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Speaker 2: Little m and a activity here in the tech sector,
Speaker 2: Intel finalizes a deal to sell fifty one percent of
Speaker 2: It's All terrorI stake to silver Lake. Now silver Lake folks,
Speaker 2: I got to know them back in the day. I
Speaker 2: think one of the smarter private equity folks that has
Speaker 2: a technology bent.
Speaker 3: Some super super smart folks.
Speaker 2: They've backed a lot of companies over the last thirty
Speaker 2: years in Silicon Valley. They know what they're doing and
Speaker 2: when they move their money, you pay attention. Man Deep Sing,
Speaker 2: I also pay attention to him. He's a senior tech analyst.
Speaker 2: The Bloomberg Intelligence Joints is here in our Bloomberg Interactive
Speaker 2: Broker studio. What's in Intel up to these days?
Speaker 4: In Deep Well, they got our news CEO, and I
Speaker 4: think he's making the moves. Everyone was looking forward to
Speaker 4: what is he going to do differently than Pat Gelsinger,
Speaker 4: And it looks like he wants to turn around the
Speaker 4: foundry business. There was one school of thought that thought
Speaker 4: Intel should sell the foundry and focus on chip design
Speaker 4: like Nvidia. But clearly he feels, you know, foundry business
Speaker 4: can be turned around. And so the easy pickings here
Speaker 4: is raise cash, you know, get rid of the non
Speaker 4: core assets.
Speaker 5: Which is all Terra here.
Speaker 4: So they're selling fifty one percent stake, mobilize another business
Speaker 4: that comes to mind that they could sell. And look,
Speaker 4: with a company like Intel, everyone knows that, you know,
Speaker 4: you can't really turn around this company to show high growth.
Speaker 4: It's more about how do you manage the company in
Speaker 4: a way where they're not burning a lot of cash
Speaker 4: as well as they can have you know, low to
Speaker 4: mid single digit growth. And I think that's to be
Speaker 4: the playbook here.
Speaker 6: So, man, deep, is silver Lake getting a good deal
Speaker 6: then with this epic?
Speaker 4: I mean Intel paid you know, sixteen billion plus ten
Speaker 4: years back, so they held the company for ten years
Speaker 4: and now they're selling it half the price. And look,
Speaker 4: this isn't a high growth asset, which is why it
Speaker 4: was noncore to Intel. But we know Semis isn't that
Speaker 4: sweet part of the cycle where everyone seems to be
Speaker 4: bullish on AI and Semis, and so maybe silver Lake
Speaker 4: can come up with a better way to you know,
Speaker 4: leverage all Terra in that semi space, because that's what
Speaker 4: everyone seems to be excited by. How can I play
Speaker 4: in the demand for Semis?
Speaker 3: Why did they solve a whole thing?
Speaker 4: Well, I mean it's a private equity player, so you know,
Speaker 4: they're not going to put a lot of money in
Speaker 4: one asset, and they just wanted fifty one percent so
Speaker 4: that they can run the company. At the same time,
Speaker 4: Intel can benefit if they are able to successfully turn
Speaker 4: it around. And yeah, I think Alterra still needs Intel
Speaker 4: technology to be successful. So it's not as if there's
Speaker 4: a complete decoupling. It just allows Intel to focus more
Speaker 4: on the core business, the foundry and their CPU business,
Speaker 4: as opposed to focusing on Alterra and mobile IE. I
Speaker 4: think down the line.
Speaker 6: Should we expect with this new Intel CEO to see
Speaker 6: more news like this Intel selling other parts of its business.
Speaker 4: I think so mobile ie is definitely another one which
Speaker 4: is non core to Intel, even if they want to
Speaker 4: double down on AI and chip design. Within AI, I
Speaker 4: mean mobile IE is more autonomous driving and that also
Speaker 4: came from another acquisition that Intel did back in the day.
Speaker 4: So I hope they don't end up taking a loss
Speaker 4: on that one. But I do think the playbook here
Speaker 4: seems to be that they want to focus on foundry
Speaker 4: and core CPU chip design.
Speaker 3: Foundry that's making chips, right.
Speaker 4: Yeah, the manufacturing side, Now, who else does that? Well,
Speaker 4: we just heard the news around in Vidia, you know,
Speaker 4: using TSMC to make their AI supercomputers here in the US.
Speaker 4: So that's that was quite a bit of news because
Speaker 4: I would have thought TSMC would partner with Intel, and
Speaker 4: there was some rumblings about, you know, TSMC doing something
Speaker 4: with Intel at least here in the US. But it
Speaker 4: looks like Nvidia is thinking about making their next CI
Speaker 4: supercomputer with TSMC. No talk about Intel, and that will
Speaker 4: be here in the US.
Speaker 3: So then invested.
Speaker 2: I thought there's some deal that there were Intel's gonna
Speaker 2: do a bunch of that stuff.
Speaker 4: Yeah, so that's where there was talk about Intel and
Speaker 4: TSMC partnering. So that was the foundry side of Intel.
Speaker 4: But I don't think that's happening now.
Speaker 2: So the Biden plan with Intel, which was to do
Speaker 2: a big, big deal, big investment, is that's still on
Speaker 2: or no.
Speaker 4: So the chips Act money was given to Intel. It
Speaker 4: was also given to TSMC for or the Phoenix fab
Speaker 4: there they will be making this AI supercomputer with you know, Nvidia.
Speaker 4: But look, I think in the case of Intel, the
Speaker 4: challenge has always been why have they not participated in
Speaker 4: this AI wave? And the Chipsack money didn't help over there,
Speaker 4: all right.
Speaker 2: Man Deep Singh, thank you so much. We appreciate it.
Speaker 2: Man Deep Singh. He's a senior tech analyst. He kind
Speaker 2: of runs our global technology research franchise over Bloomberg Intelligence,
Speaker 2: and he.
Speaker 3: And Ana Agrana are the thought leaders there and they
Speaker 3: kind of.
Speaker 2: Drive the process forward. Here Intel selling fifty one percent
Speaker 2: of one of their businesses to Silver like but a
Speaker 2: steep valuation discount that had the hurt.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 3: And Mike Grafey was sitting in for Steal here today.
Speaker 3: I'm Paul Swen.
Speaker 2: You were live on our Bloomberg Interactive Broker Studio or
Speaker 2: streaming live on YouTube as well, so you can check
Speaker 2: us out on YouTube. Golden Sachs put out, there are
Speaker 2: results this morning, better than expected results that stocks up
Speaker 2: about two and a half percent. Was really the equity
Speaker 2: trading desk powering the way here, similar to what we
Speaker 2: saw from JP Morgan, Morgan Stanley last week's Let's get
Speaker 2: the breakdown here with Alison Williams, senior analyst covering all
Speaker 2: the financial institutions for a Bloomberg intelligency joins us life
Speaker 2: here in our Bloomberg Interactive Broker Studio Goldman Sachs.
Speaker 3: The stock traders had a nice quarter.
Speaker 5: They did have a nice quarter, and you.
Speaker 7: Know they didn't They weren't up forty five to fifty
Speaker 7: percent like JP Morgan and Morgan Stanley, but still enough
Speaker 7: to hold that number one lead across and what we're
Speaker 7: hearing is derivatives, which is not surprising, right given all
Speaker 7: the volatility. And the other interesting note is, you know,
Speaker 7: Goldman this quarter a little bit weaker than the peers,
Speaker 7: but over the long term, I mean the market share
Speaker 7: games they've had in fic N equities trade really strong,
Speaker 7: leading across all of the banks over the ten years.
Speaker 7: Those three names, JP Morgan Morgan standing Goldman all gaining,
Speaker 7: But really Goldman has done a good job. They've been
Speaker 7: focusing on clients. They've also been focusing on financing revenue.
Speaker 7: Fick trading also above a year ago, just not as
Speaker 7: strong and a little bit shy. And then the other
Speaker 7: part of the story, as you know, is those weaker fees.
Speaker 7: So Goldman is number one and equity trading revenue, they're
Speaker 7: number one in M and A, equity trading really powering
Speaker 7: these banks higher. M and A really feeling the fallout
Speaker 7: from uncertainty.
Speaker 5: That's right.
Speaker 6: So the company's investment banking revenue was eight percent lower
Speaker 6: than last year. Is that just due to macro uncertainty,
Speaker 6: companies not wanting to get deals done because they're not
Speaker 6: sure what's going to happen in the future.
Speaker 5: It's exactly that. So debt fees.
Speaker 7: Really have been the area of strength across these banks
Speaker 7: continued to be the area of strength this quarter. Equity fees,
Speaker 7: which started out the year strong. As you can imagine,
Speaker 7: there was some stalling as markets sold off, like especially
Speaker 7: in the US late in the first quarter, but now
Speaker 7: really a lot of those deals coming to a standstill.
Speaker 7: On the equity side of things, and then M and A,
Speaker 7: which really can be deriven by.
Speaker 5: CEO sentiment.
Speaker 7: Keep in mind, and you know, if you're going to
Speaker 7: sell your business, you want to be sure that you're
Speaker 7: getting the best value for your shareholders. Similarly, if you're
Speaker 7: buying a business, you want to be estimating what your
Speaker 7: return on investment is going to be, and you really can't.
Speaker 5: There's so much uncertainty.
Speaker 7: There's so much I think, so much of a wait
Speaker 7: and see approach that that business has really come to
Speaker 7: a standstill.
Speaker 2: I see that David Solomon, the CEO, called out growing backlog.
Speaker 2: Backlog ain't cash, Backlog's not fees. What's the saying about
Speaker 2: the environment that gets stuff done, whether it's an M
Speaker 2: and A trade and IPO, that kind of stuff.
Speaker 7: And that's a great point because we always do look
Speaker 7: at the pipeline and as you said, Samon did point out, look,
Speaker 7: we've seen it grow another quarter in a row. But
Speaker 7: you want that pipeline growing because there's more new business
Speaker 7: not coming in, not because things are not getting done right.
Speaker 5: So the pipeline can.
Speaker 7: Increase for two reasons, and you really want to What
Speaker 7: you really want is execution and confidence in the execution.
Speaker 7: So the positive sign, which I think is true for
Speaker 7: so many things, right, is that we have a huge
Speaker 7: level of uncertainty. If that resolves, then you could be
Speaker 7: back in business, and unlike some of the other periods
Speaker 7: that we've seen with incredible uncertainty.
Speaker 6: Right.
Speaker 7: So the pandemic, I mean, there was really no control
Speaker 7: over what happened there. I mean, obviously the scientists were
Speaker 7: working very quickly to come up with a vaccine. The
Speaker 7: global financial crisis, we know that there were huge underlying
Speaker 7: issues with the financial system.
Speaker 5: In this case, it's really about the politics.
Speaker 7: So certainly that is something that is incredibly difficult to handicap.
Speaker 7: I certainly am glad that I'm not the analysts they're
Speaker 7: trying to figure out or estimate what's going on, or
Speaker 7: a CEO thinking about whether or not now is the
Speaker 7: time to sell my business. But I think that that
Speaker 7: gives a little context in terms of if we can
Speaker 7: get certainty, can we really just.
Speaker 5: Get that that that pipeline executed.
Speaker 6: What's the high level takeaway from bank earnings now that
Speaker 6: we've already seen Goldman Morgan, Stanley, Wells Fargo and JP
Speaker 6: Morgan two was on Friday, right, Yep, so we've seen
Speaker 6: all the big banks basically report and they beat. What
Speaker 6: are investors supposed to take away from all of this
Speaker 6: about what it's telling us about the health of the
Speaker 6: banking sector at large.
Speaker 7: I think, you know, so earnings, as we know, are
Speaker 7: backward lookings, and things looked very healthy in the first quarter.
Speaker 7: I think that you know, as I said, there's put
Speaker 7: some in takes, but for the most part, what we
Speaker 7: are hearing from the management is similar to what you'd
Speaker 7: expect with uncertainty. We do get Bank of America and
Speaker 7: City Group tomorrow that will give us, i think, even
Speaker 7: a richer look at terms of the US consumer, which
Speaker 7: you know, Bank of America is a good bell weather
Speaker 7: for a City Group has this big card business. But
Speaker 7: the key trends we're seeing are one, you know, trade
Speaker 7: trading strong, fees weaker, that's really.
Speaker 5: Due to the volatility UH.
Speaker 7: Two, buybacks strength, and buybacks coming in better than expected.
Speaker 5: Big program at Goldman.
Speaker 7: So really this benefit from lesser regulation UH does have
Speaker 7: an does have an impact that we're seeing. And then third,
Speaker 7: you know, uncertainty manifesting in credit provisions. We saw a
Speaker 7: big provision at JP Morgan or I should say a
Speaker 7: sizeable provision there less so Wells Fargo, but both pretty
Speaker 7: conservative so in terms of what they're estimating going forward,
Speaker 7: and again not based on what we've seen, but uncertainty.
Speaker 7: We expect the same at Bank of America and City tomorrow.
Speaker 2: What's a head count story on Wall Street these days?
Speaker 2: I mean, if this kind of outlook, in this uncertainty,
Speaker 2: I think we'll start cutting back head county thing.
Speaker 7: I think that's uh exactly goes to your point earlier,
Speaker 7: Paul about pipelines, right, so we have the pipelines. If
Speaker 7: we get uncertainty, we can get that.
Speaker 5: Relieve.
Speaker 7: The CEOs are talking positive, but actions do speak louder
Speaker 7: than words.
Speaker 5: We did see cuts at Morgan Stanley.
Speaker 7: Certainly they they cited their typical review being pulled forward.
Speaker 7: They cited technology, but certainly the timing I think is instructive.
Speaker 7: And JP Moore, I mean, sorry Gold and Zachs also
Speaker 7: talking about cuts that they'll be making into two Q
Speaker 7: flagging some severance charges there. So I think that signals
Speaker 7: that when they're thinking about the revenue sort of in
Speaker 7: the months ahead, that they do think that this uncertainty
Speaker 7: is going to damp the potential for the coming quarters.
Speaker 6: What about CEO pay Is it going.
Speaker 3: To damp problem there?
Speaker 6: No problem there.
Speaker 3: Yeah.
Speaker 7: So we we just got through that season and you
Speaker 7: know that that's going to be how they navigate this
Speaker 7: year ahead.
Speaker 2: I mean, they're all in that thirty four thirty five
Speaker 2: million dollars range, all in, so good for them.
Speaker 3: They get Hey, we appreciate that. All right, Allison Williams,
Speaker 3: thank you so much.
Speaker 5: We appreciate that.
Speaker 2: Allison Williams, senior Global Banks asset Managers, all that kind
Speaker 2: of stuff for Bloomberg Intelligence. It's a busy day and
Speaker 2: we appreciate her coming into New York City.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 3: Mikey Shaw joins us here.
Speaker 2: He's the senior Farmer, farmer and biotech analysts for Bloomberg Intelligence.
Speaker 2: He's in London and he covers all these big farmer
Speaker 2: companies and big one today Mikey Pfizer abandoning it's obesity pill.
Speaker 2: That sounds like a big deal because I keep reading
Speaker 2: the research you and your colleagues over there putting out
Speaker 2: about this obesity market.
Speaker 3: This is a big market.
Speaker 2: And for Pfizer to have this big miss year, how
Speaker 2: big of an issue is it for Pfizer.
Speaker 8: Yeah, I mean I think it's it's a sentiment issue.
Speaker 8: I mean, clearly, you know, you've got a massive BC
Speaker 8: market out there, you know, one hundred billion dollar plus
Speaker 8: in terms of sides, and it's a market where you know,
Speaker 8: Phizes already kind of trailing large farm appears like Lily
Speaker 8: rosch Novo in terms of you know, the BC pill itself.
Speaker 8: So this was Danny Glippron. So what what it they
Speaker 8: actually did was it used to be a twice daily pill.
Speaker 8: They kind of can that and repurposed it into a
Speaker 8: once daily following the failure of another one of their
Speaker 8: OBCs pills, Glippron. So I'd say, you know, confidence into
Speaker 8: this readout, you know, was pretty low. We had ready
Speaker 8: kind of removed it from our models, you know, back
Speaker 8: in twenty three. But what it does, you know, create
Speaker 8: is you know to two concerns. One is you know,
Speaker 8: the trailing timeline in the BCC space, and two it
Speaker 8: kind of adds to the mid to long term growth
Speaker 8: worries of the company. So they've got you know, about
Speaker 8: fifteen billion dollars in and lost revenue to looees that
Speaker 8: they'll need to kind of offset over twenty five to
Speaker 8: twenty nine. And at the moment, you know, it's quite
Speaker 8: hard to see you know where that where that offset
Speaker 8: and where that additional growth is going to come come from.
Speaker 8: Long term obesity would be kind of one pillar. But
Speaker 8: you know, following the Danaglipron read out today or the
Speaker 8: news today, you know, that's obviously mean terminated. So you know,
Speaker 8: we think that they're going to have to go to
Speaker 8: you know, look to external assets in the OBC space
Speaker 8: if they're going to remain a relevant player in the
Speaker 8: in that market.
Speaker 6: Is anyone else doing obesity pills in this market right now?
Speaker 8: Yeah, So, I mean there's a few biotechs out there
Speaker 8: that are that are doing pills. In terms of the
Speaker 8: large farmer competitors, you know, Lily's got one, we'll see
Speaker 8: the data for that this year phase three that couldotentially
Speaker 8: launching in twenty six. Novo's got one they're expected to
Speaker 8: file and then you know, Rush also has one kind
Speaker 8: of in early to mid stage development too. On the
Speaker 8: biotech front. You know, we're seeing moves for you know,
Speaker 8: Viking structure turns, you know, all positive share price moves
Speaker 8: today and they all hold or all JP ones in
Speaker 8: their pipeline.
Speaker 4: Two.
Speaker 3: Hey, Mikey, can.
Speaker 2: You put into just perspective the size of this obesity
Speaker 2: market relative to other big verticals that drive these farmer companies.
Speaker 8: I mean, I think the excitement around RABESTI is you
Speaker 8: know one, it's you know, prevalence is rising. You got
Speaker 8: forty percent of US adults at the moment they are obese,
Speaker 8: and it's a relatively underpenetrated market. So I mean, you know,
Speaker 8: penetration rates are you know, low single digits, you know
Speaker 8: in the US at the moment, you know, probably even
Speaker 8: lower elsewhere, you know, globally, And you know, we think
Speaker 8: that this market could grow, you know, well in excess
Speaker 8: of one hundred billion dollars. So yeah, I mean it's
Speaker 8: a massive opportunity. I think in terms of you know,
Speaker 8: drug classes, I think PD you know, immuno oncology PD
Speaker 8: are one PD one drugs you know, with the kind
Speaker 8: of biggest class to date in terms of sales. So
Speaker 8: that's like your contruder Bristol ORPDVO, but you know GLP
Speaker 8: ones could potentially surpass that.
Speaker 6: So Michael, where does Fizer go from here after this setback?
Speaker 6: Do they I mean, do they double down on OBESIT pills?
Speaker 6: Do they do they try something new? What's the plan
Speaker 6: here for Pfizer?
Speaker 8: So, I mean they've got another oral jolp one in
Speaker 8: their pipeline, So it's in phase one. It's being developed
Speaker 8: for diabetes. Notatural you know whether or not they can
Speaker 8: also look at that in obesity two. But clearly the
Speaker 8: timeline here is the issue. You know, you've got oral
Speaker 8: jill wants coming to market in twenty six onwards. You'll
Speaker 8: probably have a wave of new treatments coming in, you know,
Speaker 8: towards the end of the end of the decade. So
Speaker 8: you know, we really think that Fiser is going to
Speaker 8: have to go out, you know, either in license at
Speaker 8: jilp one or do some sort of M and A.
Speaker 8: They're well positioned to do that. You know, they've got
Speaker 8: ten to fifteen billion of M and A firepower, you
Speaker 8: know to four acquisitions. So that's really you know, how
Speaker 8: we think that they're going to do, you know, play
Speaker 8: catch up in this space in terms of you know,
Speaker 8: I mentioned some biotechs out there that have you know,
Speaker 8: quite appealing assets. You know, you've also got China too,
Speaker 8: so you know we've seen some you know, very competitive
Speaker 8: data in Chinese patients for some of those domestic players.
Speaker 8: And you know we've seen the lights of Novo Astra
Speaker 8: Mark kind of all kind of you know, delve into
Speaker 8: China's R and D locker to essentially bolster their OBCI pipelines.
Speaker 2: All right, hey, Mike, you know we much prefer to
Speaker 2: talk to you than Sam Fazzelli. This is a nice refreshman.
Speaker 2: So we hired Mikey Shaw like a million years ago.
Speaker 3: He was a kid. Now he's a grizzled veteran.
Speaker 2: I see little gray hair there, and he's one of
Speaker 2: the leading pharmaceutical analysts all across Europe and we appreciate
Speaker 2: getting a few minutes of his time. Mikey Shaw senior
Speaker 2: Pharma and biotech analysts for Bloomberg Intelligence as part of
Speaker 2: that just that great global healthcare team that we have
Speaker 2: at Bloomberg Intelligence, led by Sam Fazzelli.
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