: morning about how they don't think that the FTC per se,

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Speaker 5: we'll have a problem with this deal. But it's interesting

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Speaker 5: to do a deal in the infectious disease space given

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Speaker 5: the Department of Health and Human Services stands on vaccines

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Speaker 5: infectious disease right now, and while this isn't a vaccine,

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Speaker 5: it's just an interesting time in that space in general.

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Speaker 5: So while there might not be additional FTC scrutiny, it

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Speaker 5: might be something. And you know, again this is sort

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Speaker 5: of hypothetical, but just like given the climate right now,

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Speaker 5: is something that HHS could potentially keep an eye on

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Speaker 5: or look at.

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Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and

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Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 4: A lot of news into telecomspaceically, we had a lot

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Speaker 4: of change in the CEO suite. We've got a lot

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Speaker 4: of stuff happening here. Verizon's out with a big story

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Speaker 4: I want to get to about cutting costs there. John

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Speaker 4: Butler joins us. He covers all the telecom stuff for

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Speaker 4: Bloomberg Intelligence. Let's start with Verizon here planning to cut

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Speaker 4: about fifteen thousand jobs. It's about fifteen percent of the workforce.

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Speaker 4: I mean, this is big. What's going on?

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Speaker 6: That is a lot. So they have a new CEO,

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Speaker 6: Dan Shalman. He's been on the board for a long time,

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Speaker 6: so he's had a front row seat to what Hans

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Speaker 6: Vesperg was doing. And his feeling was that Vesperg who

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Speaker 6: was leaning into a network first strategy. So he was

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Speaker 6: out there telling everyone Verizon has the best network. It's

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Speaker 6: the only reason to be with us. It's the best

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Speaker 6: reason to be with us, and it just wasn't resonating.

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Speaker 6: I think Shulman saw it and said, we need to

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Speaker 6: be consumer first, not network first. So he took over.

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Speaker 6: I think it was October third, at the beginning of October.

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Speaker 6: He's new at the company, but again, I'm sorry he's

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Speaker 6: new in the role, but he's not new at the company,

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Speaker 6: and so I think my hope is at least that

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Speaker 6: these cuts are carefully considered, because just as you say,

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Speaker 6: with cutting fifteen to twenty percent of the workforce at

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Speaker 6: a telecom risk cutting into bone, not just not just fat.

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Speaker 4: And he was at at and T before. He's this

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Speaker 4: is a telecom guy, right.

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Speaker 6: He was at Virgin Mobile too. He has telecom experience,

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Speaker 6: and he also helped to sort of pull PayPal out

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Speaker 6: of the dredges. I think they headed back there during

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Speaker 6: his tenure as well. So it was a little bit

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Speaker 6: of a controversial ride for him there, But I think

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Speaker 6: he has the kind of telecom experience and board experience

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Speaker 6: at Verizon to bring some changes to the organization. When

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Speaker 6: I talked to the company about his naming as CEO.

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Speaker 6: The answer was, we're bringing him in as a change agent.

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Speaker 6: We really need shake up here.

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Speaker 4: For and that's an industry that could probably use it

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Speaker 4: a little bit. I mean, John Ledger T Mobile did

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Speaker 4: such a great job as a change.

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Speaker 6: He did, so what he recognized is that consumer wireless

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Speaker 6: is a consumer retail business, right. They have brand spokespeople,

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Speaker 6: they advertise on the Super Bowl, they have free Tuesday,

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Speaker 6: you know, tea Mobile Tuesday giveaways, and Verizon seems off

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Speaker 6: base there. I don't think they really hit the ball

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Speaker 6: well when it comes to being in the consumer retail

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Speaker 6: business and.

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Speaker 4: They think they think my thing is they always they're

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Speaker 4: a bell company, so they have some of that legacy.

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Speaker 6: Yeah, it's in the culture there and hopefully Shulman can

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Speaker 6: sort of instill that excitement in the consumer. That's his

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Speaker 6: big challenge.

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Speaker 4: But I mean that's a business, the wireless business, that's

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Speaker 4: a tough business. It's very competitive. Top blank growth really

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Speaker 4: not there for in a large so maybe cutting costs

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Speaker 4: is a way to deliver cash it earnings.

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Speaker 6: It's part of it. I think they also need to

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Speaker 6: move into adjacency. So if you look in Canada at

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Speaker 6: the carriers there, like Rogers owns the Toronto Blue Jays

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Speaker 6: and Rogers Center Stadium. They're in media, you know, they're

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Speaker 6: they're tapping a lot of different adjacencies to make up

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Speaker 6: for that slow growth and wireless.

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Speaker 3: All right.

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Speaker 4: Another story that is really front and center for me

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Speaker 4: in it for a lot of the kind of telecom

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Speaker 4: equity investors and bond investors is SATs Echo Star.

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Speaker 6: Yeah.

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Speaker 4: And finally, Charlie Ergen is the CEO and founder of

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Speaker 4: Ecostar finally selling the spectrum. Is that what's going on?

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Speaker 4: Because he bought a lot of spectrum.

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Speaker 6: It has been a crazy ride. So EchoStar, as you know,

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Speaker 6: their roots were in satellite delivered PayTV. That market is

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Speaker 6: dying with a capital d and his decision was, let

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Speaker 6: me take the capital I have and get into the

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Speaker 6: consumer wireless business and compete with AT and T Verizon

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Speaker 6: and T Mobile. And I think every analyst, including myself, asked,

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Speaker 6: what are you doing?

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Speaker 3: You know?

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Speaker 6: And he bought a treasure trove of spectrum and he

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Speaker 6: was sitting on it. He was beginning to deploy it.

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Speaker 6: He was building his own wireless network, but they weren't

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Speaker 6: getting any subscribers. And I think the FCC looked at

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Speaker 6: it and said, we need more spectrum in the hands

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Speaker 6: of people that can really fill the air waves. And

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Speaker 6: so they started to get pressured a lot by the FCC,

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Speaker 6: and that prompted the sales spectrum to STARLINKH and AT

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Speaker 6: and T.

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Speaker 4: I guess the good news is he is selling the

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Speaker 4: spectrum for a lot of money. The stocks up, It's

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Speaker 4: tripled this year. That's the good news. The bad news

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Speaker 4: it took him about fifteen years steam to do what

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Speaker 4: we all knew almost fifteen years ago, which is either

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Speaker 4: build a network or you flip the spectrum and we

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Speaker 4: make money. I eat either way, but right, woll it

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Speaker 4: took a long time for him.

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Speaker 6: Well, not only that, I always thought with they were

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Speaker 6: Dish as a PATV provider, it's a strong brand name.

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Speaker 6: I need become what's called a mobile virtual network operator MVNO,

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Speaker 6: where you basically have AT and T and Verizon run

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Speaker 6: the network for you. You do the billing, customer care,

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Speaker 6: most importantly the marketing, and so you're out there with

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Speaker 6: a Dish wireless brand. You don't have to worry about

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Speaker 6: spectrum or network operations. And they just decided to do

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Speaker 6: the network themselves.

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