WEBVTT - Hackers Exploit Microsoft SharePoint as Firm Works to Patch 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.600 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:18.560 Eastern on Applecarplay and Android Auto with the Bloomberg Business app. 0:00:18.640 --> 0:00:21.920 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.120 us live on YouTube. 0:00:23.760 --> 0:00:27.480 Stay in in the TMT space if you will. We're 0:00:27.480 --> 0:00:29.200 going to talk about check in with anorog Ronnie. He's 0:00:29.240 --> 0:00:33.360 a Bloomberg senior tech analyst for Bloomberg Intelligence ANRAG. You know, 0:00:34.120 --> 0:00:37.680 Microsoft as well as anybody put into context for us, 0:00:37.960 --> 0:00:40.360 this cybersecurity attack has been certainly at the top of 0:00:40.400 --> 0:00:42.559 the news here this morning, and it just kind of, 0:00:43.080 --> 0:00:44.800 I think, at least to me, is surprising that a 0:00:44.840 --> 0:00:49.120 company with the resources and the technology expertise of Microsoft 0:00:49.120 --> 0:00:51.360 that they could in fact still be subject to this 0:00:51.479 --> 0:00:53.400 type of risk. How should we think about it? 0:00:54.280 --> 0:00:56.400 Yeah, Paul, when it comes to almost all the major 0:00:56.440 --> 0:01:00.360 tech companies, this is probably the most important and biggest 0:01:00.480 --> 0:01:03.400 risk for them. And again, you know, whether it's Microsoft 0:01:03.480 --> 0:01:05.800 or Amazon or Google, you know, this is one of 0:01:05.800 --> 0:01:07.840 the biggest worries for all of us. Is you know, 0:01:07.840 --> 0:01:09.960 you wake up one morning and you see a big 0:01:10.000 --> 0:01:12.080 outage out there, I mean almost a year ago. We 0:01:12.200 --> 0:01:15.480 remember that CrowdStrike problem and what it did to you know, 0:01:15.560 --> 0:01:17.959 airports and all the other things. Now, but in this 0:01:18.000 --> 0:01:21.280 particular case, I think it's a lot less problematic than 0:01:21.600 --> 0:01:24.800 what we saw a year ago. This is primarily based 0:01:24.880 --> 0:01:28.800 on certain on premise software. I mean, there is an 0:01:28.800 --> 0:01:32.280 on premise version of scarepoint software that they have. This 0:01:32.360 --> 0:01:35.880 is the it's only affecting those particular workloads, so it's 0:01:35.880 --> 0:01:38.080 not as widespread as some of the other areas we 0:01:38.160 --> 0:01:38.520 have seen. 0:01:39.000 --> 0:01:41.000 Now, what does this mean for cybersecurity companies? 0:01:42.120 --> 0:01:43.679 I mean it's a good thing for them. They are 0:01:43.800 --> 0:01:46.000 I mean to be honest, over the last fifteen years 0:01:46.000 --> 0:01:48.480 that I can remember, they're probably the one area it 0:01:48.520 --> 0:01:52.000 doesn't matter what the macro environment is, they continue to grow, 0:01:52.120 --> 0:01:54.920 you know, bigger and bigger. That's because there's so many 0:01:54.960 --> 0:01:58.920 little nuances that I have to be protected. These networks 0:01:59.080 --> 0:02:02.960 have multiple software from multiple vendors, and a lot of 0:02:02.960 --> 0:02:07.080 these companies do some unique things go prevent them endpoints security, 0:02:07.480 --> 0:02:10.080 you know, analytics, you'd name it. I mean, there is 0:02:10.160 --> 0:02:12.720 no shortage off I would say funding for a lot 0:02:12.720 --> 0:02:13.560 of those companies. 0:02:14.600 --> 0:02:18.880 So how do you characters or how do investors characterize 0:02:18.960 --> 0:02:22.640 just cyber crime risk for some of the big tech 0:02:22.840 --> 0:02:24.920 names that you know, the MAGS seven names are just 0:02:24.919 --> 0:02:26.920 a big tech names in general. It's something that we 0:02:26.960 --> 0:02:28.919 don't really talk about too often, do. 0:02:28.919 --> 0:02:31.800 We No, In fact that as I said, I mean, 0:02:31.840 --> 0:02:34.120 I've always said that this is probably the biggest risk 0:02:34.160 --> 0:02:37.160 that faces all of us because remember, now think about it, 0:02:37.240 --> 0:02:39.720 like AWS takes care of a lot of startups site. 0:02:39.720 --> 0:02:42.600 Now you see a problem with that network, the rest 0:02:42.600 --> 0:02:44.280 that then go down. Same thing you could say with 0:02:44.400 --> 0:02:49.000 Google Cloud platform, Microsoft's cloud platform. This particular incidence is 0:02:49.040 --> 0:02:52.280 only for the on premise applications, so you know, in 0:02:52.600 --> 0:02:55.079 a roundabout way, maybe this helps Microsoft in the long 0:02:55.120 --> 0:02:57.480 run that those customers say, you know what, I need 0:02:57.520 --> 0:02:59.560 to move online. I need to move more worklows to 0:02:59.560 --> 0:03:02.280 the cloud. But in totality, I mean you look at 0:03:02.320 --> 0:03:05.320 it from a cyber insurance point of view, insurance companies 0:03:05.360 --> 0:03:07.200 don't even want to go down that route. I mean, 0:03:07.200 --> 0:03:09.600 this is a I mean one of the biggest hidden 0:03:09.720 --> 0:03:12.680 risks for all of us, especially as most of our 0:03:12.800 --> 0:03:15.519 savings are you know, digital and you know placed in 0:03:16.120 --> 0:03:20.160 not in you know, safe boxes, but in investments somewhere. 0:03:19.760 --> 0:03:22.360 Digitally and honor again the text banks. We also had 0:03:22.400 --> 0:03:24.680 some IPO news. You had fig Mal looking to raise 0:03:24.720 --> 0:03:26.440 about a billion dollars us ipo. 0:03:27.240 --> 0:03:28.240 What is Figma? 0:03:28.320 --> 0:03:28.760 What do they do? 0:03:28.840 --> 0:03:30.520 What's their market value? 0:03:30.840 --> 0:03:32.799 Yeah? I was, you know, this is probably one of 0:03:32.840 --> 0:03:34.920 the more interesting companies that I have come across in 0:03:34.960 --> 0:03:38.040 a long while. A few years ago, Adobe made around 0:03:38.120 --> 0:03:40.680 for them, you know, paid twenty billion dollars to buy them, 0:03:40.960 --> 0:03:44.160 that didn't deal didn't go through. They you know, Adobe 0:03:44.280 --> 0:03:47.160 ended up paying pigma billion dollars as sort of breakup fee. 0:03:48.000 --> 0:03:51.000 But now they're going public, so very unique software in 0:03:51.080 --> 0:03:53.720 their market. What they do nobody else does it so well. 0:03:54.120 --> 0:03:57.600 They help you design application all the way from ideation 0:03:58.520 --> 0:04:02.040 to you know, publish applications or you could say, issuing 0:04:02.080 --> 0:04:04.800 applications out there for people. So, you know, we own 0:04:04.800 --> 0:04:06.760 a white boat. You want to discuss this idea with 0:04:06.800 --> 0:04:10.840 a team. Phenomenal software. It has very high market share 0:04:11.200 --> 0:04:12.800 and at this point, to be honest, I do we 0:04:12.880 --> 0:04:15.520 had one product that had some overlap with them, but 0:04:15.600 --> 0:04:18.320 frankly speaking, there isn't a large company out there that's 0:04:18.360 --> 0:04:20.640 a credible competitor for them. So we think this is 0:04:20.680 --> 0:04:24.320 going to be an area where see strong interest. We 0:04:24.360 --> 0:04:27.400 anticipate sales growth north of forty percent both for this 0:04:27.520 --> 0:04:30.280 year and next year. We think revenue could be one 0:04:30.320 --> 0:04:33.200 point six billion by the end of next year. And 0:04:33.320 --> 0:04:37.360 you know, our analysis indicates post evaluation somewhere between you know, 0:04:37.480 --> 0:04:40.359 nineteen and twenty three billion dollars or twenty one billion 0:04:40.360 --> 0:04:41.240 at the midpoint. 0:04:41.360 --> 0:04:47.040 And propose stock symbol for this pending IPOs FIG Bankers 0:04:47.080 --> 0:04:49.040 and Morgan Stanley Goldman Sachs all in a company and 0:04:49.080 --> 0:04:51.400 JP Morgan, so the blue chippers there for that deal 0:04:51.680 --> 0:04:54.040 and anag in your software space. We've had a couple 0:04:54.120 --> 0:04:57.479 of pretty good deals this year. Circle Internet Group wore 0:04:57.480 --> 0:04:59.200 we've I mean, do you expect more? 0:05:00.360 --> 0:05:02.880 I think that. I mean, if you have the capacity 0:05:02.880 --> 0:05:05.200 to go out in this market and raise capital, this 0:05:05.320 --> 0:05:08.040 is really good valuations. I'm very nice right now. I mean, 0:05:08.040 --> 0:05:10.960 I would strongly encourage if there is somebody who's looking 0:05:11.000 --> 0:05:13.279 at it. But at the same time, you know there 0:05:13.360 --> 0:05:15.720 is an issue about do you want to go and 0:05:15.800 --> 0:05:19.920 see your work being scrutinized. Public funding is also very good. 0:05:20.080 --> 0:05:22.359 There is so much private capital out there, so it 0:05:22.480 --> 0:05:25.159 really depends on what somebody is doing. Last year, we 0:05:25.200 --> 0:05:28.280 saw an IPO came out Service Tit and just in 0:05:28.320 --> 0:05:30.800 the first two months or first two quarters of there 0:05:31.040 --> 0:05:34.000 coming out as an IPO, they actually thought demand go 0:05:34.200 --> 0:05:36.800 because people recognize what this company has. I think the 0:05:36.839 --> 0:05:39.120 same could happen to Figma when you know a lot 0:05:39.160 --> 0:05:41.240 of people don't know what these guys do, and you 0:05:41.240 --> 0:05:44.000 know that recognizes the value of the software or the 0:05:44.040 --> 0:05:45.760 company just by going public. 0:05:46.560 --> 0:05:50.520 All right, very good. Anna Agarana, Senior Technology Channels, Bloomberg Intelligence. 0:05:50.839 --> 0:05:52.760 He's in a Chicago. You were talking about a little 0:05:52.760 --> 0:05:56.080 bit about MICROSOFTIC at the cyber security issue that it 0:05:56.200 --> 0:05:59.039 is dealing with. Plus we got some IPOs in the 0:05:59.080 --> 0:06:02.880 software space picking back up. It's always a good sign here. 0:06:03.640 --> 0:06:07.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:07.440 --> 0:06:10.799 weekdays at ten am Eastern on Applecarcklay and Android Auto 0:06:10.920 --> 0:06:14.000 with the Bloomberg Business App. Listen on demand wherever you 0:06:14.000 --> 0:06:17.040 get your podcasts, or watch us live on YouTube. 0:06:17.480 --> 0:06:20.760 All right, we're earlier this morning of Verizon CEO Hans Vestsberg. 0:06:21.040 --> 0:06:23.560 He talked to us, talked to Bloomberg Shinali boss Sake 0:06:23.600 --> 0:06:25.280 about some of the things that the company is doing 0:06:25.360 --> 0:06:27.320 right now. They just had their earnings report, but now 0:06:27.320 --> 0:06:29.640 we want to get the analyst view on that. So 0:06:29.720 --> 0:06:32.200 for that we'll bring in John Butler. He's Bloomberg Intelligence 0:06:32.279 --> 0:06:37.600 senior telecom analyst on these Verizon earnings. So John, good 0:06:37.640 --> 0:06:40.560 beat second quarter revenue, raise the profit outlook, what's making 0:06:40.560 --> 0:06:41.720 the company so optimistic? 0:06:43.800 --> 0:06:47.880 So I would characterize when I look at Verizon, I 0:06:47.960 --> 0:06:51.600 think of the phrase game of the inches, right. I 0:06:52.520 --> 0:06:57.120 think the improvements here quartering and quarter rout are incrementally better. 0:06:57.880 --> 0:07:02.479 They're edging towards that acquisition of Frontier, which is really 0:07:02.520 --> 0:07:05.920 going to change the game for them. But in the meantime, 0:07:06.000 --> 0:07:09.120 they put a lot of changes in place in terms 0:07:09.120 --> 0:07:14.400 of their go to market strategy, how they're combating promotions 0:07:14.440 --> 0:07:18.040 coming from T Mobile and AT and T and on 0:07:18.080 --> 0:07:21.520 the margin quarter in and quarter out, I just see 0:07:21.560 --> 0:07:24.920 them doing a better and better job. I think all 0:07:24.960 --> 0:07:28.320 the actions they've taken are starting to work. And so 0:07:28.520 --> 0:07:32.160 taking the long view here, I really think Verizon is 0:07:34.320 --> 0:07:37.640 improving just quarter and in quarter out. And this was 0:07:37.680 --> 0:07:41.440 another quarter where you could look at it in isolation 0:07:41.680 --> 0:07:45.120 and say, you know, it was a solid quarter, a 0:07:45.200 --> 0:07:48.200 little bit mixed on some of the metrics, But I 0:07:48.240 --> 0:07:52.160 think I'm balanced better than last quarter in last year. 0:07:52.800 --> 0:07:57.240 John, what's kind of the positioning of Verizon in the marketplace? Like, 0:07:57.280 --> 0:07:59.440 I've been a long time Verizon wireless customers since the 0:07:59.440 --> 0:08:03.520 beginning of service, actually, and I guess I was initially 0:08:03.560 --> 0:08:06.280 drawn to it because I thought they had the best network. 0:08:06.360 --> 0:08:09.200 So quality, is that still the case because it seems 0:08:09.240 --> 0:08:11.760 like T Mobile's gotten a lot better in quality and 0:08:11.960 --> 0:08:13.400 AT and T. I don't know. 0:08:15.080 --> 0:08:17.240 Yeah, you know, Paul, you bring up a good point. 0:08:17.320 --> 0:08:19.760 I think there's a question mark out there as to 0:08:19.800 --> 0:08:24.560 whether Verizon still has the best network versus T Mobile 0:08:24.600 --> 0:08:28.040 and AT and T. But I think they have a 0:08:28.120 --> 0:08:31.720 slight edge they are in terms of coverage. And it's 0:08:31.800 --> 0:08:34.640 interesting a lot of people ask me about wireless, who 0:08:34.720 --> 0:08:38.000 was the best network? Who should I choose? And the 0:08:38.240 --> 0:08:41.640 one thing that people are always asking about is how's 0:08:41.720 --> 0:08:45.000 their coverage? I think coverage is very important to people, 0:08:45.440 --> 0:08:48.000 and I think when you think on that metric. In 0:08:48.120 --> 0:08:52.000 terms of that metric, for Rizon delivers the bars on 0:08:52.040 --> 0:08:55.800 your smartphone probably more than T Mobile and AT and 0:08:55.840 --> 0:09:00.240 T in terms of download speeds, though I suspect that 0:09:00.360 --> 0:09:03.880 T Mobile probably is gaining the edge here now. 0:09:03.880 --> 0:09:07.520 What about prices. Did did did Verizon increase their prices? 0:09:07.559 --> 0:09:08.520 If so, did that help? 0:09:10.440 --> 0:09:10.560 So? 0:09:10.640 --> 0:09:14.840 We did see in all the carriers are increasing prices 0:09:14.960 --> 0:09:18.360 right now as the market matures and new user growth 0:09:18.440 --> 0:09:21.400 is slowing considerably. The only way you're going to grow 0:09:21.440 --> 0:09:26.320 that important service revenue metric is by raising prices. They 0:09:26.360 --> 0:09:30.080 tend to do it on older plans. For Verizon, stunt 0:09:30.080 --> 0:09:33.320 it over the past six months. As if you look 0:09:33.360 --> 0:09:36.000 over the past year so as AT and T and 0:09:36.080 --> 0:09:40.480 T Mobile, that's flowing through and it's helping to boost 0:09:40.520 --> 0:09:44.360 the service revenue. I think over time they're adding in 0:09:44.440 --> 0:09:49.760 those little extras like you know, device insurance and perks 0:09:49.880 --> 0:09:53.079 like you know, added content that you can purchase at 0:09:53.080 --> 0:09:57.240 a discount through through Verizon, and I think all that 0:09:57.320 --> 0:10:00.840 together is going to continue to provide a lift to 0:10:00.960 --> 0:10:05.840 service revenue. It's nothing special. Again, I'm looking forward to 0:10:05.880 --> 0:10:10.559 that Frontier acquisition where they're going to buy you access 0:10:10.679 --> 0:10:16.480 to two million fiber broadband subscribers and eight million fiber 0:10:16.559 --> 0:10:21.120 homes passed, because once they get a Frontier under the hood, 0:10:21.120 --> 0:10:24.200 they're going to be able to bundle that wireless service 0:10:24.400 --> 0:10:27.360 with fiber and I think that's going to help to 0:10:27.920 --> 0:10:31.120 really drive renewed subscriber growth. 0:10:32.000 --> 0:10:34.800 So, John, use of cash heer, how do they kind 0:10:34.840 --> 0:10:37.319 of allocate it between debt reduction. They've got a lot 0:10:37.320 --> 0:10:40.480 of debt on their balance sheet versus funding that big 0:10:40.559 --> 0:10:44.680 juicy six percent plus dividen yield, so. 0:10:44.600 --> 0:10:47.760 They're doing both. Paul, I think free cash flow is 0:10:47.840 --> 0:10:50.480 going to get a lift from HR one, the new 0:10:50.600 --> 0:10:55.160 tax legislation. It's also a very cash flow rich business. 0:10:55.960 --> 0:10:59.120 As we exit the year. This year, they'll have most 0:10:59.200 --> 0:11:03.319 of their celves sites upgraded with the new C band 0:11:03.400 --> 0:11:10.000 midband spectrum, which again is improving network speeds and enhancing 0:11:10.040 --> 0:11:13.440 their coverage. So that whole project is going to begin 0:11:13.520 --> 0:11:16.040 to wind down a bit as we get to your end, 0:11:16.600 --> 0:11:19.600 so they'll be able to sort of maintain spending without 0:11:19.640 --> 0:11:23.560 having to increase, which is constructive to free cash flow growth. 0:11:24.200 --> 0:11:26.280 All right, John, thanks so much. We appreciate it as always. 0:11:26.320 --> 0:11:29.960 John Butler, Senior telecom analyst for Bloomberg Intelligence. 0:11:31.880 --> 0:11:35.560 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:35.640 --> 0:11:39.040 weekdays at ten am Eastern on Applecarplay and Android Auto 0:11:39.160 --> 0:11:42.200 with the Bloomberg Business app. Listen on demand wherever you 0:11:42.240 --> 0:11:46.400 get your podcasts. Or watch us live on YouTube. Let's 0:11:46.400 --> 0:11:48.920 go back to the car business and we talk about 0:11:48.920 --> 0:11:51.280 a name. We don't talk I don't think enough about 0:11:51.400 --> 0:11:54.360 or as much as maybe we could. And that is Stillantis. 0:11:54.360 --> 0:11:56.760 I think about the old Chrysler with Fiat and all 0:11:56.760 --> 0:11:58.920 that kind of stuff. I'm not sure what all the 0:11:58.960 --> 0:12:01.760 brands are there, but they at two point seven billion 0:12:01.840 --> 0:12:05.720 dollar charge. Here Steve Manner, Global Autos and Industrials Research 0:12:05.760 --> 0:12:09.840 Channels for Bloomberg Intelligence. He joins us. Here, Steve, what's 0:12:09.880 --> 0:12:11.680 going on with our friends at Stalantis. 0:12:12.760 --> 0:12:16.760 Yeah, so they reported the preliminary first half numbers today. 0:12:17.559 --> 0:12:20.400 They booked a loss and a charge of three point 0:12:20.400 --> 0:12:23.840 three billion. A lot of that is, you know, canceling 0:12:23.880 --> 0:12:29.040 the fuel cell R and D business. They're canceling like 0:12:29.080 --> 0:12:33.760 an EV from Maserati, taking some other charges on recalls 0:12:34.640 --> 0:12:39.160 in tariffs. So overall, at the end of the day, 0:12:39.440 --> 0:12:42.440 I think the if you listen to the call, there's 0:12:42.520 --> 0:12:45.800 really no new bad news, which is good news for 0:12:45.920 --> 0:12:48.560 the company. I don't think it can get any any worse. 0:12:49.120 --> 0:12:53.839 So then that's why the stock's actually reacting positively at 0:12:53.840 --> 0:12:54.280 the moment. 0:12:54.720 --> 0:12:57.080 Steve, what about the president's efforts to dial back the 0:12:57.080 --> 0:12:59.920 sport for evs is that affecting them as well. 0:13:00.880 --> 0:13:06.120 You know, they are revisiting the EV business, not dialing back, 0:13:06.200 --> 0:13:09.720 not so much in Europe, but revisiting it definitely in 0:13:09.760 --> 0:13:14.440 North America. And one thing that it's it's really bad 0:13:14.480 --> 0:13:17.080 for the quarter for them was really their North American business. 0:13:17.160 --> 0:13:20.800 Their North American business drives most of the profit. Shipments 0:13:20.840 --> 0:13:24.680 were down twenty five percent in the first half year 0:13:24.679 --> 0:13:27.800 on year, and a lot of that is controllable. One 0:13:27.840 --> 0:13:29.520 of the things, a couple of things that they are 0:13:29.559 --> 0:13:33.480 doing to kind of arrest that decline is not only 0:13:33.520 --> 0:13:37.520 cutting back on production, but they're relaunching a couple of 0:13:37.760 --> 0:13:42.040 popular models that they've they discontinue. One of them is 0:13:42.080 --> 0:13:45.560 the jeep Jaer Cherokee. It's going to come back later 0:13:45.600 --> 0:13:50.000 this year. And more importantly to stop market share loss 0:13:50.080 --> 0:13:52.560 on their RAM trucks is they're going to reintroduce the 0:13:52.640 --> 0:13:55.640 V eight, so you know, they can't you know, they delayed, 0:13:55.720 --> 0:13:57.960 they didn't really stay canceled, but the delay the EV 0:13:58.559 --> 0:14:02.520 product for the Ram trucks. But now in reintroducing, uh, 0:14:02.640 --> 0:14:05.280 the V eight, which is you know, the biggest engines 0:14:05.320 --> 0:14:07.760 you can get for a gasoline engine you can get 0:14:07.800 --> 0:14:08.720 on a on a truck. 0:14:08.920 --> 0:14:12.640 So where is stalanthis in the world of big auto 0:14:13.280 --> 0:14:15.319 how do you how do they position themselves? I think 0:14:15.360 --> 0:14:18.840 the four GM, Volkswagen, the Chinese players. I'm just not 0:14:18.880 --> 0:14:20.640 sure where to put Stalantis these days. 0:14:21.320 --> 0:14:25.560 Yeah, I think, I mean, they do have an important 0:14:25.640 --> 0:14:29.400 role to play in the auto market. They're really strong 0:14:29.480 --> 0:14:32.520 in Europe's particularly in there what they call the B 0:14:32.600 --> 0:14:35.600 and C segment, which is the hatchback the compacts up 0:14:35.680 --> 0:14:36.600 compact segment. 0:14:37.160 --> 0:14:37.280 Uh. 0:14:37.360 --> 0:14:41.560 They also have really high market share in their commercial 0:14:41.640 --> 0:14:46.360 vehicle business. This is like their Ram transit man that 0:14:46.480 --> 0:14:49.440 you see. You know, a lot of contractors use. You know, 0:14:49.480 --> 0:14:52.480 they have thirty percent market share in Europe. But and 0:14:52.520 --> 0:14:56.320 then again Ram truck is one of the most popular 0:14:56.360 --> 0:15:00.960 pickup trucks in the US market. Unfortunately, you know, for 0:15:01.280 --> 0:15:05.640 and GM has taken share from them because they didn't 0:15:05.680 --> 0:15:09.760 have the V eight when they talked about EV's and 0:15:10.560 --> 0:15:13.920 in more few efficient trucks. But you know, the US 0:15:13.960 --> 0:15:17.840 market is quite different. Commercial users do love the power 0:15:18.280 --> 0:15:22.360 the torque, so they're reintesting reintroducing the V eight just 0:15:22.440 --> 0:15:25.400 to try to bring a game more market share back. 0:15:25.760 --> 0:15:28.080 And they have a new CEO and Tonio Foaloza. He's 0:15:28.160 --> 0:15:30.920 in office for roughly a month, so he's just getting there. 0:15:30.960 --> 0:15:33.000 What are some of the top items on his agenda? 0:15:33.040 --> 0:15:33.880 Has he talked about it? 0:15:35.240 --> 0:15:38.080 No, but we'll hear more about it on July twenty ninth. 0:15:38.280 --> 0:15:42.000 So today's call was just a proliminary, proliminary, preliminary call 0:15:42.520 --> 0:15:45.000 on first half. We're going to hear from the new 0:15:45.080 --> 0:15:47.680 CEO on the twenty ninth, And I think a lot 0:15:47.680 --> 0:15:50.840 of the questions still in the air is, you know, 0:15:50.880 --> 0:15:54.320 what is the strategic direction for the company in terms 0:15:54.360 --> 0:15:57.320 of evs, How are they going to manage the tariffs, 0:15:57.640 --> 0:16:00.880 which is still a big unknown because because you know, 0:16:01.000 --> 0:16:05.600 negotiation is still ongoing with Europe. And then you know, 0:16:05.680 --> 0:16:07.600 what is what are they going to do do with 0:16:07.680 --> 0:16:11.840 some of the kind of slower performing brands like Maserati, 0:16:11.920 --> 0:16:15.200 which is really draining a lot of their cash. 0:16:15.320 --> 0:16:17.640 All right, Steve, thanks so much. Appreciate that Global autos 0:16:17.880 --> 0:16:19.640 Research channels for Bloomberg Intelligence. 0:16:21.360 --> 0:16:25.080 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:25.160 --> 0:16:28.520 weekdays at ten am Eastern on Applecarplay and Android Auto 0:16:28.640 --> 0:16:31.720 with the Bloomberg Business app. Listen on demand wherever you 0:16:31.760 --> 0:16:34.720 get your podcasts or watch us live on YouTube. 0:16:35.080 --> 0:16:36.720 All right, at least Mitello Paul Sweeney live here on 0:16:36.760 --> 0:16:40.360 our Bloomberg Interactive Broker Studio streaming live on YouTube as well. 0:16:40.400 --> 0:16:45.080 I consider myself a pizza aficionado, So by definition, I'm 0:16:45.080 --> 0:16:48.560 not really a Domino's person because I live in a 0:16:48.600 --> 0:16:51.360 world where there's great local yes, but for a lot 0:16:51.400 --> 0:16:53.240 of the world that's not the case. And so they 0:16:53.280 --> 0:16:55.400 depend on the Dominoes of the world. And they came 0:16:55.400 --> 0:16:56.680 out and you saw that in the number study, some 0:16:56.720 --> 0:16:58.840 pretty good numbers. Let's break it down with Michael Halem, 0:16:58.960 --> 0:17:02.560 Senior Restaurant and Foods are analyst for Bloomberg Intelligence. So 0:17:02.640 --> 0:17:05.600 some pretty good news out of Domino's, Mike, what'd you 0:17:05.680 --> 0:17:06.080 take away? 0:17:08.000 --> 0:17:11.000 Yeah, listen, they've they have some nice tailwinds this year. 0:17:11.040 --> 0:17:11.320 Stuff. 0:17:11.320 --> 0:17:15.280 Gross Pizza has done really well. It's it's really driven 0:17:15.359 --> 0:17:17.720 some strong same star sales here in the first half. 0:17:17.760 --> 0:17:20.639 You know, the industries about flat in the US, and 0:17:21.200 --> 0:17:23.480 you know, they drove are almost three and a half 0:17:23.480 --> 0:17:27.160 percent comp here in the second quarter, so outperforming the 0:17:27.200 --> 0:17:32.680 market by a pretty significant margin. And they also rolled 0:17:32.680 --> 0:17:35.840 out door dash to all their stores in this second quarter. 0:17:35.960 --> 0:17:38.600 And so they're going to start ramping up the marketing 0:17:38.640 --> 0:17:41.800 there and that should give a nice, nice boost the 0:17:41.840 --> 0:17:45.600 shares over the next twelve months or so and maybe beyond. 0:17:45.720 --> 0:17:48.119 And so yeah, for those two reasons, you know, we 0:17:48.160 --> 0:17:51.840 expect them to continue to outpace their QSR Pizza and 0:17:51.920 --> 0:17:54.160 QSR Burger competitors throughout the year end. 0:17:54.560 --> 0:17:57.119 What about their loyalty programs, they know, a lot of 0:17:57.200 --> 0:17:58.879 analysts were saying, you know what, this is going to 0:17:58.920 --> 0:18:00.880 be a big, big boost for them. Did it help 0:18:00.880 --> 0:18:01.840 out we're doing. 0:18:02.400 --> 0:18:05.000 Yeah, that's been they that was the other thing they cited. 0:18:05.080 --> 0:18:10.760 And so, you know, they they rely heavily on households 0:18:10.760 --> 0:18:14.120 making you know, fifty sixty thousand dollars a year and below. 0:18:14.760 --> 0:18:17.040 And so you know, as everyone knows, that's been a 0:18:17.119 --> 0:18:20.359 very weak segment of the restaurant industry for the last 0:18:20.680 --> 0:18:23.040 few years due to all the inflation, right, and so 0:18:23.359 --> 0:18:26.720 to bring people back in, they started lowering the redemption 0:18:27.760 --> 0:18:29.960 the number of points needed to make redemptions on the 0:18:30.040 --> 0:18:36.679 loyalty program, and it's been successfully bringing in more carry 0:18:36.680 --> 0:18:39.919 out consumers, which are typically lower income, right, And so 0:18:40.080 --> 0:18:43.520 by bringing those consumers in, you know, it's definitely given 0:18:43.640 --> 0:18:45.959 a boost to their traffic over the last three quarters 0:18:46.040 --> 0:18:47.280 or so. 0:18:47.280 --> 0:18:51.520 So, what's Dominoes and some of the other restaurant chains 0:18:51.520 --> 0:18:54.440 that you cover, Mike, what are they saying about tariffs 0:18:54.480 --> 0:18:57.480 and how that might impact their costs and how much 0:18:57.480 --> 0:18:59.840 of their costs will they take in margin versus pest 0:19:00.040 --> 0:19:02.679 along to consumers? Is their consensus building? 0:19:04.800 --> 0:19:10.320 It depends on the chain. But you know, luckily, restaurants 0:19:10.359 --> 0:19:13.600 source a large majority of their product in the in 0:19:13.640 --> 0:19:16.600 the country in which they're operating, right, So Dominoes operates 0:19:16.600 --> 0:19:19.360 in over eighty markets, and and all of their products, 0:19:20.280 --> 0:19:23.920 you know, all of their countries largely source everything domestically, right, 0:19:24.000 --> 0:19:26.359 And so restaurants are in a good space, you know, 0:19:26.400 --> 0:19:31.200 the restaurants companies, the stocks got hammered back in April. 0:19:31.320 --> 0:19:32.919 You know, I think that was largely a case of 0:19:33.000 --> 0:19:36.360 the baby being thrown out with the bathwater, because restaurants 0:19:36.400 --> 0:19:41.000 have very low exposure to tariffs, and I think we've 0:19:41.080 --> 0:19:44.280 seen that in the rebound since April. You know, some 0:19:44.320 --> 0:19:46.440 of the restaurant names we cover, you know, two ones 0:19:46.440 --> 0:19:49.600 that we like, Shakeshack and Crackerball. They've rallied one hundred 0:19:49.600 --> 0:19:53.160 percent over the last couple months. And I think they're 0:19:53.200 --> 0:19:55.600 in a good place because you know, if people do 0:19:55.760 --> 0:19:59.679 recognize some price increases at retail, at the mall, stuff 0:19:59.720 --> 0:20:02.479 like that, at whatever it is, fifteen to twenty percent, 0:20:02.640 --> 0:20:05.480 they're not going to see those same increases in restaurants 0:20:05.480 --> 0:20:08.320 and may you know, look at as a better value. 0:20:08.720 --> 0:20:11.080 So people are still dining out as much as they 0:20:11.200 --> 0:20:13.840 used to because I know, I consider myself thrifty. So 0:20:14.080 --> 0:20:16.920 I cook the entire week and then we pick one 0:20:17.040 --> 0:20:18.920 night where we go out to eat. It's a Friday, 0:20:18.960 --> 0:20:21.959 you know, because Mama don't cook on Fridays. So are 0:20:22.080 --> 0:20:24.520 more do you see that kind of a change in 0:20:24.600 --> 0:20:27.240 the habits of the people who are going to eat out? 0:20:28.119 --> 0:20:30.919 Well, we've seen that, there's no doubt, especially due to 0:20:30.920 --> 0:20:35.760 all the inflation. We've seen traffic decline now for several 0:20:35.840 --> 0:20:39.359 years in a row. But restaurants have been able to, 0:20:39.640 --> 0:20:41.199 you know, the ones that are doing well have been 0:20:41.240 --> 0:20:45.240 able to more than offset that with price increases. Right 0:20:45.240 --> 0:20:47.840 and obviously the best performers of the bunch are absolutely 0:20:48.200 --> 0:20:51.200 able to drive traffic. And it's that's really about providing 0:20:51.240 --> 0:20:54.200 a very good experience. Right now, people are very discerning 0:20:54.280 --> 0:20:57.280 about where they're going to spend their restaurant dollars when 0:20:57.280 --> 0:20:58.920 they go out. They want to make sure they're not 0:20:59.000 --> 0:21:02.400 going to have a bad experience, and so they're continuing 0:21:02.480 --> 0:21:08.159 to go to places. You know, think Texas Roadhouse is 0:21:08.200 --> 0:21:10.840 one that really stands out. They're going to a place 0:21:10.840 --> 0:21:12.879 where they know they can get good value on the 0:21:12.920 --> 0:21:16.840 plate for what they pay, a very consistent experience, right, 0:21:16.880 --> 0:21:20.280 And because of that, you're seeing a wider divergence between 0:21:20.320 --> 0:21:22.280 the winners and losers in the restaurant space. 0:21:23.680 --> 0:21:26.439 Mike, how about labor? President Trump has effectively shut the 0:21:26.480 --> 0:21:29.879 southern border. Have your companies who typically who rely to 0:21:29.920 --> 0:21:32.640 some degree on that labor force, are they seeing it yet? 0:21:34.200 --> 0:21:38.400 Yeah, you know, everybody's logged onto e verify and most 0:21:38.400 --> 0:21:41.480