1 00:00:00,280 --> 00:00:11,360 Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,440 --> 00:00:13,520 Speaker 1: with Scarletfoo and Paul Sweeney. 3 00:00:13,640 --> 00:00:15,760 Speaker 2: How do you think the FED is looking at tariffs? 4 00:00:15,880 --> 00:00:17,120 Speaker 2: The uncertainty of terriffs. 5 00:00:17,160 --> 00:00:19,160 Speaker 3: Let's take a look at the sectors and how. 6 00:00:19,000 --> 00:00:21,280 Speaker 2: They performed a lot of investors getting whip saled every 7 00:00:21,320 --> 00:00:22,279 Speaker 2: day by news. 8 00:00:22,000 --> 00:00:26,160 Speaker 1: Events, breaking market headlines, and corporate news from across the globe. 9 00:00:26,160 --> 00:00:28,680 Speaker 3: Could we see a market disruption of market event? 10 00:00:28,840 --> 00:00:30,880 Speaker 2: So people just too exuberant out there? 11 00:00:31,000 --> 00:00:33,600 Speaker 3: You see some so called low quality stocks driving this 12 00:00:33,640 --> 00:00:34,440 Speaker 3: short term rally. 13 00:00:34,479 --> 00:00:39,240 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 14 00:00:39,440 --> 00:00:41,320 Speaker 1: YouTube and Bloomberg Originals. 15 00:00:42,000 --> 00:00:44,480 Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big 16 00:00:44,520 --> 00:00:46,960 Speaker 2: business stories impacting Wall Street and global markets. 17 00:00:47,000 --> 00:00:49,240 Speaker 3: Each and every week, we provide in depth research and 18 00:00:49,320 --> 00:00:51,199 Speaker 3: data on some of the two thousand companies and one 19 00:00:51,280 --> 00:00:53,920 Speaker 3: hundred and thirty industries are analysts cover worldwide. 20 00:00:54,080 --> 00:00:56,600 Speaker 2: Today, we'll look at how AMD landed a deal with 21 00:00:56,640 --> 00:00:59,680 Speaker 2: open Ai to build AI infrastructure. 22 00:00:59,440 --> 00:01:02,680 Speaker 3: Plus why Dell Technologies is roughly doubling its growth estimates 23 00:01:02,680 --> 00:01:04,639 Speaker 3: for sales and profit for the next two years. 24 00:01:04,920 --> 00:01:07,560 Speaker 2: First, we begin with a big deal in the banking sector. 25 00:01:07,680 --> 00:01:10,040 Speaker 3: This week, Fifth Third agreed to buy Coo America for 26 00:01:10,080 --> 00:01:12,840 Speaker 3: about ten point nine billion dollars in stock. It is 27 00:01:12,880 --> 00:01:14,839 Speaker 3: the largest US bank deal this year. 28 00:01:15,240 --> 00:01:17,400 Speaker 2: The deal will create the ninth largest bank in the 29 00:01:17,400 --> 00:01:19,559 Speaker 2: country with about two hundred and eighty eight billion dollars 30 00:01:19,560 --> 00:01:21,160 Speaker 2: in assets, according to the two companies. 31 00:01:21,240 --> 00:01:24,240 Speaker 3: So we called in Herman Chan Bloomberg Intelligence, senior analysts 32 00:01:24,240 --> 00:01:26,919 Speaker 3: for US regional banks, and we began by asking Herman 33 00:01:27,000 --> 00:01:28,119 Speaker 3: for his take on the deal. 34 00:01:28,560 --> 00:01:31,720 Speaker 4: Yeah, I think it's a win win for both. Comerica 35 00:01:31,760 --> 00:01:33,600 Speaker 4: has been sort of in the doldrums over the past 36 00:01:33,640 --> 00:01:37,440 Speaker 4: couple of years after the SBB debacle. It's taken some 37 00:01:37,480 --> 00:01:41,040 Speaker 4: long time to get it under its own footing, and 38 00:01:41,400 --> 00:01:46,080 Speaker 4: they've gotten a lot of agitated investors and activists pushing 39 00:01:46,080 --> 00:01:48,880 Speaker 4: for a sale, and this was a great outcome. On 40 00:01:48,960 --> 00:01:51,200 Speaker 4: the other hand, for Fifth Third, it's a great deal. 41 00:01:51,240 --> 00:01:54,840 Speaker 4: It moves them into growth growth yer markets in Texas 42 00:01:54,920 --> 00:02:00,360 Speaker 4: and California, supplements their Michigan presence and really build out 43 00:02:00,360 --> 00:02:03,800 Speaker 4: there their branching presence across the southeast and southwest. 44 00:02:04,400 --> 00:02:07,720 Speaker 3: So within the regional banking space, what does this deal 45 00:02:07,720 --> 00:02:10,160 Speaker 3: put pressure on? Who does this deal put pressure on 46 00:02:10,240 --> 00:02:11,400 Speaker 3: to make a move of their own. 47 00:02:11,560 --> 00:02:14,600 Speaker 4: Yeah, so that's a question. The follow on question like 48 00:02:14,600 --> 00:02:18,720 Speaker 4: who's next. So there are other banks that are operating 49 00:02:18,800 --> 00:02:21,840 Speaker 4: within the size of a fifth third that have also 50 00:02:21,880 --> 00:02:25,480 Speaker 4: done deals like a PNC and Huntington, and the others 51 00:02:25,520 --> 00:02:28,480 Speaker 4: that are still on the sidelines are banks like Regions 52 00:02:28,680 --> 00:02:32,520 Speaker 4: in the southeast, Key Corp in Ohio as well, and 53 00:02:32,720 --> 00:02:35,280 Speaker 4: M and T and Citizens in the northeast. So those 54 00:02:35,320 --> 00:02:37,600 Speaker 4: are the ones that probably are going to get asked. 55 00:02:37,600 --> 00:02:39,320 Speaker 4: A lot of questions on the three two earnings go 56 00:02:39,360 --> 00:02:39,919 Speaker 4: about M and A. 57 00:02:40,360 --> 00:02:42,840 Speaker 2: So what do we know about the Trumpet administration and 58 00:02:42,880 --> 00:02:45,680 Speaker 2: its view towards bank consolidation. Are they a pined on 59 00:02:45,720 --> 00:02:46,160 Speaker 2: this at all? 60 00:02:46,240 --> 00:02:46,440 Speaker 5: Yeah? 61 00:02:46,480 --> 00:02:49,360 Speaker 4: So we can see that these bank deals are getting 62 00:02:49,400 --> 00:02:52,880 Speaker 4: approved at much faster clips. So I mentioned Huntington earlier. 63 00:02:53,120 --> 00:02:55,919 Speaker 4: They're buying a bank in Texas named Vera tex and 64 00:02:56,720 --> 00:02:59,720 Speaker 4: it's going to take them about ninety eight days from 65 00:03:00,040 --> 00:03:04,800 Speaker 4: deal closed for merger announcements. And that contrasts with under 66 00:03:04,960 --> 00:03:08,240 Speaker 4: Biden administration, it's taken four hundred to six hundred days 67 00:03:08,280 --> 00:03:11,200 Speaker 4: for a large bank made deals. So these deals under 68 00:03:11,240 --> 00:03:14,480 Speaker 4: Trump are being fast tracked and it's really encouraging the 69 00:03:14,520 --> 00:03:17,760 Speaker 4: management teams to really go out there and search for deals. 70 00:03:18,639 --> 00:03:20,840 Speaker 3: So for so long, a lot of people had commented 71 00:03:20,880 --> 00:03:24,240 Speaker 3: that the US is overbanked. By one count there's almost 72 00:03:24,520 --> 00:03:28,360 Speaker 3: forty five hundred FDI and C insured banking institutions here. 73 00:03:28,560 --> 00:03:29,560 Speaker 3: Are we still overbanked? 74 00:03:29,600 --> 00:03:30,720 Speaker 2: Herman I would. 75 00:03:30,440 --> 00:03:34,360 Speaker 4: Say, so, there's a lot of competition these and that's 76 00:03:34,400 --> 00:03:37,400 Speaker 4: the reason why COO America is looking to sell because 77 00:03:37,440 --> 00:03:42,680 Speaker 4: they were lacking in the retail branch presence. They mostly 78 00:03:42,760 --> 00:03:48,840 Speaker 4: bank middle market commercial customers that are grades, but it 79 00:03:48,880 --> 00:03:52,480 Speaker 4: doesn't create the diversity that they needed during times of 80 00:03:52,520 --> 00:03:55,800 Speaker 4: stress like the SVB environments. And so that was a 81 00:03:55,880 --> 00:03:58,640 Speaker 4: lesson learned for a lot of the banking industry that 82 00:03:58,680 --> 00:04:02,920 Speaker 4: you need to diversify your deposit base. And one way 83 00:04:02,920 --> 00:04:05,760 Speaker 4: to diversify the cell to a larger organization. 84 00:04:05,520 --> 00:04:09,760 Speaker 3: Which segment of the banking industry is bloated, needs to 85 00:04:09,880 --> 00:04:10,720 Speaker 3: streamline the most. 86 00:04:10,960 --> 00:04:14,440 Speaker 4: Yeah, so there you mentioned forty five hundred banks, Like 87 00:04:15,160 --> 00:04:17,440 Speaker 4: does there need to be that many banks within the 88 00:04:17,560 --> 00:04:20,680 Speaker 4: United States? Probably not. They don't have the scale to 89 00:04:20,760 --> 00:04:24,600 Speaker 4: operate a retail branch presidence. They don't have the capabilities 90 00:04:24,640 --> 00:04:27,400 Speaker 4: on the fee side and the advisory side to really 91 00:04:27,400 --> 00:04:31,880 Speaker 4: help their customers on the commercial side. And you see 92 00:04:31,920 --> 00:04:35,239 Speaker 4: so much competition from not only larger banks, but also 93 00:04:35,320 --> 00:04:38,120 Speaker 4: the FinTechs that are just you know, biding at the 94 00:04:38,160 --> 00:04:41,679 Speaker 4: heels on the consumer side. So it's a really tough 95 00:04:41,760 --> 00:04:45,800 Speaker 4: operating environment and we expect more consolidation over the next 96 00:04:45,800 --> 00:04:46,440 Speaker 4: several years. 97 00:04:46,520 --> 00:04:48,960 Speaker 2: All right, riod of me this year. Why do banks 98 00:04:49,000 --> 00:04:52,760 Speaker 2: even have branches? I hep adding branches. I've been into 99 00:04:52,800 --> 00:04:53,599 Speaker 2: a branch. 100 00:04:53,320 --> 00:04:55,920 Speaker 3: In years across the street from Bloomberg headquarters. 101 00:04:56,279 --> 00:04:58,400 Speaker 5: City Groups City branch right across. 102 00:04:59,240 --> 00:05:02,640 Speaker 4: A lot of it marketing because and a lot of 103 00:05:02,640 --> 00:05:06,400 Speaker 4: it is scale. So for a bank like Fifth Third, 104 00:05:06,960 --> 00:05:10,200 Speaker 4: they're growing organically in the Southeast and that's been a 105 00:05:10,240 --> 00:05:12,839 Speaker 4: major growth driver for them. If you need a branch, 106 00:05:13,240 --> 00:05:15,919 Speaker 4: you don't need a branch, but you need the branch 107 00:05:16,120 --> 00:05:17,880 Speaker 4: for a marketing aspect, so you need. 108 00:05:17,800 --> 00:05:19,120 Speaker 2: To do big ability, right. 109 00:05:19,160 --> 00:05:23,160 Speaker 3: It's a big billboard, expensive billboard in markets. 110 00:05:22,800 --> 00:05:24,960 Speaker 4: Where you have a lot of foot traffic and higher 111 00:05:25,000 --> 00:05:28,360 Speaker 4: growth markets. So it's a big billboard and it's been 112 00:05:28,560 --> 00:05:31,200 Speaker 4: a proven growth driver for banks. But on the other hand, 113 00:05:31,480 --> 00:05:35,200 Speaker 4: branches are declining. So if you have critical mass and 114 00:05:35,240 --> 00:05:38,800 Speaker 4: scale in your existing markets, you can trim your branch 115 00:05:38,880 --> 00:05:42,960 Speaker 4: presence and not affect your depositors. But if you're entering 116 00:05:43,000 --> 00:05:45,360 Speaker 4: new markets, then opening new branches. 117 00:05:45,160 --> 00:05:45,480 Speaker 1: Is the way. 118 00:05:45,520 --> 00:05:47,320 Speaker 2: Do you think I could find my checkbook? 119 00:05:48,200 --> 00:05:50,599 Speaker 3: That raises a question, does a fintech that wants to 120 00:05:50,640 --> 00:05:53,039 Speaker 3: be a bank need to therefore have a retail presence? 121 00:05:53,080 --> 00:05:55,159 Speaker 3: Do they need to open up a branch also across 122 00:05:55,200 --> 00:05:56,200 Speaker 3: the street from our office? 123 00:05:56,400 --> 00:05:59,160 Speaker 4: So that's that's the beauty of the fintech models that 124 00:05:59,200 --> 00:06:03,039 Speaker 4: they're issueing the branches. It's not a requirement. It's a 125 00:06:03,080 --> 00:06:05,560 Speaker 4: lower cost to serve because you don't have the physical 126 00:06:05,600 --> 00:06:11,520 Speaker 4: retail presence, and it's one way to really compete effectively 127 00:06:11,600 --> 00:06:16,479 Speaker 4: with these with these legacy banks where you have a 128 00:06:16,680 --> 00:06:20,840 Speaker 4: really easy to use app and you you aren't burden 129 00:06:21,000 --> 00:06:23,680 Speaker 4: by this cost basis of owning the physical presence. 130 00:06:24,080 --> 00:06:25,880 Speaker 2: All right, So when we had a couple of little 131 00:06:25,920 --> 00:06:27,599 Speaker 2: blow ups in your world a couple of years ago, 132 00:06:27,760 --> 00:06:30,560 Speaker 2: I did I found this k r E the spider 133 00:06:30,680 --> 00:06:32,400 Speaker 2: S and P Regional banking ETF. 134 00:06:32,560 --> 00:06:32,960 Speaker 6: That's right. 135 00:06:33,839 --> 00:06:36,479 Speaker 2: How are you? How are the regional banks trading these days? Yeah? 136 00:06:36,560 --> 00:06:40,520 Speaker 4: So they're really doing all right. We're talking about price 137 00:06:40,560 --> 00:06:44,680 Speaker 4: the tangibles around one point five to one points times. 138 00:06:44,760 --> 00:06:48,039 Speaker 4: Is during the height of the weakest point during the 139 00:06:48,120 --> 00:06:51,880 Speaker 4: SBB debacle, it was less than one time. So they've 140 00:06:51,920 --> 00:06:55,560 Speaker 4: rebounded really nicely despite some of the uncertainty on the 141 00:06:55,600 --> 00:06:58,760 Speaker 4: economy and with tariffs and and so we've seen some 142 00:06:58,800 --> 00:07:01,520 Speaker 4: growth from them, especially on the commercial lending side that's 143 00:07:01,560 --> 00:07:04,000 Speaker 4: really helped grow their top line. 144 00:07:04,240 --> 00:07:06,880 Speaker 2: Our thanks to Hermit Chan Bloomberg Intelligence senior analysts for 145 00:07:06,960 --> 00:07:07,920 Speaker 2: US regional banks. 146 00:07:08,240 --> 00:07:10,520 Speaker 3: We move next to some news in the telecom space. 147 00:07:10,760 --> 00:07:13,880 Speaker 2: This week, for Rizon Communications named Dan Schulman as chief 148 00:07:13,880 --> 00:07:17,040 Speaker 2: executive officer, replacing Hans Vesperg. The goal was to boost 149 00:07:17,080 --> 00:07:18,640 Speaker 2: mobile subscriber growth and shares. 150 00:07:18,880 --> 00:07:21,880 Speaker 3: Schulman is the previous CEO of PayPal and brings financial 151 00:07:21,880 --> 00:07:25,240 Speaker 3: and operational leadership experience, as well as expertise in telecoms, 152 00:07:25,360 --> 00:07:28,480 Speaker 3: technology and finance. Vessberg will stay on for a year 153 00:07:28,520 --> 00:07:30,720 Speaker 3: to help insure a smooth transition for more. 154 00:07:30,760 --> 00:07:34,400 Speaker 2: I was joined by John Butler, Bloomberg Intelligence Senior telecom analysts. 155 00:07:34,600 --> 00:07:37,320 Speaker 2: First asked John if this change was expected at Verizon. 156 00:07:37,840 --> 00:07:40,040 Speaker 7: Not at all, Paul, I mean, you know, when you 157 00:07:40,120 --> 00:07:44,440 Speaker 7: think merger Monday. I've had a lot of busy Mondays lately. 158 00:07:45,000 --> 00:07:48,080 Speaker 7: But the last piece of news I expected was this 159 00:07:48,240 --> 00:07:52,280 Speaker 7: change in leadership at Verizon. The company had really been 160 00:07:52,480 --> 00:07:56,960 Speaker 7: sort of I guess prepping the head of the consumer business, 161 00:07:57,040 --> 00:08:01,760 Speaker 7: or grooming is a better word, Orian Sampath, who is 162 00:08:02,000 --> 00:08:06,240 Speaker 7: just a phenomenal talent in my opinion, and he's been 163 00:08:06,360 --> 00:08:09,360 Speaker 7: sort of pushed out there doing a lot of investor 164 00:08:09,480 --> 00:08:13,840 Speaker 7: conferences and giving the investment community the impression that he 165 00:08:14,040 --> 00:08:16,840 Speaker 7: was the next in line. So when the news broke 166 00:08:16,920 --> 00:08:20,240 Speaker 7: that Dan is taking over as CEO, it really surprised 167 00:08:20,280 --> 00:08:21,680 Speaker 7: a lot of people, including me. 168 00:08:22,440 --> 00:08:24,800 Speaker 2: So what's the company saying here? Why do you think 169 00:08:25,040 --> 00:08:28,800 Speaker 2: they chose this outsider versus somebody that, again an insider 170 00:08:28,840 --> 00:08:30,400 Speaker 2: that maybe the street thought was going to be the 171 00:08:30,400 --> 00:08:31,640 Speaker 2: next in line? 172 00:08:32,200 --> 00:08:35,599 Speaker 7: You know, I think for telecoms, all three of the majors, 173 00:08:35,679 --> 00:08:40,720 Speaker 7: the wireless business is slowing very rapidly on them. We're 174 00:08:40,760 --> 00:08:44,360 Speaker 7: seeing subscriber growth down a lot this year. There's a 175 00:08:44,400 --> 00:08:46,880 Speaker 7: lot of pressure on pricing, and I think the thought 176 00:08:47,040 --> 00:08:51,280 Speaker 7: is Dan Shulman used to be CEO of PayPal. He's 177 00:08:51,320 --> 00:08:56,440 Speaker 7: got experience at Amex in the consumer finance business, so 178 00:08:56,559 --> 00:08:59,800 Speaker 7: they're thinking in terms of how to monetize the hundred 179 00:08:59,840 --> 00:09:05,280 Speaker 7: and fifty million consumer relationships they have to move into adjacencies. 180 00:09:05,840 --> 00:09:08,640 Speaker 7: The naming of Shulman in my mind tells me they're 181 00:09:08,640 --> 00:09:12,200 Speaker 7: looking to tap the consumer finance market. You know, they've 182 00:09:12,200 --> 00:09:16,400 Speaker 7: already got a credit card business. I think it's probably 183 00:09:16,440 --> 00:09:19,000 Speaker 7: doing pretty well, but they're not actually in the loan 184 00:09:19,080 --> 00:09:23,359 Speaker 7: business there, but they're doing a lot of device financing, 185 00:09:23,559 --> 00:09:27,000 Speaker 7: and so I think the hope, maybe this is my speculation, 186 00:09:27,960 --> 00:09:31,360 Speaker 7: maybe that they can take that perhaps a step deeper 187 00:09:31,440 --> 00:09:35,760 Speaker 7: into the consumer finance market and maybe other adjacencies to 188 00:09:35,800 --> 00:09:38,920 Speaker 7: be able to monetize that base a little bit more 189 00:09:39,360 --> 00:09:42,400 Speaker 7: and diversify away from the slowdown and wireless. 190 00:09:42,920 --> 00:09:46,200 Speaker 2: I know Verizon they've kind of dabbled over the years, 191 00:09:46,200 --> 00:09:52,080 Speaker 2: and other businesses, purchasing AOL and Yahoo. So what's the 192 00:09:52,080 --> 00:09:54,280 Speaker 2: focus going forward here? Is it to try to just 193 00:09:55,160 --> 00:09:58,160 Speaker 2: manage the wireless business as you know, the decline in 194 00:09:58,160 --> 00:09:59,880 Speaker 2: the wireless business as best they can. 195 00:10:01,200 --> 00:10:04,720 Speaker 7: So again it's the strategy here, Paul, I think, is 196 00:10:04,760 --> 00:10:07,240 Speaker 7: to sort of build off that base that they have. 197 00:10:07,320 --> 00:10:12,080 Speaker 7: The wireless business is stable, it's not going anywhere. It's 198 00:10:12,960 --> 00:10:17,280 Speaker 7: typically a GDP plus business. Again, we're seeing a slowdown now, 199 00:10:17,880 --> 00:10:21,360 Speaker 7: so it could move down to a GDP like growth rate. 200 00:10:22,120 --> 00:10:25,280 Speaker 7: But again it's all about extensions. So all three of 201 00:10:25,320 --> 00:10:30,160 Speaker 7: the majors here are pushing hard into consumer broadband. They're 202 00:10:30,200 --> 00:10:32,960 Speaker 7: doing very well there, both in the fiber and the 203 00:10:33,000 --> 00:10:37,760 Speaker 7: fixed wireless access business, but even that business is starting 204 00:10:37,800 --> 00:10:40,720 Speaker 7: to mature a bit as it saturates here in the US. 205 00:10:40,760 --> 00:10:44,400 Speaker 7: So the question becomes what's next, And maybe the what's 206 00:10:44,520 --> 00:10:48,800 Speaker 7: next could be consumer finance. If you look at T Mobile, 207 00:10:48,840 --> 00:10:53,480 Speaker 7: they've tapped the outdoor advertising market, which actually is growing 208 00:10:53,520 --> 00:10:58,760 Speaker 7: double digit. I never would have guessed, but the thought is, hey, 209 00:10:58,880 --> 00:11:02,440 Speaker 7: is people carry around these phones, we know where they are. 210 00:11:02,600 --> 00:11:06,480 Speaker 7: Perhaps we can leverage that and come up with very 211 00:11:06,520 --> 00:11:12,600 Speaker 7: innovative ways of increasing eyeballs on our outdoor advertising. So 212 00:11:12,640 --> 00:11:15,920 Speaker 7: I think they're looking for that type of creative thinking 213 00:11:16,600 --> 00:11:19,560 Speaker 7: to come up with new ways of generating growth. And 214 00:11:19,640 --> 00:11:23,080 Speaker 7: again you're trying to leverage that huge core base of 215 00:11:23,160 --> 00:11:25,319 Speaker 7: wireless subs that you have just. 216 00:11:25,280 --> 00:11:27,840 Speaker 2: Been at their balance sheet, John, this is a this 217 00:11:27,920 --> 00:11:30,959 Speaker 2: is company. Verizon's got one hundred and seventy billion dollars 218 00:11:31,360 --> 00:11:34,320 Speaker 2: of total debt there, how's the How does the market 219 00:11:34,320 --> 00:11:35,400 Speaker 2: feel about their balance sheet. 220 00:11:36,520 --> 00:11:41,200 Speaker 7: So I think of the Big three, Verizon is probably 221 00:11:41,679 --> 00:11:44,160 Speaker 7: at a point where they want to be in terms 222 00:11:44,200 --> 00:11:48,080 Speaker 7: of financing the business. Can they load on a bunch 223 00:11:48,160 --> 00:11:51,959 Speaker 7: more debt? It's it's hard to say. I'm going to 224 00:11:52,040 --> 00:11:55,040 Speaker 7: defer to our credit at les for that, Steve Flynn, 225 00:11:55,760 --> 00:12:00,640 Speaker 7: But I don't view their ability to finance new ventures 226 00:12:00,679 --> 00:12:04,000 Speaker 7: as an issue here at all. It's a very cash 227 00:12:04,120 --> 00:12:07,839 Speaker 7: rich business wireless that is, and you know, I think 228 00:12:07,960 --> 00:12:12,040 Speaker 7: that will allow Verizon to bankroll any of the new 229 00:12:12,120 --> 00:12:14,800 Speaker 7: ventures they plan to push into from here. 230 00:12:15,080 --> 00:12:17,840 Speaker 2: Certainly pro shareholders. Is six point six percent dividend yield? 231 00:12:17,880 --> 00:12:18,520 Speaker 2: Is that safe? 232 00:12:19,880 --> 00:12:22,480 Speaker 7: I think it is safe. That's a good question. I 233 00:12:22,559 --> 00:12:26,840 Speaker 7: think Verizon, of the Big three, really sort of gets 234 00:12:26,880 --> 00:12:29,680 Speaker 7: it when it comes to the importance of the dividend 235 00:12:29,760 --> 00:12:33,680 Speaker 7: to the investment community. There's a lot of telecoms out 236 00:12:33,679 --> 00:12:36,640 Speaker 7: there at and T included that have cut the dividend 237 00:12:36,679 --> 00:12:39,679 Speaker 7: in the past and learned the hard way that that 238 00:12:39,840 --> 00:12:42,719 Speaker 7: really I call it the third rail of telecom. I mean, 239 00:12:42,760 --> 00:12:45,840 Speaker 7: you do not want to cut the dividend yep. So 240 00:12:46,120 --> 00:12:49,120 Speaker 7: my call here is that I think the dividend is safe. 241 00:12:49,200 --> 00:12:52,840 Speaker 3: Yes, are Thanks to John Butler, Bloomberg Intelligence senior telecom 242 00:12:52,880 --> 00:12:55,680 Speaker 3: analyst coming up a look at how IBM is planning 243 00:12:55,720 --> 00:12:56,920 Speaker 3: to integrate AI tech. 244 00:12:57,440 --> 00:13:00,320 Speaker 2: Listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth 245 00:13:00,320 --> 00:13:02,679 Speaker 2: research and data on two thousand companies and one hundred 246 00:13:02,679 --> 00:13:03,400 Speaker 2: and thirty industries. 247 00:13:03,480 --> 00:13:06,559 Speaker 3: You can access Bloomberg Intelligence via big on the terminal. 248 00:13:06,640 --> 00:13:07,640 Speaker 3: I'm Scarlet Foo. 249 00:13:07,640 --> 00:13:09,880 Speaker 2: And I'm Paul Sweeney. This is Bloomberg. 250 00:13:13,960 --> 00:13:18,480 Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 251 00:13:18,800 --> 00:13:20,120 Speaker 1: on Bloomberg Radio. 252 00:13:20,760 --> 00:13:22,680 Speaker 2: We moved to some news in the tech space. 253 00:13:22,840 --> 00:13:25,400 Speaker 3: This week. Advanced micro Devices landed a deal with open 254 00:13:25,400 --> 00:13:28,360 Speaker 3: Ai to build AI infrastructure, and this gives the chip 255 00:13:28,400 --> 00:13:31,000 Speaker 3: maker AMD a chance to challenge in VideA in the 256 00:13:31,040 --> 00:13:32,240 Speaker 3: AI computing industry. 257 00:13:32,440 --> 00:13:36,120 Speaker 2: Open Ai will deploy AMD graphics processing units over multiple years. 258 00:13:36,360 --> 00:13:38,440 Speaker 2: The deal also sets the stage for open ai to 259 00:13:38,440 --> 00:13:40,480 Speaker 2: acquire a large steak in the chip maker, with the 260 00:13:40,520 --> 00:13:42,640 Speaker 2: ability to buy as many as one hundred and sixty 261 00:13:42,720 --> 00:13:43,840 Speaker 2: million shares of AMD. 262 00:13:44,240 --> 00:13:46,440 Speaker 3: So we asked for contacts from Ed Ludlow, b Tech 263 00:13:46,520 --> 00:13:48,760 Speaker 3: co anchor. We first asked ed what he makes of 264 00:13:48,800 --> 00:13:49,440 Speaker 3: this week's deal. 265 00:13:49,960 --> 00:13:52,800 Speaker 8: The specifics of the deal a really important. What is 266 00:13:53,280 --> 00:13:56,160 Speaker 8: open ai going to use AMD's technology for it's going 267 00:13:56,200 --> 00:13:58,720 Speaker 8: to use it for inference, in other words, running the 268 00:13:58,760 --> 00:14:02,600 Speaker 8: models that already exist, not training them. It is six 269 00:14:02,640 --> 00:14:07,440 Speaker 8: gigawatts of capacity. The reason that that figure is critical 270 00:14:07,520 --> 00:14:10,360 Speaker 8: is that it equates to the peak electricity demand of 271 00:14:10,640 --> 00:14:13,920 Speaker 8: most major US cities. Like these are huge numbers, as 272 00:14:13,920 --> 00:14:17,960 Speaker 8: you say, but it just speaks to what's happening to 273 00:14:18,040 --> 00:14:20,760 Speaker 8: the mind of the participants in the industry, which is 274 00:14:20,840 --> 00:14:26,000 Speaker 8: they will need this capacity. You guys are using words 275 00:14:26,040 --> 00:14:29,320 Speaker 8: like top and bubble, and I think that's completely fair. 276 00:14:29,400 --> 00:14:31,800 Speaker 8: Maybe you saw my column on the debt role that 277 00:14:32,440 --> 00:14:36,720 Speaker 8: in what's happening. But I would say that AMD has 278 00:14:36,800 --> 00:14:40,600 Speaker 8: done something interesting here which is different to what Nvidia did, 279 00:14:40,960 --> 00:14:45,800 Speaker 8: which is they will issue stock two open Ai AMD 280 00:14:45,920 --> 00:14:50,240 Speaker 8: shares going to open Ai, but only once open Ai 281 00:14:50,360 --> 00:14:53,720 Speaker 8: is spent some money and actually built some stuff. So 282 00:14:53,760 --> 00:14:55,280 Speaker 8: where's open Ai going to get the money? 283 00:14:56,440 --> 00:14:58,960 Speaker 3: Well, that's why Sam Allman has been traveling the world 284 00:14:59,080 --> 00:15:02,640 Speaker 3: meeting with all kinds of investors trying to get some funding. 285 00:15:02,960 --> 00:15:05,720 Speaker 3: You said the specifics matter, ed, but we don't know 286 00:15:06,280 --> 00:15:10,040 Speaker 3: how much this partnership, this deal is worth beyond the 287 00:15:10,160 --> 00:15:12,600 Speaker 3: very generic tens of billions of dollars, right, that could 288 00:15:12,640 --> 00:15:15,000 Speaker 3: be ten billion dollars, that could be ninety nine billion dollars. 289 00:15:15,200 --> 00:15:18,600 Speaker 8: Yes, that's correct. I mean AMDCFO framed it as being 290 00:15:18,720 --> 00:15:22,240 Speaker 8: tens of billion dollars of revenue opportunity. But that's why 291 00:15:22,560 --> 00:15:24,760 Speaker 8: I think the specifics of the terms I've made a 292 00:15:24,760 --> 00:15:29,520 Speaker 8: careful examination of them are really important understand versus what 293 00:15:29,640 --> 00:15:32,800 Speaker 8: Nvidia did with open Ai. So Nvidia said it was 294 00:15:32,840 --> 00:15:36,200 Speaker 8: going to invest one hundred billion dollars into open Ai. 295 00:15:36,760 --> 00:15:39,160 Speaker 8: We don't even know if that was cash or chips 296 00:15:39,200 --> 00:15:43,120 Speaker 8: in lieu of cash, but basically in Nvidia would get 297 00:15:43,120 --> 00:15:46,160 Speaker 8: some equity in open Ai in return. In this instance 298 00:15:46,240 --> 00:15:50,200 Speaker 8: AMD and open Ai. Open ai is getting AMD shares, 299 00:15:50,600 --> 00:15:54,520 Speaker 8: but they are deliverable in tranches against s milestones, which 300 00:15:54,560 --> 00:15:57,480 Speaker 8: relate to literally building the data centers. So for each 301 00:15:57,520 --> 00:16:00,080 Speaker 8: gig of wat of capacity that comes online, am you 302 00:16:00,080 --> 00:16:02,520 Speaker 8: would then say, here is this tranch of stock. And 303 00:16:02,560 --> 00:16:06,200 Speaker 8: that's why I'm saying focus on the open ai obligation here. 304 00:16:06,680 --> 00:16:09,800 Speaker 8: They need actual money to dig up the dirt, to 305 00:16:09,840 --> 00:16:12,120 Speaker 8: put the foundations in, get the data center up, and 306 00:16:12,120 --> 00:16:15,440 Speaker 8: put the servers in before any of this stock comes 307 00:16:15,440 --> 00:16:15,960 Speaker 8: into play. 308 00:16:16,320 --> 00:16:19,000 Speaker 2: Our thanks to ed Lovelow be Tech co anchor Staying 309 00:16:19,040 --> 00:16:19,440 Speaker 2: with tech. 310 00:16:19,560 --> 00:16:22,080 Speaker 3: This week, the tech company IBM announced a plan to 311 00:16:22,080 --> 00:16:25,800 Speaker 3: integrate anthropics AI technologies into its software solutions. 312 00:16:26,000 --> 00:16:28,080 Speaker 2: IBM said it will make the startups claud family of 313 00:16:28,160 --> 00:16:31,320 Speaker 2: large language models accessible for its clients. Shares the IBM 314 00:16:31,520 --> 00:16:32,800 Speaker 2: jump after the news. 315 00:16:32,560 --> 00:16:34,360 Speaker 3: So for more, we were joined by Ana ag Rana, 316 00:16:34,400 --> 00:16:38,120 Speaker 3: Bloomberg Intelligence technology analyst. We began by asking anag how 317 00:16:38,160 --> 00:16:40,160 Speaker 3: he evaluates this latest partnership. 318 00:16:40,480 --> 00:16:42,520 Speaker 9: See, when you come to a company like IBM, I 319 00:16:42,520 --> 00:16:44,520 Speaker 9: think they have done a very good job of being 320 00:16:44,560 --> 00:16:48,120 Speaker 9: open and partnering with other vendors. I think the acquisition 321 00:16:48,160 --> 00:16:50,240 Speaker 9: of red Hat was the first such example a few 322 00:16:50,320 --> 00:16:52,840 Speaker 9: years ago, and frankly speaking, the company has turned around 323 00:16:52,880 --> 00:16:55,120 Speaker 9: quite a bit. Now it's more of a software company 324 00:16:55,120 --> 00:16:58,280 Speaker 9: than it is a service order hardware company. IBM still 325 00:16:58,320 --> 00:17:02,160 Speaker 9: has a lot of footprint in legacy companies and their 326 00:17:02,280 --> 00:17:06,600 Speaker 9: internal infrastructure, whether that's a regulated entity, whether that's you know, 327 00:17:06,640 --> 00:17:10,399 Speaker 9: an on premise software. What they're basically saying is for 328 00:17:10,520 --> 00:17:13,680 Speaker 9: these companies who want to add more AI capabilities into 329 00:17:13,720 --> 00:17:16,120 Speaker 9: their infrastructure, we're going to use one of the best 330 00:17:16,160 --> 00:17:19,600 Speaker 9: models that's out there, and that's anthropic. They're not, you know, 331 00:17:19,720 --> 00:17:23,560 Speaker 9: just solely dependent on IBM's own internal models. But you know, 332 00:17:23,600 --> 00:17:25,960 Speaker 9: we see more and more of that happening that companies 333 00:17:26,040 --> 00:17:28,800 Speaker 9: like IBM and other services companies will go out and 334 00:17:29,200 --> 00:17:31,879 Speaker 9: partner with you know, anthropic with open ai which M 335 00:17:31,920 --> 00:17:36,160 Speaker 9: and I and give more enterprise capabilities to to vendors, 336 00:17:36,400 --> 00:17:37,000 Speaker 9: to companies. 337 00:17:37,000 --> 00:17:41,040 Speaker 2: Basically, how does anthropic differ from open ai if at all? 338 00:17:41,359 --> 00:17:43,880 Speaker 9: That's a very good question, Pauland right now what we're 339 00:17:43,880 --> 00:17:46,320 Speaker 9: seeing is entropy is pushing more and more stuff on 340 00:17:46,359 --> 00:17:50,040 Speaker 9: the corporate side or the enterprise side, on open Ai side. 341 00:17:50,040 --> 00:17:53,000 Speaker 9: You know, their core businesses still chat GPT, which is 342 00:17:53,040 --> 00:17:55,520 Speaker 9: the app, and that's more of a consumer app right now. 343 00:17:55,720 --> 00:17:58,280 Speaker 9: And the question is, you know which one of the 344 00:17:58,320 --> 00:18:01,239 Speaker 9: models will somebody use, Whether if you are let's say, 345 00:18:01,280 --> 00:18:03,400 Speaker 9: a JP Morgan or a City Corp, you know, would 346 00:18:03,400 --> 00:18:05,280 Speaker 9: you be going to be using one of their models 347 00:18:05,359 --> 00:18:07,919 Speaker 9: or an open source model. I think they're going to 348 00:18:07,920 --> 00:18:11,560 Speaker 9: be using all of the models. What anthropic relationship with 349 00:18:11,640 --> 00:18:14,280 Speaker 9: IBM does. It actually helps them to spread the word 350 00:18:14,320 --> 00:18:17,400 Speaker 9: out across their entire customer base. So if you are 351 00:18:17,400 --> 00:18:20,000 Speaker 9: trying to get more coding done, for example, in an 352 00:18:20,000 --> 00:18:22,960 Speaker 9: IT department and you have all the legacy products that 353 00:18:23,040 --> 00:18:26,000 Speaker 9: they're now you can use you know, an AI model 354 00:18:26,080 --> 00:18:28,920 Speaker 9: from Anthropic rather than using you know, whatever tools you 355 00:18:29,000 --> 00:18:29,600 Speaker 9: had before. 356 00:18:29,840 --> 00:18:33,240 Speaker 3: Okay, so it makes sense why Anthropic is a good 357 00:18:33,240 --> 00:18:36,359 Speaker 3: fit for IBM or how it's going to incorporate Anthropic 358 00:18:36,359 --> 00:18:40,480 Speaker 3: into IT software. But what does IBM specifically offer Anthropic? 359 00:18:40,560 --> 00:18:44,159 Speaker 3: What access does IBM have that Anthropic wants and needs. 360 00:18:45,440 --> 00:18:48,000 Speaker 9: That's another excellent question. And in this case you're looking 361 00:18:48,040 --> 00:18:51,640 Speaker 9: at IBM's entire customer base. IBM has a very large 362 00:18:51,640 --> 00:18:55,400 Speaker 9: services business or IBM consulting. These consultant will go out 363 00:18:55,440 --> 00:18:58,960 Speaker 9: and sell Anthropic software into the enterprises and say, hey, bank, 364 00:18:59,080 --> 00:19:02,080 Speaker 9: let me help you to you know, automate this particular 365 00:19:02,160 --> 00:19:04,639 Speaker 9: process and you can use it with this software. It 366 00:19:04,760 --> 00:19:07,520 Speaker 9: drives their consulting business and it also helps out their 367 00:19:07,560 --> 00:19:10,160 Speaker 9: software business, which is fairly popular. 368 00:19:10,240 --> 00:19:13,920 Speaker 2: Right now, IBM hitting all time high on a rug. 369 00:19:14,200 --> 00:19:16,119 Speaker 2: This stock has found that a new life has. 370 00:19:15,960 --> 00:19:18,600 Speaker 9: It absolutely and this is something that we've been saying 371 00:19:18,640 --> 00:19:21,119 Speaker 9: it for almost five years now that you know, the 372 00:19:21,680 --> 00:19:25,240 Speaker 9: acquisition of red Hat completely changed it. You know, if 373 00:19:25,280 --> 00:19:27,240 Speaker 9: you go back and look at some of the comments 374 00:19:27,240 --> 00:19:29,680 Speaker 9: we've made on TV about IBM. Prior to red Hat, 375 00:19:29,880 --> 00:19:32,000 Speaker 9: it was a very closed company. It only wanted to 376 00:19:32,000 --> 00:19:34,400 Speaker 9: sell their own products to people and was not very 377 00:19:34,480 --> 00:19:36,600 Speaker 9: keen on embracing you know, what I would say is 378 00:19:36,600 --> 00:19:40,080 Speaker 9: open source. With the acquisition of red Hat and the 379 00:19:40,119 --> 00:19:42,080 Speaker 9: company saying, you know what, red Hat can work with 380 00:19:42,160 --> 00:19:44,640 Speaker 9: any cloud provider, I think that was the biggest difference 381 00:19:44,680 --> 00:19:48,119 Speaker 9: to me was it allowed red Hat to work with 382 00:19:48,240 --> 00:19:53,159 Speaker 9: companies but based on Amazon Web Services or Microsoft, so 383 00:19:53,200 --> 00:19:55,600 Speaker 9: they were not just pushing their own cloud products, and 384 00:19:55,640 --> 00:19:58,639 Speaker 9: I think that really made a difference. Their software business 385 00:19:58,680 --> 00:20:01,800 Speaker 9: has been doing so well competitively to the rest of 386 00:20:01,840 --> 00:20:03,800 Speaker 9: the world, and I think that's where you see the 387 00:20:03,800 --> 00:20:06,760 Speaker 9: market validation that this is the right strategy for them. 388 00:20:06,880 --> 00:20:09,920 Speaker 2: Our thanks to Ana rog Rana Bloomberg Intelligence technology analysts. 389 00:20:10,160 --> 00:20:12,080 Speaker 3: We moved to some more news in the IT hardware 390 00:20:12,119 --> 00:20:13,920 Speaker 3: space this week and it's investor day. 391 00:20:13,920 --> 00:20:17,040 Speaker 2: Dell Technologies roughly doubled its growth estimates for sales and 392 00:20:17,080 --> 00:20:18,320 Speaker 2: profit for the next two years. 393 00:20:18,400 --> 00:20:21,640 Speaker 3: Dell also said demand for artificial intelligence products will extend 394 00:20:21,680 --> 00:20:24,080 Speaker 3: those higher projections at least through twenty thirty. 395 00:20:24,280 --> 00:20:27,560 Speaker 2: Separately, Cisco system says it is releasing a new chip 396 00:20:27,720 --> 00:20:31,360 Speaker 2: networking system to connect AIDATA centers across hundreds of miles. 397 00:20:31,440 --> 00:20:33,239 Speaker 3: So for more on both of these companies, we were 398 00:20:33,280 --> 00:20:36,800 Speaker 3: joined by Woujin Hoo Bloomberg Intelligence senior technology analysts. We 399 00:20:36,880 --> 00:20:39,320 Speaker 3: began by asking Woods should break down what we heard 400 00:20:39,359 --> 00:20:39,720 Speaker 3: from Dell. 401 00:20:40,200 --> 00:20:42,320 Speaker 5: This is a very seasoned management team. They have a 402 00:20:42,359 --> 00:20:45,480 Speaker 5: tendency to give out three to four year guidance plans. 403 00:20:45,960 --> 00:20:50,720 Speaker 5: I think the surprise here is what's driving that seventy 404 00:20:50,840 --> 00:20:54,280 Speaker 5: nine percent growth outlook for from twenty twenty six to 405 00:20:54,320 --> 00:20:57,000 Speaker 5: twenty twenty of twenty thirty, and it's going to be 406 00:20:57,040 --> 00:20:59,399 Speaker 5: AI servers, right, And one of the things that they 407 00:20:59,400 --> 00:21:01,359 Speaker 5: said at the Animal day that AI servers are going 408 00:21:01,440 --> 00:21:03,760 Speaker 5: to grow at a twenty to twenty five percent compounded rate. 409 00:21:04,800 --> 00:21:07,919 Speaker 5: I think there was some skepticism there heading into the 410 00:21:07,960 --> 00:21:11,080 Speaker 5: print in terms of is there an AI bubble? And 411 00:21:11,119 --> 00:21:14,320 Speaker 5: by laying out a twenty to twenty five percent AI 412 00:21:14,440 --> 00:21:18,479 Speaker 5: server growth going through twenty thirty off of already high numbers, 413 00:21:18,800 --> 00:21:21,200 Speaker 5: shows that there is some durability the aiserver demand. 414 00:21:21,880 --> 00:21:24,440 Speaker 2: So when you get an analyst meaning together, it's a 415 00:21:24,440 --> 00:21:26,040 Speaker 2: big day for a company. They put a lot of 416 00:21:26,040 --> 00:21:28,640 Speaker 2: time and effort in putting getting their senior management together, 417 00:21:28,680 --> 00:21:32,080 Speaker 2: putting together presentations, presenting a vision here. What were some 418 00:21:32,119 --> 00:21:33,840 Speaker 2: of the two or three takeaways from you from this 419 00:21:34,200 --> 00:21:34,840 Speaker 2: investor date. 420 00:21:35,160 --> 00:21:38,720 Speaker 5: Yeah, so, so the one highlight here is the a 421 00:21:38,960 --> 00:21:43,560 Speaker 5: server demand, the durability of a server demand. But more importantly, 422 00:21:44,800 --> 00:21:47,320 Speaker 5: and we talk about this all the time, you know, Paul, 423 00:21:47,760 --> 00:21:50,639 Speaker 5: It's about earnings and cash flow, right And at the 424 00:21:50,760 --> 00:21:53,600 Speaker 5: end of the day, we're talking about EPs growth about 425 00:21:53,600 --> 00:21:56,280 Speaker 5: fifteen percent, and how do we get to that fifteen percent? 426 00:21:56,600 --> 00:22:00,760 Speaker 5: We're talking about eight percent of the sales growth dropping 427 00:22:00,760 --> 00:22:03,320 Speaker 5: down to the bottom line. But given all that cash generation, 428 00:22:03,480 --> 00:22:05,440 Speaker 5: there's going to be a fair amount of capital returns 429 00:22:05,720 --> 00:22:08,280 Speaker 5: through buybacks, so you're going to get a lift on 430 00:22:08,320 --> 00:22:10,640 Speaker 5: EPs there. So share holders are going to be happy 431 00:22:11,760 --> 00:22:15,720 Speaker 5: from an EPs standpoint. We're already seeing that from evaluation standpoint, 432 00:22:16,200 --> 00:22:19,520 Speaker 5: because it is lifting from an eight to ten times 433 00:22:20,240 --> 00:22:23,080 Speaker 5: PE to about fifteen times growth, which makes it into 434 00:22:23,119 --> 00:22:25,000 Speaker 5: a one times peg oo gien. 435 00:22:25,080 --> 00:22:27,560 Speaker 3: Another story that we're tracking here and that I've been 436 00:22:27,560 --> 00:22:32,080 Speaker 3: fascinated by, is this idea of legacy tech companies finding 437 00:22:32,280 --> 00:22:35,800 Speaker 3: their feed in this AI wave, whether it's Oracle, whether 438 00:22:35,840 --> 00:22:39,080 Speaker 3: it's Dell, and now Cisco as well. Cisco is releasing 439 00:22:39,080 --> 00:22:42,920 Speaker 3: a new chip and networking system to connect AI data centers, 440 00:22:43,160 --> 00:22:45,159 Speaker 3: and this is a move that pretty much puts it 441 00:22:45,240 --> 00:22:49,160 Speaker 3: in more direct competition with Broadcom. How big of an 442 00:22:49,200 --> 00:22:52,200 Speaker 3: opportunity is this for Cisco? And should Broadcome be worried? 443 00:22:53,359 --> 00:22:57,240 Speaker 5: Yeah, so we published and react, and essentially I don't 444 00:22:57,240 --> 00:22:59,879 Speaker 5: think Broadcom should be fully worried. There's a couple of 445 00:22:59,880 --> 00:23:02,639 Speaker 5: thing that I'll say, right, Cisco is actually one of 446 00:23:02,720 --> 00:23:08,040 Speaker 5: the biggest chip networking chip manufacturers globally, but more for 447 00:23:08,160 --> 00:23:12,359 Speaker 5: their legacy enterprise IT chips. Right, they produce their own 448 00:23:12,440 --> 00:23:15,879 Speaker 5: chips that powers their own networking gear. They're fairly newer 449 00:23:15,920 --> 00:23:20,800 Speaker 5: to the game in the networking chip side. From a 450 00:23:20,840 --> 00:23:24,639 Speaker 5: revenue standpoint, it's really not a big driver, but it 451 00:23:24,680 --> 00:23:27,280 Speaker 5: may be able to push more boxes. A couple of 452 00:23:27,320 --> 00:23:30,320 Speaker 5: things that I'll say, They did about one billion dollars 453 00:23:30,320 --> 00:23:34,320 Speaker 5: in AI back end revenue, but to put that into context, 454 00:23:35,280 --> 00:23:37,199 Speaker 5: you know they're doing about fifty five to fifty six 455 00:23:37,280 --> 00:23:41,080 Speaker 5: billion dollars in total sales. So you know, from an 456 00:23:41,080 --> 00:23:44,480 Speaker 5: overall percentage of AI as an overall percentage of sales, 457 00:23:44,480 --> 00:23:46,399 Speaker 5: it's still about two to three percent of total sales. 458 00:23:47,040 --> 00:23:50,080 Speaker 5: Are they going to challenge Broadcom? I doubt it, but 459 00:23:50,119 --> 00:23:52,960 Speaker 5: I do think there'll be a second source to the 460 00:23:53,000 --> 00:23:57,040 Speaker 5: cloud providers versus Broadcom. 461 00:23:57,160 --> 00:24:00,480 Speaker 2: Which in your coverage area? What's your best I play? 462 00:24:00,520 --> 00:24:02,560 Speaker 2: Because I'm sure you get that call from clients all 463 00:24:02,600 --> 00:24:03,240 Speaker 2: the time. 464 00:24:04,240 --> 00:24:08,919 Speaker 5: You know, I mean I have a handful. Dell was one. 465 00:24:10,640 --> 00:24:13,200 Speaker 5: You know. Hp is another one to take a look 466 00:24:13,240 --> 00:24:16,280 Speaker 5: out for. They have an analyst day next week. But 467 00:24:16,560 --> 00:24:19,119 Speaker 5: from from a networking standpoint, Arista has actually been one 468 00:24:19,119 --> 00:24:21,760 Speaker 5: of the high flyers from from the from from a 469 00:24:21,800 --> 00:24:25,920 Speaker 5: networking standpoint, so I will look at Arista and people 470 00:24:26,000 --> 00:24:32,160 Speaker 5: have been taking the AI networking angle and using Arista 471 00:24:32,160 --> 00:24:33,200 Speaker 5: as one of the tools. 472 00:24:33,400 --> 00:24:35,040 Speaker 3: I like that Arista. I haven't heard that one come 473 00:24:35,080 --> 00:24:38,880 Speaker 3: up yet. You know, HPE or HPQ Just to clarify. 474 00:24:38,960 --> 00:24:42,480 Speaker 5: Oh, HPE. So think think of it as a mini 475 00:24:42,600 --> 00:24:44,720 Speaker 5: Dell and a mini Cisco. 476 00:24:44,440 --> 00:24:47,480 Speaker 2: In one our thanks to Will Jino Bloomberg Intelligence senior 477 00:24:47,520 --> 00:24:48,440 Speaker 2: technology analysts. 478 00:24:48,680 --> 00:24:50,280 Speaker 3: Coming up, we'll look at why the owner of the 479 00:24:50,320 --> 00:24:53,800 Speaker 3: Corona and Wdella, especially ol brands reported positive quarrely results. 480 00:24:53,880 --> 00:24:56,600 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, but riding 481 00:24:56,600 --> 00:24:58,720 Speaker 2: in depth research and data on two thousand companies and 482 00:24:58,760 --> 00:24:59,960 Speaker 2: one hundred and thirty industries. 483 00:25:00,040 --> 00:25:03,120 Speaker 3: You can access Bloomberg Intelligence through Bigo on the terminal. 484 00:25:03,200 --> 00:25:04,320 Speaker 3: I'm Scarlettfoo and. 485 00:25:04,200 --> 00:25:06,200 Speaker 2: I'm Paul Sweeney. This is Bloomberg. 486 00:25:14,080 --> 00:25:19,000 Speaker 1: This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney on 487 00:25:19,160 --> 00:25:20,240 Speaker 1: Bloomberg Radio. 488 00:25:21,119 --> 00:25:23,359 Speaker 2: Move next to some news in the consumer product space. 489 00:25:23,480 --> 00:25:26,920 Speaker 3: This week, Constellation Brands, which owns Corona and Wdella especial 490 00:25:26,960 --> 00:25:29,760 Speaker 3: brands in the US, reported better than expected results for 491 00:25:29,800 --> 00:25:32,840 Speaker 3: its fiscal second quarter. The company cited robust beer and 492 00:25:32,920 --> 00:25:33,560 Speaker 3: wine sales. 493 00:25:33,760 --> 00:25:36,440 Speaker 2: This comes despite the company stock falling more than thirty 494 00:25:36,480 --> 00:25:39,600 Speaker 2: percent this year. Beer an alcoholic beverages in general have 495 00:25:39,640 --> 00:25:42,600 Speaker 2: broadly struggled as younger consumers and women drink less. 496 00:25:42,640 --> 00:25:44,159 Speaker 3: So for more on this and other news in the 497 00:25:44,160 --> 00:25:47,040 Speaker 3: consumer space, we were joined by Ken Sha, Bloomberg Intelligence 498 00:25:47,119 --> 00:25:48,640 Speaker 3: senior consumer products analyst. 499 00:25:48,960 --> 00:25:51,560 Speaker 2: First, ask Ken more about why Constellation Brands had been 500 00:25:51,600 --> 00:25:52,520 Speaker 2: struggling this year. 501 00:25:52,920 --> 00:25:58,440 Speaker 10: It's definitely a slow beer market. Tariffs are playing a role, 502 00:25:59,440 --> 00:26:03,320 Speaker 10: and also some of the crackdown you know, the ice 503 00:26:03,359 --> 00:26:07,119 Speaker 10: has had in inner community is hurting the Hispanic community 504 00:26:07,240 --> 00:26:10,040 Speaker 10: and their socialization trends. All these things have been a 505 00:26:10,040 --> 00:26:12,679 Speaker 10: factor for the last couple of quarters. The company said 506 00:26:12,800 --> 00:26:16,560 Speaker 10: that their beer volumes were not quite as poor as 507 00:26:16,640 --> 00:26:19,639 Speaker 10: a lot of street analysts expected. But the pressures are 508 00:26:19,640 --> 00:26:23,399 Speaker 10: still on and they're very real for this company. And 509 00:26:23,400 --> 00:26:26,760 Speaker 10: that's because they're suite of products. As you mentioned Corona Medello, 510 00:26:27,080 --> 00:26:30,359 Speaker 10: these command high price points about twice the level of 511 00:26:30,400 --> 00:26:34,040 Speaker 10: a popular beer, so in times where consumers are pulling 512 00:26:34,080 --> 00:26:37,760 Speaker 10: back a little cautious about expenditures, got to remember, you know, 513 00:26:37,800 --> 00:26:40,320 Speaker 10: you've had high inflationary pricing in this category for the 514 00:26:40,400 --> 00:26:44,560 Speaker 10: last few years. These brands aren't doing so well right now, 515 00:26:44,880 --> 00:26:47,119 Speaker 10: and then compounding that with some of the factors that 516 00:26:47,160 --> 00:26:51,160 Speaker 10: I mentioned and some longer term issues like cannabis substitution 517 00:26:51,359 --> 00:26:54,440 Speaker 10: things we talked about GLP one user not drinking as much, 518 00:26:54,920 --> 00:26:58,320 Speaker 10: moderation among gen Z. All these things are weighing of 519 00:26:58,359 --> 00:26:59,280 Speaker 10: a company right now. 520 00:27:00,080 --> 00:27:02,439 Speaker 3: Yeah, I'm super interested in what you said about the 521 00:27:02,480 --> 00:27:05,800 Speaker 3: last part, Like the structural changes in consumer tastes, especially 522 00:27:05,880 --> 00:27:10,680 Speaker 3: from gen Z younger people overall, beers just not where 523 00:27:10,720 --> 00:27:13,080 Speaker 3: people want to be spending their money necessarily. 524 00:27:14,160 --> 00:27:16,080 Speaker 10: That seems to be the case. You know, it's it's 525 00:27:16,080 --> 00:27:18,080 Speaker 10: been around a long time. It's one hundred and fifteen 526 00:27:18,119 --> 00:27:22,919 Speaker 10: billion dollar market that is growing very slowly. It's especially flat. 527 00:27:23,160 --> 00:27:26,080 Speaker 10: In fact, volumes are expected to be down low single 528 00:27:26,080 --> 00:27:29,240 Speaker 10: digit this year. So clearly it's a very mature category. 529 00:27:29,440 --> 00:27:30,840 Speaker 10: And what we've seen in over the last few years 530 00:27:30,960 --> 00:27:33,520 Speaker 10: is consumers just want different tastes. You know, you have 531 00:27:33,560 --> 00:27:36,959 Speaker 10: a proliferation of the ray to drink cocktails, you know, 532 00:27:37,040 --> 00:27:41,800 Speaker 10: like truly and white clothes and more sophisticate you know, 533 00:27:41,880 --> 00:27:44,119 Speaker 10: Margarita's in a can and so on. That's where a 534 00:27:44,160 --> 00:27:47,359 Speaker 10: lot of the consumers who wants tastes experimentation are going. 535 00:27:47,880 --> 00:27:50,399 Speaker 10: And then you have other more mundane factors like just 536 00:27:50,800 --> 00:27:54,680 Speaker 10: you know, calorie more conscientious, calorie counts, and all these 537 00:27:54,680 --> 00:27:57,240 Speaker 10: things are just weighing on this very very mature industry. 538 00:27:58,200 --> 00:28:00,480 Speaker 2: So somebody like Constellation Brands, did they go out and 539 00:28:00,480 --> 00:28:04,440 Speaker 2: look to maybe buy some of these brands or verticals 540 00:28:04,440 --> 00:28:07,159 Speaker 2: that within the spirit's business may be growing. 541 00:28:08,720 --> 00:28:13,320 Speaker 10: Well, they've had kind of a mixed history of M 542 00:28:13,320 --> 00:28:15,199 Speaker 10: and A over the last few years. I'll put it 543 00:28:15,280 --> 00:28:18,919 Speaker 10: up me kind say that way, not really, you know, 544 00:28:19,080 --> 00:28:22,400 Speaker 10: they're downsizing their wine and spirit segment and try to 545 00:28:22,720 --> 00:28:24,960 Speaker 10: shift it to more of a high end mix, which 546 00:28:25,000 --> 00:28:27,880 Speaker 10: I think they're having success with. But what that does 547 00:28:27,960 --> 00:28:30,879 Speaker 10: is it makes their beer business even that much more important. 548 00:28:30,920 --> 00:28:33,720 Speaker 10: It's now about eighty five percent of their sales. So 549 00:28:33,880 --> 00:28:36,800 Speaker 10: as beer goes, I mean, the company has really good 550 00:28:36,840 --> 00:28:41,000 Speaker 10: brands and a lot of brand loyalty there. But again 551 00:28:41,040 --> 00:28:42,400 Speaker 10: there's not a lot of wiggle room. 552 00:28:42,600 --> 00:28:46,640 Speaker 3: So with beer becoming less popular, and you mentioned other 553 00:28:47,000 --> 00:28:51,920 Speaker 3: big trends like ozebic, weight loss, drugs and greater cannabis use, 554 00:28:52,520 --> 00:28:55,640 Speaker 3: what is Constlation doing about non alcoholic beverages. 555 00:28:57,280 --> 00:29:01,480 Speaker 10: So they've rolled out a non alcoholic Corona. They've come 556 00:29:01,520 --> 00:29:03,640 Speaker 10: out a couple of years ago. They came out with 557 00:29:03,640 --> 00:29:09,440 Speaker 10: a low calorie brand called Medello ro Corona no alcohol 558 00:29:10,040 --> 00:29:13,600 Speaker 10: I mentioned. So those two brands, while they're relatively small, 559 00:29:13,880 --> 00:29:16,920 Speaker 10: they see, you know, a lot of opportunity that's on 560 00:29:17,120 --> 00:29:21,440 Speaker 10: trend with what you said, so you know they're doing that. 561 00:29:21,640 --> 00:29:25,600 Speaker 10: They're also modifying some of their portfolio for more taste. 562 00:29:25,640 --> 00:29:27,880 Speaker 10: There's the consumers that want a lot of taste. They're 563 00:29:27,880 --> 00:29:33,280 Speaker 10: coming out with, you know, a fruity surveysa and so 564 00:29:33,720 --> 00:29:35,880 Speaker 10: they're doing as much as they can to stay on 565 00:29:35,960 --> 00:29:36,959 Speaker 10: trend with consumers. 566 00:29:37,320 --> 00:29:40,320 Speaker 3: I love myself a great fruit beer. Yeah, there's a 567 00:29:40,320 --> 00:29:43,640 Speaker 3: German great fruit beer that I really like. Yeah, tastes good. 568 00:29:43,960 --> 00:29:46,520 Speaker 2: Talk to us about this legal cannabis and obesity drugs 569 00:29:46,520 --> 00:29:49,400 Speaker 2: and the impact that's having on kind of the beer business, 570 00:29:49,400 --> 00:29:52,040 Speaker 2: the spirits business overall. Ken, is that something that a 571 00:29:52,040 --> 00:29:53,360 Speaker 2: lot of your companies are calling out. 572 00:29:54,120 --> 00:29:56,880 Speaker 10: Bi came out of their fourth annual consumer survey on 573 00:29:57,480 --> 00:30:03,320 Speaker 10: beverage preferences, and again we see that consumers are substituting 574 00:30:04,240 --> 00:30:09,240 Speaker 10: cannabis for alcohol. Of consumers that do partake in cannabis, 575 00:30:09,560 --> 00:30:13,840 Speaker 10: now more than half have substituted for alcohol at least 576 00:30:13,880 --> 00:30:16,680 Speaker 10: once a week, and that's up from forty six percent 577 00:30:16,760 --> 00:30:18,880 Speaker 10: last year. So that's a trend that just keeps moving. 578 00:30:19,480 --> 00:30:22,120 Speaker 10: Now you're seeing a lot of these cannabis companies coming 579 00:30:22,120 --> 00:30:26,280 Speaker 10: out with hemp THC products beverages that are sold in 580 00:30:26,360 --> 00:30:30,640 Speaker 10: mainstream liquor stores. You know, traditional cannabis, legal cannabis sold 581 00:30:30,680 --> 00:30:33,640 Speaker 10: in dispensaries. It was not really a big hit, but 582 00:30:33,800 --> 00:30:38,200 Speaker 10: now that some of these federally legal hemp based THC 583 00:30:38,360 --> 00:30:41,560 Speaker 10: products beverages are sold in liquor stores right next to 584 00:30:41,600 --> 00:30:44,840 Speaker 10: the beer rile. In about half the states of the country, 585 00:30:45,200 --> 00:30:48,480 Speaker 10: that's really chipping away also at beer consumption. 586 00:30:49,480 --> 00:30:51,840 Speaker 3: Final question to you, Ken, what about return of cash 587 00:30:51,880 --> 00:30:54,440 Speaker 3: to shareholders. I'm looking at the dividend yield about two 588 00:30:54,480 --> 00:30:59,040 Speaker 3: point nine percent if you're being generous. Is Constellation Brands 589 00:30:59,080 --> 00:31:01,640 Speaker 3: still able to make good on its dividends continue buying 590 00:31:01,640 --> 00:31:02,320 Speaker 3: back its shares? 591 00:31:03,280 --> 00:31:07,680 Speaker 10: Yeah, that's an important point, Scarlett. Yes, they can despite 592 00:31:07,720 --> 00:31:11,040 Speaker 10: the pressure on sales. Believe it or not, the operating 593 00:31:11,040 --> 00:31:14,520 Speaker 10: margins and Constellation generates are best in class. They're about 594 00:31:14,520 --> 00:31:18,479 Speaker 10: twice that of other alcoholic beverage companies in general, so 595 00:31:18,520 --> 00:31:20,880 Speaker 10: they have strong cash flows. As a matter of fact, 596 00:31:20,920 --> 00:31:24,520 Speaker 10: they're winding down construction of a brewery right now. Over 597 00:31:24,520 --> 00:31:26,320 Speaker 10: the next couple of years, you're going to see free 598 00:31:26,320 --> 00:31:29,400 Speaker 10: cash flow likely rising. So it's high in rising and 599 00:31:29,440 --> 00:31:33,400 Speaker 10: that's enabling them to continue to meet their commitments to 600 00:31:33,520 --> 00:31:34,880 Speaker 10: share buybacks and dividends. 601 00:31:35,360 --> 00:31:38,160 Speaker 3: Our thanks to Kenneth Shae Bloomberg Intelligence, a senior consumer 602 00:31:38,200 --> 00:31:39,000 Speaker 3: products analyst. 603 00:31:39,240 --> 00:31:42,480 Speaker 2: We move next to some news on Intercontinental Exchange or ICE. 604 00:31:42,760 --> 00:31:44,760 Speaker 3: This week we heard the company plans to invest as 605 00:31:44,800 --> 00:31:47,720 Speaker 3: much as two billion dollars in cash in polymarket, which 606 00:31:47,800 --> 00:31:49,640 Speaker 3: is a crypto based betting platform. 607 00:31:49,800 --> 00:31:52,720 Speaker 2: The transaction values poly market at roughly eight billion dollars, 608 00:31:53,000 --> 00:31:55,520 Speaker 2: and ICE will become a global distributor of poly markets 609 00:31:55,600 --> 00:31:56,760 Speaker 2: event driven data. 610 00:31:56,840 --> 00:31:59,560 Speaker 3: We are joined by Catherine Doherty, Bloomberg Finance Reporter. We 611 00:31:59,600 --> 00:32:01,920 Speaker 3: first Catherine for some more background on ICE. 612 00:32:02,400 --> 00:32:06,080 Speaker 6: It runs on the blockchain. So you have this storied institution, 613 00:32:06,440 --> 00:32:09,719 Speaker 6: ICE that owns the New York Stock Exchange, as you mentioned, 614 00:32:10,200 --> 00:32:12,640 Speaker 6: and they're putting their money where their mouth is. It 615 00:32:12,680 --> 00:32:16,000 Speaker 6: really is an indication of where the market is headed. 616 00:32:16,320 --> 00:32:19,560 Speaker 6: So you have these institutional players that are teaming up 617 00:32:19,960 --> 00:32:23,200 Speaker 6: with either crypto native firms or in this case it's 618 00:32:23,240 --> 00:32:28,200 Speaker 6: also the prediction market based players. And we have seen 619 00:32:28,200 --> 00:32:32,360 Speaker 6: this recently with also CME, the derivatives exchange based in Chicago. 620 00:32:32,720 --> 00:32:36,760 Speaker 6: They're partnering with FanDuel, and most people associate FanDuel with 621 00:32:36,920 --> 00:32:41,360 Speaker 6: sports betting, but they are big in prediction markets as well. 622 00:32:41,520 --> 00:32:47,560 Speaker 6: And with CME and FanDuel, they're doing a markets based 623 00:32:47,680 --> 00:32:51,480 Speaker 6: prediction of yes or no will for example, gold Bee 624 00:32:51,520 --> 00:32:57,240 Speaker 6: above a certain benchmark. And this announcement also shows a 625 00:32:57,560 --> 00:33:02,760 Speaker 6: storied institution kind of getting behind the newer incumbents and 626 00:33:02,880 --> 00:33:07,000 Speaker 6: showing where they see the next phase of the market headed. 627 00:33:07,160 --> 00:33:10,360 Speaker 2: What does polymarket really do? I see them quoted around 628 00:33:10,360 --> 00:33:11,400 Speaker 2: in the press and things like that. 629 00:33:11,520 --> 00:33:14,280 Speaker 6: So you've probably seen polymarket around the time of the election. 630 00:33:14,400 --> 00:33:18,000 Speaker 6: They were one of the platforms that users were placing 631 00:33:18,080 --> 00:33:20,840 Speaker 6: bets on who was going to win the presidential election. 632 00:33:22,120 --> 00:33:25,200 Speaker 6: They at a time were also in the news around 633 00:33:25,200 --> 00:33:29,760 Speaker 6: twenty twenty two because they were prohibited from actually operating 634 00:33:30,000 --> 00:33:34,800 Speaker 6: in the US, and more recently in the last few 635 00:33:34,840 --> 00:33:37,920 Speaker 6: months in twenty twenty five, they've re entered the US market, 636 00:33:38,080 --> 00:33:42,160 Speaker 6: and they've done so through two avenues. One, it's a 637 00:33:42,240 --> 00:33:48,760 Speaker 6: changing regulatory environment, it's a crypto friendly regulatory regime. And 638 00:33:49,200 --> 00:33:55,360 Speaker 6: number two, they bought their own regulated derivatives platform that 639 00:33:55,560 --> 00:33:59,160 Speaker 6: essentially allowed them it was a pathway back into the 640 00:33:59,320 --> 00:34:00,240 Speaker 6: United States market. 641 00:34:01,000 --> 00:34:04,320 Speaker 3: So with this deal, which values Polymarket at about eight 642 00:34:04,360 --> 00:34:09,160 Speaker 3: billion dollars, cee ICE becomes the global distributor of Polymarket's 643 00:34:09,320 --> 00:34:12,120 Speaker 3: event driven data. What does that mean to have that 644 00:34:12,280 --> 00:34:15,640 Speaker 3: data now in its hands? What can it do with 645 00:34:15,680 --> 00:34:18,600 Speaker 3: that information? Because exchanges don't just they're not just a 646 00:34:18,600 --> 00:34:22,439 Speaker 3: platform for collecting commissions on trades. They're also huge source 647 00:34:22,520 --> 00:34:24,200 Speaker 3: of information data that they then sell. 648 00:34:24,320 --> 00:34:27,120 Speaker 6: That's right, it's a huge part of their business, and 649 00:34:27,200 --> 00:34:30,960 Speaker 6: you have these big institutions that are paying millions of 650 00:34:31,000 --> 00:34:36,400 Speaker 6: dollars for access to this data. And as the market 651 00:34:36,520 --> 00:34:41,759 Speaker 6: becomes a mix of institutional client base and retail clients 652 00:34:42,200 --> 00:34:46,520 Speaker 6: that data these companies, you have ICE, you have polymarket. 653 00:34:47,440 --> 00:34:52,279 Speaker 6: This combination is giving ICE access to retail clients that 654 00:34:52,280 --> 00:34:56,120 Speaker 6: they otherwise wouldn't necessarily have access to, and vice versa. 655 00:34:56,280 --> 00:35:00,800 Speaker 6: Polymarket gets now all of their data displayed through ICE 656 00:35:00,920 --> 00:35:06,680 Speaker 6: channels that institutional clients have been set up and working 657 00:35:06,680 --> 00:35:10,879 Speaker 6: with ICE for years. So it's a fast entry way 658 00:35:11,000 --> 00:35:16,759 Speaker 6: for both companies to increase their user base, increase their access, 659 00:35:16,960 --> 00:35:22,040 Speaker 6: and how they market themselves to an entirely new client. 660 00:35:22,480 --> 00:35:25,839 Speaker 2: So it just feels like some of these traditional exchanges, 661 00:35:25,880 --> 00:35:29,319 Speaker 2: if you will, I think, are they saying, basically, if 662 00:35:29,320 --> 00:35:30,840 Speaker 2: we want to grow in the future, we have to 663 00:35:30,880 --> 00:35:34,600 Speaker 2: embrace some of these new asset classes, whether it's crypto 664 00:35:34,800 --> 00:35:38,600 Speaker 2: or whether it's predictive markets and things like. Is that 665 00:35:38,680 --> 00:35:39,680 Speaker 2: kind of what they're telling us. 666 00:35:39,800 --> 00:35:42,120 Speaker 6: I think that it's very much where they see their 667 00:35:42,160 --> 00:35:47,400 Speaker 6: clients headed. There's a blurring line between you have hedge 668 00:35:47,400 --> 00:35:51,720 Speaker 6: funds and traditional institutional firms, and then you have retail 669 00:35:51,800 --> 00:35:55,960 Speaker 6: investors that at a time, there was so much news 670 00:35:56,440 --> 00:36:02,400 Speaker 6: during the memestock era around who these users were that 671 00:36:02,440 --> 00:36:06,240 Speaker 6: were in their basements, But now these are really sophisticated 672 00:36:06,760 --> 00:36:11,840 Speaker 6: investors that are playing in the options market prediction markets. 673 00:36:12,440 --> 00:36:16,920 Speaker 6: Many of the leaders of these exchanges are saying there 674 00:36:17,000 --> 00:36:20,399 Speaker 6: is no difference between what we've been running and at 675 00:36:20,480 --> 00:36:25,799 Speaker 6: least a binary yes or no. Is this index going 676 00:36:25,880 --> 00:36:30,799 Speaker 6: to be above or below a certain threshold. They're combining 677 00:36:31,160 --> 00:36:34,400 Speaker 6: to what was presumably two different worlds into one now. 678 00:36:34,880 --> 00:36:39,480 Speaker 3: And competitors at polymarket include Calshi Andcrypto dot Com. Are 679 00:36:39,480 --> 00:36:42,040 Speaker 3: you anticipating, Catherine, There's going to be similar tie ups 680 00:36:42,040 --> 00:36:43,400 Speaker 3: for those companies as well. 681 00:36:43,440 --> 00:36:46,480 Speaker 6: There is a race too. I believe that this is 682 00:36:46,920 --> 00:36:50,480 Speaker 6: just the start, or really the CME partnership with FanDuel 683 00:36:50,640 --> 00:36:53,280 Speaker 6: was kind of the first indication. This is just another 684 00:36:53,680 --> 00:36:55,200 Speaker 6: and I think that it's going to be off to 685 00:36:55,239 --> 00:36:57,960 Speaker 6: the races in terms of who partners up next, because 686 00:36:58,320 --> 00:37:02,759 Speaker 6: you to build something for scratch is hard, and when 687 00:37:02,800 --> 00:37:06,640 Speaker 6: you partner with a existing client base too, it is 688 00:37:06,680 --> 00:37:09,800 Speaker 6: an easy way in to an entirely new market. 689 00:37:10,200 --> 00:37:14,000 Speaker 2: It wasn't cheap. I'm reading Bloomberg Intelligence research react from 690 00:37:14,040 --> 00:37:18,120 Speaker 2: Paul Goldberg. This acquisition applies fifty times revenue. 691 00:37:18,280 --> 00:37:19,439 Speaker 9: Is the purchase price there. 692 00:37:20,040 --> 00:37:21,759 Speaker 2: That's not cheap and it's an all cash deal. 693 00:37:21,960 --> 00:37:25,000 Speaker 3: They're just saying we're in our Thanks to Catherine Doherty, 694 00:37:25,000 --> 00:37:26,400 Speaker 3: Bloomberg News Finance Reporter. 695 00:37:26,880 --> 00:37:29,600 Speaker 2: It's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 696 00:37:29,800 --> 00:37:32,360 Speaker 2: providing in depth research and data on two thousand companies 697 00:37:32,360 --> 00:37:33,720 Speaker 2: and one hundred and thirty industries. 698 00:37:33,800 --> 00:37:36,480 Speaker 3: And remember you can access Bloomberg Intelligence via bi Go 699 00:37:36,760 --> 00:37:38,680 Speaker 3: on the terminal. I'm Scarlet Foo. 700 00:37:38,560 --> 00:37:41,000 Speaker 2: And I'm Paul Sweeney. Stay with us. Today's top stories 701 00:37:41,040 --> 00:37:44,200 Speaker 2: and global business headlines are coming up right now