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

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

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: That Apple is really that Charlie was just reporting really

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Speaker 2: got my attention. Apples held exploratory discussions with Intel and

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Speaker 2: Samsung about producing main processors sports devices in the US.

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Speaker 2: That's US a secondary option beyond Taiwan semikentuckty manufacturing.

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Speaker 3: That's pretty interesting. That's a pretty big change here. Look

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Speaker 3: at it.

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Speaker 2: Intel stocks up another thirteen percent today, fifty two week high.

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Speaker 2: I'm going to say an all time high, and I'm

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Speaker 2: old enough to remember when the last time it hit

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Speaker 2: an all time Hi, my boy Frank Yeary, who's a

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Speaker 2: chairman of board Intel, one of my palmon Brother's runn buddies.

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Speaker 2: He just announced he's stepping down from the chairmanship. So

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Speaker 2: a good day for my boyfriend.

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Speaker 3: Ranks are good for him going out on a high note. There.

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Speaker 2: Carolin Hydoints is here be tech co anchor along with

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Speaker 2: some dude named Ed Ludlow.

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Speaker 3: This Apple News. It seems kind of interesting, Caroline, because

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Speaker 3: I mean, Taiwan semi.

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Speaker 2: Conductor is such a huge supplier for all of the

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Speaker 2: technology space.

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Speaker 3: What's Apple doing here?

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Speaker 4: It's almost going back to it's partners of old. Remember

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Speaker 4: Apple didn't always design its own chips. It used to

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Speaker 4: rely upon Intel and Samsung. And Samsung it still depends

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Speaker 4: upon a lot for other parts of the iPhone, remember

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Speaker 4: the screens for example. But this is about the dominance

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Speaker 4: of Taiwan. TSMC obviously has most of its manufacturing out

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Speaker 4: of Taiwan, about ninety percent of all chips in the world.

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Speaker 5: Made in Taiwan.

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Speaker 4: That is a huge potential choke point bottleneck concern, particularly

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Speaker 4: when Taiwan is in the eye of the storm not

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Speaker 4: only weather storms, but also in terms of geopolitics and

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Speaker 4: what if China was to start making any sort of

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Speaker 4: aggressive moves.

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Speaker 5: This just means that for Tim Cook, the supply.

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Speaker 4: Chain god over at Apple, who's now moving to the

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Speaker 4: chairman role, he's always try and think ahead of how

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Speaker 4: he can be less dependent. So remember TSMC is manufacturing

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Speaker 4: in the US more, they're likely to be committing ever

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Speaker 4: more billions into Arizona. That is something President Trump wants,

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Speaker 4: but Samsung too is investing in the United States and Texas.

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Speaker 4: We understand that people who have been from Apple to

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Speaker 4: go and look around those fabs over in Texas.

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Speaker 5: And then what about Intel, a company.

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Speaker 4: That the US administration has skin in the game in

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Speaker 4: And this would also be a political movement in many ways.

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Speaker 6: So this is Apple's way of sort of insulating itself

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Speaker 6: best it can. And one of the last major things

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Speaker 6: I guess Tim Cook will do during his tenure a

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Speaker 6: CEO before he passes the rains what about supply shortages.

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Speaker 6: We know there's a lot of demand for the for

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Speaker 6: the Mac. How are they doing with that? And also

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Speaker 6: would this deal with an Intel or a Samsung for

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Speaker 6: these microprocesses processors help with that?

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Speaker 5: Well?

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Speaker 4: I think that was what was surprised many was the

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Speaker 4: admission that maybe the memory chip issue wasn't so much

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Speaker 4: Apple's problem this time. It was more the sheer desire

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Speaker 4: to buy max trying to buy basically the Apple products,

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Speaker 4: to run your own open claw, run your own agents overnight,

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Speaker 4: and suddenly they see Mac mini's fly off the shells.

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Speaker 4: They just cannot get the equipment fast enough. And so yes,

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Speaker 4: that has been a bit of a blocker for Tim Cook. Basically,

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Speaker 4: they've got a lot of demand and it's the supply

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Speaker 4: that's the issue in terms of their previous quarter.

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Speaker 5: How quickly this can get off the ground, that's a

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Speaker 5: question Alexis.

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Speaker 4: And so whether or not we'll see Tim Cook make

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Speaker 4: any moves while his CEO to fix that is still

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Speaker 4: an open book because look, they're still building fabrication points

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Speaker 4: for Intel. This is a long term play coming from

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Speaker 4: Lip Bhutan, But we know that the CEO of Intel

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Speaker 4: has in many ways been the issue.

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Speaker 5: Of look, I will build it if they come.

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Speaker 4: So if Apple is coming, they will start to build

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Speaker 4: out the Ohio presence, for example, be able to become

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Speaker 4: the fabrication partner of choice. Samsung already is building out

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Speaker 4: in Texas. How quickly they can start running off But

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Speaker 4: you're right, the supply chain issue has been what chips

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Speaker 4: are getting into their Mac and their hardware products.

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Speaker 2: More broadly, Apple is also preparing a new creative Pass

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Speaker 2: feature for its next major iPhone software upgrading, allowing you

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Speaker 2: users to build and customize their own digital tickets and

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Speaker 2: gift cards within the wallet app.

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Speaker 3: That seems pretty.

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Speaker 5: Funny, it also seems pretty confusing.

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Speaker 3: What does that mean for this stuff in my wallet?

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Speaker 3: I mean that digital wallet. I'm putting more. It's still

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Speaker 3: more stuff in there.

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Speaker 4: Right, yeah, yeah, And that's with even certain events that

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Speaker 4: you go to, certain gift cards, you might get not

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Speaker 4: actually having the ability to put it on Apple Wallet.

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Speaker 5: So this is the instead.

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Speaker 4: Say you get a one off event down at Jones Beach,

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Speaker 4: You're going in New Jersey and you're spending your summer

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Speaker 4: by the shore there.

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Speaker 6: Carolina knows you.

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Speaker 5: I love working and I get to know the New

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Speaker 5: Jersey love.

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Speaker 4: But say that particular event doesn't have the feasibility of

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Speaker 4: a relationship with iOS. You can take a QR code

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Speaker 4: that they send you and just load it into your wallet.

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Speaker 4: So there it is, so you kind of have all

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Speaker 4: things in one place. They're trying to become more of

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Speaker 4: a hub in that respect. So this is a nice

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Speaker 4: lot upgrade that we're going to see to the software

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Speaker 4: operating system.

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Speaker 5: Stay with us more from Boomberg Intelligence coming up after this.

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

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

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

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

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Speaker 2: Paramount Skuiddance reported first quarter sales and earnings that beat

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Speaker 2: animal's expectations as the company moves closer to.

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Speaker 3: Acquiring Warner Brothers Discovery. Investors underwhelmed.

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Speaker 2: I would say, stocks off six and a half percent today,

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Speaker 2: off twenty two percent year to date. So there's a

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Speaker 2: lot of moving pieces at Paramount Skuidance. Let's break it

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Speaker 2: down with Etha rong Andath and she is the media

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Speaker 2: analyst for Bloomberg Intelligency's down there in Princeton.

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Speaker 3: Hey, KEITHA.

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Speaker 2: First of all, let's just kind of go to the

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Speaker 2: earnings here. How's the Paramount Skiddance we're managing under new management.

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Speaker 7: They actually did a really good job, Paul. So you know,

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Speaker 7: just from the results that they reported yesterday for the

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Speaker 7: first quarter, it was really strong. Revenue as well as

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Speaker 7: just ibadah came in well above consensus estimates. And you know,

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Speaker 7: the really encouraging thing and what investors look at quatern

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Speaker 7: and quarter out is how well they are progressing on

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Speaker 7: the streaming front. And they had pretty good subscriber growth.

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Speaker 7: A lot of this has been driven by their new

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Speaker 7: UFC deal, but more importantly, they actually reported profits. Remember

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Speaker 7: this is a service that has been a very you know,

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Speaker 7: has been racking up loss after loss, quarter after quarter.

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Speaker 7: But for the first time, you know, there was an inflection.

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Speaker 7: They reported about two hundred and fifty million dollars in

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Speaker 7: a justitybadah and they are actually going to sustain momentum

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Speaker 7: when it comes to that profitability. So across the board,

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Speaker 7: actually pretty good numbers. But then, as you said, there's

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Speaker 7: just a lot of different moving pieces and a lot

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Speaker 7: of investor anxiety about those moving pieces.

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Speaker 6: And I want to pick at some of those moving

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Speaker 6: pieces right now, Githa. Because revenue from Paramount's film studios

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Speaker 6: grew eleven percent. There was a strong theatrical performance from

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Speaker 6: the horror movie Scream seven, so I guess lots of

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Speaker 6: fans out there. But sales and Paramount's TV unit fell

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Speaker 6: six percent. Was that driven by just lost business or

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Speaker 6: is there a fall off and advertising or maybe a

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Speaker 6: little bit of both.

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Speaker 7: Yeah, there was definitely you know, advertising, so remember Paramount

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Speaker 7: derives about thirty three percent off its revenue from advertising,

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Speaker 7: so huge, you know, very very critical part of the business.

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Speaker 7: And yes, you know, across the ecosystem, Alexis, we are

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Speaker 7: seeing a weakness in TV linear advertising, and of course

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Speaker 7: no exception there at Paramount as well. They're obviously going

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Speaker 7: to have a little bit more weakness for the second quarter.

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Speaker 7: That's what they guided. They did not have the March

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Speaker 7: Madness Final four which they had the previous year, so

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Speaker 7: you know, we're seeing tough comps and this and just

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Speaker 7: general core ad weakness.

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Speaker 2: So Keitha, what are the companies saying here? I'm thinking

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Speaker 2: about the big companies that own broadcast and cable networks.

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Speaker 2: What are they that's a declining business. It's inn a

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Speaker 2: secular decline. It kind of kind of feels like newspapers

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Speaker 2: thirty years ago, radio twenty years ago.

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Speaker 3: What do they plan to do that structurally wise?

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Speaker 7: So structury, Paul, what all of them are doing really

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Speaker 7: is moving to digital. So you know, it's the big

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Speaker 7: shift from linear TV to what they're calling connected TV.

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Speaker 7: That shift couldn't happen any faster. You know, they're all

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Speaker 7: trying their best. It's a sixty fifty five to sixty

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Speaker 7: billion dollar linear market, but there really still remains this

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Speaker 7: huge gap between eyeballs and monetization. Because we've seen all

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Speaker 7: of the eyeballs move from linear TV to streaming. We

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Speaker 7: haven't seen an equally fast or an equally rapid shift

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Speaker 7: of that monetization from linear to to streaming. And that's

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Speaker 7: really what all of these companies are trying to capitalize on.

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Speaker 7: You know, Netflix of course made it's big move into advertising,

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Speaker 7: but then all of the linear companies already have advertising relationships,

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Speaker 7: you know, whether that's a Disney Plus or a Paramount,

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Speaker 7: you know, but again it's about how fast they can

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Speaker 7: get there. But they're all trying.

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Speaker 6: We know that Paramount, you know, clinched the one hundred

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Speaker 6: and ten billion dollar deal for Netflix. It hopes to

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Speaker 6: close on that deal in the third quarter. But Paramount

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Speaker 6: has asked the FCC GITHA to sign off on a

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Speaker 6: funding structure that includes more than a third of the

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Speaker 6: company's equity coming from Middle East government entities. Are they

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Speaker 6: going to get that FCC approval? And I'm wondering if

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Speaker 6: the war in Iran is you know, putting any of

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Speaker 6: that in jeopardy.

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Speaker 7: I think they will get the FCC approval. I think

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Speaker 7: so far, all the indications that we've gotten on the

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Speaker 7: regulatory front seem to indicate that, you know, the administration

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Speaker 7: is definitely going to give them the go ahead. I

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Speaker 7: think if at all they have any problems, it'll probably

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Speaker 7: be in California. The California AG has on numerous occasions

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Speaker 7: stated that this is not a done deal, that you know,

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Speaker 7: he thinks that this is actually going to be bad

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Speaker 7: for Hollywood. So I think there's definitely a little bit

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Speaker 7: of you know, regulatory nervousness when it comes to the

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Speaker 7: California AG. But I think on the FCC front, they

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Speaker 7: should be fine. I think the reason why we're seeing

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Speaker 7: so much of weakness in the stock today is really

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Speaker 7: worries around post deal execution. You know, this is a

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Speaker 7: tall order. This is a company pro format that's going

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Speaker 7: to have about eighty billion dollars in debt that's about

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Speaker 7: seven times EBITDA, so highly leveraged company. You have only

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Speaker 7: about twelve billion dollars in EBITDA. Their goal is to

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Speaker 7: get to above twenty billion because they need to get

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Speaker 7: to a three times leverage ratio. But that's going to

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Speaker 7: be possible only if they achieve about six billion dollars

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Speaker 7: in synergies and really bump up that EBITDA. So there's

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Speaker 7: really a lot for them to do Paul and Alexis

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Speaker 7: and I think, you know so execution regulatory. And then

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Speaker 7: there's the issue of dilution from a sharecount perspective, because

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Speaker 7: right now they have about one point one billion shares

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Speaker 7: with paramount. When they get the WBD deal, that that's

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Speaker 7: going to go to about five billion. So we are

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Speaker 7: expecting massive share dilution there. And so that's another big reason.

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Speaker 3: Thirty seconds left, Githa.

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Speaker 2: When you put all these companies together, this Paramount, sky Dance,

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Speaker 2: Warner Brothers, Discovery, is that going to be a streaming

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Speaker 2: service of scale that can compete against Netflix and maybe

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Speaker 2: even Disney?

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Speaker 7: It can it can fallen. I think that's what invests

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Speaker 7: the pulls are definitely betting on that. I mean, this

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Speaker 7: is a service that's going to have over about two

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Speaker 7: hundred and twenty two hundred and thirty million subscribers. Definitely

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Speaker 7: puts in with it within striking distance of both Netflix

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Speaker 7: and Disney. And I think what we're really kind of

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Speaker 7: betting on with this new management team is how they

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Speaker 7: leverage technology. I mean, this is David Ellison we're talking about.

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Speaker 7: He's a tech kid.

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Speaker 8: You know.

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Speaker 7: Can they leverage AI to get all of those efficiencies.

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Speaker 1: Stay with us.

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Speaker 3: More from Bloomberg Intelligence coming up after this.

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

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

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

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

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Speaker 2: Coinbase cutting fourteen percent of its workforce, citing Volta markets

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Speaker 2: and AI. Let's break it down with Paul Goldberg, Bloomberg

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Speaker 2: Intelligence Senior equity analyst. Paul talk to us about what's

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Speaker 2: going on with our forensic coinbase warningful.

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Speaker 9: I think there is a change of heart. Obviously, when

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Speaker 9: they reported EARNIS in February and guide it for the

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Speaker 9: first quarter, they were guiding for their expenses to be

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Speaker 9: roughly flat, which kind of raised the eyebrows a little

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Speaker 9: bit because the activity levels were trained in down and

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Speaker 9: there were some concern But going back to December when

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Speaker 9: they announced the build out of everything exchanged, there are a

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Speaker 9: lot of investments that they have been making, so they

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Speaker 9: basically wanted to maintain those investments going forward. But clearly

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Speaker 9: three months later we do get some change of heart here.

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Speaker 6: So they were talking about fourteen percent of coinbases workforce

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Speaker 6: being cut, I guess that amounts to about seven hundred jobs.

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Speaker 6: Is AI behind this cut?

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Speaker 9: I would think that AI is probably part of the equation,

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Speaker 9: but not necessarily the driver. They did in Brian Armstrong's

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Speaker 9: post one X they did mention the volatility as being

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Speaker 9: the biggest issue. Even we've seen a bitcoin price dropping

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Speaker 9: from two one hundred and twenty five thousand to sixty

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Speaker 9: five thousand and it's probably what eighty one thousand today,

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Speaker 9: so it's coming back in the second quarter, but there's

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Speaker 9: a lot of uncertainty, so they trying to adjust to

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Speaker 9: that mainly. They're also as part of the transition, they're

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Speaker 9: cutting out some management levels, so they're trying to optimize

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Speaker 9: the business, and maybe AI is the helper there where

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Speaker 9: the managers can actually be individual contributors as well.

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Speaker 2: So, Paul, you know, I think a lot of people

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Speaker 2: know coinbase as simply a platform to buy and sell cryptocurrencies.

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Speaker 2: So is this stock primarily entirely partially driven by the

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Speaker 2: price of bitcoin?

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Speaker 9: If you look at the stock chart, part of that

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Speaker 9: reaction is kind of similar to what the bitcoin is doing.

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Speaker 9: But if you look at the businesses that are in

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Speaker 9: the subscription and services businesses, the stake in the payments

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Speaker 9: and all those other things that they're building. There's really

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Speaker 9: a lot of other things happening across the entire ecosystem,

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Speaker 9: including the toganization and getting even into more traditional markets

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Speaker 9: like equities.

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Speaker 6: And certainly coinbase is not alone, right, I mean, you've

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Speaker 6: got a number of companies in this space announcing job

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Speaker 6: cuts recently, block Gemini space Station comes to mind, I

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Speaker 6: think Crypto dot com. What are the reasons why that

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Speaker 6: these companies are offering for why they are tightening their belts?

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Speaker 9: I think so. I don't think it's necessarily a long

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Speaker 9: term problem. I think it's more of a cyclical problem.

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Speaker 9: And because the cycles are so short in those businesses,

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Speaker 9: the technology developed so fast, they really have to adapt

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Speaker 9: and adjust almost on an annial basis or every few

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Speaker 9: years when things change very dramatically, so they do have

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Speaker 9: to refresh their workforce.

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Speaker 2: So, Paul, what's what's the next step for Coinbase here?

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Speaker 2: What's kind of the bowl case for this stock?

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Speaker 8: Here?

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Speaker 9: Bookcases the ecosystem on the blockchain and tokenization, the base

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Speaker 9: layer program in that the building that can allow their

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Speaker 9: users to build on that blockchain, the tokenization of different

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Speaker 9: kinds of assets. So we're just having a lot of

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Speaker 9: things in terms of payments, market structure and things like

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Speaker 9: that shifting very dramatically onto usage of blockchain. So I

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Speaker 9: think that's where the opportunity is for them.

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Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.

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

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

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

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

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Speaker 2: We also get some earnings out of PayPal, and the

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Speaker 2: earnings I'm looking at just at the earnings PayPal reporter.

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Speaker 2: First corn it adjusted earnings about a dollar thirty four,

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Speaker 2: beating the average analyst estimate of the dollar twenty seven,

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Speaker 2: and the company it reiterated its full year guidance. PayPal did,

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Speaker 2: but they are also cutting costs here and cutting some

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Speaker 2: jobs here. So let's break down what's happening at PayPal.

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Speaker 2: Diction gera senior fintech and payments analysts, joined us. She's

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Speaker 2: a Bloomberg Intelligence She's based out there in San Francisco.

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Speaker 2: Dick show what you learned from PayPal with their earnings results.

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Speaker 7: Yeah.

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Speaker 8: Hi, As you can see, Paul, revenue was up about

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Speaker 8: seven percent. It was a decent beat, about six percent

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Speaker 8: EPs beat and just a DPS was a head of consensus.

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Speaker 8: Volume was up eleven percent when more volume accelerated to

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Speaker 8: fourteenth operationally, it wasn't really a bad quarter, but the

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Speaker 8: stocks are still down. So how i'd frame it is

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Speaker 8: that this is a decent show me result, but the

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Speaker 8: bigger issue here is around credibility, and I think the

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Speaker 8: market basically wants to see can new leadership really demonstrate

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Speaker 8: some stabilization and execution. So not a blowout quarter, especially

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Speaker 8: given you know, the tough environment, but was better than

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Speaker 8: what we feared.

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Speaker 6: Was more street happy, though with guidance for the current

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Speaker 6: quarter because I'm sort of reading some mixed things here

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Speaker 6: on the Bloomberg terminal, and also saw them guide toward

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Speaker 6: a decline in earnings per share in the second quarter.

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Speaker 8: Yeah, you're right right, See, this is what we had

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Speaker 8: flagged in our react as well. I think there is

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Speaker 8: a lot to prove yet, Like so, this was a

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Speaker 8: great quarter, but on one point, one data point does

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Speaker 8: not make a trend. We are still yet to see

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Speaker 8: whether branded checkout growth can increase sustainably, ideally grow above

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Speaker 8: slow single digits. The second thing is whether transaction margin

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Speaker 8: dollars return to growth after the second quarter dip, So

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Speaker 8: guidance to that is also signaling weakness, you know, like

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Speaker 8: it doesn't really inspired confidence in that sense. And thirdly,

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Speaker 8: I think the market also wants to see whether the

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Speaker 8: new CEO can convert this whole one point five dollars

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Speaker 8: cost program into product velocity rather than just like some

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Speaker 8: EPs support.

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Speaker 2: What's the what's the bare case here for paypalt Fintech

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Speaker 2: is a A it's an exciting growth segment, but boy,

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Speaker 2: it just feels like competition is everywhere.

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Speaker 8: You're right, well, I think see the barecase. Investors have

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Speaker 8: heard several turnaround stories before with PayPal, and there is

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Speaker 8: that fatigue setting in the second cut quota guidance does

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Speaker 8: not suggest that the reset is still ongoing. So the

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Speaker 8: bare case is evidence stocks something. What I'd argue is

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Speaker 8: that is there a bully caase here, especially like just

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Speaker 8: looking at the valuation and the capital situation with PayPal,

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Speaker 8: like they have targeted six billion plus dollars of free

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Speaker 8: cash flow this year and they plan to buy back

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Speaker 8: as much of stock, So that is definitely very interesting

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Speaker 8: for value investor. It's a very cheap, highly profitable company,

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Speaker 8: but I think there is still nervousness around can new

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Speaker 8: management turn it around?

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Speaker 6: And it really was considered a pioneer, wasn't it in

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Speaker 6: the payment space? And would you say that it just

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Speaker 6: was too late to sort of change with the times

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Speaker 6: and other companies in that space started to eat its lunch.

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Speaker 8: I think it's I mean, definitely there are a lot

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Speaker 8: of new players that are coming in, Stripe being one

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Speaker 8: of them at in coming in, but the more non

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Speaker 8: branded kind of offering, So there are lapses, particularly the

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Speaker 8: challenges around the branded business for PayPal, But I wouldn't

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Speaker 8: say the battle is lost right. Just the scale and

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Speaker 8: the size of this company and the two sided network,

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Speaker 8: these are very enviable attributes and I think there's still

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Speaker 8: room for that. One thing I would kind of allude

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Speaker 8: to is the whole job gut situation as well. We've

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Speaker 8: been getting a lot of questions around that.

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Speaker 6: It's an unspecified number of job cuts, right or did

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Speaker 6: they say how many they're looking to let go?

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Speaker 8: So I saw a news line saying twenty percent job

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Speaker 8: cuts wow, and PayPal is like twenty four thousand plus

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Speaker 8: employees at the end of last year, and that could

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Speaker 8: mean around four and a half thousand jobs being culled.

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Speaker 8: And I mean the job cuts technically are a double

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Speaker 8: edged signal. Right, on one hand, they show that management is

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Speaker 8: serious about taking costs and complexity out of their business.

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Speaker 8: But on the other hand, when a company is cutting

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Speaker 8: this deeply, investors tend to ask whether this is just

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Speaker 8: margin repair or whether it actually fixes the growth problem. Like, basically,

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Speaker 8: PayPal does not need to be smaller just for the

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Speaker 8: sake of being smaller, right, It needs to be faster,

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Speaker 8: more focused, and more competitive at checkout. So that's the question,

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Speaker 8: Like will they be able to deliver on that.

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