1 00:00:00,280 --> 00:00:11,680 Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,760 --> 00:00:13,800 Speaker 1: with Scarletfoo and Paul Sweeney. 3 00:00:13,920 --> 00:00:16,040 Speaker 2: How do you think the FED is looking at tariffs? 4 00:00:16,160 --> 00:00:17,360 Speaker 2: The uncertainty of terriffs. 5 00:00:17,440 --> 00:00:19,560 Speaker 3: Let's take a look at the sectors and how they. 6 00:00:19,520 --> 00:00:22,520 Speaker 2: Performed a lot of investors getting whipsaled every day by news. 7 00:00:22,320 --> 00:00:26,439 Speaker 1: Events, breaking market headlines and corporate news from across the globe. 8 00:00:26,480 --> 00:00:29,040 Speaker 3: Could we see a market disruption of market events? 9 00:00:29,160 --> 00:00:31,200 Speaker 2: So people just too exuberant out there? 10 00:00:31,280 --> 00:00:33,839 Speaker 3: You see some so called low quality stocks driving this 11 00:00:33,920 --> 00:00:34,720 Speaker 3: short term rally. 12 00:00:34,760 --> 00:00:39,560 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 13 00:00:39,720 --> 00:00:41,640 Speaker 1: YouTube and Bloomberg Originals. 14 00:00:42,520 --> 00:00:45,200 Speaker 2: On today's Bloomberg Intelligence Show, we tag inside the big 15 00:00:45,200 --> 00:00:47,800 Speaker 2: business story is impacting Wall Street and the global markets. 16 00:00:47,840 --> 00:00:50,080 Speaker 3: Each and every week we provide in depth research and 17 00:00:50,159 --> 00:00:52,080 Speaker 3: data on some of the two thousand companies and one 18 00:00:52,159 --> 00:00:54,720 Speaker 3: hundred and thirty industries are analysts cover worldwide. 19 00:00:54,800 --> 00:00:57,120 Speaker 2: Today, we'll look at why the energy company exon Mobil 20 00:00:57,200 --> 00:00:59,680 Speaker 2: is cutting three to four percent of its global workforce, 21 00:01:00,120 --> 00:01:00,320 Speaker 2: us a. 22 00:01:00,280 --> 00:01:02,800 Speaker 3: Look at why the AI cloud computing startup core Weave 23 00:01:02,960 --> 00:01:05,040 Speaker 3: is signing a deal with tech giant Meta platforms. 24 00:01:05,120 --> 00:01:06,880 Speaker 2: But first we begin with the news from the athletic 25 00:01:06,920 --> 00:01:08,080 Speaker 2: footwear company Nike. 26 00:01:08,319 --> 00:01:10,399 Speaker 3: This week, the company said that efforts to roll out 27 00:01:10,440 --> 00:01:13,360 Speaker 3: new products, boost marketing efforts, and clear out old inventory 28 00:01:13,560 --> 00:01:15,480 Speaker 3: helped ease a long time sales slump. 29 00:01:15,760 --> 00:01:17,760 Speaker 2: Nick You said it's sales fell one percent on a 30 00:01:17,800 --> 00:01:20,720 Speaker 2: currency neutral basis in its most recent quarter, and that 31 00:01:20,880 --> 00:01:23,039 Speaker 2: was a smaller job that investors anticipated. 32 00:01:23,240 --> 00:01:25,760 Speaker 3: For the analysis, we were joined by Punam Goyel, senior 33 00:01:25,840 --> 00:01:28,640 Speaker 3: US e Commerce and retail analysts at Bloomberg Intelligence. 34 00:01:28,800 --> 00:01:31,800 Speaker 2: We first ask Poonam if Nike's turnaround plant is working. 35 00:01:32,400 --> 00:01:36,679 Speaker 4: It's working, Nike is able to pick up momentum. Sales 36 00:01:36,680 --> 00:01:40,920 Speaker 4: on a reported basis were up a one percent, Inventories 37 00:01:40,959 --> 00:01:44,120 Speaker 4: were down two percent. This is exactly what we wanted 38 00:01:44,120 --> 00:01:47,520 Speaker 4: to see. We wanted to see inventories aligned with sales. 39 00:01:47,800 --> 00:01:50,520 Speaker 4: So while the work isn't done and it's not over 40 00:01:50,600 --> 00:01:53,919 Speaker 4: and it's not a straight lineup, we do see momentum building. 41 00:01:54,160 --> 00:01:57,320 Speaker 4: What they're doing is working, the new products, the innovation, 42 00:01:57,520 --> 00:02:01,080 Speaker 4: the focus on wholesale, it's all coming together. There are 43 00:02:01,160 --> 00:02:04,840 Speaker 4: still some pitfalls. China is still sluggish and we'll need 44 00:02:04,880 --> 00:02:06,720 Speaker 4: to wait and see what happens there as well as 45 00:02:06,800 --> 00:02:08,120 Speaker 4: with its Converse brand. 46 00:02:08,880 --> 00:02:12,840 Speaker 3: Okay, so China's definitely an issue. Converse is work in progress. 47 00:02:13,040 --> 00:02:15,200 Speaker 3: When I look at the revenue line, the top line, 48 00:02:15,560 --> 00:02:18,040 Speaker 3: what I see is direct revenue fell four percent, wholesale 49 00:02:18,040 --> 00:02:20,560 Speaker 3: revenue rows seven percent. Just break that down for us 50 00:02:20,600 --> 00:02:23,560 Speaker 3: in terms of what that means direct revenue versus wholesale revenue. 51 00:02:24,600 --> 00:02:28,200 Speaker 4: Sure, so direct revenue composers of stores, which were actually 52 00:02:28,280 --> 00:02:30,639 Speaker 4: up one percent. So that shows us that the innovation 53 00:02:30,680 --> 00:02:33,200 Speaker 4: and the new products which are flowing through their own 54 00:02:33,240 --> 00:02:36,920 Speaker 4: stores is working. What made the DTC revenue go down 55 00:02:36,960 --> 00:02:40,720 Speaker 4: four percent was that digital was down twelve percent. No 56 00:02:40,880 --> 00:02:43,320 Speaker 4: surprise here if this is where they're clearing all that 57 00:02:43,360 --> 00:02:46,480 Speaker 4: access inventory, so this channel will be pressured for a 58 00:02:46,520 --> 00:02:50,240 Speaker 4: couple of quarters. Still, wholesale up seven percent a great, 59 00:02:50,320 --> 00:02:52,960 Speaker 4: great number. I mean, it just shows that coming back 60 00:02:53,000 --> 00:02:55,720 Speaker 4: into partnerships with folt Locker in a more meaningful way, 61 00:02:55,760 --> 00:02:59,520 Speaker 4: getting on Amazon dot Com, all these efforts are paying off, 62 00:02:59,600 --> 00:03:01,960 Speaker 4: and they're where the customer is. They're gaining their shelf 63 00:03:02,000 --> 00:03:04,840 Speaker 4: space back and the customers that are responding favorably. 64 00:03:05,120 --> 00:03:07,079 Speaker 2: You know, the Nike brand is such a powerful brand. 65 00:03:07,080 --> 00:03:09,760 Speaker 2: I think of it like Coca Cola or Apple. It's 66 00:03:10,000 --> 00:03:14,160 Speaker 2: so powerful. Yet some of those American brands in China 67 00:03:14,280 --> 00:03:16,960 Speaker 2: under pressure. And I'm wondering, just with the geopolitics, is 68 00:03:17,080 --> 00:03:20,400 Speaker 2: Nike a brand where that might be feeling some anti 69 00:03:20,440 --> 00:03:22,240 Speaker 2: American sentiment from consumers. 70 00:03:22,520 --> 00:03:24,680 Speaker 4: Well, that has happened in the past, there have been 71 00:03:24,720 --> 00:03:28,040 Speaker 4: boycotts against you know, US American brands. We don't think 72 00:03:28,120 --> 00:03:31,200 Speaker 4: that's the issue yet from what we're hearing, but we 73 00:03:31,280 --> 00:03:34,800 Speaker 4: do think that the issue is more product at Nike 74 00:03:35,000 --> 00:03:36,920 Speaker 4: in China, So they do need to ramp a product 75 00:03:36,960 --> 00:03:39,000 Speaker 4: and they do have a lot of access inventory there, 76 00:03:39,040 --> 00:03:41,200 Speaker 4: more so than they do in the US today, So 77 00:03:41,280 --> 00:03:43,080 Speaker 4: that's also a work in progress that they need to 78 00:03:43,120 --> 00:03:43,560 Speaker 4: get through. 79 00:03:44,280 --> 00:03:45,720 Speaker 5: Let's talk about profitability. 80 00:03:45,840 --> 00:03:48,880 Speaker 3: Margins declined due to higher discounts and then also the 81 00:03:48,960 --> 00:03:52,040 Speaker 3: higher tariffs in North America. I look at gross margin 82 00:03:52,120 --> 00:03:54,680 Speaker 3: forty two point two percent last year. At this time 83 00:03:54,760 --> 00:03:57,160 Speaker 3: it was more than forty five percent. Now the forty 84 00:03:57,200 --> 00:04:00,080 Speaker 3: two point two percent was better than estimated. How How 85 00:04:00,120 --> 00:04:01,800 Speaker 3: long is it going to take for Nike to turn 86 00:04:01,840 --> 00:04:02,400 Speaker 3: that around. 87 00:04:03,040 --> 00:04:05,520 Speaker 4: I think we have quite some time. They said that 88 00:04:05,600 --> 00:04:09,520 Speaker 4: they do still aspire to reach double digit EBIT margin 89 00:04:09,760 --> 00:04:12,880 Speaker 4: EBIT margins in the quarter that they just reported was 90 00:04:12,960 --> 00:04:16,599 Speaker 4: only at seven point one percent, So that's a long runway. 91 00:04:16,640 --> 00:04:19,000 Speaker 4: We don't think it's any time soon. And the hit 92 00:04:19,040 --> 00:04:22,680 Speaker 4: from tariffs is building, not reducing. They had expected a 93 00:04:22,800 --> 00:04:25,200 Speaker 4: billion dollars the last time they spoke to us, and 94 00:04:25,279 --> 00:04:28,600 Speaker 4: that one to one point five billion dollars and access 95 00:04:29,600 --> 00:04:30,840 Speaker 4: costs from teriffs. 96 00:04:31,320 --> 00:04:34,359 Speaker 2: How much are they passing along to the retailer versus 97 00:04:34,400 --> 00:04:36,880 Speaker 2: taking it in their margin, because I mean, Nike's probably 98 00:04:37,040 --> 00:04:39,240 Speaker 2: just a great example of how companies are trying to 99 00:04:39,240 --> 00:04:40,040 Speaker 2: deal with the tariffs. 100 00:04:40,279 --> 00:04:42,960 Speaker 4: Yes, I think they're doing this actually very smartly. They're 101 00:04:43,000 --> 00:04:46,640 Speaker 4: not increasing prices on products that are under one hundred dollars, 102 00:04:46,960 --> 00:04:50,320 Speaker 4: but they are taking prices up on sneakers that are 103 00:04:50,360 --> 00:04:53,400 Speaker 4: above that price point. So if you think about moving 104 00:04:53,440 --> 00:04:55,719 Speaker 4: prices up, it's very easy to say the price of 105 00:04:55,760 --> 00:04:58,080 Speaker 4: milk went up from three dollars to three point fifty. 106 00:04:58,279 --> 00:05:00,320 Speaker 4: But when you're looking at a pair of sneakers actually 107 00:05:00,320 --> 00:05:02,800 Speaker 4: a new launch, you have no comparison, So you can 108 00:05:02,839 --> 00:05:06,080 Speaker 4: go ahead and price up your new innovation and the 109 00:05:06,160 --> 00:05:08,640 Speaker 4: customer may not even recognize that there was a material 110 00:05:08,680 --> 00:05:11,240 Speaker 4: price increase, and that customer has a little bit more 111 00:05:11,279 --> 00:05:14,200 Speaker 4: flexibility to stretch their wallets at that price point. 112 00:05:14,440 --> 00:05:18,880 Speaker 3: Pam, if you are heading up on Holdings or Adidas 113 00:05:19,000 --> 00:05:22,640 Speaker 3: or Sketchers or you know, any of the Hoka, what 114 00:05:22,720 --> 00:05:25,000 Speaker 3: would you be thinking looking at this set of results. 115 00:05:25,440 --> 00:05:28,479 Speaker 4: So Sketchers, I think is in a different league than Nike. 116 00:05:28,760 --> 00:05:31,320 Speaker 4: It's a little bit different. It's a value play, and 117 00:05:31,600 --> 00:05:34,560 Speaker 4: I think they don't compete directly like an Adidas or 118 00:05:34,600 --> 00:05:37,159 Speaker 4: an On or a Hoka would with them. Adidas is 119 00:05:37,200 --> 00:05:41,680 Speaker 4: doing really well on its franchise lifestyle shoes, and I 120 00:05:41,680 --> 00:05:44,440 Speaker 4: think Nike, what you've heard, was doing well in performance. 121 00:05:44,760 --> 00:05:48,320 Speaker 4: So two still very distinct categories. Though for On and Hoka, 122 00:05:48,360 --> 00:05:50,040 Speaker 4: I think it's a little bit of a different story 123 00:05:50,080 --> 00:05:55,080 Speaker 4: because Running was back on It's doing phenomenally well and 124 00:05:55,200 --> 00:05:58,679 Speaker 4: that is where hogaing On both took share from Nike. 125 00:05:59,080 --> 00:06:01,440 Speaker 4: So I would be just, you know, a little concerned 126 00:06:01,520 --> 00:06:03,760 Speaker 4: and just make sure that I keep my game on 127 00:06:03,880 --> 00:06:05,680 Speaker 4: when it comes to innovation, because at the end of 128 00:06:05,680 --> 00:06:08,239 Speaker 4: the day, product is what's going to drive how sales 129 00:06:08,279 --> 00:06:09,880 Speaker 4: momentum will go moving forward. 130 00:06:10,320 --> 00:06:12,640 Speaker 3: Our thanks to Punam goy Alva, senior US e Commerce 131 00:06:12,680 --> 00:06:14,800 Speaker 3: and retail analysts at Bloomberg Intelligence. 132 00:06:15,080 --> 00:06:16,719 Speaker 2: We move next to some news in the media and 133 00:06:16,800 --> 00:06:20,360 Speaker 2: entertainment space. This week, we heard that Spotify CEO Daniel 134 00:06:20,400 --> 00:06:22,880 Speaker 2: Eck is stepping down after two decades at the company. 135 00:06:23,040 --> 00:06:25,720 Speaker 3: Spotify will leave the leadership of the music streaming company 136 00:06:25,760 --> 00:06:29,280 Speaker 3: in the hands of two trusted executives, their Gustaf Soderstrom, 137 00:06:29,360 --> 00:06:33,440 Speaker 3: Chief Product and Technology Officer and Alex Norstrom, chief business Officer. 138 00:06:33,640 --> 00:06:35,880 Speaker 3: This move will go into effect on January first. 139 00:06:36,160 --> 00:06:38,000 Speaker 2: For more, we were joined by Githa Rang and Athen, 140 00:06:38,240 --> 00:06:41,760 Speaker 2: Bloomberg Intelligence analyst on US Media. Well first asked Githa 141 00:06:41,839 --> 00:06:44,600 Speaker 2: to explain why CEO Daniel Ck stepping down. 142 00:06:44,600 --> 00:06:46,800 Speaker 6: Now, this is, you know, one of your classic cases 143 00:06:46,839 --> 00:06:49,640 Speaker 6: of the founder finally kind of establishing a really good 144 00:06:50,000 --> 00:06:52,480 Speaker 6: transition plan and handing it off to his you know, 145 00:06:52,960 --> 00:06:57,320 Speaker 6: to lieutenants here. So we're having a co CEO structure. 146 00:06:57,360 --> 00:06:59,200 Speaker 6: And really, I mean the first when I heard this, 147 00:06:59,240 --> 00:07:01,599 Speaker 6: I mean, this really kind of hearkens back to what 148 00:07:01,800 --> 00:07:05,159 Speaker 6: Reed Hastings did with Netflix, you know, kind of left 149 00:07:05,240 --> 00:07:08,039 Speaker 6: right at the peak, right when the companies, you know, 150 00:07:08,520 --> 00:07:11,120 Speaker 6: everything was kind of you know, all cylinders were firing 151 00:07:11,160 --> 00:07:14,440 Speaker 6: away and left it to Greg Peters and Ted Sorrandos 152 00:07:14,480 --> 00:07:17,600 Speaker 6: to kind of take charge, and it seems like Spotify 153 00:07:17,760 --> 00:07:20,240 Speaker 6: is in a very similar position. So they had a 154 00:07:20,240 --> 00:07:22,360 Speaker 6: couple of things that had to get done this year, 155 00:07:22,360 --> 00:07:25,360 Speaker 6: which was new contracts with all of the music labels. 156 00:07:25,400 --> 00:07:29,000 Speaker 6: It looks like Daniel Eck has you know, accomplished all 157 00:07:29,040 --> 00:07:31,280 Speaker 6: of that, and I think he's really kind of left 158 00:07:31,280 --> 00:07:33,960 Speaker 6: the company in a good position for for its next 159 00:07:34,000 --> 00:07:36,720 Speaker 6: phase of growth. And this is really, you know, a 160 00:07:36,800 --> 00:07:39,960 Speaker 6: huge story in the internet space, the possibility to get 161 00:07:40,240 --> 00:07:43,040 Speaker 6: to a billion users very very quickly. They already have 162 00:07:43,040 --> 00:07:44,400 Speaker 6: about seven hundred million. 163 00:07:44,360 --> 00:07:47,160 Speaker 3: Okay, so there are almost three quarters of the way there. 164 00:07:47,840 --> 00:07:50,640 Speaker 3: He's leaving on top as George Costanza wood in Seinfeld. 165 00:07:50,960 --> 00:07:53,800 Speaker 3: But my question, Keita is you talk about the new 166 00:07:53,840 --> 00:07:56,800 Speaker 3: phase of growth, how much of that will rely on 167 00:07:56,960 --> 00:08:01,280 Speaker 3: continued price increases. Unlike Paul, I do subscribe, and it's 168 00:08:01,360 --> 00:08:03,560 Speaker 3: alarming how frequently the price changes come. 169 00:08:04,800 --> 00:08:07,640 Speaker 6: Yeah, and it is going to keep coming, Scariot, There's 170 00:08:07,680 --> 00:08:10,320 Speaker 6: absolutely no doubt about it. I mean, this whole story 171 00:08:10,480 --> 00:08:13,640 Speaker 6: is kind of predicated on those price increases. Remember though, 172 00:08:13,720 --> 00:08:16,760 Speaker 6: that they never took up prices for the first ten 173 00:08:16,800 --> 00:08:19,960 Speaker 6: to twelve years, and then it started coming fast and furious. 174 00:08:20,040 --> 00:08:20,160 Speaker 7: Right. 175 00:08:20,200 --> 00:08:22,240 Speaker 6: We had one price increase in twenty twenty three, another 176 00:08:22,280 --> 00:08:24,200 Speaker 6: in twenty twenty four, We're going to have probably another 177 00:08:24,240 --> 00:08:26,280 Speaker 6: one in twenty twenty six. But if you kind of 178 00:08:26,320 --> 00:08:28,600 Speaker 6: look at all of the streaming services out there, you know, 179 00:08:28,640 --> 00:08:31,720 Speaker 6: Spotify is of course the leader in audio streaming. They 180 00:08:31,720 --> 00:08:34,000 Speaker 6: have a thirty five percent global market share in terms 181 00:08:34,040 --> 00:08:36,559 Speaker 6: of subscribers. You kind of look at their price, Let's 182 00:08:36,559 --> 00:08:39,760 Speaker 6: say in the US, it's twelve dollars for an individual plan. 183 00:08:40,120 --> 00:08:43,640 Speaker 6: You compare that to let's say the video leader Netflix. Again, 184 00:08:43,679 --> 00:08:45,640 Speaker 6: I go back to the Netflix example, They're priced at 185 00:08:45,679 --> 00:08:48,720 Speaker 6: eighteen dollars. So I think Spotify still has quite a 186 00:08:48,720 --> 00:08:50,679 Speaker 6: lot of runway when you kind of compare it to 187 00:08:50,840 --> 00:08:52,880 Speaker 6: the rest of the field. And the other thing that 188 00:08:52,880 --> 00:08:54,480 Speaker 6: I like to point out here is when you're kind 189 00:08:54,480 --> 00:08:57,120 Speaker 6: of subscribing to an audio service, it's typically only one 190 00:08:57,200 --> 00:08:59,600 Speaker 6: service that you're subscribing to, as opposed to a video service. 191 00:09:00,000 --> 00:09:02,160 Speaker 6: I think people really like their you know, if they 192 00:09:02,280 --> 00:09:04,440 Speaker 6: like Spotify, they're absolutely going to hold on to it 193 00:09:04,480 --> 00:09:07,880 Speaker 6: at any cost. And the other thing is, you know, 194 00:09:07,920 --> 00:09:11,679 Speaker 6: Spotify is adding new features all the time, so they 195 00:09:11,720 --> 00:09:15,920 Speaker 6: are like really getting down on you know, monetizing more 196 00:09:15,960 --> 00:09:19,240 Speaker 6: and more, but it's not They are innovating also constantly, 197 00:09:19,280 --> 00:09:22,480 Speaker 6: so I think I think people don't mind paying for it. 198 00:09:22,840 --> 00:09:25,400 Speaker 2: What's the biggest challenge to them on the cost side 199 00:09:25,400 --> 00:09:26,119 Speaker 2: of the business. 200 00:09:25,920 --> 00:09:30,200 Speaker 6: KEITHA music royalty is all. I mean, that's you know, 201 00:09:30,320 --> 00:09:32,880 Speaker 6: for every dollar that they make, they're paying out about 202 00:09:32,920 --> 00:09:37,040 Speaker 6: seventy cents in terms of musical royalties back to the labels. 203 00:09:37,320 --> 00:09:40,719 Speaker 6: So it is definitely a very you know, from that perspective, 204 00:09:40,760 --> 00:09:42,880 Speaker 6: the model is hard. But one of the things that 205 00:09:42,920 --> 00:09:46,920 Speaker 6: they've done very well is, you know, they've obviously renegotiated 206 00:09:46,960 --> 00:09:49,000 Speaker 6: a lot of the deals kind of try to provide 207 00:09:49,040 --> 00:09:52,080 Speaker 6: investors with a lot more visibility into the cost space. 208 00:09:52,320 --> 00:09:55,600 Speaker 6: But more importantly for them, they're really trying to go 209 00:09:55,720 --> 00:09:59,480 Speaker 6: away from you know, licensed content to more owned content, 210 00:09:59,559 --> 00:10:02,240 Speaker 6: so kind of going into you know, podcasts, going to 211 00:10:02,360 --> 00:10:04,760 Speaker 6: more non music content, where again they have a lot 212 00:10:04,800 --> 00:10:08,719 Speaker 6: more leverage, you know, whether it's audiobooks, whether it's video podcasts, 213 00:10:09,080 --> 00:10:11,600 Speaker 6: getting away from you know, just being a core music 214 00:10:11,640 --> 00:10:14,760 Speaker 6: service to more of kind of an global kind of 215 00:10:14,800 --> 00:10:17,720 Speaker 6: an audio service, and they're doing that really well, and 216 00:10:17,760 --> 00:10:20,680 Speaker 6: that's going to help them with their margin expansion story 217 00:10:20,720 --> 00:10:22,840 Speaker 6: as they get better unit economics right. 218 00:10:22,720 --> 00:10:25,360 Speaker 3: And introducing premium tiers on top of that you have 219 00:10:25,440 --> 00:10:28,200 Speaker 3: to unlock in order to unlock some of the more 220 00:10:28,520 --> 00:10:30,640 Speaker 3: I don't know, high profile podcasts, you then have to 221 00:10:30,679 --> 00:10:34,080 Speaker 3: pay extra. Keith talk a little bit about AI because 222 00:10:34,080 --> 00:10:37,440 Speaker 3: I keep reading about how AI generated music is a challenge, 223 00:10:37,440 --> 00:10:39,959 Speaker 3: but in what way? And could it actually become an 224 00:10:39,960 --> 00:10:42,319 Speaker 3: opportunity as well for Spotify? 225 00:10:43,440 --> 00:10:45,560 Speaker 6: I think so. I think it is going to become, 226 00:10:46,160 --> 00:10:48,200 Speaker 6: you know, an opportunity as we go. They're already actually 227 00:10:48,440 --> 00:10:50,640 Speaker 6: using you know, a lot of AI features when it 228 00:10:50,679 --> 00:10:54,120 Speaker 6: comes to curation, you know, when it comes to music discovery, 229 00:10:54,160 --> 00:10:58,440 Speaker 6: when it comes to providing better features, and they're already 230 00:10:58,440 --> 00:11:01,360 Speaker 6: and you just brought up the super premium tier and 231 00:11:01,400 --> 00:11:03,240 Speaker 6: a lot of that is actually going to be having 232 00:11:03,280 --> 00:11:06,920 Speaker 6: like an AIDJ type of a feature there, you know, 233 00:11:07,080 --> 00:11:10,240 Speaker 6: for both listeners as well as music creators. So I 234 00:11:10,240 --> 00:11:12,400 Speaker 6: think it is definitely going to be you know, a 235 00:11:12,440 --> 00:11:15,200 Speaker 6: good opportunity for them to present a much better product. 236 00:11:15,200 --> 00:11:18,280 Speaker 6: I mean, we've already seen AI being used by a 237 00:11:18,320 --> 00:11:20,120 Speaker 6: lot of the other platforms. Again, I go back to 238 00:11:20,200 --> 00:11:22,600 Speaker 6: Netflix because they've done this really well in terms of 239 00:11:22,920 --> 00:11:25,679 Speaker 6: you know, having a much better algorithm now to serve 240 00:11:25,760 --> 00:11:28,400 Speaker 6: up better content. And I think that's exactly what Spotify 241 00:11:28,480 --> 00:11:30,240 Speaker 6: is doing in terms of its playlists as well. 242 00:11:30,480 --> 00:11:33,080 Speaker 2: Where's Apple in this audio game? 243 00:11:34,400 --> 00:11:37,880 Speaker 6: So just in terms of subscribers share, Paul, I mean Spotify, 244 00:11:37,960 --> 00:11:40,360 Speaker 6: as I said, leads with about thirty five percent share 245 00:11:40,360 --> 00:11:42,400 Speaker 6: of the market. Apple is really far behind. They have 246 00:11:42,440 --> 00:11:46,400 Speaker 6: about a ten percent share, so very very hard for 247 00:11:46,400 --> 00:11:48,199 Speaker 6: them to catch up in terms of in terms of 248 00:11:48,200 --> 00:11:49,600 Speaker 6: subscribers at least. 249 00:11:49,440 --> 00:11:52,240 Speaker 3: Are Thanks to Getha Rong and Aathan, Bloomberg Intelligence analysts 250 00:11:52,320 --> 00:11:54,760 Speaker 3: on US Media coming up a look at why the 251 00:11:54,840 --> 00:11:57,720 Speaker 3: video game maker Electronic Arts has agreed to sell itself 252 00:11:57,760 --> 00:11:58,880 Speaker 3: to a group of investors. 253 00:11:58,960 --> 00:12:01,920 Speaker 2: You're listening to Bloomberg and Intelligence on Bloomberg Radio, providing 254 00:12:01,960 --> 00:12:04,120 Speaker 2: in depth research and data on two thousand companies and 255 00:12:04,120 --> 00:12:05,400 Speaker 2: one hundred and thirty industries. 256 00:12:05,520 --> 00:12:08,559 Speaker 3: You can access Bloomberg Intelligence via Bigo on the terminal. 257 00:12:08,640 --> 00:12:09,800 Speaker 3: I'm Scarlet Foo and. 258 00:12:09,679 --> 00:12:11,800 Speaker 2: I'm Paul Sweeney. This is Bloomberg. 259 00:12:15,520 --> 00:12:20,040 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 260 00:12:20,360 --> 00:12:21,680 Speaker 1: on Bloomberg Radio. 261 00:12:22,720 --> 00:12:24,960 Speaker 2: We move next to the electronic gaming space. 262 00:12:25,480 --> 00:12:28,520 Speaker 3: This week, the video game maker Electronic Arts or, EA 263 00:12:28,559 --> 00:12:31,120 Speaker 3: agreed to sell itself to a group of investors. They 264 00:12:31,160 --> 00:12:34,080 Speaker 3: include a firm managed by Jared Kushner and Saudi Arabia's 265 00:12:34,080 --> 00:12:35,079 Speaker 3: Sovereign Wealth Fund. 266 00:12:35,280 --> 00:12:38,120 Speaker 2: The deal values EA at about fifty five billion dollars, 267 00:12:38,160 --> 00:12:40,400 Speaker 2: with the investors agreeing to pay two hundred and ten 268 00:12:40,440 --> 00:12:43,400 Speaker 2: dollars per share in cash. This makes it the largest 269 00:12:43,480 --> 00:12:44,840 Speaker 2: leverage buyout on record. 270 00:12:45,040 --> 00:12:47,840 Speaker 3: For more, we were joined by Nathan Natu Bloomberg Intelligence 271 00:12:47,840 --> 00:12:49,200 Speaker 3: Technology Research Analysts. 272 00:12:49,280 --> 00:12:52,440 Speaker 2: We first asked Nathan to break down the EA's recent valuation. 273 00:12:53,240 --> 00:12:56,200 Speaker 7: The valuation is at a twenty to thirty percent premium 274 00:12:56,280 --> 00:12:59,360 Speaker 7: versus the last three quorder market cab before this deal 275 00:12:59,520 --> 00:13:03,400 Speaker 7: was now and it seems like, you know, it is 276 00:13:03,720 --> 00:13:06,400 Speaker 7: a premium deal, but actually, you know, EA has a 277 00:13:06,440 --> 00:13:10,400 Speaker 7: lot going for it. It is actually launching a new 278 00:13:10,440 --> 00:13:13,960 Speaker 7: batterfield game, and there's a strong prospect for this game. 279 00:13:14,040 --> 00:13:16,920 Speaker 7: And actually the game is now in prely release, and 280 00:13:16,960 --> 00:13:20,480 Speaker 7: even then, he has already smashed all prior records set 281 00:13:20,520 --> 00:13:23,160 Speaker 7: by the biggest game in that genre, and that genre 282 00:13:23,240 --> 00:13:26,160 Speaker 7: is first person should and that game that's dominated that 283 00:13:26,240 --> 00:13:30,160 Speaker 7: genre is called Duty from Microsoft. So Betterview six is 284 00:13:30,440 --> 00:13:33,240 Speaker 7: looking to be a successful launch. And next year we 285 00:13:33,280 --> 00:13:36,160 Speaker 7: have FIFA and obviously we know that EA has the 286 00:13:36,200 --> 00:13:39,240 Speaker 7: biggest soccer game in the industry, and that's FIFA. What 287 00:13:39,280 --> 00:13:41,559 Speaker 7: was called FIFA but now it's called EA Sports FC. 288 00:13:42,080 --> 00:13:44,400 Speaker 7: And next year FIFA World Cup will be a special 289 00:13:44,400 --> 00:13:48,000 Speaker 7: one because it will be hosted across three cities, including 290 00:13:48,040 --> 00:13:51,560 Speaker 7: the US, and if people don't know, US is actually 291 00:13:51,600 --> 00:13:54,120 Speaker 7: the biggest market in terms of revenue for all kinds 292 00:13:54,120 --> 00:13:56,480 Speaker 7: of sports games. So that's the second thing going for 293 00:13:56,520 --> 00:13:59,480 Speaker 7: EA that I think it's going to lead to at 294 00:13:59,559 --> 00:14:04,240 Speaker 7: least two round circumstensus beat on EPs share. So I 295 00:14:04,240 --> 00:14:07,440 Speaker 7: think for e A, this is a this is actually 296 00:14:07,440 --> 00:14:09,840 Speaker 7: a good deal, and we can talk about the common 297 00:14:09,880 --> 00:14:13,400 Speaker 7: struggles faced by you know, game publishers and how these 298 00:14:13,440 --> 00:14:15,760 Speaker 7: deals would make sense for e A as well as 299 00:14:15,840 --> 00:14:18,520 Speaker 7: the the investors in this context. 300 00:14:18,760 --> 00:14:20,760 Speaker 3: So yeah, let's do that because you mentioned a bunch 301 00:14:20,880 --> 00:14:24,400 Speaker 3: of the titles and these are you know, very valuable franchises. 302 00:14:24,400 --> 00:14:26,920 Speaker 3: These this is a top quality ip, whether it's E 303 00:14:27,040 --> 00:14:31,360 Speaker 3: Sports FC, madd in NFL, the SIMS battlefield. What does 304 00:14:31,560 --> 00:14:35,920 Speaker 3: ownership by private equity, by private investors allow e A 305 00:14:36,080 --> 00:14:39,200 Speaker 3: to do that it can't do as a publicly traded company. 306 00:14:39,360 --> 00:14:42,880 Speaker 7: I think it's all down to funds. So publishers. Game 307 00:14:42,880 --> 00:14:46,200 Speaker 7: publishers in general have been have been facing two struggles. 308 00:14:46,360 --> 00:14:49,800 Speaker 7: First one is gamers attention spend and playtime are increasingly 309 00:14:49,800 --> 00:14:54,000 Speaker 7: getting limited. The reason is people are sticking to brands 310 00:14:54,200 --> 00:14:56,800 Speaker 7: or franchises that they have played for a long time. 311 00:14:57,080 --> 00:14:59,640 Speaker 7: And in fact, new Zoo published data saying that a 312 00:15:00,000 --> 00:15:03,280 Speaker 7: percent of playtime tend to go back to the sixty 313 00:15:03,400 --> 00:15:06,920 Speaker 7: or so titles, leaving only eight percent of playtime for 314 00:15:07,080 --> 00:15:09,840 Speaker 7: brand new IP. And this is actually in favor of 315 00:15:09,880 --> 00:15:13,400 Speaker 7: EA because we mentioned those valuable IP. In fact, if 316 00:15:13,440 --> 00:15:17,680 Speaker 7: we look at global unit sales, EA has topped twenty 317 00:15:18,360 --> 00:15:22,640 Speaker 7: has four of those top twenty selling IP globally, he 318 00:15:22,680 --> 00:15:25,400 Speaker 7: has four out of the twenty. So that is actually 319 00:15:25,640 --> 00:15:29,760 Speaker 7: a pretty enticing deal thing for companies like private equity 320 00:15:29,800 --> 00:15:32,760 Speaker 7: because you know, profit generation is key, and what this 321 00:15:33,000 --> 00:15:36,480 Speaker 7: means that is that EA has franchises that can bring 322 00:15:36,480 --> 00:15:39,760 Speaker 7: in recurring revenue. We talked about EA Sports FC, we 323 00:15:39,800 --> 00:15:42,720 Speaker 7: talk about MED and MFL and they actually revived a 324 00:15:42,760 --> 00:15:45,880 Speaker 7: new franchise, College Football, and you know, it was one 325 00:15:45,920 --> 00:15:48,320 Speaker 7: of the best selling titles in the US last year. 326 00:15:48,720 --> 00:15:51,800 Speaker 7: So recurring revenue is key here. And the second struggle 327 00:15:51,800 --> 00:15:54,080 Speaker 7: that I was going to go into is development cost 328 00:15:54,560 --> 00:15:57,520 Speaker 7: is really high, especially in the US, So that means 329 00:15:57,520 --> 00:16:00,960 Speaker 7: that we publishers actually have a cost is advantage when 330 00:16:01,000 --> 00:16:04,800 Speaker 7: compared to Eastern developers. For example, you know, salaries for 331 00:16:04,880 --> 00:16:09,080 Speaker 7: game engineers in China is more than half the level 332 00:16:09,120 --> 00:16:13,240 Speaker 7: in California, and personnel cost game engineers is a huge 333 00:16:13,280 --> 00:16:16,840 Speaker 7: part of developing a game. So you know, tens and 334 00:16:16,880 --> 00:16:19,720 Speaker 7: actually launched a new game in the same genre as 335 00:16:19,720 --> 00:16:23,160 Speaker 7: Better Few six and that's Deltalk Force is doing really well. 336 00:16:23,400 --> 00:16:27,840 Speaker 7: And what that costs disadvantage is stopping EA from is 337 00:16:27,960 --> 00:16:32,160 Speaker 7: continuously to push out a stronghalence of content to essentially 338 00:16:32,200 --> 00:16:35,680 Speaker 7: extending the shelf life of any game, and Eastern developers 339 00:16:35,720 --> 00:16:38,240 Speaker 7: can do that better because of that cost edge. 340 00:16:38,600 --> 00:16:41,920 Speaker 3: Our thanks to Nathan Native, Bloomberg Intelligence technology research analyst. 341 00:16:42,360 --> 00:16:44,480 Speaker 2: We move next to some news in the energy industry. 342 00:16:44,920 --> 00:16:47,520 Speaker 3: This week, the energy company Exon Mobile said it plans 343 00:16:47,520 --> 00:16:50,080 Speaker 3: to cut about two thousand jobs globally as part of 344 00:16:50,080 --> 00:16:51,560 Speaker 3: its long term restructuring plan. 345 00:16:51,920 --> 00:16:54,600 Speaker 2: The reductions represent about three to four percent of Xcellon's 346 00:16:54,600 --> 00:16:57,680 Speaker 2: global workforce and are part of the company's ongoing efficiency drive. 347 00:16:58,040 --> 00:17:01,280 Speaker 3: For the analysis, we're joined by Vincent Pas, Bloomberg Intelligence, 348 00:17:01,320 --> 00:17:03,520 Speaker 3: senior equity research analyst of oil and gas. 349 00:17:03,960 --> 00:17:06,800 Speaker 2: First ask Vincent for his take on this Exon news. 350 00:17:07,080 --> 00:17:10,640 Speaker 8: Well, I think it's part of managing through the cycle. 351 00:17:10,760 --> 00:17:14,920 Speaker 8: Right in prior cycles, the sector was exposed to more 352 00:17:14,960 --> 00:17:20,960 Speaker 8: extreme volatility, higher highs, lower lows. The industry is trying 353 00:17:21,000 --> 00:17:25,560 Speaker 8: to manage through what seems to be a rather clouded 354 00:17:26,560 --> 00:17:30,600 Speaker 8: backdrop right now. So we're sitting here and you got 355 00:17:31,040 --> 00:17:33,720 Speaker 8: NAT gas somewhere around three point thirty Henry Hubb. You 356 00:17:33,800 --> 00:17:37,800 Speaker 8: got WTI in the low sixties. You have OPEC bringing 357 00:17:37,840 --> 00:17:43,200 Speaker 8: back on capacity and maybe even speeding up that capacity. 358 00:17:43,240 --> 00:17:43,560 Speaker 6: Ads. 359 00:17:43,960 --> 00:17:49,200 Speaker 8: You have a more clouded, broader economic backdrop across the globe. 360 00:17:49,240 --> 00:17:53,639 Speaker 8: You have geopolitical issues, so lots of uncertainty, and not 361 00:17:53,680 --> 00:17:56,840 Speaker 8: only Exon. Exon's probably going to cut somewhere about two 362 00:17:57,040 --> 00:18:01,080 Speaker 8: three four percent of its global workforce, its affiliate a 363 00:18:01,160 --> 00:18:05,320 Speaker 8: much more substantial cut, roughly about twenty percent over the 364 00:18:05,359 --> 00:18:09,160 Speaker 8: next two years or so. You're seeing it at Conico Phillips, 365 00:18:09,160 --> 00:18:13,679 Speaker 8: You're seeing it at Chevron, even BP, the major European 366 00:18:14,560 --> 00:18:17,920 Speaker 8: energy conglomerate. You're seeing it across the board. And so Paul, 367 00:18:18,480 --> 00:18:20,720 Speaker 8: as you know, when you're not growing revenue, right, you're 368 00:18:20,720 --> 00:18:23,719 Speaker 8: not getting the revenue increase on price, you're not growing 369 00:18:23,920 --> 00:18:26,960 Speaker 8: production because your investor base does not want to see 370 00:18:26,960 --> 00:18:31,200 Speaker 8: that production growth. You are looking at very steady revenue, 371 00:18:31,200 --> 00:18:34,320 Speaker 8: maybe even declining revenue. You have to manage that netback 372 00:18:34,359 --> 00:18:37,439 Speaker 8: from the cost perspective, and you have to support that 373 00:18:37,560 --> 00:18:40,400 Speaker 8: cash flow stream. And so you're doing it via these 374 00:18:40,440 --> 00:18:43,640 Speaker 8: cost cuts over a number of years too, maybe even 375 00:18:43,720 --> 00:18:47,119 Speaker 8: three years, to sort of bring that cost structure in 376 00:18:47,280 --> 00:18:50,360 Speaker 8: line with a new reality of uncertainty in the marketplace, 377 00:18:50,640 --> 00:18:52,120 Speaker 8: to reduce that volatility. 378 00:18:52,160 --> 00:18:54,840 Speaker 3: Well, there's cost cuts, and then there's exon mobiles cost cuts. 379 00:18:54,880 --> 00:18:58,520 Speaker 3: Since twenty nineteen, it's trimmed thirteen and a half billion 380 00:18:58,560 --> 00:19:00,679 Speaker 3: dollars in annual cost That is more than all the 381 00:19:00,720 --> 00:19:04,040 Speaker 3: other big oil companies combined. How much more room is 382 00:19:04,080 --> 00:19:06,440 Speaker 3: there for Exxon to slash expenses. 383 00:19:07,200 --> 00:19:14,200 Speaker 8: Well, it bought Pioneer, so it has a relatively sizable workforce. 384 00:19:14,320 --> 00:19:16,639 Speaker 8: In general, it doesn't necessarily mean that those cuts are 385 00:19:16,680 --> 00:19:19,600 Speaker 8: going to come there, but there are ways you cut 386 00:19:20,320 --> 00:19:24,080 Speaker 8: you gain efficiency. In this technological era where we have 387 00:19:24,320 --> 00:19:30,600 Speaker 8: advancements across the energy value chain. You will consistently and 388 00:19:30,680 --> 00:19:36,040 Speaker 8: continually seek out ways to get efficiency, to bring down 389 00:19:36,119 --> 00:19:39,560 Speaker 8: that cost structure and to bring unit costs in line 390 00:19:40,400 --> 00:19:45,520 Speaker 8: with a very anemic outlook for global energy prices in general, 391 00:19:45,600 --> 00:19:50,200 Speaker 8: and also a very clouded outlook for the global economy too. 392 00:19:50,920 --> 00:19:53,159 Speaker 2: So Vince kind of looking out, you know, one in 393 00:19:53,240 --> 00:19:55,199 Speaker 2: two years, what is the view of the companies you 394 00:19:55,240 --> 00:19:58,000 Speaker 2: talk to about energy prices, oil and gas? Is it 395 00:19:58,080 --> 00:19:59,560 Speaker 2: still going to be a challenge market here? 396 00:20:00,400 --> 00:20:02,240 Speaker 8: It looks like it. It looks like it's going to 397 00:20:02,240 --> 00:20:05,240 Speaker 8: be a very challenge market, especially for the WTI side, 398 00:20:05,240 --> 00:20:08,359 Speaker 8: for the oil side of the equation. On natural gas, Paul, 399 00:20:08,400 --> 00:20:10,840 Speaker 8: I know you and I have talked about this numerous times. 400 00:20:10,880 --> 00:20:15,120 Speaker 8: You have a structural growth trajectory for natural gas here 401 00:20:15,160 --> 00:20:19,720 Speaker 8: in the US via export LNG, whether it's seaborne energy 402 00:20:19,840 --> 00:20:24,719 Speaker 8: or whether it's pipeline gas into Mexico to help fuel 403 00:20:24,760 --> 00:20:26,119 Speaker 8: their economy as well. 404 00:20:26,440 --> 00:20:30,160 Speaker 9: You have the AI build out, which will be a 405 00:20:30,240 --> 00:20:35,160 Speaker 9: which will digest significant amounts of energy, and that's beneficial 406 00:20:35,800 --> 00:20:36,919 Speaker 9: for natural gas. 407 00:20:36,960 --> 00:20:41,120 Speaker 8: But on the oil side, you have very anemic growth. 408 00:20:41,600 --> 00:20:47,720 Speaker 8: You have your transportation fuels having to compete with alternative 409 00:20:47,840 --> 00:20:51,600 Speaker 8: and renewable fuels, so there's a greater competition there. The 410 00:20:51,760 --> 00:20:55,560 Speaker 8: growth trajectory and the outlook for the demand side on 411 00:20:55,680 --> 00:21:00,480 Speaker 8: the liquid fuels seems to be very clouded and seems 412 00:21:00,480 --> 00:21:05,800 Speaker 8: to be somewhat less secure relative to the natural gas 413 00:21:05,800 --> 00:21:06,480 Speaker 8: side of the house. 414 00:21:06,880 --> 00:21:10,119 Speaker 3: Our thanks to Vincent Piazza, Bloomberg Intelligence, senior equity research 415 00:21:10,119 --> 00:21:11,480 Speaker 3: analyst on oil and gas. 416 00:21:11,720 --> 00:21:14,399 Speaker 2: Staying with energy, Bloomberg Intelligence recently put out a report 417 00:21:14,440 --> 00:21:16,960 Speaker 2: on its outlook for nuclear power in twenty twenty six. 418 00:21:17,119 --> 00:21:20,160 Speaker 3: It's titled AI driven Power Demand set to spark three 419 00:21:20,280 --> 00:21:23,440 Speaker 3: hundred and fifty billion dollar build cycle. This deep dive 420 00:21:23,520 --> 00:21:27,119 Speaker 3: describes why nuclear remains a favorite power source for artificial intelligence. 421 00:21:27,280 --> 00:21:30,200 Speaker 2: For more, we were joined by Scott Levine, Bloomberg Intelligence 422 00:21:30,200 --> 00:21:33,080 Speaker 2: senior Energy Services Analysts. I first asked Scott to talk 423 00:21:33,119 --> 00:21:35,840 Speaker 2: about what the energy industry is doing to prepare for 424 00:21:35,960 --> 00:21:38,480 Speaker 2: what seems to be an insatiable need for power. 425 00:21:38,880 --> 00:21:44,080 Speaker 10: Nuclear really has two very big positives going for it. 426 00:21:44,800 --> 00:21:48,920 Speaker 10: Number One, it's a emissions free power source, and the 427 00:21:49,000 --> 00:21:54,520 Speaker 10: hyperscillers that are really behind the investments care about that deeply, right, 428 00:21:54,600 --> 00:21:59,359 Speaker 10: and so they've favored, you know more renewable sources heretofore 429 00:21:59,520 --> 00:22:03,160 Speaker 10: like when in solar, But what those lack are you know, 430 00:22:03,200 --> 00:22:06,920 Speaker 10: twenty four by seven base load characteristics and for a 431 00:22:07,000 --> 00:22:10,400 Speaker 10: data center to be up twenty four to seven, that's 432 00:22:10,440 --> 00:22:13,480 Speaker 10: not going to do it right. So nuclear checks both 433 00:22:13,480 --> 00:22:16,680 Speaker 10: of those boxes, and those are two very big positives 434 00:22:17,040 --> 00:22:20,040 Speaker 10: and the reasons that you're seeing folks like Microsoft and 435 00:22:20,080 --> 00:22:23,640 Speaker 10: Meta come out in favor of nuclear power. 436 00:22:23,840 --> 00:22:27,760 Speaker 2: And yeah, so what's the how much does nuclear provide 437 00:22:27,800 --> 00:22:29,880 Speaker 2: today in the US versus where you think it might 438 00:22:29,920 --> 00:22:31,240 Speaker 2: be in twenty five years. 439 00:22:31,480 --> 00:22:33,879 Speaker 10: Yeah, so today it's a little bit below twenty percent 440 00:22:33,880 --> 00:22:37,800 Speaker 10: of the grid, which we're saying we'll return to about 441 00:22:38,240 --> 00:22:41,280 Speaker 10: in our you know, base case scenario twenty percent of 442 00:22:41,280 --> 00:22:44,199 Speaker 10: the grid by twenty fifty. That may not seem like 443 00:22:44,280 --> 00:22:47,320 Speaker 10: much two percentage points, right, but it you know, will 444 00:22:47,359 --> 00:22:49,840 Speaker 10: equate to or amount to a three hundred and fifty 445 00:22:49,840 --> 00:22:51,560 Speaker 10: billion dollar investment. 446 00:22:51,160 --> 00:22:51,640 Speaker 11: To get there. 447 00:22:51,680 --> 00:22:54,920 Speaker 10: So those are big numbers. And in addition that, we're 448 00:22:54,920 --> 00:22:59,719 Speaker 10: talking about adding sixty some odd gigawatts to the grid, 449 00:22:59,800 --> 00:23:03,080 Speaker 10: and you can think about each full sized nuke being 450 00:23:03,160 --> 00:23:08,360 Speaker 10: one gigawatt, so that's basically building sixty generating units as 451 00:23:08,400 --> 00:23:10,960 Speaker 10: our base case. So those are big numbers to get 452 00:23:11,000 --> 00:23:13,440 Speaker 10: you from eighteen to twenty percent over a twenty five 453 00:23:13,680 --> 00:23:14,240 Speaker 10: period of time. 454 00:23:14,280 --> 00:23:16,000 Speaker 2: I tell you, I went in this report that you 455 00:23:16,040 --> 00:23:19,640 Speaker 2: and your team put together Section five Small modular reactors. 456 00:23:19,640 --> 00:23:21,040 Speaker 2: That's where I wanted to go to because. 457 00:23:20,800 --> 00:23:21,040 Speaker 9: I had that. 458 00:23:21,080 --> 00:23:22,560 Speaker 2: We've had some people come into the studio over the 459 00:23:22,640 --> 00:23:24,480 Speaker 2: last few years and just talk to us about the 460 00:23:24,520 --> 00:23:28,920 Speaker 2: science and engineering and the possibilities to be small modular reactors. 461 00:23:28,960 --> 00:23:31,440 Speaker 2: Tell us what they are and what role they could 462 00:23:31,440 --> 00:23:32,160 Speaker 2: play going forward. 463 00:23:32,400 --> 00:23:35,720 Speaker 10: Yeah, so really these are and none of these have 464 00:23:35,720 --> 00:23:37,800 Speaker 10: been built in the US yet, right, So this is 465 00:23:37,920 --> 00:23:41,960 Speaker 10: very much an emerging technology play. But basically you're talking 466 00:23:42,000 --> 00:23:44,359 Speaker 10: about is taking a full sized nuke. You're driving down 467 00:23:44,359 --> 00:23:46,960 Speaker 10: the highway. You see a big, cool tower, a bunch 468 00:23:46,960 --> 00:23:48,679 Speaker 10: of smoke coming out the top of it. These are 469 00:23:48,760 --> 00:23:52,200 Speaker 10: much much smaller, right, and so the idea here would 470 00:23:52,200 --> 00:23:54,919 Speaker 10: be that these are much more flexible, and so if 471 00:23:54,960 --> 00:23:58,480 Speaker 10: you have more disparate data centers located throughout the country, 472 00:23:58,840 --> 00:24:02,720 Speaker 10: you can power these and with these smaller units. Right, 473 00:24:03,080 --> 00:24:05,479 Speaker 10: And we're talking about you know, some of these are 474 00:24:05,520 --> 00:24:08,800 Speaker 10: smaller versions of what's already in operation today, which is 475 00:24:08,840 --> 00:24:12,439 Speaker 10: a light water reactor. And then some of these types 476 00:24:12,440 --> 00:24:16,840 Speaker 10: of units are different types of technologies. You have gas 477 00:24:16,960 --> 00:24:20,720 Speaker 10: cooled reactors as opposed to water, you have molten salt 478 00:24:20,760 --> 00:24:24,320 Speaker 10: cooled reactors as opposed to water, and these use different 479 00:24:24,359 --> 00:24:29,359 Speaker 10: types of technologies, different types of fuels still remain to 480 00:24:29,400 --> 00:24:30,800 Speaker 10: be licensed improven. 481 00:24:30,880 --> 00:24:32,000 Speaker 2: So a lot of it's very. 482 00:24:31,960 --> 00:24:35,760 Speaker 10: Much on the com But the technology in each of 483 00:24:35,760 --> 00:24:40,199 Speaker 10: those areas holds promise, so we'll see, and each of 484 00:24:40,240 --> 00:24:44,000 Speaker 10: them has pros and cons right, and so we'll see 485 00:24:44,000 --> 00:24:47,560 Speaker 10: over the next five years the technology shakeout and see 486 00:24:47,600 --> 00:24:49,840 Speaker 10: which ones end up being at the top of the 487 00:24:49,880 --> 00:24:52,119 Speaker 10: stack for the US. But each of them have a 488 00:24:52,119 --> 00:24:54,600 Speaker 10: lot of money behind them and a lot of support 489 00:24:54,720 --> 00:24:56,680 Speaker 10: from a lot of depocketed players. 490 00:24:57,080 --> 00:24:59,960 Speaker 3: Our thanks to Scott Levine, Bloomberg Intelligence, senior Energy Star 491 00:25:00,040 --> 00:25:02,600 Speaker 3: VERSUS analyst, coming up a look at why the cruise 492 00:25:02,600 --> 00:25:05,160 Speaker 3: company Carnival raised its full year earnings forecast. 493 00:25:05,440 --> 00:25:08,240 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 494 00:25:08,520 --> 00:25:10,760 Speaker 2: research and data on two thousand companies and one hundred 495 00:25:10,760 --> 00:25:11,520 Speaker 2: and thirty industries. 496 00:25:11,640 --> 00:25:14,800 Speaker 3: You can access Bloomberg Intelligence via Bigo on the terminal. 497 00:25:14,880 --> 00:25:22,199 Speaker 2: I'm Scarlet Foo and I'm Paul Sweeney. This is Bloomberg. 498 00:25:26,040 --> 00:25:30,560 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 499 00:25:30,880 --> 00:25:32,200 Speaker 1: on Bloomberg Radio. 500 00:25:32,880 --> 00:25:35,440 Speaker 2: We moved to some news in the tech space this week. 501 00:25:35,480 --> 00:25:37,960 Speaker 3: We heard that the AI cloud computing startup core Weave 502 00:25:38,040 --> 00:25:40,239 Speaker 3: has signed a deal to supply Meta with as much 503 00:25:40,280 --> 00:25:43,280 Speaker 3: as fourteen point two billion dollars worth of computing power. 504 00:25:43,600 --> 00:25:45,600 Speaker 2: As part of the deal, core Weave will provide Meta 505 00:25:45,640 --> 00:25:49,200 Speaker 2: with access to Nvidia's latest GB three hundred AI chips. 506 00:25:49,280 --> 00:25:51,120 Speaker 3: So for more, we were joined by Honor A. Rana, 507 00:25:51,160 --> 00:25:54,600 Speaker 3: Bloomberg Intelligence tech analyst. We first asked anaog how this 508 00:25:54,640 --> 00:25:55,760 Speaker 3: deal benefits core. 509 00:25:55,600 --> 00:26:00,560 Speaker 11: Weave corviv is basically is a is a company that 510 00:26:01,040 --> 00:26:03,560 Speaker 11: takes all these GPUs and rents it out to people 511 00:26:03,600 --> 00:26:06,200 Speaker 11: for whatever they want to use. So they do get 512 00:26:06,200 --> 00:26:09,919 Speaker 11: the dips on the most latest equipment that is sold 513 00:26:10,000 --> 00:26:13,600 Speaker 11: by Nvidia, and then the clients can And now I 514 00:26:13,600 --> 00:26:16,640 Speaker 11: did show that Meta is buying directly from Nvidia as well, 515 00:26:16,960 --> 00:26:19,240 Speaker 11: but in this case they're just going and outsourcing the 516 00:26:19,359 --> 00:26:22,840 Speaker 11: entire infrastructure for an amount of fourteen billion dollars, which 517 00:26:22,960 --> 00:26:25,000 Speaker 11: you know may be a very small piece of it 518 00:26:25,119 --> 00:26:28,159 Speaker 11: has overall capex for AI infrastructure, but it's still a 519 00:26:28,160 --> 00:26:31,040 Speaker 11: start that they are now leasing capacity rather than building 520 00:26:31,040 --> 00:26:31,600 Speaker 11: it in house. 521 00:26:32,359 --> 00:26:34,760 Speaker 2: So how should we think about this in the overall 522 00:26:34,800 --> 00:26:38,000 Speaker 2: growth of AI. I mean, this feels like incremental spending 523 00:26:38,000 --> 00:26:40,400 Speaker 2: to me, but I'm not sure if it's just shifted 524 00:26:40,440 --> 00:26:42,679 Speaker 2: somewhere else. Do you when you see announcements like this 525 00:26:42,680 --> 00:26:45,040 Speaker 2: from core we've how do you kind of welded in 526 00:26:45,160 --> 00:26:47,280 Speaker 2: or you know, kind of weave it into the larger picture. 527 00:26:48,520 --> 00:26:52,520 Speaker 11: So every company, every hyperscale cloud provider right now, you know, 528 00:26:52,520 --> 00:26:56,040 Speaker 11: whether that's Microsoft or whether that's Meta or any other 529 00:26:56,080 --> 00:26:58,480 Speaker 11: company that's out there that is spending a lot on 530 00:26:58,680 --> 00:27:02,640 Speaker 11: capital expenditures, on spending their AI capabilities. They have two options. 531 00:27:02,680 --> 00:27:04,800 Speaker 11: They can either build it themselves and they can go 532 00:27:04,880 --> 00:27:07,720 Speaker 11: to a specialized vendor like core Weave and rent it 533 00:27:07,760 --> 00:27:10,400 Speaker 11: from them or lease it from them. Microsoft has said 534 00:27:10,400 --> 00:27:14,399 Speaker 11: that they are really into expanding their leasing capacity or 535 00:27:14,480 --> 00:27:17,399 Speaker 11: capabilities down the road, which is good for companies like 536 00:27:17,400 --> 00:27:20,359 Speaker 11: core Weave. Their job is to build this only this 537 00:27:20,480 --> 00:27:23,000 Speaker 11: infrastructure and rent it out to whoever wants it. 538 00:27:23,760 --> 00:27:26,000 Speaker 3: My other question when it comes to core Weave, and 539 00:27:26,240 --> 00:27:29,600 Speaker 3: you know all this, all these deals it's making with 540 00:27:29,960 --> 00:27:34,200 Speaker 3: these cloud providers, is that they're also raising a lot 541 00:27:34,240 --> 00:27:37,399 Speaker 3: of money. Core Weave is tapping the debt market, or 542 00:27:37,520 --> 00:27:40,960 Speaker 3: there's there's there's expectations that it may tap the debt market. 543 00:27:42,080 --> 00:27:44,359 Speaker 3: Is there going to be enough demand to meet, you 544 00:27:44,400 --> 00:27:46,680 Speaker 3: know what, what it wants to sell. 545 00:27:48,040 --> 00:27:50,040 Speaker 11: So here is the case. When it comes to a 546 00:27:50,080 --> 00:27:53,240 Speaker 11: customer like Microsoft or Meta, which all of us know 547 00:27:53,400 --> 00:27:55,680 Speaker 11: have a lot of cash flow coming in. If they 548 00:27:55,720 --> 00:27:57,920 Speaker 11: have signed let's say a five year deal, seven a deal, 549 00:27:58,119 --> 00:28:00,280 Speaker 11: you kind of know that the money is good. It's 550 00:28:00,359 --> 00:28:03,200 Speaker 11: much easier to raise capital. Then then let's say from 551 00:28:03,200 --> 00:28:05,600 Speaker 11: a brand new company that may not have that amount 552 00:28:05,600 --> 00:28:07,600 Speaker 11: of cash flow coming in. So I would say, I mean, 553 00:28:07,880 --> 00:28:10,400 Speaker 11: you would you know, one should not be concerned that 554 00:28:10,480 --> 00:28:12,240 Speaker 11: Meta is not good for that money. I don't think 555 00:28:12,280 --> 00:28:14,359 Speaker 11: that's going to be, you know a concern for anybody 556 00:28:14,400 --> 00:28:18,000 Speaker 11: who's giving them the bonds of their debt for that Yeah. 557 00:28:18,040 --> 00:28:20,760 Speaker 2: Meta raised twenty nine billion dollars in a financing package 558 00:28:20,800 --> 00:28:24,960 Speaker 2: for a massive data center in Louisiana. Oracle raise eighteen 559 00:28:24,960 --> 00:28:27,960 Speaker 2: billion dollars in bonds as it builds infrastructure for Open AI. 560 00:28:28,119 --> 00:28:30,760 Speaker 2: So the markets are open for this kind of trade. 561 00:28:30,760 --> 00:28:32,680 Speaker 5: It seems like yeah, apparently they are. 562 00:28:33,320 --> 00:28:35,880 Speaker 3: And the other thing with Corewave, of course is that 563 00:28:36,000 --> 00:28:39,640 Speaker 3: it has an increased commitment from open AI. It's got 564 00:28:39,680 --> 00:28:43,040 Speaker 3: this big customer in Microsoft I think makes up seventy 565 00:28:43,080 --> 00:28:46,480 Speaker 3: one percent of its revenue. How diversified is Corewave's customer 566 00:28:46,520 --> 00:28:47,160 Speaker 3: base right now? 567 00:28:48,240 --> 00:28:50,760 Speaker 11: See when you see the core piece's first biggest customer 568 00:28:50,880 --> 00:28:53,720 Speaker 11: was Microsoft. Microsoft didn't have the capacity to run a 569 00:28:53,720 --> 00:28:56,400 Speaker 11: lot of their AI workloads, so they went to Corewave. So, 570 00:28:56,720 --> 00:28:59,360 Speaker 11: you know, frankly speaking, I understand that's seventy percent. But 571 00:28:59,600 --> 00:29:02,680 Speaker 11: you know, this is an area where everybody needs capacity, 572 00:29:02,760 --> 00:29:05,040 Speaker 11: so you know, for us it is an issue, but 573 00:29:05,120 --> 00:29:07,000 Speaker 11: it's not like, you know, it's not a deal breaker 574 00:29:07,200 --> 00:29:09,040 Speaker 11: when it comes to the quality or even you look 575 00:29:09,080 --> 00:29:12,280 Speaker 11: at the fundamentals of somebody like a Corevieve. Now what's 576 00:29:12,320 --> 00:29:14,840 Speaker 11: happening is other cloud providers are going to them and say, 577 00:29:15,040 --> 00:29:17,560 Speaker 11: whatever access capacity that you have, you know, we will 578 00:29:17,600 --> 00:29:18,360 Speaker 11: take that as well. 579 00:29:18,960 --> 00:29:20,960 Speaker 2: Are there other companies that are going to come public 580 00:29:21,000 --> 00:29:25,240 Speaker 2: here like core weave, these neo cloud companies. 581 00:29:25,880 --> 00:29:28,320 Speaker 11: Yeah, I mean, I'm sure a lot of them are 582 00:29:28,440 --> 00:29:31,560 Speaker 11: caring up for it. Coreweve is probably the biggest one 583 00:29:31,600 --> 00:29:34,360 Speaker 11: that's out there, you know, We saw Microsoft signing another 584 00:29:34,400 --> 00:29:37,800 Speaker 11: deal recently with the Nebius, I believe, and you know 585 00:29:37,840 --> 00:29:41,120 Speaker 11: that was a very similar arrangement where Microsoft is going 586 00:29:41,120 --> 00:29:43,320 Speaker 11: to them and saying, Okay, for the next several years, 587 00:29:43,360 --> 00:29:45,200 Speaker 11: this is the kind of money that I or the 588 00:29:45,240 --> 00:29:48,200 Speaker 11: capacity that I want from you, and this is how 589 00:29:48,240 --> 00:29:50,200 Speaker 11: I'm going to give you the money to fund it. 590 00:29:50,240 --> 00:29:54,320 Speaker 3: Basically, So an RAG when you look at these kinds 591 00:29:54,320 --> 00:29:57,480 Speaker 3: of deals and you know, fourteen billion dollars here, ten 592 00:29:57,520 --> 00:30:01,400 Speaker 3: billion dollars somewhere else, what gets your attention in terms 593 00:30:01,400 --> 00:30:02,880 Speaker 3: of you know, I need to look into this a 594 00:30:02,920 --> 00:30:05,480 Speaker 3: little bit more versus this is just one in a 595 00:30:05,560 --> 00:30:08,520 Speaker 3: long string of deals that these companies will continue to sign. 596 00:30:09,920 --> 00:30:11,960 Speaker 11: The biggest thing you want to think about is what 597 00:30:12,040 --> 00:30:15,080 Speaker 11: are these companies doing these deals for. So, say somebody 598 00:30:15,160 --> 00:30:18,120 Speaker 11: like a Microsoft, are they giving a lot of their 599 00:30:18,240 --> 00:30:21,360 Speaker 11: inference workloads or the outcome of chart GPT running on 600 00:30:21,600 --> 00:30:25,960 Speaker 11: Microsoft's cloud workloads, or are they giving model training workloads? 601 00:30:26,200 --> 00:30:28,040 Speaker 11: Because there is a there is a there is a 602 00:30:28,160 --> 00:30:30,760 Speaker 11: narrative out there in the market that the long tail 603 00:30:31,160 --> 00:30:34,360 Speaker 11: of the AI revenue comes from people using apps, which 604 00:30:34,400 --> 00:30:37,200 Speaker 11: we you know, think of this as infriance revenue. Compared 605 00:30:37,240 --> 00:30:40,640 Speaker 11: to the model training revenue, which make ups and down 606 00:30:40,720 --> 00:30:44,280 Speaker 11: depending on what kind of technological advancement we see in 607 00:30:44,360 --> 00:30:45,400 Speaker 11: you know, software development. 608 00:30:45,800 --> 00:30:48,880 Speaker 2: Our Thanks Dona rod Rana, Bloomberg Intelligence Technology Analysts. 609 00:30:49,200 --> 00:30:51,840 Speaker 3: We move next to the cruise industry, the cruise company 610 00:30:52,040 --> 00:30:54,760 Speaker 3: Carnival this week raising it's full year earnings forecast. 611 00:30:55,160 --> 00:30:58,000 Speaker 2: Carnival cited a record pace for forward bookings and improving 612 00:30:58,080 --> 00:31:01,040 Speaker 2: net yields, but shares of the company felt after the news. 613 00:31:01,200 --> 00:31:02,960 Speaker 3: For more on this, we were joined by Brian Egger, 614 00:31:03,000 --> 00:31:05,960 Speaker 3: Bloomberg Intelligence, Senior Gaming and Lodging Analysts. 615 00:31:06,120 --> 00:31:10,160 Speaker 2: First, Brian, why investors see Carnival's earnings forecast as conservative? 616 00:31:10,640 --> 00:31:12,600 Speaker 12: I think there are two ways in which maybe they're 617 00:31:13,400 --> 00:31:16,960 Speaker 12: being perceived as conservative. The one is that their yield 618 00:31:16,960 --> 00:31:19,720 Speaker 12: growth guidance for the fourth quarter, while it's certainly very 619 00:31:19,760 --> 00:31:22,400 Speaker 12: solid in there in the mid fores, you know, with 620 00:31:22,520 --> 00:31:25,440 Speaker 12: a little bit below consensus, maybe the street got a 621 00:31:25,440 --> 00:31:27,840 Speaker 12: little bit heav itself. The second thing is, for all 622 00:31:27,920 --> 00:31:32,040 Speaker 12: their optimism about bookings and direction of yields, they are 623 00:31:32,160 --> 00:31:34,560 Speaker 12: very conservative and how they're deploying capital. They've only got 624 00:31:34,560 --> 00:31:37,480 Speaker 12: about one percent annual yield growth for this year in 625 00:31:37,520 --> 00:31:40,880 Speaker 12: the next two years. So they're growing very effectively, but 626 00:31:40,920 --> 00:31:43,680 Speaker 12: they are also very measured in how they deploy capacity. 627 00:31:44,560 --> 00:31:46,600 Speaker 12: So all this is really good, but they do mention 628 00:31:46,720 --> 00:31:48,840 Speaker 12: that you know, they can afford to they can really 629 00:31:48,880 --> 00:31:52,040 Speaker 12: be judicious on expense growth because they're only growing capacity 630 00:31:52,080 --> 00:31:53,360 Speaker 12: at a very modest pace. 631 00:31:54,120 --> 00:31:56,160 Speaker 3: Is that a bad thing to be conservative? How does 632 00:31:56,200 --> 00:31:59,120 Speaker 3: Carnival compare with Norwegian or Royal Caribbean. 633 00:31:59,200 --> 00:32:01,560 Speaker 12: Yeah, so if you look at Norwegian World Caribbean, they're 634 00:32:01,560 --> 00:32:05,440 Speaker 12: anticipating or actually scheduling about a mid single digit, call 635 00:32:05,480 --> 00:32:08,720 Speaker 12: it five percent ish level of annual capacity growth for 636 00:32:09,480 --> 00:32:12,160 Speaker 12: twenty twenty six, twenty seven to twenty eight. You know, 637 00:32:12,160 --> 00:32:14,720 Speaker 12: it's closer to one percent for Carnival, maybe two percent 638 00:32:14,760 --> 00:32:17,280 Speaker 12: in twenty twenty eight. So they're just taking a more 639 00:32:17,280 --> 00:32:22,160 Speaker 12: conservative tack. And I think they're equally long term optimistic 640 00:32:22,160 --> 00:32:24,880 Speaker 12: about their ability to penetrate the vacation market, but they're 641 00:32:24,880 --> 00:32:26,880 Speaker 12: going about it in a much more measured way. And 642 00:32:26,920 --> 00:32:29,160 Speaker 12: then that sense it could strike people as conservative. 643 00:32:29,760 --> 00:32:31,560 Speaker 2: Talk to us about capacity. I mean, if they added 644 00:32:31,600 --> 00:32:33,080 Speaker 2: a couple of ships, would they sell them out? 645 00:32:33,840 --> 00:32:34,040 Speaker 11: Yeah? 646 00:32:34,040 --> 00:32:36,800 Speaker 12: I mean certainly, their their auquancy is back to pre 647 00:32:36,920 --> 00:32:41,440 Speaker 12: pandemic levels. Their yell growth against that capacity increase is positive, 648 00:32:41,440 --> 00:32:44,280 Speaker 12: and we were looking at we've seen steadily increasing yield 649 00:32:44,320 --> 00:32:48,240 Speaker 12: expectations throughout twenty twenty five and they've got the free 650 00:32:48,320 --> 00:32:50,200 Speaker 12: cash leot But I think they just want to build 651 00:32:50,240 --> 00:32:52,680 Speaker 12: this out slowly, you know, and maybe strike people some 652 00:32:52,760 --> 00:32:53,880 Speaker 12: people as being too slowly. 653 00:32:54,040 --> 00:32:56,600 Speaker 2: Hey, not for nothing. The CEO get paid a lot 654 00:32:56,600 --> 00:33:00,320 Speaker 2: of money here, Josh Weinstein. Fourteen million in cash vitation 655 00:33:00,400 --> 00:33:02,520 Speaker 2: for Countary. You're twenty four to fourteen million in stock 656 00:33:02,920 --> 00:33:05,200 Speaker 2: twenty eight million to drive a cruise ship round. That's 657 00:33:05,200 --> 00:33:05,600 Speaker 2: not too bad. 658 00:33:05,680 --> 00:33:06,920 Speaker 5: Nice job if you can get it right. 659 00:33:07,680 --> 00:33:10,520 Speaker 3: So here's my question to you, Brian, how do Royal 660 00:33:10,600 --> 00:33:12,520 Speaker 3: Caribbean or arrange and cruise and Carnival? 661 00:33:12,520 --> 00:33:14,080 Speaker 5: How do they grow their market? 662 00:33:14,160 --> 00:33:16,440 Speaker 3: Are they stealing from each other or is there still 663 00:33:16,480 --> 00:33:17,920 Speaker 3: a big base from which to grow. 664 00:33:18,040 --> 00:33:20,240 Speaker 12: There's definitely a penetration oportunity. I mean, just back up 665 00:33:20,280 --> 00:33:22,200 Speaker 12: for a second on Carnival. You know their goal is 666 00:33:22,200 --> 00:33:25,080 Speaker 12: to become investment grade. So part of the conservativism I 667 00:33:25,080 --> 00:33:27,280 Speaker 12: think you're seeing, which may be a headscratch, want to 668 00:33:27,280 --> 00:33:30,960 Speaker 12: get an investment grade, and I think that's probably priority one. 669 00:33:31,440 --> 00:33:35,320 Speaker 12: Shifting some of the enterprise value from bondholders to equity holders. 670 00:33:35,760 --> 00:33:38,600 Speaker 12: That being said, yes, they see opportunity to grow a 671 00:33:38,760 --> 00:33:43,800 Speaker 12: relatively underpenetrated overall vacation market, but they're going about it 672 00:33:43,840 --> 00:33:46,000 Speaker 12: with kind of balance sheet being front center if that 673 00:33:46,120 --> 00:33:46,640 Speaker 12: helps it all. 674 00:33:48,120 --> 00:33:49,720 Speaker 2: The only thing I know about the cruise business is 675 00:33:49,720 --> 00:33:51,719 Speaker 2: what I learned from Disney, who got into the business 676 00:33:52,120 --> 00:33:55,160 Speaker 2: fifteen twenty years ago, and it's been a great business 677 00:33:55,200 --> 00:33:58,320 Speaker 2: for them. How do you stratify the cruise market? Now, 678 00:33:58,320 --> 00:34:01,120 Speaker 2: I'm going to be the very very top, but how 679 00:34:01,120 --> 00:34:03,280 Speaker 2: does the cruise industry kind of stratify itself? 680 00:34:03,640 --> 00:34:07,120 Speaker 12: Yeah, I mean I think they, I think convincingly argue 681 00:34:07,160 --> 00:34:10,520 Speaker 12: that they are relatively affordable form of vacations, the package product. 682 00:34:11,040 --> 00:34:13,920 Speaker 12: The value is very good for the consumer, but it 683 00:34:14,040 --> 00:34:18,640 Speaker 12: runs across different tiers from luxury side you know, Seaborn, 684 00:34:18,800 --> 00:34:22,120 Speaker 12: wind Star Oceania Region seven Seas to the more mass 685 00:34:22,160 --> 00:34:25,640 Speaker 12: market like Carnival Cruise Line, So they run the gamut, 686 00:34:25,640 --> 00:34:29,400 Speaker 12: but the overall spectrum tends to be generally, you know, 687 00:34:29,560 --> 00:34:32,959 Speaker 12: relatively affordable and part of that package vacation product people 688 00:34:33,000 --> 00:34:35,960 Speaker 12: buying cruises beforehand, buying stuff on the cruise. With a 689 00:34:36,000 --> 00:34:38,840 Speaker 12: good share of wallet left over that works to their favor. 690 00:34:39,440 --> 00:34:42,200 Speaker 5: How brand loyal are cruising fans? 691 00:34:42,320 --> 00:34:44,160 Speaker 3: I mean, if you are a Carnival person, are you 692 00:34:44,320 --> 00:34:45,600 Speaker 3: a Carnival person for life? 693 00:34:45,680 --> 00:34:49,200 Speaker 12: Yeah, there's certainly some brand loyalty. And remember they've they've 694 00:34:49,200 --> 00:34:52,120 Speaker 12: got kind of as an industry. They've companies got two goals. 695 00:34:52,120 --> 00:34:55,640 Speaker 12: One is to drive bookings for their particular brand, and 696 00:34:55,680 --> 00:34:58,160 Speaker 12: they do that through new hardware with all the bells 697 00:34:58,160 --> 00:35:01,120 Speaker 12: and whistles. The other is to drive the overall awareness 698 00:35:01,120 --> 00:35:03,920 Speaker 12: of the value of cruising relative to other forms of vacationing. 699 00:35:04,400 --> 00:35:06,680 Speaker 12: And so you know, they've kind of got that dual mandate. 700 00:35:08,200 --> 00:35:11,200 Speaker 2: So you're sitting on the Jersey Shore Sunday after in 701 00:35:11,280 --> 00:35:12,000 Speaker 2: around five. 702 00:35:11,880 --> 00:35:15,279 Speaker 5: So you're Sweeney's sitting on there. Okay, go ahead, all this. 703 00:35:15,560 --> 00:35:18,280 Speaker 2: Every Sunday during the summer, you'd see this massive cruise 704 00:35:18,280 --> 00:35:20,839 Speaker 2: ship coming out of New York Harbor. I think it's 705 00:35:20,880 --> 00:35:21,880 Speaker 2: the Star of the Seas. 706 00:35:22,280 --> 00:35:23,040 Speaker 12: Yeah, that's a new one. 707 00:35:23,120 --> 00:35:26,160 Speaker 2: Yeah, I mean, things massive, and they filled that thing up. 708 00:35:26,719 --> 00:35:29,560 Speaker 12: Oh just remember and that's a that's a Royal Caribbean ship. 709 00:35:29,600 --> 00:35:31,319 Speaker 12: But I will point out that one of the things 710 00:35:31,320 --> 00:35:33,640 Speaker 12: Carnival's pointing to is, you know they've reached the thirteen 711 00:35:33,680 --> 00:35:36,359 Speaker 12: percent return on invested capital this year, so they're kind 712 00:35:36,360 --> 00:35:38,960 Speaker 12: of getting to that double digit return base that they targeted. 713 00:35:39,040 --> 00:35:42,239 Speaker 12: So there are Their argument would be that they fill 714 00:35:42,280 --> 00:35:44,799 Speaker 12: it up, they get good pricing and relative that their 715 00:35:44,840 --> 00:35:48,320 Speaker 12: investments are getting you know, solid low teens or turns 716 00:35:48,320 --> 00:35:52,280 Speaker 12: on incremental invested capital with an opportunity to take that higher. 717 00:35:52,440 --> 00:35:54,160 Speaker 12: So as long as they can get that return, I 718 00:35:54,200 --> 00:35:57,280 Speaker 12: think they can convincingly say we're getting there. But obviously, 719 00:35:57,280 --> 00:36:00,719 Speaker 12: in the case of Carnival through relatively conservative capital to 720 00:36:00,800 --> 00:36:01,120 Speaker 12: point I. 721 00:36:01,120 --> 00:36:04,399 Speaker 2: Mean Star of the Sea, Icon of the Seas, they 722 00:36:04,440 --> 00:36:07,279 Speaker 2: have a massive passenger capacity with the ability to hold 723 00:36:07,320 --> 00:36:11,160 Speaker 2: over seventy six hundred passengers and a large crew. And 724 00:36:11,200 --> 00:36:12,879 Speaker 2: for somebody who doesn't like people like me. 725 00:36:13,440 --> 00:36:16,960 Speaker 12: That that's a tough it's not the miss anthrop's favorite 726 00:36:17,000 --> 00:36:20,200 Speaker 12: vacation activity. But you know, they do get good economies 727 00:36:20,200 --> 00:36:22,160 Speaker 12: by field peoples and. 728 00:36:22,440 --> 00:36:23,200 Speaker 2: How big things. 729 00:36:23,320 --> 00:36:25,200 Speaker 3: Well, I'm always talking with my friend who suggests that 730 00:36:25,280 --> 00:36:28,440 Speaker 3: instead of retiring to a nursing home or retirement community, 731 00:36:28,560 --> 00:36:29,319 Speaker 3: just go on a cruise trip. 732 00:36:29,400 --> 00:36:29,759 Speaker 8: I've heard that. 733 00:36:29,760 --> 00:36:31,560 Speaker 2: I've heard that too, you know, you know, it's a 734 00:36:31,560 --> 00:36:35,000 Speaker 2: big cruises Charlie Pellett and he doesn't like cruise the Caribbean. 735 00:36:35,440 --> 00:36:37,720 Speaker 5: Hers cruises like adventurous places. 736 00:36:37,760 --> 00:36:40,280 Speaker 2: Yeah, like I'm going to I'm cruising to Turkey and 737 00:36:41,000 --> 00:36:43,880 Speaker 2: I don't know Antarctica. Yes, that's what Charlie. 738 00:36:43,880 --> 00:36:45,279 Speaker 12: People pair a premium for those. Yeah. 739 00:36:45,640 --> 00:36:48,480 Speaker 3: Thanks sreic to Brian Egger, Bloomberg Intelligence senior Gaming and 740 00:36:48,560 --> 00:36:49,560 Speaker 3: Lodging analysts. 741 00:36:49,600 --> 00:36:52,279 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 742 00:36:52,360 --> 00:36:54,840 Speaker 2: providing in research and data on two thousand companies in 743 00:36:54,840 --> 00:36:56,120 Speaker 2: one hundred and thirty industries. 744 00:36:56,160 --> 00:36:58,680 Speaker 3: And of course you can access Bloomberg Intelligence via b 745 00:36:58,920 --> 00:37:00,000 Speaker 3: I go on the terminal. 746 00:37:00,160 --> 00:37:02,680 Speaker 2: I'm Scarlet Foo and I'll Paul Sweeney. Stay with us. 747 00:37:02,800 --> 00:37:05,359 Speaker 2: Today's top stories and global business headlines are coming up 748 00:37:05,600 --> 00:37:06,040 Speaker 2: right now