WEBVTT - Intel Is Planning Thousands of Job Cuts 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.160 YouTube search Bloomberg Global News. Well, you know, all this week, 0:00:32.200 --> 0:00:35.280 we've been talking a lot about the semiconductor area really 0:00:35.320 --> 0:00:38.640 for the last few weeks, some concerns about the outlook, 0:00:38.840 --> 0:00:41.360 and this story certainly plays into it. We got this 0:00:41.680 --> 0:00:45.800 last night at Bloomberg exclusive Intel shares. Uh, certainly, I 0:00:45.840 --> 0:00:48.159 think they were a little bit higher actually, Uh. And 0:00:48.240 --> 0:00:50.280 this is on the news that the chip giant is 0:00:50.280 --> 0:00:52.400 planning thousands of job cuts to cut costs and cope 0:00:52.400 --> 0:00:55.200 with a PC slow. We're talking some serious job cuts 0:00:55.200 --> 0:00:57.640 to this exclusive by her own Mark German and Debbie. 0:00:57.880 --> 0:00:59.680 We got Mark German on the line right now. He's 0:00:59.680 --> 0:01:02.160 techno Audrey Porter for Bloomberg News. He joins us from 0:01:02.160 --> 0:01:04.319 our Los Angeles bureau. If you're watching on YouTube, you'll 0:01:04.319 --> 0:01:06.600 be able to see him there as well. So Mark, 0:01:06.600 --> 0:01:08.800 give us the details here, because, as I mentioned, we're 0:01:08.840 --> 0:01:12.480 talking serious job cuts potentially affecting about twenty percent of staff. 0:01:12.680 --> 0:01:16.840 What's going on. Yeah, So if you are an Intel employee, 0:01:16.840 --> 0:01:19.400 this is bad news. If you are an Intel Intel 0:01:19.440 --> 0:01:23.760 shareholder slash investor, this is potentially good news. As Carol mentioned, 0:01:23.800 --> 0:01:26.480 the stock is up a little bit today, so there 0:01:26.480 --> 0:01:28.720 has been some you know, benefit from this news there. 0:01:29.040 --> 0:01:31.039 These are gonna be major cuts. I'm told this is 0:01:31.120 --> 0:01:33.680 likely to be the largest layoff to hit until since 0:01:34.840 --> 0:01:37.319 at that point they laid off under former CEO Brian 0:01:37.360 --> 0:01:40.640 Krazani about eleven percent of the company, or twelve thousand 0:01:40.640 --> 0:01:44.479 employees across the entire corporation globally. This is probably not 0:01:44.520 --> 0:01:46.160 going to be as big as that, but it is 0:01:46.200 --> 0:01:49.560 going to be something that requires some sort of major restructuring. 0:01:50.120 --> 0:01:52.720 I'm told the employee count is going to be in 0:01:52.760 --> 0:01:56.280 the thousands. Let's just face it, the PC market over 0:01:56.320 --> 0:01:59.320 the last couple of quarters has slowed dramatically. Some of 0:01:59.360 --> 0:02:03.160 the PC may or shipment totals have you know, dropped thirty. 0:02:03.560 --> 0:02:06.360 You look at the Novo, you look at HP, you 0:02:06.360 --> 0:02:08.080 look at some of the other PC makers that use 0:02:08.120 --> 0:02:11.560 Intel processors. You're seeing a drop off there. So clearly 0:02:11.600 --> 0:02:15.320 Intel's bread and butter that's slowing down. At the same time, 0:02:15.520 --> 0:02:18.640 their profits are also shrinking, right, So it's not a 0:02:18.680 --> 0:02:22.000 good situation for Intel. Right now. They're reporting earnings on 0:02:22.000 --> 0:02:26.240 October that's their third quarter earnings. We are anticipating about 0:02:26.280 --> 0:02:30.919 a year over year decline. Profit is down fifteen basis 0:02:30.919 --> 0:02:34.600 points right from their usual measures. So they have to 0:02:34.639 --> 0:02:36.760 do these layoffs to really try to up their profit, 0:02:36.840 --> 0:02:38.639 up their gross margins. And that's why you're seeing the 0:02:38.680 --> 0:02:41.280 positive reaction from the stock. But obviously we're talking about 0:02:41.320 --> 0:02:43.840 human beings here, we're talking about employees. This is not 0:02:43.880 --> 0:02:45.880 going to be a positive site. This is gonna be 0:02:45.919 --> 0:02:49.040 one of the bigger layoffs in the chip sector. Two 0:02:49.120 --> 0:02:52.800 companies that compete with Intel, Micron and in Video, recently 0:02:52.800 --> 0:02:55.680 said they wouldn't be doing layoffs. But arm Right, a 0:02:55.760 --> 0:02:59.560 key technology competitor to Intel, uh an Oracle who competes 0:02:59.600 --> 0:03:02.480 with Intel on the server side, of the data center side. Uh, 0:03:02.520 --> 0:03:05.680 they have seen some cuts recently. Mark awkward, as you 0:03:05.720 --> 0:03:08.200 point out in your story, Uh, this is an awkward 0:03:08.200 --> 0:03:11.200 moment for Intel because they lobbied so much for that 0:03:11.240 --> 0:03:13.720 fifty two billion dollar chip stimulus bill this year, and 0:03:13.720 --> 0:03:18.359 they talked about expanding chip manufacturing, semi manufacturing, uh here 0:03:18.360 --> 0:03:21.240 in the United States in particular. So not a good look, 0:03:22.240 --> 0:03:23.760 not a good book. But a lot of the damage 0:03:23.800 --> 0:03:27.040 is already done. Right. They need because they clearly have 0:03:27.160 --> 0:03:30.160 to cut their costs. They need to do something, and unfortunately, 0:03:30.720 --> 0:03:32.280 it looks a lot like that's going to come on 0:03:32.320 --> 0:03:35.160 the human side, right, with those thousands of cuts to employees. 0:03:35.720 --> 0:03:38.400 We're actually told that a lot of the cuts are 0:03:38.440 --> 0:03:41.360 going to come in their sales and marketing group, right, 0:03:41.480 --> 0:03:44.120 And that's typically where you see cuts happen, you know, 0:03:44.160 --> 0:03:47.400 initially in these types of circumstances, Right, Marketing and sales, 0:03:47.720 --> 0:03:50.360 that's one group. It's called SMG at Intel, it's one 0:03:50.440 --> 0:03:53.480 mixed part of the organization. We're told cuts there could 0:03:53.640 --> 0:03:56.920 come as high as twenty percent of that division, right, 0:03:57.120 --> 0:03:59.520 But in terms of the general cut company wide, that 0:03:59.560 --> 0:04:02.640 number will will be less than overall. But you know, 0:04:02.680 --> 0:04:05.880 sales and marketing. You're going to see a big hit there. Unfortunately, Hey, Mark, 0:04:05.920 --> 0:04:07.280 we got about a minute and a half left with you, 0:04:07.280 --> 0:04:09.280 and I wanted to touch on among your latest stories, 0:04:09.320 --> 0:04:11.920 this one about Apple. We talked Caroline, I talked about 0:04:11.920 --> 0:04:14.200 this solar earlier. The company's planning to withhold its latest 0:04:14.240 --> 0:04:17.480 employee perks from its unionized store. What can you tell 0:04:17.560 --> 0:04:19.400 us about what's happening there and and put it in 0:04:19.440 --> 0:04:22.240 the context of the types of benefits that Apple does 0:04:22.279 --> 0:04:28.320 provide its employees. So three new benefits. One tuition reimbursement 0:04:28.360 --> 0:04:31.080 is now going to be tuition pre pay for some colleges, 0:04:31.080 --> 0:04:32.719 so Apple will pay in advance so they don't have 0:04:32.760 --> 0:04:35.040 to reimburse you at the end of the semester course 0:04:35.080 --> 0:04:38.720 ERA normally fos a year for a subscriber online. That's 0:04:38.720 --> 0:04:40.960 going to be a free subscription now for Apple employees. 0:04:41.320 --> 0:04:43.799 And then the healthcare plan through United Health that's gonna 0:04:44.000 --> 0:04:47.120 get some improvements waived co pays for select doctors in 0:04:47.200 --> 0:04:50.200 reasons like New York, New Jersey, Washington State, Connecticut, and 0:04:50.200 --> 0:04:53.040 a couple of other states. Uh, those perks not coming 0:04:53.080 --> 0:04:55.800 to Maryland right In terms of the taws in store Maryland. 0:04:55.839 --> 0:04:59.040 That's apples sole unionized store. Uh. So they're going to 0:04:59.120 --> 0:05:01.000 have to negotiate if they want to get those into 0:05:01.040 --> 0:05:04.800 their collective bargaining agreement. Uh. This is interesting timing. What's 0:05:04.839 --> 0:05:08.320 happening tomorrow. Well, voting will now begin for a second 0:05:08.320 --> 0:05:11.560 potential unionized store, this one in Oklahoma City. We'll see 0:05:11.600 --> 0:05:14.400 if this news has any impact there. Shortly. It's like 0:05:14.720 --> 0:05:17.560 another volley the back and forth with this issue. Mark 0:05:17.560 --> 0:05:20.720 German great reporting. As we mention that Intel story a 0:05:20.760 --> 0:05:24.560 Bloomberg exclusive by Mark. Mark is technology reporter at Bloomberg 0:05:24.560 --> 0:05:26.839 News joining us on the phone from our l A bureau. 0:05:26.920 --> 0:05:29.240 And just to remind everybody's Mark pointed out to that 0:05:29.560 --> 0:05:31.840 Intel shares up about one point six percent is, as 0:05:31.839 --> 0:05:35.600 he said, not good news for several a bunch in 0:05:35.640 --> 0:05:39.200 fact Intel workers, but investors certainly liking the news that 0:05:39.240 --> 0:05:41.040 they're kind so much to this story. What's happening in 0:05:41.040 --> 0:05:42.640 the PC market around the world, and then of course 0:05:42.640 --> 0:05:45.080 also the Chips act here in the US. You're listening 0:05:45.200 --> 0:05:49.000 to Bloomberg Business Week with Carol Messer and Bloomberg Quick 0:05:49.080 --> 0:05:53.200 Takes Tim Stinovic on Bloomberg Radio. The story that keeps 0:05:53.200 --> 0:05:56.640 on kiving and it isn't quite over yet. We're talking 0:05:56.640 --> 0:05:59.240 about Elon Musk's pursuit of Twitter and this week in 0:05:59.240 --> 0:06:01.960 the upcoming issue a Bloomberg Business Week magazine, the cover 0:06:02.120 --> 0:06:05.440 story is about Twitter and how it faces only bad 0:06:05.520 --> 0:06:09.440 outcomes if Elon's four billion dollar deal closes. That piece 0:06:09.520 --> 0:06:12.640 by Kurt Wagner. He's technology reporter for Bloomberg News. He 0:06:12.720 --> 0:06:15.479 joins us on the phone from San Francisco this afternoon. 0:06:15.760 --> 0:06:18.479 Also with us as Joel Webber, the editor of Bloomberg 0:06:18.560 --> 0:06:21.279 Business Week in the Bloomberg Interactive Broker Studio. You can 0:06:21.320 --> 0:06:23.360 follow Joel on Twitter at Joel Webber Show and Kurt 0:06:23.360 --> 0:06:26.280 Wagner at Kurt Wagner eight. Hey, Kurt, I want to 0:06:26.320 --> 0:06:28.400 send it over to you to start with this afternoon. 0:06:28.640 --> 0:06:31.320 So you can't want it's like you win. It's it's 0:06:31.360 --> 0:06:33.920 like there's no good outcome. Here is my big takeaway 0:06:33.920 --> 0:06:36.720 from your story because the company has been so beat 0:06:36.839 --> 0:06:40.720 up over the drama, and if it goes through, then 0:06:41.040 --> 0:06:44.760 what does that look like? Yeah? And and that's you 0:06:44.800 --> 0:06:47.440 know what we've been talking about for a couple months now, 0:06:47.680 --> 0:06:50.159 is that you know what is the end result here? 0:06:50.160 --> 0:06:53.720 And and and I think it became apparently abundantly clear. 0:06:53.720 --> 0:06:57.119 Excuse me that, Uh, no matter what happens, you know, Twitter, 0:06:57.160 --> 0:07:00.360 the company is in for a crazy ride. And you know, 0:07:00.400 --> 0:07:04.360 if Elon gets Twitter, as we are starting to expect, 0:07:04.400 --> 0:07:06.839 you know, that's going to lead the layoffs, cost cuts, 0:07:06.920 --> 0:07:09.560 UM going to rescind a lot of the rules around 0:07:10.040 --> 0:07:13.040 speech and and misinformation is the expectations. So you know, 0:07:13.200 --> 0:07:16.560 suddenly this service that's incredibly important is going to look 0:07:16.600 --> 0:07:19.120 and feel very different. Um and and the company is 0:07:19.160 --> 0:07:21.520 going to look until different. Now for some reason, that 0:07:21.600 --> 0:07:25.080 deal falls apart. Uh, Suddenly you still have a company 0:07:25.120 --> 0:07:27.880 that you know has spent the last six to nine 0:07:27.920 --> 0:07:30.840 months just in total chaos, and they have to kind 0:07:30.840 --> 0:07:34.239 of pick up and try and pretend like nothing ever happened. 0:07:34.280 --> 0:07:36.520 And I just don't think that that's realistic either. So 0:07:36.880 --> 0:07:38.600 you know, the story was meant to kind of give 0:07:38.600 --> 0:07:41.360 people a glimpse into what the Twitter employees are feeling 0:07:41.440 --> 0:07:43.160 right now, which is a lot of which is a 0:07:43.200 --> 0:07:45.400 lot of chaos. Tough place to be in. Joe Webb 0:07:45.440 --> 0:07:47.680 or the editor Blooberg Business Week magazine also with us. 0:07:47.680 --> 0:07:49.600 First of all, can I just say the cover and 0:07:49.640 --> 0:07:52.840 you made Ellen nice pecks there. Yeah, he's got some 0:07:52.880 --> 0:07:57.960 good biceps too. So we've been talking about this for 0:07:57.960 --> 0:08:00.360 for months. You know, it's obviously probably the one of 0:08:00.400 --> 0:08:03.360 the biggest business stories of the year, and and I'm curious. 0:08:03.400 --> 0:08:06.640 You know, one of the things that um uh, that 0:08:06.760 --> 0:08:09.800 you had in here was even some new stuff about 0:08:10.040 --> 0:08:13.679 you know, what the employees really felt about their potential 0:08:13.760 --> 0:08:16.200 new boss. So so take us, take us there and 0:08:16.240 --> 0:08:19.960 sort of the these uh, these slacks that you were 0:08:19.960 --> 0:08:23.800 able to get. Well, there's there's two scenes that are 0:08:23.840 --> 0:08:26.880 in the book. The first one is from early Elon 0:08:27.240 --> 0:08:29.680 showed up at a Twitter off site with the entire 0:08:29.720 --> 0:08:32.800 company and he complained about bots, and um you know, 0:08:32.840 --> 0:08:36.400 at that point, everyone kind of just sort of shrugged 0:08:36.400 --> 0:08:38.600 it off, like here's just a popular user who has 0:08:38.640 --> 0:08:41.080 an issue. Fast forward two and a half years and 0:08:41.080 --> 0:08:43.800 suddenly Ellen is still complaining about bots. But now, you know, 0:08:43.840 --> 0:08:46.079 when he addresses employees and in all hands in June, 0:08:46.120 --> 0:08:48.560 the vibe is very different, right. It's it's no longer 0:08:48.960 --> 0:08:52.280 here's this outside kind of tech celebrity showing up to 0:08:52.559 --> 0:08:55.480 give us advice. It's here's the new boss starting to 0:08:55.880 --> 0:08:58.560 you know, lay down the future of the company. And 0:08:59.080 --> 0:09:02.400 employees were not happy. You know, he alluded to layoffs, 0:09:02.440 --> 0:09:05.400 he alluded to other cost cuts, maybe getting rid of 0:09:05.400 --> 0:09:07.520 remote work, which a lot of people on Twitter have 0:09:07.640 --> 0:09:10.600 really come to enjoy, and so on slack. They're basically 0:09:10.800 --> 0:09:14.720 mocking that they're soon to be boss as he's speaking 0:09:14.760 --> 0:09:17.440 to them. You know, there's things like, hey, is it 0:09:17.480 --> 0:09:19.520 too early to get a drink? Like this guy doesn't 0:09:19.520 --> 0:09:22.200 know what he's talking about, and you know that just 0:09:22.240 --> 0:09:25.360 gives you a sense of like how unhappy a lot 0:09:25.400 --> 0:09:27.360 of Twitter employees are with this right that they would 0:09:27.440 --> 0:09:30.760 openly mock kind of the new boss um during the 0:09:31.040 --> 0:09:34.000 opening Q and A with with staff. And I just 0:09:34.040 --> 0:09:35.640 think this is only going to get worse from here, 0:09:35.720 --> 0:09:38.440 because there's a lot that's happened in the last couple 0:09:38.440 --> 0:09:40.480 of months to make him even less attractive to a 0:09:40.480 --> 0:09:44.680 lot of Twitter employees. Okay, so what you he ends up? 0:09:44.760 --> 0:09:46.760 Let's say he has to cut this check forty four 0:09:46.840 --> 0:09:50.040 billion dollars, right, like, don't bounce that check? That that 0:09:50.040 --> 0:09:54.480 would be unfortunate. Uh he's uh, he becomes you know, 0:09:54.559 --> 0:09:58.440 owner of Twitter after all of this. What what chess 0:09:58.440 --> 0:10:00.360 moves go down from there? Do you do? Do we 0:10:00.400 --> 0:10:03.440 think Yeah, I think there's a few things. Um, First 0:10:03.480 --> 0:10:07.319 and foremost, I imagine he's gonna put in or probably 0:10:07.320 --> 0:10:09.920 put in his own executive team. He's he's been pretty 0:10:09.920 --> 0:10:12.000 open that he has, you know, no faith in the 0:10:12.000 --> 0:10:16.079 current leadership at Twitter. We expect that CEO Prague Agawal 0:10:16.160 --> 0:10:19.360 will probably be out. Um. Also the top lawyer, Vigid Gotti, 0:10:19.480 --> 0:10:21.320 will probably be out. So you know, there's gonna be 0:10:21.360 --> 0:10:23.960 new new people at the top of this company. And 0:10:23.960 --> 0:10:25.360 then I think the other thing is, you know, he's 0:10:25.400 --> 0:10:28.840 talked a lot about wanting to bring quote free speech 0:10:28.920 --> 0:10:31.240 back to Twitter, right, And what does that mean. Well, 0:10:31.320 --> 0:10:34.360 for starters, that means reversing permanent bands. So we might 0:10:34.360 --> 0:10:36.720 see President Trump back on Twitter quite soon. We might 0:10:36.720 --> 0:10:38.680 see other people who have been banned back on Twitter. 0:10:39.080 --> 0:10:41.280 But I also think he's you know, it sounds like 0:10:41.320 --> 0:10:42.640 he plans to get rid of a lot of the 0:10:42.720 --> 0:10:46.520 rules around harassments and hate speech and misinformation that Twitter 0:10:46.559 --> 0:10:48.840 has been building over the last couple of years. That's 0:10:48.840 --> 0:10:50.959 going to have a huge impact on just the vibe 0:10:51.040 --> 0:10:53.320 of of what it feels like the scroll through your 0:10:53.360 --> 0:10:56.240 Twitter timeline, right. And I don't know exactly how quickly 0:10:56.240 --> 0:10:59.200 all that stuff can be unraveled. But I imagine, um, 0:10:59.240 --> 0:11:01.520 you know, it might feel very different to people in 0:11:01.520 --> 0:11:03.600 the next couple of months. That's a really interesting point card. 0:11:03.600 --> 0:11:05.800 And that's when I really wanted to hit on because 0:11:06.080 --> 0:11:07.520 there is a you know, there's got to be a 0:11:07.559 --> 0:11:09.240 portion of people who think that this is a good thing. 0:11:09.240 --> 0:11:10.840 I've seen it play out on Twitter and you see 0:11:10.840 --> 0:11:13.000 a lot of people say, wait a second, this is 0:11:13.000 --> 0:11:15.800 a good thing for Twitter because you know, this is 0:11:15.840 --> 0:11:18.800 going to be more about quote unquote free speech. So 0:11:19.200 --> 0:11:21.080 what else does it look like on the other side 0:11:21.120 --> 0:11:23.480 of this if this does go through, does it actually 0:11:23.520 --> 0:11:26.480 attract more people, doesn't become a more attractive platform? Or 0:11:26.520 --> 0:11:29.480 do those protections that must potentially takes away or could 0:11:29.559 --> 0:11:34.360 take away? Does that hinders people, hinder people's experience on it? Well, 0:11:34.400 --> 0:11:36.960 you know what's funny is, um, there was a time, 0:11:37.040 --> 0:11:39.760 probably three or four years ago when Twitter was still 0:11:39.840 --> 0:11:42.040 very much struggling with all of this hate speech and 0:11:42.120 --> 0:11:44.280 harafsment stuff, and there were people leaving right like, hey, 0:11:44.320 --> 0:11:46.440 I don't want to be on this health site. I 0:11:46.440 --> 0:11:50.560 don't wanna you know, there's a there a lot of 0:11:50.720 --> 0:11:53.679 mean things said about Twitter, and people were saying that 0:11:53.720 --> 0:11:56.280 they were leaving, right, and then Donald Trump got this 0:11:56.760 --> 0:11:59.960 band and people said, well, now everyone's gonna lead Twitter 0:12:00.040 --> 0:12:04.120 because they banned President Trump. And in both cases, the 0:12:04.200 --> 0:12:06.760 numbers didn't really reflect either of those things. Right, Like 0:12:06.800 --> 0:12:10.240 it was, it was mostly people complaining about this, but 0:12:11.080 --> 0:12:13.559 the majority of user stuck around. Now in this case, 0:12:13.960 --> 0:12:16.000 I think that's probably the same thing that's going to happen. Right. 0:12:16.040 --> 0:12:17.680 There will be people who are happy to see some 0:12:17.720 --> 0:12:20.760 of these rules rescinded, some people will be very sad, 0:12:20.960 --> 0:12:23.880 but for the most part, I imagine most people will 0:12:23.880 --> 0:12:26.320 probably stick around, at least in the near term. Hey, Kurt, 0:12:26.520 --> 0:12:28.680 one thing I'm curious about too, though, is you know 0:12:28.679 --> 0:12:31.319 Elon Musk has a lot on his plate. Well the 0:12:31.440 --> 0:12:34.160 ultimately how you know, have a deputy really you know 0:12:34.240 --> 0:12:36.719 running things that Twitter. How do how do we anticipate 0:12:36.760 --> 0:12:39.640 in my play out? Yeah, this is this is still 0:12:39.640 --> 0:12:42.440 an unknown. Um. You know, I mentioned that I think 0:12:42.480 --> 0:12:44.760 the current executive team is probably going to be out 0:12:44.760 --> 0:12:47.880 the door, But who does he bring in to run 0:12:47.920 --> 0:12:50.040 the day to day It doesn't seem really feasible for 0:12:50.120 --> 0:12:53.200 him to do that considering his responsibilities that SpaceX and 0:12:53.240 --> 0:12:56.079 Tesla as well, um, But one thing he did tell 0:12:56.120 --> 0:12:58.320 employees in June and that we mentioned the story, is 0:12:58.400 --> 0:13:00.400 he said he doesn't really care much about ales like 0:13:00.400 --> 0:13:03.679 you see the CEO is he something else? But he 0:13:03.720 --> 0:13:05.880 wants to make the decisions. He wants people to listen 0:13:05.920 --> 0:13:07.920 to him. You know. So I do think he's going 0:13:07.960 --> 0:13:10.880 to be pretty involved, at least in the direction of 0:13:10.880 --> 0:13:13.240 where this company is going now. He is he the 0:13:13.280 --> 0:13:16.240 one who's going to be, you know, answering emails UM 0:13:16.440 --> 0:13:20.400 all day about product tweaks. I don't know. It seems unlikely, 0:13:20.800 --> 0:13:23.199 but he does claim he wants to be heavily involved here. 0:13:23.360 --> 0:13:25.079 I love the last line of your story. Bad. I 0:13:25.120 --> 0:13:28.280 guess what what title or role Musk will be and 0:13:28.320 --> 0:13:29.800 he says, I don't really care what the title is, 0:13:29.840 --> 0:13:32.880 but obviously people do need to listen to me. Right, 0:13:33.200 --> 0:13:36.240 Who's in charge of the new guy? Alright? Great story. 0:13:36.360 --> 0:13:38.000 It is the cover story of the new issue of 0:13:38.000 --> 0:13:40.600 Bloomberg Business Week, which will be out on newstands tomorrow 0:13:40.640 --> 0:13:42.959 online already at Bloomberg dot com slash business weekn on 0:13:43.000 --> 0:13:45.240 the Bloomberg terminal. What what's the over under on whether 0:13:45.280 --> 0:13:47.679 or not that title has the letter X in it? 0:13:47.840 --> 0:13:50.480 Something that he's just totally obsessed with, you know, X 0:13:51.440 --> 0:13:54.200 it's a whole new dimension for where where Ellen could 0:13:54.200 --> 0:13:55.920 go here and like, you know, you thought Mars was 0:13:55.960 --> 0:13:58.400 the last one, so oh my gosh, and it ain't 0:13:58.440 --> 0:14:00.640 over yet. Where are the final friends? All right? Oh? 0:14:00.640 --> 0:14:03.080 Thanks to Kurt Wagner, Bloomberg News Technology reportn of course, 0:14:03.120 --> 0:14:08.960 till webber a Business Week. This is Bloomberg Business Week 0:14:09.120 --> 0:14:13.120 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:14:13.240 --> 0:14:16.360 Bloomberg Radio. We just talked about airline or I did 0:14:16.440 --> 0:14:19.320 airline stocks release? Amount performance today? The rally and American 0:14:19.400 --> 0:14:22.440 Airlines alone up again and up around five percent in 0:14:22.480 --> 0:14:26.080 the past two trading days. The US carrier yesterday lifting uh. 0:14:26.160 --> 0:14:30.520 It's forecasting its guidance above prior guidance. American officially reports 0:14:30.560 --> 0:14:34.480 next week, so does United. Meantime, we've got Delta reporting tomorrow. 0:14:34.520 --> 0:14:36.480 All right. For a roundup of what to expect from 0:14:36.480 --> 0:14:39.440 airlines and already what we've heard, we turned to Colin Scarola, 0:14:39.520 --> 0:14:42.200 equity analyst at cfre A Research. Collin joins us this 0:14:42.200 --> 0:14:45.400 afternoon on the phone from New York City. So Colin 0:14:45.480 --> 0:14:47.680 is Carol mentioned we've already heard from a pre announcement 0:14:47.680 --> 0:14:51.200 from American Airlines. Um, what does that tell us what 0:14:51.240 --> 0:14:53.240 we learned from American yesterday, what does that tell us 0:14:53.240 --> 0:14:58.720 about what to expect across the wider industry? Well, thank 0:14:58.720 --> 0:15:01.040 you for having me first of all. Uh, specifically as 0:15:01.080 --> 0:15:05.600 it relates to Delta's earnings released tomorrow. I think what 0:15:05.880 --> 0:15:10.600 the American numbers tell us is that pricing across the industry, 0:15:11.040 --> 0:15:15.760 ticket pricing, it's held up really strong. We haven't seen 0:15:15.840 --> 0:15:20.800 that anyone who's trying to book a flight anywhere realizes that, right. 0:15:21.040 --> 0:15:22.600 I mean it's like we're trying to decide if we 0:15:22.720 --> 0:15:27.520 drive for Thanksgiving or or fly because it's so expensive calling, right. 0:15:27.640 --> 0:15:30.440 And I think what what a lot of sort of 0:15:30.480 --> 0:15:35.080 industry watchers were expecting was that that big springway of 0:15:35.200 --> 0:15:37.760 booking would drive up the prices, but then they would 0:15:37.800 --> 0:15:41.640 start trailing down a bit over the summer. But it's 0:15:41.680 --> 0:15:45.080 been you know, from American standpoint, and I expected to 0:15:45.080 --> 0:15:48.240 be the same for Delta tomorrow. It's been great for 0:15:48.280 --> 0:15:51.440 them to see that the pricing really isn't coming down, 0:15:52.400 --> 0:15:55.640 because maybe they're seeing a little bit of trailing down 0:15:55.640 --> 0:15:59.560 in domestic but as they bring those international flights back. 0:16:00.080 --> 0:16:03.600 You see the brand new that first big booking way 0:16:03.680 --> 0:16:07.400 bidding the international markets, and that's keeping I think overall 0:16:07.440 --> 0:16:10.480 pricing very strong. I feel like everybody, Colin, right now 0:16:10.600 --> 0:16:12.960 is going overseas. I mean, I hear everybody talking about 0:16:12.960 --> 0:16:16.680 we talked about Kati Griffield cheese overseas right now. Everybody 0:16:16.680 --> 0:16:18.760 seems to be probably listening right now because she just 0:16:18.800 --> 0:16:22.280 can't take the break she's getting about. But Colin, what 0:16:22.320 --> 0:16:24.880 I'm wondering is, so, what are the big macro dynamics. 0:16:24.920 --> 0:16:27.240 Is this just a case of people who were stuck 0:16:27.240 --> 0:16:29.960 in their homes during the pandemic buying stuff they probably 0:16:30.000 --> 0:16:32.320 didn't need, and now they're going out just kind of 0:16:32.400 --> 0:16:35.440 enjoying life and being back to normal and experiencing things. 0:16:35.600 --> 0:16:39.640 Is it that? But is it also reduced capacity, reduced workers? 0:16:39.680 --> 0:16:42.520 And so it's just kind of supply demand dynamics at 0:16:42.520 --> 0:16:46.880 work in the airline industry. Yeah, it's a little bit 0:16:46.880 --> 0:16:50.160 of both. So you get you get unusually high demand 0:16:50.480 --> 0:16:53.800 with unusually low supply, and that's where this sort of 0:16:56.200 --> 0:17:00.960 increase in pricing comes from. Relative to and just a 0:17:00.960 --> 0:17:04.040 few anecdotes, I think we have a record number of 0:17:04.080 --> 0:17:07.360 weddings happening in the US this year and next year. 0:17:07.680 --> 0:17:09.680 You know that that's the type of thing that's driving 0:17:10.040 --> 0:17:13.240 that leisure travel demand, plus the vacation demand getting to 0:17:13.320 --> 0:17:16.080 Europe wherever it might be that people used to love 0:17:16.119 --> 0:17:20.359 to go. And then what was good to see for 0:17:20.440 --> 0:17:24.520 the industry is we saw we saw the consumer and 0:17:24.520 --> 0:17:28.760 the households have that huge pent up demand streak this 0:17:28.880 --> 0:17:31.440 spring and summer, and I think now we're starting to 0:17:31.480 --> 0:17:34.239 see it from businesses as well. Um, you look at 0:17:34.240 --> 0:17:37.920 a lot of the accounting and consulting firms who used 0:17:37.960 --> 0:17:40.639 to have people out on the road working at client 0:17:40.720 --> 0:17:43.600 sites four days every week. You know that sort of 0:17:44.040 --> 0:17:47.639 Monday morning Thursday night travel routine that seems to be 0:17:47.680 --> 0:17:50.719 coming back in a pretty big way now this falling 0:17:50.760 --> 0:17:53.640 into this winter. So what started with the pent up 0:17:53.640 --> 0:17:58.000 demand on the consumer and leisure side that you know, 0:17:58.440 --> 0:18:01.000 it's still strong, it hasn't on its course, It's still 0:18:01.080 --> 0:18:03.560 very strong, but it's it's certainly not growth anymore, I 0:18:03.560 --> 0:18:07.199 don't think. But now international and business are starting to 0:18:07.280 --> 0:18:10.040 see that same sort of big pent up demand waves. 0:18:10.080 --> 0:18:14.280 So overall, very good things for the airlines, and they 0:18:14.359 --> 0:18:17.520 look like extremely cheap stocks to me, generally, that's interest 0:18:17.600 --> 0:18:20.280 how strong demand is Colin? Do we ever do we 0:18:20.359 --> 0:18:24.480 ever see business travel resumed levels? And I asked because 0:18:24.560 --> 0:18:27.439 friend of mine is an event planner for for company. 0:18:27.520 --> 0:18:30.359 She plans conferences, and she was saying, it is so 0:18:30.440 --> 0:18:34.879 much more economic economical to do these virtual conferences. The 0:18:34.960 --> 0:18:38.800 lead generation that we get per cost is just so 0:18:38.880 --> 0:18:41.480 much better, it's so much lower. And she's like, I 0:18:41.520 --> 0:18:43.439 don't see us ever going back to, you know, what 0:18:43.480 --> 0:18:45.119 we were doing before the pandemic because it was just 0:18:45.119 --> 0:18:50.240 too expensive. Yeah, it's tough to make a call on that. 0:18:50.359 --> 0:18:53.680 I hear. I hear piece of information like you just relayed, 0:18:53.720 --> 0:18:57.000 But then I also hear from a lot of surveys 0:18:57.040 --> 0:19:01.240 on businesses that you just can't replace face to face interaction. 0:19:01.640 --> 0:19:05.479 And I think my my view tends to lead towards 0:19:05.480 --> 0:19:08.880 that it will come back bigger than it was. Um 0:19:09.520 --> 0:19:14.560 American Airlines specifically, they reported on small and medium business 0:19:14.600 --> 0:19:20.879 revenues they were actually up in the past Q two. 0:19:21.560 --> 0:19:25.359 So already small and medium businesses seem to be putting 0:19:25.359 --> 0:19:28.320 in greater demand for air travel than they were before 0:19:28.359 --> 0:19:34.679 the pandemic. And uh, it's not a given that corporates. 0:19:34.880 --> 0:19:37.480 You know, the larger corporates will follow that same track. 0:19:38.560 --> 0:19:41.439 But I certainly think that's the most likely outcome, just 0:19:41.440 --> 0:19:44.359 because I think people want to get back to seeing 0:19:44.400 --> 0:19:47.520 their clients and seeing their coworkers. Hey, hey, Colin, not 0:19:47.600 --> 0:19:49.440 to be a Debbie downer, and just got about thirty seconds. 0:19:49.440 --> 0:19:51.240 I just want to squeeze in if we go though 0:19:51.280 --> 0:19:53.399 to a downturn, or maybe we're already in it, but 0:19:53.440 --> 0:19:56.600 if something protracted happened certainly into next year, are the 0:19:56.640 --> 0:19:58.800 airlines in good shape to weather it? And again, just 0:19:58.840 --> 0:20:04.760 got about thirty seconds. Yeah, I think a recession would 0:20:04.760 --> 0:20:07.240 not get the airlines as acutely as it as it 0:20:07.320 --> 0:20:12.280 has historically because of the pent up demand factor. So 0:20:12.520 --> 0:20:17.160 the recession, in my view, it's it's hitting goods producing industries, 0:20:17.600 --> 0:20:20.600 whereas services like air travel mold up pretty well because 0:20:20.600 --> 0:20:24.040 there's that natural offset from the pent up demand. All right, Well, 0:20:24.080 --> 0:20:26.640