Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence
Speaker 1: with Alex Steel and Paul Sweeney.
Speaker 2: The real app performance has been the US corporate high yield.
Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
Speaker 2: The semiconductor business is a really cyclical business.
Speaker 1: Breaking market headlines and corporate news from across the globe.
Speaker 3: Do investors like the M and A that we've seen?
Speaker 4: These are two.
Speaker 2: Big time blue chip companies.
Speaker 3: The window between the peak and cut changing super fast.
Speaker 1: Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio.
Speaker 5: I'm Paul Sweeney and I'm normal Linda filling in for
Speaker 5: Alex Steele.
Speaker 2: Today's Bloomberg Intelligence Show we dig inside the big business
Speaker 2: stories from PACTE, Wall Street and the global markets.
Speaker 5: Each and every week we provide in depth research and
Speaker 5: data on some of the two thousand companies and one
Speaker 5: hundred and thirty industries are analysts covered worldwide.
Speaker 2: Today, we'll look at why the coffee giants Bucks has
Speaker 2: withdrawn its guidance for twenty twenty five plus.
Speaker 5: We'll dive into the telecommunication space and look at earnings
Speaker 5: from AT and T.
Speaker 2: But first we look at earnings from the shipping giant UPS.
Speaker 5: This week, the company reported that it returned to sales
Speaker 5: and profit growth for the first time in nearly two years.
Speaker 5: UPS benefited from higher volumes, more profitable packages, and studying
Speaker 5: labor costs for more.
Speaker 2: Nora and I were joined by Lee Klascow, Bloomberg Intelligence
Speaker 2: Senior Transport, Logistics and shipping analysts.
Speaker 5: We first asked Lee for his take on UPS's most
Speaker 5: recent quarter.
Speaker 6: Yeah, so UPS had a pretty good print. May also,
Speaker 6: you know, indicated that earnings might be a little better
Speaker 6: than expectations are in the fourth quarter. UPS has been
Speaker 6: kind of a show me story. They've been doing a
Speaker 6: lot of self help things, but a lot of those
Speaker 6: initiatives really haven't bubbled up to the bottom line or
Speaker 6: the revenue numbers, just given the difficult backdrop. And what
Speaker 6: we saw was earnings per share for growth finally inflected
Speaker 6: positively after seven quarterly declines. So things seem to be
Speaker 6: working for UPS, and you know, we expect earnings expectations
Speaker 6: for the fourth quarter and probably next year to move
Speaker 6: higher on kind of the progress that they've made thus far.
Speaker 5: Hayley, I mean, you mentioned that difficult backdrop as we're
Speaker 5: thinking about the future. I mean, how much of a
Speaker 5: move higher do you really anticipate as we're thinking about
Speaker 5: the year end, should investors start to see some gains here?
Speaker 6: Well, we don't do buy hoole sell recommendations of Bloomberg Intelligence,
Speaker 6: but you know, what we can tell you is that
Speaker 6: the company are doing the right things to see their
Speaker 6: margins expand. And you know, our view is that margin
Speaker 6: expansion could be more than where where the market currently
Speaker 6: is at. And a lot of that has to do
Speaker 6: with a lot of the cost savings that they've been
Speaker 6: able to generate. They've been able to you know, shut
Speaker 6: down various shifts, sorting shifts, They've been able to close
Speaker 6: some facilities and just do more with the network that
Speaker 6: they have. That and if you fast forward that, you know,
Speaker 6: maybe you know, volumes could start to improve a little
Speaker 6: more meaningfully from here. You know, they expect a better
Speaker 6: peak season this year, albeit probably not as robust as
Speaker 6: they were probably planning for three months ago, but the
Speaker 6: peak season is expected to grow. And the reason for
Speaker 6: you know, them tempering the outlook for the peak season
Speaker 6: is given the fact that the peak season is condensed
Speaker 6: the peak season for those that don't know is from
Speaker 6: Black Friday to Christmas Eve and because of that condensed
Speaker 6: peaks time. You know, a lot of retailers think that
Speaker 6: some consumers might be going to the stores versus ordering
Speaker 6: online and making that gamble whether or not you get
Speaker 6: it under the tree in time.
Speaker 7: Hay Lee.
Speaker 2: We love talking to you for a variety of reasons,
Speaker 2: not the least of which is the companies you covered
Speaker 2: lead give us a real sense of how the underlying
Speaker 2: economy is doing, whether it's stuff's being shipped by rail
Speaker 2: or truck or air cargo. What's GPS telling you about
Speaker 2: kind of underlying activity that they're seeing.
Speaker 6: Well, first and foremost, I love talking to you as well, Paul,
Speaker 6: But you know what I think they're telling us is
Speaker 6: the consumer is doing okay. You know, it's not doom
Speaker 6: and gloom going into the holiday season. I think that
Speaker 6: you know, you are going to see growth. Like I
Speaker 6: said earlier, that growth might be a little more tempered,
Speaker 6: but you know, we are seeing a return to kind
Speaker 6: of seasonality, which is really good because it's not just
Speaker 6: going to impact the parcel providers. It's going to impact
Speaker 6: the truckload providers, you know, like the night swifts and
Speaker 6: the warners of the world. It's going to impact the
Speaker 6: intermodal providers like the JB Hunts and the hub groups
Speaker 6: of the world, and the railroads as well. So, you
Speaker 6: know what we're hearing about the consumer and the fact
Speaker 6: that B to B volume grew for the first time
Speaker 6: in a long time within their domestic business is also
Speaker 6: telling me, you know, that that things might be might
Speaker 6: be a little better in twenty twenty five. So you know,
Speaker 6: we're pretty optimistic that demand should be increasing across most
Speaker 6: of the modes that we cover, and you know, twenty
Speaker 6: twenty five and our view was going to be a
Speaker 6: much better year than twenty twenty four was.
Speaker 5: And I do know back in about April, I remember
Speaker 5: that UPS became USPS's primary air cargo provider. Is that
Speaker 5: still a topic of conversation. How much has that really
Speaker 5: added to the business if at all?
Speaker 6: Yeah, So it is a great business win for them.
Speaker 6: You know, FedEx walked away from it for various reasons
Speaker 6: and UPS decided to pick it up. It's going to
Speaker 6: be consistent volumes at a consistently good margin. And you
Speaker 6: know what they're doing is they're really restructuring their overall
Speaker 6: business they've been getting out of businesses that are a
Speaker 6: lot more volatile. They just sold their freight brokerach business,
Speaker 6: which was called Coyote to RXO, and then that was
Speaker 6: earlier last month, and then in twenty twenty one they
Speaker 6: sold their less than truckload business UPS Freight to TFI
Speaker 6: and those were not great businesses for UPS. And now
Speaker 6: UPS can really focus on being a parcel provider. And
Speaker 6: to answer your question, what the US postal service business
Speaker 6: can also do, It's going to build density and density
Speaker 6: is the name of the game in any transportation company,
Speaker 6: and so they can build off that density with other volumes.
Speaker 2: Our thanks to Lee Klasgow, Bloomberg Intelligence Senior Transport, Logistics
Speaker 2: and Shipping analyst.
Speaker 5: We move next to earnings from ev giant Tesla.
Speaker 2: Tesla's expectations for earnings in the third quarter. The company
Speaker 2: also forecasted as much as thirty percent growth in vehicle
Speaker 2: sales next year. This reflects the rebound and demand for
Speaker 2: Tesla's electric vehicles.
Speaker 5: For more, Paul and I were joined by Craig Trudell,
Speaker 5: Bloomberg Global Autos Editor. We first asked Craig for his
Speaker 5: take on Tesla's most recent.
Speaker 4: Results Oftentimes it's not necessarily the case that you can
Speaker 4: count on both earnings and the vision to be positive.
Speaker 4: In this case, both were working in Musk's favor. I
Speaker 4: think the earnings were much better than expected. I do
Speaker 4: think that those expectations came down quite a bit over
Speaker 4: the last year year and a half, but they sort
Speaker 4: of they did exceed expectations by pretty significant measures. And
Speaker 4: the profit margins in particular, or something that everybody keeps
Speaker 4: a very close eye on their automotive profit margins when
Speaker 4: you back out the credits that they sell to other
Speaker 4: automakers for regulatory purposes, those in particular, I feel like,
Speaker 4: are you know, just quarter in and quarter out what
Speaker 4: everybody looks at? That was a big beat. And then
Speaker 4: I think Musk was as self assured as I've ever heard.
Speaker 4: He's never won lacking in confidence. And for him to
Speaker 4: throw out, you know, twenty to thirty percent sales increase
Speaker 4: for next year, I think was very surprising. For nine
Speaker 4: ten months into the year, and they've delivered fewer vehicles
Speaker 4: in twenty twenty four than they did in twenty twenty three.
Speaker 5: Hey, Craig, So when I'm walking around New York City
Speaker 5: every so often I will see, to my surprise, a
Speaker 5: cyber truck. What is the leadst on that? What do
Speaker 5: they say in earnings? What can we expect there?
Speaker 4: They said that it was gross margin positive for the
Speaker 4: first time in the recent quarter, and so we're almost
Speaker 4: we're roughly a year into the launch of that vehicle.
Speaker 4: I would say that's a little on the early side,
Speaker 4: just relative to how Tesla has you know, done with
Speaker 4: with new vehicle launches in the past. So that is
Speaker 4: another another positive I think, you know, in terms of volume,
Speaker 4: it's it's still quite low relative to the Model Y
Speaker 4: and the Model three. That is still where you see
Speaker 4: the vast majority of Tesla's deliveries, so much so that
Speaker 4: Tesla has even yet to break out that that vehicle.
Speaker 4: And in terms of you know, quarterly results, and so
Speaker 4: I think we have a rough idea of how many
Speaker 4: they've sold. Ironically, based on the recalls that the company
Speaker 4: has had to do with the vehicle. It's it's as
Speaker 4: of the latest recall was, which was just a few
Speaker 4: weeks ago, it was around twenty seven thousand units, I believe,
Speaker 4: So you know, that's that's pretty small for a company
Speaker 4: that you know, may sell somewhere in a one point
Speaker 4: eight million vehicles this year.
Speaker 2: Where is the focus from the company here in terms
Speaker 2: of they seems like they have a lot of balls
Speaker 2: in the air, obviously, the car business itself, robotaxis, artificial intelligence,
Speaker 2: what are they? What does Elon want investors to focus on?
Speaker 4: Do you think? I think that's actually really one of
Speaker 4: the most interesting things here. And I think Liam Denning's
Speaker 4: column for Bloomberg Opinion, you know, does a great job
Speaker 4: of laying out this idea that you know, Musk's emphasis
Speaker 4: has really been on, you know, don't bother with the
Speaker 4: here and now, forget the near term earnings. The sort
Speaker 4: of big potential for this company has to do with,
Speaker 4: you know, selling self driving cars and humanoid robots and
Speaker 4: things that you know, we've heard Elon talk about time
Speaker 4: and time again, but not actually deliver. And I think,
Speaker 4: you know, if if you're sort of looking at this
Speaker 4: company sort of class half full, it's I'm less concerned
Speaker 4: than I am today about the here and now of
Speaker 4: this company and the earnings power of Tesla and it's
Speaker 4: it's current business and therefore, you know, more encouraged that
Speaker 4: that they have, you know, the ability and the time
Speaker 4: and the financial wherewithal to go out and pursue those
Speaker 4: you know, big stretch goals that Musk has stepped for
Speaker 4: the company, and you know, depending on who you ask,
Speaker 4: you know may or may not be able to actually
Speaker 4: follow through on his various predictions.
Speaker 5: Well, from an equity perspective, this stock has been all
Speaker 5: over the place this year. What's the goal case here?
Speaker 5: What are people saying? How much legs do they have
Speaker 5: to run? Can the stock go much further? What's the
Speaker 5: consensus there?
Speaker 4: You're absolutely right. I mean back in April, this was
Speaker 4: a stock that was down forty three percent for the year,
Speaker 4: and so for for them to have you know, come
Speaker 4: all the way back, they it's sold off quite a bit,
Speaker 4: you know, after the Robotaxi unveiling just a few weeks ago,
Speaker 4: and you know, we we've now seen the shares to
Speaker 4: go positive again for the year. I think whether or
Speaker 4: not the the company can can actually grow next year
Speaker 4: with deliveries, I think is really important. Because even Musk,
Speaker 4: who's you know, sort of perpetually said, you know, next
Speaker 4: year will be our year for autonomy, even he is saying,
Speaker 4: you know that this cyber cab that they showed a
Speaker 4: couple of weeks ago isn't going to be ready in
Speaker 4: twenty twenty six, and so we need this company to bring,
Speaker 4: you know, more affordable vehicles to market, to make teslas
Speaker 4: more accessible to more consumers and get back to when
Speaker 4: it's you know, growing again. To put it simply, and
Speaker 4: you know, I think it's still unclear what exactly they
Speaker 4: have to offer that's going to help them get there.
Speaker 2: Thanks to Craig Trudell, Bloomberg Global Autos Editor.
Speaker 5: Coming up, we'll discuss what we can expect and Walt
Speaker 5: Disney's succession planning.
Speaker 2: You're listening to the Bloomberg Intelligence on Bloomberg Radio, providing
Speaker 2: in depth research and data on two thousand companies and
Speaker 2: one hundred and thirty industries. You can access Bloomberg Intelligence
Speaker 2: be a b I go on the terminal.
Speaker 5: I'll Paul Sweeten and I'm normal. DUP, this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Affle Card Playing and
Speaker 1: broud Otto with the Bloomberg Business app. Listen on demand
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
Speaker 5: I'm Paul and I'm normal. Enda, filling in for Alex Steel.
Speaker 2: We move next to earnings from the coffee chains Starbucks.
Speaker 2: This week, the company reported sales that plunged for the
Speaker 2: third consecutive quarter.
Speaker 5: Starbucks also pulled its guidance for twenty twenty five. This
Speaker 5: comes as a new CEO, Brian Nichol, tries to assess
Speaker 5: his business and develop a turnaround plan for more.
Speaker 2: Guest host Emily Grafao and I were joined by Michael Halen,
Speaker 2: Bloomberg Intelligence Senior Restaurant and food service analyst. We first
Speaker 2: asked Michael what exactly is going on at Starbucks.
Speaker 8: They played catch up a bit once the hiring of
Speaker 8: Brian Nichol was announced. You know, Brian Nichols started last month,
Speaker 8: and you know he's moving quickly.
Speaker 2: Man.
Speaker 7: He's making a lot of management changes, and he's.
Speaker 8: Aggressively making moves to simplify operations. You know, they're going
Speaker 8: to rationalize menu items, make it easier to execute, and
Speaker 8: try to bring.
Speaker 7: Hospitality back to the coffee shops right.
Speaker 8: They want to free up their employees, their partners as
Speaker 8: they like to call them, to get back to knowing
Speaker 8: the names of their customers right and being able to
Speaker 8: greet them with a smile and friendly service, right, and
Speaker 8: so's that's going to be job one, and then from
Speaker 8: there they're going to expand on the marketing side.
Speaker 7: You know, Starbucks has historically.
Speaker 8: Only marketed to its rewards members, right, and Brian nicol
Speaker 8: wants to expand that to everyone, right.
Speaker 7: And we think that's a smart plan.
Speaker 8: We think they've been under investing in marketing for a
Speaker 8: long time and we expect it to pay dividends as
Speaker 8: early as fiscal twenty twenty five.
Speaker 9: What is the company said to explain the seven percent
Speaker 9: decline in same store sales? Because before you came on,
Speaker 9: we were talking about how you have to wait in
Speaker 9: a really long line to get your Starbucks.
Speaker 10: There's less foot traffic.
Speaker 2: Right every doing it.
Speaker 9: There's I guess, well maybe some teams in the store,
Speaker 9: but there's less people in the store. What have they
Speaker 9: said about really what's driving that decline?
Speaker 1: You know?
Speaker 8: Part of what new CEO Brian Niccholas said is is
Speaker 8: like it's largely about the experience. You know, it's become
Speaker 8: largely transactional. Right, They've lost that customer service feel. They've
Speaker 8: had the trouble executing the orders. You know, a big
Speaker 8: part of it is, you know. And then he also
Speaker 8: mentioned that, you know, all of these new menu items
Speaker 8: that they added to try to bring people in didn't work, right.
Speaker 8: And then pricing has gotten ahead of itself at Starbucks
Speaker 8: as well.
Speaker 7: And then China, China.
Speaker 8: There's a huge price gap between the prices that they're charging.
Speaker 8: Sometimes they're charging three times as much as as some
Speaker 8: of their smaller.
Speaker 7: Competitors like Luck and Coffee and k Coffee.
Speaker 8: So, you know, prices has also been a big part
Speaker 8: of their issue, and it's something that they're they're going
Speaker 8: to address right away.
Speaker 2: You know, I've seen some crazy graphics in various articles
Speaker 2: showing the permutations of the different orders that one could have,
Speaker 2: and if you're bar barber, it's virtually impossible to learn
Speaker 2: all these Is there a sense that they got to
Speaker 2: simplify just the menu a little bit.
Speaker 8: Yeah, they issued a video and that was a big
Speaker 8: point of emphasis. It was like making the jobs of
Speaker 8: their bearistas a lot easier and their employees a lot easier, right,
Speaker 8: and so you know, when an employee stressed, it's very
Speaker 8: hard for them to provide the customer with a good experience, right,
Speaker 8: So this all flows downhill.
Speaker 7: So making the Barista's jobs easier.
Speaker 8: Making it more enjoyable environment for them is going to
Speaker 8: flow down to the consumer and then it's going to
Speaker 8: result in better traffic and same source sales.
Speaker 9: I was curious to get your thoughts, you know, Brian
Speaker 9: Nichols said. The company said that they're pulling back this
Speaker 9: guidance because the CEO needs more time to kind of
Speaker 9: think through all this. How unprecedented is that just thirty seconds?
Speaker 11: Uh?
Speaker 7: No, it would be This is very common.
Speaker 8: Any any good CEO worth his soult is going to
Speaker 8: suspend guidance so they have more time to get their
Speaker 8: initiatives in place.
Speaker 7: This is huge.
Speaker 8: Companies can take a long time for momentum to start
Speaker 8: building in the right direction, and this is a wise.
Speaker 5: Move our thanks to Michael Halen Bloomberg Intelligence senior restaurant
Speaker 5: and food service analysts.
Speaker 2: We move next to the Median entertainment space and Walt Disney.
Speaker 5: This week, Disney named a former Morgan Stanley CEO, James Gorman,
Speaker 5: chairman of the board. The company also said it will
Speaker 5: appoint a new CEO in early twenty twenty six.
Speaker 2: Nor and I were joined by Githa Rong Andathan Bloomberg
Speaker 2: Intelligence analyst on US Media. We first asked Githa for
Speaker 2: her thoughts on the latest with Disney's succession plan.
Speaker 12: So I think this is the number one issue for
Speaker 12: this company right now. I mean, succession planning has obviously
Speaker 12: not been Disney's strong suit. You know, they had botched
Speaker 12: succession attempts now multiple times, this is important. I mean,
Speaker 12: you have arguably one of the best executives in the
Speaker 12: business in James Gorman, who led such a smooth, orderly transition,
Speaker 12: you know, in his own CEO transition, just did it
Speaker 12: in five months with all internal candidates. So if it's
Speaker 12: going to be orchestrated by him, I think obviously he's
Speaker 12: been on the succession planning committee. It's his number one priority,
Speaker 12: and I think it definitely gives investors a lot of confidence.
Speaker 12: The one thing, though, that you know, you have to
Speaker 12: mention here is that the early twenty twenty six time
Speaker 12: frame that they have announced in terms of the new
Speaker 12: CEO appointment, I think that's a little bit later than
Speaker 12: what investors were expecting. I think most investors were expecting
Speaker 12: it to happen in twenty twenty five.
Speaker 5: I mean, things have really been tumultuous as we think
Speaker 5: about succession plans. What are investors looking for from a
Speaker 5: successor here?
Speaker 12: So right now, all that we know is that you
Speaker 12: have the four internal chiefs, you know, So you have
Speaker 12: the parks chief Josh Tomorrow, you have ESPN's Jimmy Pittaro,
Speaker 12: and you have the two big creative heads on the
Speaker 12: TV and the film side, Dana Walden and Alan Bergman,
Speaker 12: who are all front runners. So, you know, leading a
Speaker 12: company like Disney is really really challenging because you know,
Speaker 12: you had a parks guy in Bob Chapek who was
Speaker 12: leading the company, and obviously that turned out not so
Speaker 12: well because you know, the creative side was completely neglected.
Speaker 12: And now you have Barbiger kind of coming back in
Speaker 12: and cleaning up all those relationships that were broken with
Speaker 12: the Hollywood community. So it's going to be interesting to
Speaker 12: see whom he really picks. Obviously, the two front runners
Speaker 12: here are Dana Walden, who is a very well known,
Speaker 12: very well respected TV executive. She has deep, deep ties
Speaker 12: in Hollywood. She actually came over from Fox. She has
Speaker 12: built a lot of credibility within the industry, but she
Speaker 12: has absolutely no experience with the parks business. And remember,
Speaker 12: parks brings in almost fifty five to sixty percent of
Speaker 12: Disney's profits, so this is critical to the future of
Speaker 12: the company. Josh Tomorrow on the other side, of course,
Speaker 12: he's an out and out parks guy, has absolutely no
Speaker 12: experience with creative so this is where it gets really
Speaker 12: really challenging. So it's going to be interesting to see
Speaker 12: whether Barbiger things having that creative element is more important
Speaker 12: or whether it's again going to be a parks pick
Speaker 12: like Bob Schapeck.
Speaker 2: So Githa, you know, probably the end of the day,
Speaker 2: only one person counts, and it's not James Gorman, It's
Speaker 2: not the board, it's Bob Eiger. What do you think
Speaker 2: he wants to do? Will he be ready to go
Speaker 2: when this happens.
Speaker 12: I think he will be ready to go. The question
Speaker 12: is does he want to stick with an internal candidate?
Speaker 12: I mean we you know you know this very well, Paul.
Speaker 12: He's been doing this now for a very very long time.
Speaker 12: You know, there was first, of course the Jay Rozzulo thing.
Speaker 12: Then of course there was Bob Japek. There's always kind
Speaker 12: of been this proclivity towards an internal candidate. But having
Speaker 12: said that, for the CFO, they did look outside with
Speaker 12: Hugh Johnston. So again it's it's going to be interesting
Speaker 12: to see what happens and what he really wants to prioritize.
Speaker 12: If he thinks this time around the creative element is
Speaker 12: going to be more important, or whether he wants more
Speaker 12: of an operations kind of person. But I think yes,
Speaker 12: he will, he will go. His contract ends in December
Speaker 12: twenty twenty sixth.
Speaker 5: Our thanks to GEETHA. Rogenathan Bloomberg Intelligence analysts on US media.
Speaker 2: This week we focused on a Bloomberg Big Takes we're
Speaker 2: entitled Cracked Skull, Broken Bones show Rivian's Plant Danger.
Speaker 5: You can find it on Bloomberg dot Com and The Terminal.
Speaker 5: The story looks at how interviews with factory workers show
Speaker 5: serious safety issues at Rivian's only US plant.
Speaker 2: For more, guest host Emily Grafao and I were joined
Speaker 2: by Kyle Porter, Bloomberg Industrials reporter. We first asked Kyle
Speaker 2: to discuss his findings at Rivian.
Speaker 11: They're really struggling to build a safety culture that they
Speaker 11: can be proud of. In short, there's been numerous incidents,
Speaker 11: some of which you start that in the headline, or
Speaker 11: those which we didn't put into the story. Or this,
Speaker 11: which I haven't been investigated by OSHA. If you talk
Speaker 11: to people out there in normal Illinois, a lot of
Speaker 11: them go to work every day because it's the best
Speaker 11: paid employer in the region, but they don't feel safe.
Speaker 2: So I mean again, they only have one plant here.
Speaker 2: I'm wondering, how did Rivian like if I were starting
Speaker 2: up a new hotalk cup and I'd just go over
Speaker 2: to Ford or GM or Stalantis steal a bunch of
Speaker 2: their factory people and say, hey, guys, start building my
Speaker 2: car here. How did Rivian do it? How is Rivian
Speaker 2: kind of I guess learning on the job if you will.
Speaker 11: Well, Rivian got a deal. The original the plan that
Speaker 11: they have they purchased the sixteen million dollars been abandoned
Speaker 11: by Mitsubishi when they were trying to make an electric
Speaker 11: car in the US, so it's sort of all fell
Speaker 11: into place. There were still workers from the time that
Speaker 11: it was owned by Mitsubishi that could come in and work,
Speaker 11: so they felt that they could get some muscle memory.
Speaker 11: And then at the start they you know, it was
Speaker 11: designed to be a very niche comaker, and then they
Speaker 11: got the Amazon deal. Things exploded and they had to
Speaker 11: ramp up.
Speaker 2: So what's the company responding, like, how they've kind of
Speaker 2: respond to this and do they have any policies in
Speaker 2: place to try to address this, because I'm just looking
Speaker 2: at another great graphic. Get you having a story that
Speaker 2: just shows a number of serious violation sited and Ruvin's
Speaker 2: at the top of that list.
Speaker 11: Yes it is, and as you pointed out, it's only
Speaker 11: one factory with eight thousand staff. Most of the companies
Speaker 11: on that list have multiple sites and tens of thousands
Speaker 11: of workers.
Speaker 2: I just want to know kind of have the companies
Speaker 2: responding here.
Speaker 11: They're responded in great detail to us. It's fair to say.
Speaker 11: They pointed out that most of the serious citations that
Speaker 11: they were issued were ultimately downgraded or in a couple
Speaker 11: of cases, dismiss which is true of most people that
Speaker 11: go through the citation process. And they pointed as to
Speaker 11: things that they've done to improve their safety processes. And indeed,
Speaker 11: Osher itself has commended the company for being open and
Speaker 11: looking to improve itself in safety.
Speaker 2: So is any materially different than say a Tesla factory
Speaker 2: or you know the other EV makers.
Speaker 11: Well, it currently only builds two types of vehicle. You
Speaker 11: have the Amazon truck, and then you have the R one,
Speaker 11: which comes into several bottles. It's a ne SUV in
Speaker 11: a truck, and they're looking to ramp that up with
Speaker 11: an expansion with the R two next year. So it's smaller.
Speaker 11: It's I think it's aiming to produce now. They actually
Speaker 11: cut their forecast this year about fifty thousand vehicles, so
Speaker 11: the scale of it is much smaller.
Speaker 2: Does Rivin have the money to invest in their plants
Speaker 2: into the safety because well, you look at the the
Speaker 2: stocks of some of these companies that are just so volatile,
Speaker 2: and I wonder if they even really have the money
Speaker 2: to invest in safety protocols.
Speaker 11: It's a question to ask the company that they say
Speaker 11: that they have a real commitment to safety and they
Speaker 11: are investing in it.
Speaker 2: Is it is making an evy?
Speaker 4: I don't know.
Speaker 2: It seems like they're not building an internal combustion engine,
Speaker 2: so they're not actually building an engine.
Speaker 7: There is it?
Speaker 2: I would think the process is a lot different. Is
Speaker 2: it any more or less dangerous as the industry said
Speaker 2: versus say, a you know, traditional guess assembly plant.
Speaker 11: Given that you're building this thing from scratch, you know,
Speaker 11: from the engine upwards there's a lot of process that
Speaker 11: has to be learned. There's a lot of things that
Speaker 11: need to be learned. Indeed, one of the things that
Speaker 11: the company was cited for was a movement vehicle that
Speaker 11: the engineers are designed and you know, wasn't safe for
Speaker 11: employees to use. They were telling employees to be careful
Speaker 11: until I she cited them and they figured out a
Speaker 11: way to do it differently. And you could replicate that
Speaker 11: across a thousand examples, from how you attach the doors
Speaker 11: to how you put the glass in. You could go
Speaker 11: on and on and on, and Rivian's had to work
Speaker 11: out new and different ways of doing all these things
Speaker 11: for these new bespoke vehicles.
Speaker 2: But the employees, I guess they are. Are they aware
Speaker 2: of the hazards when they take these jobs.
Speaker 11: That's a very good question. It's rapidly becoming a company town.
Speaker 11: Most of the people that we spoke to for the
Speaker 11: story are one of several family members who work at
Speaker 11: the plant. They all talk about how when the plant
Speaker 11: first opened, it was very small, very welcoming. You saw
Speaker 11: members of senior management. It felt like a family. And
Speaker 11: as production as ramp up, that's gone away and there's
Speaker 11: been a pressure just to produce.
Speaker 2: Our thanks to Kyle Porter, Bloomberg Industrials Reporter and.
Speaker 5: Coming up on the program, well look at where we
Speaker 5: stand with nuclear reactor technology.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
Speaker 2: b I go on the terminal, Paul Sweeney.
Speaker 5: And I'm normal. Dup, this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa, play Bloomberg eleven thirty M.
Speaker 5: Paul Sweeney and I'm Normalinda filling in for Alex Steele.
Speaker 5: We moved next to the telecommunications space. Both AT and
Speaker 5: T and Verizon both reported third quarter earnings this week.
Speaker 2: AT and T said it gained more mobile subscribers and
Speaker 2: analysts expected well steady focus on its fiber optic network
Speaker 2: and fixed wireless service.
Speaker 5: But Verizon reported quarterly revenue that missed analyst expectations. The
Speaker 5: company said it was weighed down by lackluster sales of
Speaker 5: hardware such as mobile phones.
Speaker 2: For more, guest host Emily Grafeo and I were joined
Speaker 2: by John Butler, Bloomberg Intelligence senior telecom analyst. We first
Speaker 2: asked John for his take on what he saw from
Speaker 2: AT and T this quarter.
Speaker 13: Mob Bell delivered It is what I would say. They
Speaker 13: actually had a very steady quarter. The one thing I've
Speaker 13: always liked about AT and T is they are the
Speaker 13: steady hand in the telecom space, unlike technology. For example,
Speaker 13: in telecom, I always say a millimeter is a mile.
Speaker 13: You know, if they edged out expectations on key metrics
Speaker 13: particularly and wireless and so, you know, steady as she
Speaker 13: goes really a good story. And it continues to be
Speaker 13: based on what I saw this quarter.
Speaker 9: So they gain more mobile subscribers in the third quarter
Speaker 9: than analysts expected. Where is that coming from? Is that
Speaker 9: people switching from a competitor to AT and T?
Speaker 13: Yeah, Emily, So what we're seeing in telecom is the
Speaker 13: market is largely saturated, So when you see gains at
Speaker 13: AT and T, it's typically coming from other carriers. We're
Speaker 13: also seeing a big migration coming out of the prepaid
Speaker 13: business as carriers like AT and T take their best
Speaker 13: credits out of that category and sort of elevate them
Speaker 13: into the low end of the post paid space. The
Speaker 13: other thing we're seeing our second line, So a lot
Speaker 13: of people are actually getting second cell phones or adding
Speaker 13: an additional line to their phone, and so we're getting
Speaker 13: what I termed second line growth as well. So it's
Speaker 13: really a combination of those factors that's at work there.
Speaker 2: So John kind of zoom out a little bit. Look
Speaker 2: at the wireless space in general. We've got you know, Verizon,
Speaker 2: AT and T, T Mobile. I mean, it's got three big,
Speaker 2: big players, and the pie is not growing a whole lot,
Speaker 2: I don't think. So how do investors think about where
Speaker 2: to lay their wireless that's here between those three names, So.
Speaker 13: Let me take it from the top. T Mobile continues
Speaker 13: to be the growth name in the space. They have
Speaker 13: I think, the strongest brand they've been out there with
Speaker 13: a consumer friendly brand. It's very splashy, it resonates well
Speaker 13: with the young people. When you look at those net
Speaker 13: news subscribers coming in every quarter. Team mobile just continues
Speaker 13: to be quartered and quarter out. As I said a
Speaker 13: moment Ago, AT and T is this steady hand. They're
Speaker 13: growing steadily, they're executing very well. And then at the
Speaker 13: low end of that spectrum is Verizon. They've had some trouble,
Speaker 13: they've been losing share in recent quarters. They're starting to
Speaker 13: make the turn. So it's going to be interesting to
Speaker 13: see the industry dynamics here as Verizon on the margin
Speaker 13: gets better I think in coming quarters. So we're watching that.
Speaker 13: But in terms of how the stack lays out, now,
Speaker 13: that's that's where it is.
Speaker 10: How are you thinking about AT and T and these
Speaker 10: other wireless providers versus the traditional telecom companies because we've
Speaker 10: learned in at least the AT and T earnings reports
Speaker 10: they're trying to get more into that traditional telecom business
Speaker 10: laying out broadband fiber. Is it working.
Speaker 13: Yeah, So if you look at the history of telecom,
Speaker 13: AT and T and for Verizon are the old regional
Speaker 13: bell operating companies. There are a number of them put together, actually,
Speaker 13: and so they both still have a wireline business, a
Speaker 13: fixed line network that they're using now to deliver and
Speaker 13: really grow in the broadband space, and that is causing
Speaker 13: convergence with the cable industry. Right the cable operators are
Speaker 13: now getting into wireless, and telcos are all leaning into
Speaker 13: broadband and having very good success building share and taking
Speaker 13: share from the cable guys. So that's going to continue
Speaker 13: to play out in coming quarters. And I think the
Speaker 13: competitive edge that the telcos have is a lot of
Speaker 13: their networks are built on fiber, and so fiber is
Speaker 13: the best long term solution for broadband. It's the highest
Speaker 13: capacity and it stands up very well to environmental pressures.
Speaker 2: How did the cable companies, then, John, compete? What's their
Speaker 2: competitive I guess strengths versus AT and T and Verizon.
Speaker 13: I think so great question, Paul. You know, on the
Speaker 13: broadband front, they're trying to upgrade their networks to what's
Speaker 13: called doss for it's going to give them the ability
Speaker 13: to offer the same upload and download speeds, which they
Speaker 13: can't do now. The download speeds are very fast, but
Speaker 13: the upload speeds are rather slow, so you don't get
Speaker 13: that the metrical service, but hopefully coming soon. And I
Speaker 13: think on the wireless side, they're capturing a lot of
Speaker 13: share at the low end of the market. They're coming
Speaker 13: in with some very compelling offers and it's working and
Speaker 13: they're taking share from the telecoms.
Speaker 5: And wireless to John Butler, Bloomberg Intelligence senior telecom analysts.
Speaker 2: Each week we look at research from Bloomberg and EF
Speaker 2: previously known as New Energy Finance.
Speaker 5: They're the team at Bloomberg that tracks and analyzes the
Speaker 5: energy transition from commodities to power, transport, industries, buildings, and
Speaker 5: agriculture sectors.
Speaker 14: This week we.
Speaker 2: Took a look at nuclear power and for the first
Speaker 2: time in seventeen years, there are no nuclear reactors under
Speaker 2: construction in the US.
Speaker 5: For more, Paul and I were joined by Chris Gadomski,
Speaker 5: be an EF lead nuclear analyst. We first asked Chris
Speaker 5: where we stand with nuclear reactor technology.
Speaker 14: Think about a football team or a basketball team and
Speaker 14: you're sitting your best player on the bench, and there's
Speaker 14: a lot of issues with regards to nuclear energy, but
Speaker 14: it is a very, very robust technology that can provide
Speaker 14: the twenty four to seven type of baseload power that
Speaker 14: many customers are looking for and interested in having. We
Speaker 14: are are for the first time since two thousand and
Speaker 14: seven without a reactor under construction, which is very, very discouraging,
Speaker 14: especially in the context of the fact that China has
Speaker 14: got something like twenty seven to twenty eight reactors under construction,
Speaker 14: and Russia is building twenty two or twenty three reactors
Speaker 14: around the world in six different countries. So what has
Speaker 14: happened to the US nuclear industry. We've kind of dropped
Speaker 14: the ball on large reactor construction. And there's a lot
Speaker 14: of hope and a lot of cheerleading that some of
Speaker 14: these advanced reactors are being developed by a whole slew
Speaker 14: of companies will carry the day and provide an alternative
Speaker 14: nuclear solution.
Speaker 5: Talk us through just how long it takes to license
Speaker 5: and build a lot of these larger reactors.
Speaker 14: So though the AP one thousand that was built in
Speaker 14: Vogel at a budget a cost of thirty four billion dollars,
Speaker 14: it took about fifteen years to license and build. And
Speaker 14: that's quite a long period of time. What utility executive
Speaker 14: is going to look around and say, listen, let me
Speaker 14: grab another one of these and spend that type of
Speaker 14: cash and wait that long, Especially since the new technologies
Speaker 14: intermittent renewables are coming on and they provide an alternatives,
Speaker 14: and there's a lot of change in the utility industry
Speaker 14: and the electric power industry, and hence it becomes a
Speaker 14: pretty risky proposition to place a bet billions of dollars
Speaker 14: for a technology that's not going to come and return
Speaker 14: an investment for several different years. And there's several examples
Speaker 14: not only in the US, but also in Europe where
Speaker 14: this is going on.
Speaker 2: Some of these smaller modular reactors that we hear about
Speaker 2: that kind of seems like a reasonable solution to me.
Speaker 2: I don't have to build this monster generator. I do
Speaker 2: something smaller for maybe lower cost, presumably cheaper all the
Speaker 2: kind of stuff.
Speaker 14: Well, the question is is that we anticipate that those
Speaker 14: reactors may be more expensive on a per kill a
Speaker 14: wide basis, but the risk that they present to a
Speaker 14: utility executive signing to invest this technology is less. You
Speaker 14: can build them sequentially so that you get a cash
Speaker 14: flow after the first one is up and running and
Speaker 14: now you're building the second one, as opposed to waiting
Speaker 14: the many years to get that. We anticipate that licensing
Speaker 14: and building an SMR and will take about five to
Speaker 14: six years, two years in the licensing process and three
Speaker 14: or four years optimistically for construction. We don't anticipate any
Speaker 14: of these advanced reactors coming online in North America until
Speaker 14: twenty thirty.
Speaker 10: How does this compare internationally.
Speaker 14: Well, the US is a leader in the development of
Speaker 14: advanced reactors and SMRs. There's only two SMRs that operate
Speaker 14: around the world, one in China, one in Russia, and
Speaker 14: only two under construction, one in China and one allegedly
Speaker 14: in Russia. They're supposed to break around soon. We have
Speaker 14: a very interesting development in Wyoming with terror Power developing
Speaker 14: or replacing a coal plant with an advanced reactor, which
Speaker 14: is very, very exciting. But they have not received a
Speaker 14: construction permit for that reactor yet and they're still doing
Speaker 14: preliminary work, and we anticipate that coming online around the
Speaker 14: twenty thirties.
Speaker 2: What's the feeling within the halls of Congress about this
Speaker 2: power source? Is there any support for nuclear power or
Speaker 2: is ideologically divided or where are we on this?
Speaker 14: It's certainly changing from being very very questioning and very
Speaker 14: very nervous about it to be more accepting of the
Speaker 14: technology because they realize the certain advantages of nuclear power.
Speaker 14: I live in a solar powered house in California. I
Speaker 14: get all of my electricity from solar energy. But when
Speaker 14: you think about powering a large city or so, you
Speaker 14: need something more than just intermittent renewables. Renewables are very
Speaker 14: good solution for part of the problem, but they're not
Speaker 14: a solution for the entire problem. So to displace some
Speaker 14: of the fossil fuel that we see being used now,
Speaker 14: we need to have a clean, carbon free source of
Speaker 14: nuclear power. SMRs have greater flexibility, easier to bring online,
Speaker 14: and hopefully they'll have a role to play in the future.
Speaker 10: Well, let's talk about AI.
Speaker 5: We think about data centers and the demand there, and
Speaker 5: when we think about nuclear supplying these data centers. I
Speaker 5: know you mentioned that this should be a pretty much
Speaker 5: a post twenty thirty phenomenon, apart from the revival of
Speaker 5: Three Mile Island by twenty twenty eight. Can you talk
Speaker 5: a bit more about that.
Speaker 14: Yes, several studies that suggest that there's a tremendous demand
Speaker 14: growth for nuclear power between now and twenty thirty. There
Speaker 14: are some questions will that growth continue after twenty thirty
Speaker 14: or will plateau for a while. I wish I could
Speaker 14: say that there'll be a solution from the advanced nuclear
Speaker 14: community before twenty thirty, but if it is, it's just
Speaker 14: going to be first of a kind one or two
Speaker 14: WHO reactors, and the challenge is developing a supply chain
Speaker 14: that can deliver a fleet of these advanced reactors to
Speaker 14: really respond to the growing demand for electricity from the
Speaker 14: data centers.
Speaker 5: Our thanks to Chris Kadomski, be any app lead Nuclear Analysts.
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify,
Speaker 1: and anywhere else you'll get your podcasts. Listen live each
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal