WEBVTT - Warner Bros. Weighs Sale Amid Interest From Several Parties 

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<v Speaker 2>YouTube, Netflix, Comcast said to be interested in Warner Brothers.

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<v Speaker 2>Who isn't interested in Warner Brothers Discovery Again, I spent

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<v Speaker 2>most of my career putting that company together. Now they're

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<v Speaker 2>taking it a part. Go figure. That's how the bankers

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<v Speaker 2>and lawyers get paid. That's how it works, folks. Geith

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<v Speaker 2>ron Gannathan Bloomberg Intelligence analyst. She covers all the media stuff.

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<v Speaker 2>She's been covering media for gosh, north of fifteen years now,

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<v Speaker 2>one of the best on the street. Githa, I'm gonna

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<v Speaker 2>put it to you. You got to get this deal done.

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<v Speaker 2>I mean, what happens to Warner Brothers Discovery here.

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<v Speaker 3>Oh they're gonna get sold Paul one way or the other,

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<v Speaker 3>and David Zaslav will make sure of that. So his

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<v Speaker 3>whole move this morning. Yes, we got the red headline

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<v Speaker 3>on Netflix and Comcast, but before that, basically what Warner

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<v Speaker 3>Brothers management team did is they kind of launched this

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<v Speaker 3>whole strategic review of the company, which was basically amounting

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<v Speaker 3>to just putting on like a forced sale sign. So,

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<v Speaker 3>you know, we know that they wanted to already split

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<v Speaker 3>their company into two parts. You have the low growth business,

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<v Speaker 3>which was TV Networks. You have the other high growth

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<v Speaker 3>streaming and studios. But really the problem for Warner Brothers

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<v Speaker 3>Discovery was that they were you know, I guess the

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<v Speaker 3>way that people were thinking about it was not everybody

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<v Speaker 3>was kind of incentivized to put in a bid for

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<v Speaker 3>the whole company other than Paramount. And this is really

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<v Speaker 3>the way that they kind of drum up interest from

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<v Speaker 3>everybody to kind of get that sale process going.

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<v Speaker 4>So where does Paramount stand? I mean, wasn't their offer

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<v Speaker 4>too low? Were they going to come back? What are

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<v Speaker 4>they doing now?

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<v Speaker 3>Yeah, So, you know, we had a Bloomberg report suggesting

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<v Speaker 3>that Paramount made a twenty dollars per share offer, which

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<v Speaker 3>was rejected. There were multiple reports this morning suggested that

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<v Speaker 3>Paramount actually made several bits for Warner Brothers Discovery, all

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<v Speaker 3>higher than that reported twenty dollars price, so probably somewhere

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<v Speaker 3>even upwards of twenty five dollars, but again those were rejected.

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<v Speaker 5>So this is.

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<v Speaker 3>Basically, you know, really kind of forcing Paramount's hand to

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<v Speaker 3>raise their price pretty significantly. We know it's been reported

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<v Speaker 3>that you know, David's aslov is seeking something like forty

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<v Speaker 3>dollars per share for all of the company, and so

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<v Speaker 3>this is really his way, you know, kind of putting

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<v Speaker 3>you know, basically inviting everybody out there to bid on

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<v Speaker 3>all of the assets. Really kind of forcing Paramount to

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<v Speaker 3>take that price up or the price point up for

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<v Speaker 3>Warner Brothers pretty pretty dramatically.

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<v Speaker 2>All right, here's my prediction. You heard it here, folks,

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<v Speaker 2>This will be the biggest M and A ticket certainly

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<v Speaker 2>in the TMT space ever because they have so many

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<v Speaker 2>companies that have to be bought sold here, so much financing,

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<v Speaker 2>so much refinancing. Everybody's going to get paid here. The

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<v Speaker 2>name that kind of came out of nowhere for some

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<v Speaker 2>people GITHA is Comcast. But we know Bran, we know

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<v Speaker 2>the team there. They are very comfortable during transformational deals here.

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<v Speaker 2>What do you think Comcast strategy is?

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<v Speaker 3>So this actually, Paul, if you just kind of think

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<v Speaker 3>about it even more than Netflix, and you know this

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<v Speaker 3>really well the Warner Brothers Discovery really makes perfect sense

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<v Speaker 3>for comcasts. I mean, they have linear TV assets, they

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<v Speaker 3>have a streaming business with Peacock, they have a fabulous

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<v Speaker 3>studio with Universal. They could do a lot, a lot

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<v Speaker 3>with the Warner Brothers Discovery assets. And I think everybody's

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<v Speaker 3>kind of looking at this as a once in a generation,

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<v Speaker 3>as a once in a lifetime opportunity. I mean, you

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<v Speaker 3>let Warner Brothers Discovery go, there's really nothing else on

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<v Speaker 3>the market that even compares, that even comes close to

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<v Speaker 3>these assets. I mean you have top tier ip here,

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<v Speaker 3>whether you're thinking about DC Comics or Harry Potter or

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<v Speaker 3>Game of Thrones, So everybody knows they have to do something.

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<v Speaker 3>I think it makes a lot of sense for comcasts.

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<v Speaker 3>The only problem for them is really going to be

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<v Speaker 3>getting regulatory approval. We know that, you know, Brand Roberts

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<v Speaker 3>has not exactly been in the good graces of either

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<v Speaker 3>the FCC or the Trump administration, so that's going to

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<v Speaker 3>be a difficult hurdle to cross. And then of course financing.

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<v Speaker 3>I mean, this is going to be, as you just said,

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<v Speaker 3>it's going to be the biggest deal probably for a

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<v Speaker 3>long time to come in the media space. So we're

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<v Speaker 3>looking at you know, tens of billions of dollars, if

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<v Speaker 3>not maybe even hundreds.

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<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming.

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<v Speaker 2>Up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am. He's done on Apple, Cocklay and

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<v Speaker 1>Android Auto with the Bloomberg Business app. Listen on demand

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<v Speaker 1>YouTube ahead.

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<v Speaker 2>You know, all these companies reporting earnings, Lockheed Martin, just

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<v Speaker 2>Rathon some really good numbers. GE Airspace rt X, which

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<v Speaker 2>is j Ratheon, also reported some good numbers. Let's go

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<v Speaker 2>to the analys who covers this stuff for Bloomberg Intelligence,

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<v Speaker 2>George Ferguson. He's been covering these companies for decades and

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<v Speaker 2>he has Bloomberg Intelligence senior Aerospace, Defense and Airlines analysts,

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<v Speaker 2>George ste Ge Air. Here's a company that you know,

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<v Speaker 2>we've all grown up with GE putting itself together than

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<v Speaker 2>breaking itself apart into smaller companies. I think the market

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<v Speaker 2>likes this. Ge Airspace business doesn't.

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<v Speaker 7>Yeah, so I think it's telling too that Larry Colep,

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<v Speaker 7>the CEO of the combined companies, broke them apart and

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<v Speaker 7>went with the aerospace business, right, that was the other

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<v Speaker 7>the crown jewel. They're they're the largest maker of jet

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<v Speaker 7>engines globally. I think they have probably the best technology

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<v Speaker 7>for jet engines globally. And look, this was a really

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<v Speaker 7>nice quarter. Margins were even stronger than we expected. I

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<v Speaker 7>think they may be close to plateauing though. Here there's

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<v Speaker 7>just a heavy, heavy demand for aircraft maintenance, even higher

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<v Speaker 7>than sort of the amount of the increase in airline

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<v Speaker 7>traffic would indicate just a lot of pent up demand.

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<v Speaker 7>And then coming out of the pandemic and some of

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<v Speaker 7>the newer technology engines just aren't as robust, so a

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<v Speaker 7>lot of people flying the old ones longer. And we

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<v Speaker 7>heard a lot of good news about supply chain. Supply

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<v Speaker 7>chain sound like it was delivering. For Larry, it's been

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<v Speaker 7>generally been a challenge. It was delivering, and he had

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<v Speaker 7>parts to put on airplanes and those were high margin

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<v Speaker 7>parts and each each showed it in the financial statements.

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<v Speaker 4>Hey, George, you mentioned maintenance and repairs. So does that

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<v Speaker 4>help the company kind of offset those those higher costs

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<v Speaker 4>when you have the rise in the new engine deliveries.

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<v Speaker 7>Yeah, So, like I said, I think we might be

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<v Speaker 7>seeing a plateau here in the margins we're gonna get

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<v Speaker 7>out of this company. So the air framers Bowing and

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<v Speaker 7>Airbus have been slow in ramping up deliveries because they're

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<v Speaker 7>working through their supply chain challenges. So we really see

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<v Speaker 7>Boeing an Airbus increasing deliveries of new aircraft all the

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<v Speaker 7>way to the back end of the decade. And that

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<v Speaker 7>increase in deliveries is going to you know, we'll come

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<v Speaker 7>with those new engines from ge and RTX for that matter,

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<v Speaker 7>and those are diluted to margins, so you know, so

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<v Speaker 7>they're kind of in this sweet spot where the original equipment,

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<v Speaker 7>you know, shipments haven't taken off yet because Boeing and

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<v Speaker 7>Airbus are working on that supply chain and they're doing

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<v Speaker 7>a lot of spare parts deliveries and that's really juicing

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<v Speaker 7>profitability very strongly. So next year I think becomes more

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<v Speaker 7>challenging on the whole profitability front.

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<v Speaker 2>All right, George, rt X, the old wraitheon. That's kind

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<v Speaker 2>of how I know this company. Tell us like what's

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<v Speaker 2>the business of RTX, what are their specialties and what

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<v Speaker 2>did they report?

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<v Speaker 7>So they they make jet engines as well, right, competitor

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<v Speaker 7>to ge. They make the pratt Wickie gear turbo fan.

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<v Speaker 7>They have the Collins business, which is is all kinds

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<v Speaker 7>of parts for aircraft, you know, it could be breaks,

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<v Speaker 7>it could be landing gear. And then they've got the

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<v Speaker 7>Raytheon business, which is the old wraitheon that you know,

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<v Speaker 7>the defense contractor from up Boston area, and they make

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<v Speaker 7>they make radars, they missiles, they make air defense kind

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<v Speaker 7>of equipment, and like all of the you know, all

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<v Speaker 7>of those businesses in that portfolio are really clicking right now. Look,

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<v Speaker 7>defense is going to grow slower. It takes time. The

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<v Speaker 7>backlog builds quickly, but it takes a lot longer to

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<v Speaker 7>build some of those products because they're not you know,

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<v Speaker 7>running down a line that are making you know, as

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<v Speaker 7>many like you know seven thirty sevens or a three

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<v Speaker 7>twenties where you're doing five or six hunderd a year.

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<v Speaker 7>These are a lot slower cadence. But we're seeing a

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<v Speaker 7>lot of demand from customers around the world for missiles

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<v Speaker 7>and for air defense, and so that backlog continues to

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<v Speaker 7>build and they're building margin in that business. They're still

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<v Speaker 7>in kind of eleven is twelve ish percent margin. That

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<v Speaker 7>was quite good in that defense business, and then at

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<v Speaker 7>the same time, like it has told you, for GE,

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<v Speaker 7>the strength of demand for aircraft maintenance right now and

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<v Speaker 7>the high margin parts that go into it thoroughly drove

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<v Speaker 7>that Allen's business. Their collins business is a thirteen ish

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<v Speaker 7>fourteen percent is operating margin business, really seeing strong growth.

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<v Speaker 7>Their engine business is not as strong as gees. GE's

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<v Speaker 7>returns in the twenty plus percent margins pat and Whitney's

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<v Speaker 7>kind of an eight to nine percent operating margin. They've

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<v Speaker 7>had problems with their latest narrow body engines, so they're

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<v Speaker 7>managing some of those issues. They just don't the volume

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<v Speaker 7>that GE has, but they continue to see margin growth

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<v Speaker 7>in that business too as they deliver spare parts of

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<v Speaker 7>some of the older legacy V twenty five hundred engines

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<v Speaker 7>we know them as that power old A three twenties.

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<v Speaker 7>Really did a nice job in that business, and they

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<v Speaker 7>raise guidance even more than GE going into the back

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<v Speaker 7>into the last quarter of the year. I think they

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<v Speaker 7>had some of that in their back pocket, but it

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<v Speaker 7>looked pretty nice.

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<v Speaker 4>Hey, jeorded before you go about a minute left on

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<v Speaker 4>they're one of the largest recipients of US federal contract

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<v Speaker 4>funding we're talking about RTX. Can you name some of

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<v Speaker 4>the projects they're working on with the Trump administration. What

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<v Speaker 4>are they working on?

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<v Speaker 7>Yeah, so, I mean they're gonna do things like patriot

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<v Speaker 7>missile systems. They're gonna do a bunch of sorry, patriot

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<v Speaker 7>air defense systems. They're gonna do a bunch of missile

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<v Speaker 7>systems like gen T all right, you can think of

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<v Speaker 7>if you know, in air defense, you use they make

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<v Speaker 7>radars as well. You use a radar, you find a target,

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<v Speaker 7>you you sort all the targets you got coming at

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<v Speaker 7>you at it, and then you have to shoot a

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<v Speaker 7>high value interceptor at that target. And the reason that

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<v Speaker 7>interceptor is so high value is it's got to go

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<v Speaker 7>and hit a missile approaching you know, your position, your country, whatever,

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<v Speaker 7>which means you put a lot of value out in

0:10:41.720 --> 0:10:44.600
<v Speaker 7>that missile so it can go find another one and

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<v Speaker 7>destroy it. So that's part of what they're building. They'll

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<v Speaker 7>also probably be involved in the in the you know,

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<v Speaker 7>the Global Dome or whatever, you know, the our version

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<v Speaker 7>of iron.

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<v Speaker 2>Dome, Golden Dome. Yeah.

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<v Speaker 7>Yeah, So there's just a lot of demand for the

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<v Speaker 7>products that they're going to build.

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<v Speaker 6>Stay with us more from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

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<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

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0:11:23.840 --> 0:11:27.160
<v Speaker 2>An automaker, General Motors put out some really good numbers

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<v Speaker 2>here and the stocks are reacting up double digits. You're

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<v Speaker 2>Steve manjoins is Bloomberg Intelligence Global Autos and Industrials Research analyst. Steve.

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<v Speaker 2>What are your takeaways from the results from our friends

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<v Speaker 2>at General Motors?

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<v Speaker 5>Hey, Paul, I mean, the earnings report was just half

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<v Speaker 5>of the story. The call was very, very positive, That's

0:11:49.160 --> 0:11:53.440
<v Speaker 5>my takeaway. And the biggest takeaway from that call was

0:11:53.559 --> 0:11:58.600
<v Speaker 5>really the mixshift towards more selling more bigger SUVs, the

0:11:58.640 --> 0:12:05.839
<v Speaker 5>picka trucks. Those are usually the highest margin business for them.

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<v Speaker 4>Now they did get some really from the Trump Administration's

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<v Speaker 4>tariffs on auto parts, right, wasn't that part of the discussions?

0:12:12.160 --> 0:12:15.120
<v Speaker 5>Yeah, terroriffs is one thing, but I think for twenty

0:12:15.200 --> 0:12:20.040
<v Speaker 5>twenty six, the stars are really aligning for higher profit

0:12:20.120 --> 0:12:24.240
<v Speaker 5>for General Motors. So you got lower terrorists but lower

0:12:24.280 --> 0:12:27.880
<v Speaker 5>tariff costs for general motors and for the industry. Right,

0:12:28.080 --> 0:12:32.160
<v Speaker 5>you have actually the elimination of admission penalties. So a

0:12:32.200 --> 0:12:35.760
<v Speaker 5>lot of in the past automakers in the US had

0:12:35.800 --> 0:12:40.520
<v Speaker 5>to pay a penalty for selling these gas guzzling SUVs

0:12:40.600 --> 0:12:43.720
<v Speaker 5>and pickup trucks. Now they don't have to do that anymore.

0:12:43.960 --> 0:12:46.559
<v Speaker 5>So that's going to contribute to the bottom line, right,

0:12:46.600 --> 0:12:49.280
<v Speaker 5>and then they're gonna they're also not going to sell

0:12:49.320 --> 0:12:54.600
<v Speaker 5>as many evs. EV's are basically loss making for many

0:12:54.640 --> 0:12:57.640
<v Speaker 5>of the automakers, So you know, you get all these

0:12:58.080 --> 0:13:01.440
<v Speaker 5>contributors into the for the twenty twenty six earnings.

0:13:03.679 --> 0:13:06.079
<v Speaker 2>And Steve, maybe this is just me being a you know,

0:13:06.600 --> 0:13:08.920
<v Speaker 2>a cynical Wall Street guy, but reading between the lines,

0:13:09.000 --> 0:13:11.120
<v Speaker 2>I took away that message that they were backing up

0:13:11.400 --> 0:13:14.920
<v Speaker 2>as much as they possibly could from evs, and if

0:13:14.920 --> 0:13:17.760
<v Speaker 2>I'm an investor, that's a positive for me from a

0:13:17.800 --> 0:13:20.320
<v Speaker 2>profitability standpoint. Might is that too much reading between the lines?

0:13:20.400 --> 0:13:22.760
<v Speaker 2>Or do you think GM and maybe even Ford and

0:13:22.760 --> 0:13:24.240
<v Speaker 2>Stalantes are backing away.

0:13:24.520 --> 0:13:27.960
<v Speaker 5>Absolutely not, they are backing away. GM just took a

0:13:28.000 --> 0:13:31.800
<v Speaker 5>one point six billion dollar charge, most of it was

0:13:31.920 --> 0:13:36.079
<v Speaker 5>to rationalize ev production capacity in the US. I think

0:13:36.120 --> 0:13:39.560
<v Speaker 5>everybody is seeing that EV sales in the US in

0:13:39.600 --> 0:13:43.320
<v Speaker 5>the next quarter, maybe two quarters. Well, we'll be down

0:13:43.400 --> 0:13:46.920
<v Speaker 5>quite a bit after the poll heead demand. We'll see

0:13:46.960 --> 0:13:51.200
<v Speaker 5>how what the penetration is beyond that. But you know,

0:13:51.280 --> 0:13:54.839
<v Speaker 5>they're cutting capacity. They're going to have to revisit their portfolio.

0:13:55.080 --> 0:13:59.720
<v Speaker 5>Especially GM. They have launched more vehicles than you know,

0:13:59.760 --> 0:14:03.360
<v Speaker 5>they're Detroit Rivals, so they're gonna have to look at that.

0:14:03.920 --> 0:14:06.520
<v Speaker 6>So, you know, evs for GM.

0:14:06.600 --> 0:14:09.800
<v Speaker 5>You know, they call it variable profit, but at the

0:14:09.880 --> 0:14:12.199
<v Speaker 5>end of the day, the bottom line is still loss

0:14:12.200 --> 0:14:15.800
<v Speaker 5>making for these vehicles. And you know when when when

0:14:15.800 --> 0:14:19.640
<v Speaker 5>they sell less of them, uh, the mixshift improves. Uh,

0:14:19.800 --> 0:14:22.080
<v Speaker 5>you know, you get and then now you're they're probably

0:14:22.080 --> 0:14:26.320
<v Speaker 5>gonna even sell more uh, SUVs and and and pickup trucks.

0:14:26.360 --> 0:14:32.160
<v Speaker 5>Those are typically the highest margin business vehicles for them.

0:14:32.200 --> 0:14:34.640
<v Speaker 4>So what exactly did Mary Bot have to say about

0:14:34.680 --> 0:14:37.680
<v Speaker 4>the EV adoption? Does she give any specific numbers or

0:14:37.920 --> 0:14:38.720
<v Speaker 4>or dates?

0:14:38.720 --> 0:14:39.800
<v Speaker 2>Extend any dates?

0:14:40.000 --> 0:14:43.000
<v Speaker 5>Now she wouldn't. She didn't give any dates, but it

0:14:43.120 --> 0:14:47.960
<v Speaker 5>is still a priority quote unquote priority. She called it

0:14:48.000 --> 0:14:54.120
<v Speaker 5>the north Star for General motors. She thinks that long term, uh,

0:14:54.160 --> 0:14:56.840
<v Speaker 5>and she didn't really define what long term is is

0:14:56.840 --> 0:15:01.000
<v Speaker 5>that there's going to be a continued shift uh into evs.

0:15:01.160 --> 0:15:03.480
<v Speaker 5>And I think you know when you when you listen

0:15:03.600 --> 0:15:06.480
<v Speaker 5>to some of the consumers in the marketplace, you know

0:15:06.520 --> 0:15:10.120
<v Speaker 5>a lot of them who switched over to evs do

0:15:10.360 --> 0:15:13.240
<v Speaker 5>like them. I'm not sure if that the evs are

0:15:13.320 --> 0:15:15.720
<v Speaker 5>are going to be there, you know, their only vehicle.

0:15:15.880 --> 0:15:19.520
<v Speaker 5>I think it fits, especially in the US marketplace as

0:15:19.520 --> 0:15:24.480
<v Speaker 5>a second vehicle, a commuter vehicle. So I think you

0:15:24.520 --> 0:15:28.080
<v Speaker 5>know there will be there will be adoption of EV's.

0:15:28.120 --> 0:15:31.880
<v Speaker 5>I think even before the seventy five hundred dollars credit

0:15:32.040 --> 0:15:35.520
<v Speaker 5>was was was available, there was some you know, we

0:15:35.600 --> 0:15:37.480
<v Speaker 5>did see a start of ev adoption.

0:15:39.160 --> 0:15:41.600
<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming.

0:15:41.480 --> 0:15:42.240
<v Speaker 2>Up after this.

0:15:45.760 --> 0:15:49.480
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:15:49.560 --> 0:15:52.080
<v Speaker 1>weekdays at ten a m. Eastern on Apple Cock Play

0:15:52.120 --> 0:15:55.080
<v Speaker 1>and Android Auto with the Bloomberg Business app. Listen on

0:15:55.160 --> 0:15:58.440
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0:15:58.480 --> 0:15:59.120
<v Speaker 1>on YouTube.

0:16:00.000 --> 0:16:02.600
<v Speaker 2>A big, big day for earnings. We had industrial companies out.

0:16:02.880 --> 0:16:05.720
<v Speaker 2>We also had General Motors out. Get some consumer companies

0:16:05.720 --> 0:16:08.960
<v Speaker 2>coming out with earnings today as well, Philip Mars, Coca Cola,

0:16:09.680 --> 0:16:11.440
<v Speaker 2>and we'd go to Ken Che He covers all these

0:16:11.440 --> 0:16:15.400
<v Speaker 2>consumer facing companies for Bloomberg in intelligence. Hey can let's

0:16:15.760 --> 0:16:18.320
<v Speaker 2>start with Coca Cola. I am a Coca Cola person,

0:16:18.360 --> 0:16:20.280
<v Speaker 2>but again it's been widely reported that if you put

0:16:20.280 --> 0:16:21.760
<v Speaker 2>au PEPs in front of me, I'm just as happy.

0:16:21.800 --> 0:16:23.320
<v Speaker 2>But I'll talk to about Coca Cola.

0:16:23.360 --> 0:16:23.480
<v Speaker 7>Ken.

0:16:23.480 --> 0:16:25.720
<v Speaker 2>What what did you hear from them? Sure?

0:16:25.720 --> 0:16:29.240
<v Speaker 8>All right, Paul so Cola Cola. Today they reported numbers

0:16:29.280 --> 0:16:33.600
<v Speaker 8>that were slightly better than expected. The organic growth probably

0:16:33.600 --> 0:16:37.000
<v Speaker 8>the biggest metric of all is about six percent operating

0:16:37.000 --> 0:16:39.600
<v Speaker 8>margins wide and better than expected. EPs came in a

0:16:39.640 --> 0:16:42.920
<v Speaker 8>little better. So that's why I'd probably why the shares

0:16:42.920 --> 0:16:45.160
<v Speaker 8>are trading a little higher today. So it's good. They

0:16:45.200 --> 0:16:48.280
<v Speaker 8>reiterated their expectations for the full year. They gave a

0:16:48.320 --> 0:16:51.920
<v Speaker 8>hint for next year. They said, basically, they see lots

0:16:51.920 --> 0:16:55.880
<v Speaker 8>of opportunities in some product innovation, so look out for

0:16:55.960 --> 0:17:02.080
<v Speaker 8>things like more rollout of the zero colin sprites, zero sugar,

0:17:02.080 --> 0:17:07.240
<v Speaker 8>I should say, more fair life protein drinks, more enhanced

0:17:07.400 --> 0:17:12.240
<v Speaker 8>and low sugar sports drinks, and enhanced waters. So these

0:17:12.240 --> 0:17:16.320
<v Speaker 8>are really the franchise full beverage products that they're known

0:17:16.359 --> 0:17:19.359
<v Speaker 8>for and so they're going to continue to innovate next year.

0:17:19.440 --> 0:17:21.800
<v Speaker 8>I should ask one quick thing. Another big news with

0:17:21.920 --> 0:17:25.040
<v Speaker 8>Coke today is that they were successful in some of

0:17:25.040 --> 0:17:28.440
<v Speaker 8>their refranchising. Basically, what that means is they're monetizing a

0:17:28.480 --> 0:17:32.960
<v Speaker 8>lot of their bottling assets. They were instrumental in selling

0:17:33.160 --> 0:17:36.720
<v Speaker 8>some seventy five percent of their Coca Cola Africa unit today.

0:17:38.000 --> 0:17:41.160
<v Speaker 8>So anyway, what that does is streamlines and strengthens their

0:17:41.200 --> 0:17:43.679
<v Speaker 8>global bottling network. And so I think that was another

0:17:43.760 --> 0:17:45.919
<v Speaker 8>reason for investor encouragement today.

0:17:48.200 --> 0:17:50.199
<v Speaker 4>Yeah, that was some big news that came out earlier

0:17:50.200 --> 0:17:53.640
<v Speaker 4>before the earnings came out. Now, if we talk about earnings,

0:17:53.840 --> 0:17:55.600
<v Speaker 4>you said, the consumers are still buying the drinks, but

0:17:55.600 --> 0:17:57.240
<v Speaker 4>they're buying them at higher prices too.

0:17:57.320 --> 0:18:00.639
<v Speaker 8>No, they are for the most part. And that's one

0:18:00.680 --> 0:18:03.000
<v Speaker 8>of the things Coca Cola did mention today. He said,

0:18:03.040 --> 0:18:05.480
<v Speaker 8>you know, I mean again, a company that's this global,

0:18:05.480 --> 0:18:07.920
<v Speaker 8>you're going to have pockets of strength and weakness. And

0:18:08.000 --> 0:18:10.760
<v Speaker 8>so they said, you know, in some areas are doing well,

0:18:11.680 --> 0:18:16.439
<v Speaker 8>people are trading up and still favoring the premium products. Affordability, though,

0:18:16.560 --> 0:18:18.720
<v Speaker 8>was a key issue in other big markets. So Mexico,

0:18:18.800 --> 0:18:23.320
<v Speaker 8>for instance, is having a tough time macroeconomics. And by

0:18:23.320 --> 0:18:25.720
<v Speaker 8>the way, Mexico is also going to pass a big

0:18:25.720 --> 0:18:29.040
<v Speaker 8>sugar tax beginning next year, so they're a little wary

0:18:29.119 --> 0:18:30.600
<v Speaker 8>on that, and so they're going to be rolling out

0:18:30.600 --> 0:18:36.200
<v Speaker 8>a lot of affordability, universal bottles, returnable bottles, smaller package

0:18:36.200 --> 0:18:38.719
<v Speaker 8>of sizes. So the company, you know, it's been doing

0:18:38.800 --> 0:18:40.959
<v Speaker 8>us a long time though, so they've been through, you know,

0:18:41.200 --> 0:18:44.119
<v Speaker 8>some of these ebbs and flows of the markets.

0:18:44.440 --> 0:18:51.959
<v Speaker 2>It's well positioned, Philip marsh that this is the tobacco company.

0:18:52.000 --> 0:18:55.000
<v Speaker 2>They had some numbers out today, stopped trading down a

0:18:55.040 --> 0:18:55.760
<v Speaker 2>little bit here today.

0:18:57.320 --> 0:19:00.280
<v Speaker 8>Yeah, Paul Pilla Morris also hit their numbers. It was

0:19:00.320 --> 0:19:03.840
<v Speaker 8>a really strong quarter EPs on a comparable base of

0:19:03.920 --> 0:19:07.200
<v Speaker 8>seventeen percent, strong top line margin improvement. It was hard

0:19:07.200 --> 0:19:09.479
<v Speaker 8>to find any fault with the actual numbers that came in.

0:19:09.720 --> 0:19:12.960
<v Speaker 8>But I think what may we've got a little some

0:19:13.000 --> 0:19:15.240
<v Speaker 8>people a little nervous was that they lowered their guidance

0:19:15.240 --> 0:19:18.199
<v Speaker 8>for operating organic operating earnings and a lot of that

0:19:18.320 --> 0:19:20.879
<v Speaker 8>is just reinvestment in the business. One of the biggest

0:19:20.880 --> 0:19:25.120
<v Speaker 8>products successes in recent years has been this zin oral

0:19:25.240 --> 0:19:28.640
<v Speaker 8>nicotine product. It's a non tobacco pouch product. You put,

0:19:28.640 --> 0:19:30.640
<v Speaker 8>you know, put in your mouth, you don't spit, get

0:19:30.640 --> 0:19:34.280
<v Speaker 8>your nicked, your nicotine buzz that way. It's doing wonderful.

0:19:35.119 --> 0:19:38.920
<v Speaker 8>The company said that now that has recently edits some

0:19:39.000 --> 0:19:42.639
<v Speaker 8>manufacturing capacity and has some more supplies, it's going to

0:19:42.720 --> 0:19:45.600
<v Speaker 8>look to expand the market. How do you expand the market.

0:19:46.359 --> 0:19:49.760
<v Speaker 8>You convince smokers to move to a non combustible variety,

0:19:49.800 --> 0:19:52.240
<v Speaker 8>particularly in the US. So it's spent a quite a

0:19:52.240 --> 0:19:54.840
<v Speaker 8>bit of money to do that. And so for those

0:19:54.960 --> 0:19:57.280
<v Speaker 8>you know, with a short term mind, I guess they

0:19:57.320 --> 0:19:59.439
<v Speaker 8>were a little nervous about, you know, that lowered guidance

0:19:59.440 --> 0:20:02.639
<v Speaker 8>for operating earnings. But I think they're doing the smart

0:20:02.640 --> 0:20:04.399
<v Speaker 8>thing longer term thout, If you're a long term investor,

0:20:04.480 --> 0:20:08.399
<v Speaker 8>it's hard to find fault in that strategy.

0:20:09.720 --> 0:20:13.680
<v Speaker 4>How big is their smoke free business, it's now.

0:20:13.480 --> 0:20:16.159
<v Speaker 8>About forty one percent of their total business, and the

0:20:16.320 --> 0:20:19.960
<v Speaker 8>way of ahead of their competitors. Why I say smoke free,

0:20:20.000 --> 0:20:23.600
<v Speaker 8>you're talking about a combination of things, the so called

0:20:23.600 --> 0:20:26.560
<v Speaker 8>heat and not burn icoas family of products that contains

0:20:26.600 --> 0:20:30.160
<v Speaker 8>actually some nicotine in there that heats it, that doesn't

0:20:30.160 --> 0:20:34.760
<v Speaker 8>burn it. You have the revive e vapor product like

0:20:34.760 --> 0:20:38.520
<v Speaker 8>an eat cigarette, and then you also have these in

0:20:39.200 --> 0:20:42.160
<v Speaker 8>oral nicotine products. So it's combined. You have really three

0:20:42.400 --> 0:20:45.720
<v Speaker 8>really strong franchises, and they're at the point now where

0:20:46.119 --> 0:20:48.960
<v Speaker 8>they come on a combined basis, they're more profitable. I'm

0:20:49.000 --> 0:20:53.719
<v Speaker 8>an operating margin standpoint. Then they're conventional cigarette business. So

0:20:53.760 --> 0:20:55.919
<v Speaker 8>the faster this thing grows and it has a bigger

0:20:56.160 --> 0:20:59.240
<v Speaker 8>proportion of their business, it's all good from a margin standpoint.

0:21:00.160 --> 0:21:04.800
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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