WEBVTT - BI Weekend: DirecTV, Dish Merger, Nike Earnings 0:00:02.960 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.680 --> 0:00:14.400 with Alex Steel and Paul'sweeny. 0:00:14.520 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.920 --> 0:00:20.280 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:24.119 The semiconductor business is a really cyclical business. 0:00:23.640 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.280 --> 0:00:29.920 Do investors like the M and A that we've seen? 0:00:30.120 --> 0:00:31.080 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.120 --> 0:00:42.040 Bloomberg Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio. 0:00:43.080 --> 0:00:45.319 On Today's Boomberg Intelligence Show, we dig inside the big 0:00:45.360 --> 0:00:48.000 business stories impacting Wall Street and the global markets. Each 0:00:48.040 --> 0:00:50.080 and every week we provide in depth research and data 0:00:50.080 --> 0:00:51.840 on some of the two thousand companies and one hundred 0:00:51.880 --> 0:00:54.880 and thirty industries our analysts cover worldwide. Today, well look 0:00:54.880 --> 0:00:57.640 at why sales at the sportswork company Nike are declining. 0:00:57.960 --> 0:01:00.880 Plus we'll discuss how the Inflation Reduction Act is impacting 0:01:00.920 --> 0:01:03.760 the energy sector. But first we begin in the M 0:01:03.800 --> 0:01:06.560 and A space. DirecTV and Dish have agreed to combine 0:01:06.560 --> 0:01:09.240 in a deal that would create the biggest PayTV provider 0:01:09.280 --> 0:01:12.480 in the US. That one included about eighteen million subscribers. 0:01:12.720 --> 0:01:15.760 Under the terms of the transaction, DirecTV will acquire Dish 0:01:15.840 --> 0:01:19.160 TV and Sling TV from EchoStar, and DirecTV would assume 0:01:19.200 --> 0:01:22.319 about nine point seventy five billion dollars of Dish's debt. 0:01:22.480 --> 0:01:25.800 The deal is contingent upon regulatory approvals and bondholders writing 0:01:25.800 --> 0:01:28.480 off nearly one point six billion dollars in debt related 0:01:28.520 --> 0:01:30.600 to Dish. Co host Alex Steel and I were joined 0:01:30.600 --> 0:01:33.520 by Githa Rong Andathan Bloomberg, intelligence analyst on the US 0:01:33.560 --> 0:01:37.120 media space. We first asked, getha, what's driving this deal? 0:01:37.560 --> 0:01:41.200 What's really driving this deal is desperate times kind of 0:01:41.200 --> 0:01:45.880 call for desperate measures, Paul, So, satellite TV has steadily 0:01:46.440 --> 0:01:49.320 seen an erosion of its subscriber base. I mean, at 0:01:49.360 --> 0:01:52.400 one point it was the only other game in town, 0:01:52.520 --> 0:01:55.160 along with cable TV, for people to get access to 0:01:55.240 --> 0:01:59.400 different PATV packages. Today the world is a completely different place. 0:01:59.440 --> 0:02:01.680 I mean, you have cable, you have satellite, which is 0:02:01.720 --> 0:02:05.040 of course the traditional facilities based operators, but then you 0:02:05.160 --> 0:02:10.440 also have a whole slew of new Internet based options. 0:02:10.480 --> 0:02:12.960 Whether you know it's a YouTube TV, which gives you 0:02:13.000 --> 0:02:15.720 all of the linear TV options, or whether it's like 0:02:16.040 --> 0:02:19.799 completely different what are known as sphalts services subscription video 0:02:19.800 --> 0:02:22.440 on demand services like an Amazon Prime or Netflix, and 0:02:22.480 --> 0:02:24.760 so the world today is completely different. And because of this, 0:02:25.080 --> 0:02:28.200 satellite TV has has seen a huge, huge erosion of 0:02:28.200 --> 0:02:31.919 its subscriber based dish and direct TV. Once upon a time, 0:02:32.240 --> 0:02:34.919 you know, they were some of the largest PATV operators. 0:02:34.960 --> 0:02:38.720 They've lost about sixty three percent of their satellite subscriber 0:02:38.760 --> 0:02:40.520 base just over the past seven years. 0:02:40.960 --> 0:02:45.400 That's unbelievable. Did two wrongs then make a right slash? 0:02:45.600 --> 0:02:46.919 Will regulators like it? 0:02:48.160 --> 0:02:52.360 So regulators of course squashed this deal back you know, 0:02:52.360 --> 0:02:54.640 about twenty years ago, but then again, it was a 0:02:54.680 --> 0:02:58.920 completely different landscape. They have to kind of understand that 0:02:59.040 --> 0:03:01.079 things have completely each change today. One of the main 0:03:01.200 --> 0:03:03.919 appealing points of satellite TV, why people even taken in 0:03:03.960 --> 0:03:06.440 the first place, is because in a lot of areas 0:03:06.440 --> 0:03:09.120 in rural America, this is the only way that you 0:03:09.120 --> 0:03:11.880 can get access to PATV. But things have been changing 0:03:11.919 --> 0:03:15.400 because you know, we've had this whole initiative to narrow 0:03:15.480 --> 0:03:19.120 the digital divide, So more and more houses in rural 0:03:19.200 --> 0:03:22.280 America are getting wired up and with that they now 0:03:22.320 --> 0:03:26.480 have the option to switch to Internet based TV, which 0:03:26.520 --> 0:03:28.880 is you know, exactly what Distion direct Tv are saying. 0:03:28.880 --> 0:03:31.080 This is the reason why they've lost subscribers. So this 0:03:31.160 --> 0:03:33.600 is the reason why there is more competition, and therefore 0:03:33.960 --> 0:03:36.240 regulators should allow the deal to pass. 0:03:36.520 --> 0:03:39.720 And I guess a parallel announcement here is that TPG Group, 0:03:39.760 --> 0:03:41.960 the private equity company, is going to acquire AT and 0:03:42.000 --> 0:03:45.320 t's seventy percent stake in direct TV that TBG doesn't 0:03:45.320 --> 0:03:48.480 already own. So in effect, a private equity owner is 0:03:48.480 --> 0:03:52.120 now going to own the entire US satellite television business. 0:03:52.640 --> 0:03:53.400 What's going on there? 0:03:53.440 --> 0:03:53.600 Why? 0:03:53.600 --> 0:03:54.440 Why is this happening? 0:03:55.080 --> 0:03:58.200 Yeah, exactly, Paul. So it's you know, Charlie ergan walking 0:03:58.200 --> 0:04:01.280 away from the PATV business, and in many ways again 0:04:01.560 --> 0:04:03.720 AT and T also walking away from the PATV business. 0:04:03.720 --> 0:04:05.960 And as you well know, AT and T had invested 0:04:06.000 --> 0:04:08.440 heavily in the media businesses. They had bought the whole 0:04:08.520 --> 0:04:10.880 Warner Brothers operation, which they kind of got rid of, 0:04:10.960 --> 0:04:13.360 selling that to Discovery, and then of course they had 0:04:13.360 --> 0:04:16.240 also bought the Direct TV operations, which they sold a 0:04:16.320 --> 0:04:18.880 thirty percent stake to TPG. They still retained a seventy 0:04:18.880 --> 0:04:20.960 percent stake, and of course with that deal with TPG, 0:04:21.720 --> 0:04:24.920 they are completely exiting that business. And for both of them, 0:04:24.960 --> 0:04:26.760 if you kind of look at what you know is 0:04:26.760 --> 0:04:29.240 the final endgame here for both AT and T and 0:04:29.480 --> 0:04:32.920 EchoStar or the other part of the dish business, they 0:04:33.000 --> 0:04:35.920 really want to kind of focus on their core business, 0:04:35.920 --> 0:04:37.800 which is the wireless business for AT and T. Of 0:04:37.800 --> 0:04:41.360 course it's the wireless business for EchoStar. They have, you know, built, 0:04:41.400 --> 0:04:43.960 they've mastered a huge amount of spectrum, and they ultimately 0:04:44.000 --> 0:04:48.240 want to become the fourth largest wireless player in the 0:04:48.360 --> 0:04:50.359 United States, and this deal really helps them do that 0:04:50.400 --> 0:04:53.600 and kind of focus their resources, investments, time, and energy 0:04:53.640 --> 0:04:55.000 on just that part of the operation. 0:04:55.200 --> 0:04:58.280 This might be a dumb question, but do they grow 0:04:58.400 --> 0:05:00.599 their customer base at this point? Is they're a customer 0:05:00.640 --> 0:05:02.680 base to grow, or as you said, do they just 0:05:02.720 --> 0:05:05.680 become better at execution and they kind of cut with 0:05:05.720 --> 0:05:08.360 synergis and that's how they become successful. 0:05:08.800 --> 0:05:11.760 Yes, they outline about a billion dollars in synergies. A 0:05:11.800 --> 0:05:13.839 lot of those will of course be programming costs. They 0:05:13.920 --> 0:05:16.039 still will be with the combination, they still will be 0:05:16.120 --> 0:05:19.280 the largest PATV operator. They will have about nineteen to 0:05:19.279 --> 0:05:22.719 twenty million subscribers, but there's not a whole lot to 0:05:22.800 --> 0:05:26.160 really grow ALEX, So it's really more kind of stemming 0:05:26.200 --> 0:05:30.680 the declines, if you will, just reducing the bleeding and 0:05:30.720 --> 0:05:34.560 becoming much much more efficient in kind of delivering customized, 0:05:34.600 --> 0:05:37.360 tailor made packages for the PayTV market. 0:05:37.720 --> 0:05:39.839 And Keith, you're about thirty seconds left. What's your forecast 0:05:39.880 --> 0:05:43.200 for just the overall pay TV business? Are paying subscribers 0:05:43.279 --> 0:05:44.680 going to go to zero? Is where we're going to 0:05:44.680 --> 0:05:46.000 be all streaming stuff soon? 0:05:47.240 --> 0:05:50.320 I hope not, but we're definitely seeing that. You know, 0:05:50.400 --> 0:05:53.479 YouTube tv is becoming a major major player in the 0:05:53.520 --> 0:05:57.320 market again. They are delivering linear TV channels. They right 0:05:57.360 --> 0:05:59.200 now are you know, about the third or the fourth 0:05:59.279 --> 0:06:01.880 largest operator eight million subscribers, so they actually have more 0:06:01.880 --> 0:06:04.640 subscribers than Dish has on its satellite business. But we 0:06:04.680 --> 0:06:06.560 eventually in the next two to three years see them 0:06:06.600 --> 0:06:09.880 becoming the largest player and then that of course changes 0:06:09.920 --> 0:06:12.560 the whole dynamics off the whole PATV market because then 0:06:12.600 --> 0:06:16.000 you have a streaming based operator that's the largest operator 0:06:16.080 --> 0:06:17.599 of you know, the PATV market. 0:06:17.960 --> 0:06:21.720 Our thanks to Geitha Ranganathan Bloomberg Intelligence media analyst. We 0:06:21.760 --> 0:06:24.320 move now to the tech space. Open Ai is bolstering 0:06:24.360 --> 0:06:28.080 its efforts to build the world's leading generative artificial intelligence technology. 0:06:28.320 --> 0:06:30.520 The company has completed a deal to raise six point 0:06:30.600 --> 0:06:33.320 six billion dollars in new funding, giving it a one 0:06:33.360 --> 0:06:36.600 hundred and fifty seven billion dollar valuation. The funding round 0:06:36.640 --> 0:06:39.919 was led by Thrive Capital and Microsoft. Other investors included 0:06:40.080 --> 0:06:44.400 Costla Ventures, Fidelity Management, and Nvidia. Open Ai also tapped 0:06:44.400 --> 0:06:46.840 Global Banks for a four billion dollar revolving line of 0:06:46.880 --> 0:06:49.360 credit on top of its recent fundraising. For more and 0:06:49.440 --> 0:06:51.719 all this. Guest hosts Bailey Lipscholtz and I were joined 0:06:51.760 --> 0:06:55.200 by anaag Rana, Bloomberg Intelligence technology analyst. I first asked 0:06:55.200 --> 0:06:57.640 anarrog what else he knows about what's going on with 0:06:57.720 --> 0:06:58.240 open Ai. 0:06:58.640 --> 0:07:00.719 Yeah, Openea is really taking going to lead over the 0:07:00.760 --> 0:07:03.680 last three years because of the launch of chat GPT 0:07:03.839 --> 0:07:06.240 and after that it has become the go to things, 0:07:06.279 --> 0:07:09.600 even for enterprises. We recently did a CIO survey and 0:07:09.760 --> 0:07:13.120 open Ai Microsoft combination was far ahead than all the 0:07:13.160 --> 0:07:15.760 other large language models that was out there. So that's 0:07:15.760 --> 0:07:18.280 on the enterprise side and consumer side. We already know 0:07:18.600 --> 0:07:21.200 how well they are doing both on the app that 0:07:21.200 --> 0:07:25.080 they're selling along with the distribution that the the what 0:07:25.120 --> 0:07:27.880 they won with Apple being part of CD when the 0:07:27.920 --> 0:07:30.560 software upgrade is going to come. So open AI in 0:07:31.120 --> 0:07:33.360 the world of large language models really at the top 0:07:33.440 --> 0:07:37.080 of the top of the mountain at this point, and 0:07:37.160 --> 0:07:40.000 this is one of the reasons you're getting these high valuations. 0:07:40.280 --> 0:07:42.520 Yeah, I just want to put into perspective. At one 0:07:42.600 --> 0:07:44.960 hundred and fifty seven billion dollars, open ai would be 0:07:45.160 --> 0:07:48.160 larger than uber and at that six point six billion 0:07:48.200 --> 0:07:51.920 dollars in funding relative to IPOs, it would be the 0:07:51.960 --> 0:07:58.200 twelfth largest global IPO since twenty eighteen. So anak are 0:07:58.240 --> 0:08:01.520 we in a AI bubble as it relates to private markets? 0:08:02.960 --> 0:08:04.480 I think, to be very frank with you, I can 0:08:04.520 --> 0:08:06.800 only answer that five years from now. But we just 0:08:07.080 --> 0:08:11.160 you know, updated our numbers looking at capital expenditures for 0:08:11.200 --> 0:08:16.400 the top five six companies. These companies, which includes Amazon, Microsoft, Meta, Oracle, 0:08:16.400 --> 0:08:19.120 et cetera. In twenty twenty three, they spent about one 0:08:19.200 --> 0:08:21.400 hundred and ten billion dollars in all the things what 0:08:21.440 --> 0:08:24.840 we call capital expenditures. In twenty twenty five, they're going 0:08:24.880 --> 0:08:27.040 to spend about two hundred billion dollars so that's a 0:08:27.120 --> 0:08:29.680 massive increase of ninety billion over a two year period. 0:08:29.960 --> 0:08:32.040 You know, where is that money going to? Expansion of 0:08:32.120 --> 0:08:36.400 data center, buying more GPUs, buying more hardware, expanding their 0:08:36.440 --> 0:08:37.560 own large language models. 0:08:37.559 --> 0:08:39.840 So it really feels. 0:08:39.520 --> 0:08:41.559 Real, frankly as to the amount of money that the 0:08:42.040 --> 0:08:45.079 big guys are spending it over here, and they won't 0:08:45.080 --> 0:08:47.000 be doing it if they didn't see the demand on 0:08:47.040 --> 0:08:48.120 the other side of the equation. 0:08:48.840 --> 0:08:51.520 This has been a turbulent year for the company here. 0:08:51.920 --> 0:08:55.280 I know, lass November the company's board fired and then 0:08:55.360 --> 0:08:58.760 quickly we hired the CEO, Sam Altman. Following months had 0:08:58.760 --> 0:09:01.360 a lot of key leaders leave, including the co founder, 0:09:01.400 --> 0:09:05.240 the chief technology officer. It seems like the market's kind 0:09:05.240 --> 0:09:07.680 of forgotten all about that, or maybe it's not a 0:09:07.720 --> 0:09:10.439 problem anymore. How's the market dealing with some of that 0:09:10.800 --> 0:09:12.240 turmoil we've seen over the last year. 0:09:13.559 --> 0:09:16.040 I think people tend to forget that who's really behind 0:09:16.120 --> 0:09:19.760 a lot of backing off this particular company, and that's Microsoft, 0:09:19.800 --> 0:09:24.040 and you know they have the biggest distribution and among enterprises. 0:09:24.360 --> 0:09:27.160 So if they are basically telling people if you want 0:09:27.160 --> 0:09:31.120 to create an enterprise application using some AI large language model, 0:09:31.400 --> 0:09:33.920 here is OpenAI model and you can host it on 0:09:33.960 --> 0:09:36.920 our cloud platform. I think that is resonating very well 0:09:36.920 --> 0:09:39.800 with customers. So as long as that continues for the 0:09:39.840 --> 0:09:43.000 next several years, open AI's revenue will continue to go up. 0:09:43.320 --> 0:09:45.680 And you know, then you can you know, argue whether 0:09:45.679 --> 0:09:46.920 the valuations is high or not. 0:09:47.520 --> 0:09:50.040 And just from the bloom we're reporting Tiger Global put 0:09:50.040 --> 0:09:52.560 in three hundred and fifty million dollars, Ultimeter putting in 0:09:52.559 --> 0:09:54.280 at least two hundred and fifty million dollars. But to 0:09:54.320 --> 0:09:57.920 your point, if Microsoft is able to write such large checks, 0:09:58.000 --> 0:10:01.960 how does that impact the funding environment for AI companies. 0:10:01.960 --> 0:10:04.560 I'm just thinking about the biggest competitors for open ai 0:10:04.679 --> 0:10:06.440 in Anthropic and XAI. 0:10:07.400 --> 0:10:09.800 Yeah, I mean Anthropic is backed by you know, Amazon 0:10:09.840 --> 0:10:12.680 Web Services at this point primarily, and almost all the others. 0:10:12.920 --> 0:10:15.240 The one thing we heard, you know, from reporting from 0:10:15.280 --> 0:10:18.080 Bloomberg News is that open aye is asking them not 0:10:18.160 --> 0:10:21.520 to back up you know, Elon's xai or others. And 0:10:21.559 --> 0:10:23.440 I think that's partially the reason you see all the 0:10:23.480 --> 0:10:26.760 other plays coming in because and by the way, there's 0:10:26.760 --> 0:10:28.160 not going to be one winner, They're going to be 0:10:28.240 --> 0:10:31.160 multiple models. They're going to be multiple companies doing well here, 0:10:31.720 --> 0:10:34.440 and there is no reason Anthropic can't thrive in this 0:10:34.520 --> 0:10:37.720 way or Mistral or all the other large language model companies. 0:10:38.520 --> 0:10:41.880 What do we know about open AI's financials if anything. 0:10:42.880 --> 0:10:45.040 It's I mean, I don't have a clear picture on it. 0:10:45.080 --> 0:10:47.200 I've I've read as much as you have, and you know, 0:10:47.240 --> 0:10:49.800 we have seen projections out there for the next several 0:10:49.880 --> 0:10:51.760 years they can get to I don't know, five billion, 0:10:51.840 --> 0:10:54.439 ten billion or so forth. So I mean it's it's 0:10:54.520 --> 0:10:56.559 unless we see the s one when they go public, 0:10:57.360 --> 0:10:59.760 you know, up till at that point, you know, it's 0:10:59.760 --> 0:11:01.120 it's it's purely a guess work. 0:11:01.160 --> 0:11:03.440 Do we have any sense of do they have an 0:11:03.440 --> 0:11:05.880 appetite to go public? Is it a sense of timing? 0:11:06.080 --> 0:11:08.760 What are their plans for going public? If any? 0:11:09.760 --> 0:11:09.960 See? 0:11:10.000 --> 0:11:11.720 My personal view is they don't need to go public 0:11:11.760 --> 0:11:14.400 at all. They don't need the funding they will you know, 0:11:14.400 --> 0:11:17.319 the whoever is part of this particular ecosystem is getting 0:11:17.400 --> 0:11:20.280 rich every day. I think they should figure out how 0:11:20.280 --> 0:11:23.600 to grab as much enterprise workloads as possible before they 0:11:23.640 --> 0:11:26.160 think about it, because one thing is for sure, even 0:11:26.200 --> 0:11:28.720 as they are doing this land grabbing right now, they're 0:11:28.760 --> 0:11:30.240 at a loss, and they will be at a loss 0:11:30.280 --> 0:11:33.120 for several years out because the cost of running these 0:11:33.120 --> 0:11:35.679 workloads is very high and it's going to you know, 0:11:35.760 --> 0:11:37.360 you're not going to see any free cash flow. You're 0:11:37.360 --> 0:11:39.679 not going to see any But once you've got public, 0:11:39.880 --> 0:11:41.840 you know, you really go under the lens when it's 0:11:41.880 --> 0:11:44.160 about profitability and your margins. 0:11:44.120 --> 0:11:46.360 Wellly have about thirty seconds. But going back to a 0:11:46.400 --> 0:11:48.959 story that has been reported out recently in terms of 0:11:49.040 --> 0:11:51.440 giving all in a stake in the company that could 0:11:51.440 --> 0:11:53.079 be worth more than ten billion dollars, what do you 0:11:53.120 --> 0:11:55.199 make of those conversations and what that could mean for 0:11:55.240 --> 0:11:56.400 the company and its ambitions. 0:11:57.800 --> 0:11:59.760 Yeah, I mean it's always talked about how he is 0:11:59.800 --> 0:12:02.280 doing for the greater good of the world. But I 0:12:02.280 --> 0:12:04.000 bet I guess when you get this much options you 0:12:04.320 --> 0:12:07.840 change your mind on that. But it's it is what 0:12:07.960 --> 0:12:08.280 it is. 0:12:08.679 --> 0:12:12.200 Our thanks to anaag Rana, Bloomberg Intelligence technology analyst, coming 0:12:12.280 --> 0:12:15.280 up or break down why investors are disappointed in Tesla 0:12:15.480 --> 0:12:19.080 despite its first quarterly sales gain this year. You're listening 0:12:19.080 --> 0:12:22.120 to Bloomberg Intelligence on Bloomberg Radio, providing in depth research 0:12:22.160 --> 0:12:24.079 and data on two thousand companies and one hundred and 0:12:24.120 --> 0:12:26.880 thirty industries. You can ask us Bloomberg Intelligence if via 0:12:26.960 --> 0:12:29.680 b I go on the terminal. I'm Paul Sweeney and 0:12:29.800 --> 0:12:30.800 this is Bloomberg. 0:12:37.000 --> 0:12:40.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:40.960 --> 0:12:43.760 weekdays at ten am Eastern on Apple Card playing en 0:12:43.800 --> 0:12:47.160 Broudouto with the Bloomberg Business app, Listen on demand wherever 0:12:47.240 --> 0:12:51.040 you get your podcasts, or watch us live on YouTube. 0:12:51.760 --> 0:12:54.640 We move now to earnings from the sportswear company Nike, 0:12:54.960 --> 0:12:57.160 and they you reported first quarter sales that fell ten 0:12:57.200 --> 0:13:00.480 percent and we're short of analyst expectations. Thank He Also, 0:13:00.520 --> 0:13:02.920 it drew it's for year sales guidance, citing a transition 0:13:03.000 --> 0:13:06.160 to its new CEO, Elliott Hill, who will arrive later 0:13:06.200 --> 0:13:09.439 this month. The company also said it'll postpone its investor Day, 0:13:09.440 --> 0:13:12.280 which had been scheduled for November for more. Co hosts. 0:13:12.280 --> 0:13:14.400 Alex Steel and I were joined by Punam Goyle, senior 0:13:14.520 --> 0:13:17.240 US e Commerce and retail analyst at Bloomberg Intelligence. We 0:13:17.360 --> 0:13:20.800 first asked Poonam for her take on Nike's latest quarterly results. 0:13:21.320 --> 0:13:24.120 It was weak, right. Their sales continue to drop and 0:13:24.520 --> 0:13:27.920 there's no signs of a recovery at least yet until 0:13:27.920 --> 0:13:31.040 they have a better planning place. I'd say this year 0:13:31.080 --> 0:13:33.240 for them, their fiscal year is going to be the 0:13:33.320 --> 0:13:36.400 year of a reset. Once the new CEO comes into 0:13:36.480 --> 0:13:39.560 play in just a few weeks, he will have a 0:13:39.640 --> 0:13:44.160 new playbook and that playbook will drive Nike's turnaround in 0:13:44.200 --> 0:13:45.680 the fiscal twenty twenty six. 0:13:46.280 --> 0:13:48.520 So part of that was, yes, cleaning the sleeve for him. 0:13:48.559 --> 0:13:50.320 They got rid of their investor day for all of 0:13:50.320 --> 0:13:52.839 those reasons. Can we assume that this is the drop, 0:13:52.960 --> 0:13:54.880 this is the worst it's going to get. It's only 0:13:55.000 --> 0:13:55.520 up from here. 0:13:57.000 --> 0:14:00.560 I would say fiscal twenty twenty five the year of 0:14:00.559 --> 0:14:03.840 a trough. I wouldn't necessarily say that to that physical 0:14:03.880 --> 0:14:07.000 one Q is a trough because as you probably heard, 0:14:07.480 --> 0:14:10.240 they have guided to fiscal two Q sales to be 0:14:10.320 --> 0:14:13.520 down eight to ten percent, which is roughly still in 0:14:13.679 --> 0:14:18.599 line with one queue. And with the holiday season being unpredictable, 0:14:19.000 --> 0:14:22.680 we have port strikes, we have a shorter holiday season 0:14:22.840 --> 0:14:25.640 with fewer days of shopping. You know, things are still 0:14:25.760 --> 0:14:28.080 very much up in the air from a macro perspective, 0:14:28.080 --> 0:14:30.240 and the Nike has its own troubles on top of that. 0:14:31.440 --> 0:14:34.320 All right, So from your perspective, Punum, what is the 0:14:34.440 --> 0:14:35.600 problem with Nike. 0:14:37.360 --> 0:14:40.360 The problem is that they don't have enough newness in 0:14:40.400 --> 0:14:44.880 their pipeline and they haven't been focused on merchandise. Nike 0:14:45.400 --> 0:14:50.520 has to have good merchandise, new merchandise, performance based merchandise 0:14:50.680 --> 0:14:54.440 in front of consumers on a constant basis to really 0:14:54.560 --> 0:14:57.840 drive the outperformance that they had seen a pre pandemic. 0:14:58.280 --> 0:15:02.040 They lost that under the current leadership because the focus 0:15:02.120 --> 0:15:05.960 is more on DTC and using the franchises that did 0:15:06.000 --> 0:15:09.480 well and really just adding new variations of them. For 0:15:09.520 --> 0:15:12.120 example the Air Force, Right, we have so many variations 0:15:12.120 --> 0:15:14.760 of the Air Force, saying with the dunks and saying 0:15:14.760 --> 0:15:17.120 with the Jordan's just new color waves. So we need 0:15:17.160 --> 0:15:19.160 to see more. We need to see them do more 0:15:19.160 --> 0:15:21.640 on the product front and then the marketing of it 0:15:21.680 --> 0:15:22.320 of course too. 0:15:22.760 --> 0:15:26.360 So what s Nike saying just about the consumer in 0:15:26.440 --> 0:15:28.480 general these days? Because I would think WOY with their 0:15:28.520 --> 0:15:30.480 broad product line in reach, they would have a pretty 0:15:30.520 --> 0:15:30.920 good view. 0:15:32.080 --> 0:15:35.880 They you know, the consumers uneven, they're spending in certain 0:15:35.920 --> 0:15:38.880 places and then they're not spending. For example, they talked 0:15:38.880 --> 0:15:41.520 a lot about their new product that they brought to 0:15:41.560 --> 0:15:42.320 market earlier. 0:15:42.360 --> 0:15:42.760 This year. 0:15:42.800 --> 0:15:45.960 That's actually done really well for them, and that's a 0:15:46.000 --> 0:15:48.440 good sign. But then the rest of the stuff is 0:15:48.560 --> 0:15:51.400 just status quo. They are seeing weakness in their own 0:15:51.440 --> 0:15:54.360 retail channels, and the weakness is coming from traffic, right. 0:15:54.680 --> 0:15:57.000 So this goes back to the macro a little, where 0:15:57.240 --> 0:16:00.400 traffic is down in the stores, Traffic is down on line, 0:16:00.680 --> 0:16:03.600 and traffic is what's hurting sales because the average selling 0:16:03.640 --> 0:16:06.480 price was actually up, which means they're able to sell 0:16:06.480 --> 0:16:09.080 these expensive sneakers. They're just not able to get enough 0:16:09.080 --> 0:16:10.320 people to come in and buy them. 0:16:10.880 --> 0:16:13.920 Okay, do Nikes have sneakers with those heels, because if 0:16:13.920 --> 0:16:16.560 they did, I'd feel like, Yeah, there's like a whole 0:16:16.560 --> 0:16:19.920 brand of like sneakers with a heel, so like stilettos, 0:16:19.920 --> 0:16:21.960 and they have the look of a sneaker, and I 0:16:22.000 --> 0:16:24.080 think they have I think that would be helpful. 0:16:24.160 --> 0:16:26.000 I don't think they have that, but I don't know 0:16:26.000 --> 0:16:27.240 if they actually need. 0:16:27.040 --> 0:16:31.960 That to win They probably they're not talking up fair enough. 0:16:32.280 --> 0:16:35.560 But in all seriousns though, how is China doing for Nike? 0:16:35.840 --> 0:16:39.600 China is not doing well. China has struggled for some time, 0:16:40.120 --> 0:16:42.520 and I think the China struggle will eb and flow. 0:16:42.840 --> 0:16:45.680 The highlight for China is a new stimulus that they 0:16:45.720 --> 0:16:49.000 have just gotten, and I think that can serve as 0:16:49.000 --> 0:16:52.360 a catalyst to help at least improve sales from where 0:16:52.360 --> 0:16:55.720 they are today in the near future, because that should 0:16:55.800 --> 0:16:59.000 get Nike back onto people's feet there as they have 0:16:59.160 --> 0:17:02.400 more spending pass. The thing is, though, everyone's fighting for 0:17:02.480 --> 0:17:05.320 share in China right That's the growth engine for most 0:17:05.320 --> 0:17:08.120 app leisure companies, and while Nike does have a lead 0:17:08.280 --> 0:17:11.520 still in China, it's one among many players, the locals 0:17:11.520 --> 0:17:12.400 and the nationals. 0:17:12.680 --> 0:17:16.080 Thirty seconds, Punham, what's the you know, the holiday season 0:17:16.200 --> 0:17:18.520 look like we have any growth there? For US retailers, 0:17:19.359 --> 0:17:20.280 there will be growth. 0:17:20.320 --> 0:17:22.200 We think e commerce is going to lead, Bob. We 0:17:22.320 --> 0:17:24.879 think there's a value play here. Consumers are scratched. It's 0:17:24.920 --> 0:17:26.840 a shorter season. There's going to be a lot of 0:17:26.840 --> 0:17:28.640 deals in the next few weeks of the time day 0:17:28.720 --> 0:17:31.800 kicking off, so shoppers bull shop deals and will shop early. 0:17:32.240 --> 0:17:34.480 Our thanks to Punham Goyle, senior US e Commerce and 0:17:34.560 --> 0:17:37.840 retail analyst at Bloomberg Intelligence, We look next at the 0:17:37.880 --> 0:17:41.720 ev giant Tesla. Tesla posted its first increase in quarterly 0:17:41.760 --> 0:17:44.920 vehicle sales this year, but the automaker let down investors 0:17:44.960 --> 0:17:47.400 who are expecting more of a bump from China boosting 0:17:47.440 --> 0:17:50.359 electric car subsidies for more. Co hosts Alex Steel and 0:17:50.400 --> 0:17:53.280 I were joined by Keith marton Bloomberg Auto Reporter. We 0:17:53.400 --> 0:17:56.040 first asked Keith for his take on Tessa's recent numbers. 0:17:56.440 --> 0:17:59.400 Yeah, there's a little disappointment on the vehicle sales. They 0:17:59.440 --> 0:18:04.360 came in just under analysts expectations about one thousand vehicles 0:18:04.440 --> 0:18:07.600 under They sold four hundred and sixty two thousand and 0:18:08.119 --> 0:18:11.119 four hundred and sixty three was more the It was 0:18:11.160 --> 0:18:14.280 a consensus, but more to the point, they kind of 0:18:14.560 --> 0:18:19.400 missed the whisper expectation, which was maybe as high as 0:18:19.560 --> 0:18:23.240 four seventy. Seems like there's some softness in the cyber truck. 0:18:23.960 --> 0:18:27.639 There also were high expectations for sort of a cash 0:18:27.680 --> 0:18:31.119 for Clunger's sort of promotion going on in China. They've 0:18:31.280 --> 0:18:34.040 doubled the incentive for EV sales if you turn in 0:18:34.080 --> 0:18:37.280 an older model there. That was expected to give more 0:18:37.840 --> 0:18:42.680 tailwind to Tesla, and that didn't quite materialize the way 0:18:42.800 --> 0:18:44.240 that investors expected. 0:18:44.680 --> 0:18:47.920 You know, just in terms of ubers, for example, every 0:18:48.000 --> 0:18:49.800 Uber I'm in now feels like it's a Tesla. I 0:18:49.840 --> 0:18:51.840 don't know if you guys experienced the same thing. And 0:18:51.960 --> 0:18:54.480 I feel like, is that a good or bad sign 0:18:54.480 --> 0:18:57.040 for Tesla, because yeah, okay, it's promotional, but I feel 0:18:57.040 --> 0:18:59.719 like the reason why all the Ubers are now Tesla 0:18:59.800 --> 0:19:02.400 is is because it's a promotion, like get this off 0:19:02.440 --> 0:19:04.800 my lot. Are we at the trough with that? 0:19:06.080 --> 0:19:09.960 Yeah? You know, Model three and Model Y. That is 0:19:10.000 --> 0:19:12.159 the volume of the company, which are their you know, 0:19:12.240 --> 0:19:16.479 mainstream cars, their luxury models does not sell very well anymore. 0:19:16.520 --> 0:19:19.520 It's getting pretty long on the tooth. And cyber Truck, 0:19:20.000 --> 0:19:23.199 you know, is priced sort of around one hundred thousand, 0:19:23.359 --> 0:19:27.280 and that limits its volume under twenty thousand probably for 0:19:27.320 --> 0:19:32.520 the quarter. So they are becoming a more mainstream brand, 0:19:32.560 --> 0:19:35.639 and when that happens, they become Ubers. 0:19:36.080 --> 0:19:40.040 Matt from Westchester emails in here and says, is Tesla 0:19:40.080 --> 0:19:42.320 ever gonna have a new model? We haven't had a 0:19:42.320 --> 0:19:44.760