WEBVTT - AMD Suffers Worst Rout Since 2018 on Disappointing Forecast 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Coarclay, and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.520 or watch us live on YouTube. 0:00:24.079 --> 0:00:26.360 I want to start John with the AMD. That stock. 0:00:26.440 --> 0:00:28.560 That story really got my attentions down sixteen and a 0:00:28.600 --> 0:00:30.400 half percent today. I mean, this was one of the 0:00:30.480 --> 0:00:32.760 Darling tech stocks, the chip names that we're really writing 0:00:32.800 --> 0:00:36.400 the AI wave here, and it's at its worst day 0:00:36.440 --> 0:00:40.040 since twenty seventeen. Stocks up seventy percent over the trailing 0:00:40.040 --> 0:00:40.879 twelve months, but taking a. 0:00:40.840 --> 0:00:41.400 Big hit today. 0:00:41.400 --> 0:00:43.120 So let's figure out what's going on in that part 0:00:43.159 --> 0:00:45.720 of the world. Kun John Sabanni joins US senior analyst 0:00:45.920 --> 0:00:49.600 covering the semiconductor companies Bloomberg Intelligency's based on our Los 0:00:49.640 --> 0:00:53.080 Angeles OFFICEO John, is this an Norman reaction for AMD? 0:00:53.280 --> 0:00:56.040 Is there something fundamentally problematic there? 0:00:57.680 --> 0:01:01.000 There was nothing fundamentally wrong in this report. 0:01:01.280 --> 0:01:03.200 There were a lot of good things to take away, 0:01:03.240 --> 0:01:05.160 but it comes down to you know, when you become 0:01:05.160 --> 0:01:08.200 an ar Darling, you set up really, really high expectations, 0:01:08.640 --> 0:01:12.200 and when you take out the China revenue, which was 0:01:12.240 --> 0:01:15.560 not included in the guidance and the expectations, the beat 0:01:15.680 --> 0:01:18.600 came out pretty modest, which I guess people didn't like, 0:01:18.680 --> 0:01:21.600 and then was not at power against the really high 0:01:21.640 --> 0:01:24.399 expectations that you have now every quarter from these companies. 0:01:25.080 --> 0:01:28.000 Like they used to ask in the old Westerns, you know, 0:01:28.280 --> 0:01:29.920 is there room enough for the two of us in 0:01:29.959 --> 0:01:30.360 this town? 0:01:30.720 --> 0:01:35.280 Is there room enough for them? And in Nvidia there 0:01:35.319 --> 0:01:37.520 is right now. I mean, look, all the tide is 0:01:37.560 --> 0:01:41.080 lifting all boats. There is so much demand for accelator 0:01:41.160 --> 0:01:44.520 chips that there's room for AMD as a GPU provider. 0:01:44.560 --> 0:01:47.680 There's even room for other folks like Broadcommon Marvell as 0:01:47.680 --> 0:01:48.560 an AC provider. 0:01:48.600 --> 0:01:51.600 So there's a plenty of demand right now. You know. 0:01:51.800 --> 0:01:53.840 I used to work for a portfolio manager and you know, 0:01:53.880 --> 0:01:55.680 one of our native I was recommending AMD and it 0:01:55.720 --> 0:01:58.400 had a day like today. He would just pop ahead 0:01:58.440 --> 0:02:02.400 and said, do we like management? Do we still like management? 0:02:02.440 --> 0:02:05.040 And if the answer was yes, oftentimes you'd go out 0:02:05.080 --> 0:02:07.000 and buy more on days like today? 0:02:07.160 --> 0:02:07.960 Do we like management? 0:02:07.960 --> 0:02:08.280 At least? 0:02:08.280 --> 0:02:11.200 As Sue, I think is just when I just see 0:02:11.200 --> 0:02:13.200 your interviews, it seems super on top of it. 0:02:14.400 --> 0:02:18.240 Yeah, I mean, like I said, fundamentally, nothing changed from yesterday. 0:02:18.320 --> 0:02:22.359 Right Their CPU story continues to become stronger. Nobody's paying 0:02:22.360 --> 0:02:24.520 attention to do it right now because all the focuses 0:02:24.560 --> 0:02:27.600 on GPU and competing with Nvidia, But people are forgetting 0:02:27.680 --> 0:02:29.880 inherently I when you look at two years back, this 0:02:30.040 --> 0:02:34.160 was really a CPU company. Their GPU storyline remains intact. 0:02:34.280 --> 0:02:37.360 We didn't expect any fireworks coming into this earnings. We 0:02:37.400 --> 0:02:40.839 don't expect it until really four Q twenty twenty six, 0:02:40.919 --> 0:02:43.880 so the market is aware of this. We really have 0:02:43.960 --> 0:02:46.760 to wait until the four Q twenty twenty six. This 0:02:46.880 --> 0:02:49.280 is when they will be really put to tests if 0:02:49.280 --> 0:02:52.840 they can really execute their first server level. 0:02:52.600 --> 0:02:53.320 Solution or not. 0:02:53.480 --> 0:02:57.040 So there's nothing changed overnight yesterday that we saw should 0:02:57.080 --> 0:02:58.480 really concern us. 0:02:59.200 --> 0:03:01.919 How important is China in all this? I thought the 0:03:01.960 --> 0:03:04.880 expert restrictions were lifted. I mean, what's what's taking some on? 0:03:06.360 --> 0:03:09.720 Well, so the expert restrictions are different for each chip. 0:03:09.800 --> 0:03:12.240 So the MI three to eight which they were able 0:03:12.280 --> 0:03:18.000 to ship, had already licenses approved prior, so that's a 0:03:18.040 --> 0:03:21.200 different chip. The newer chips that now is in the 0:03:21.280 --> 0:03:23.160 news when it comes to in media, is that aged 0:03:23.160 --> 0:03:26.120 two hundreds and equivalent, it will be the MI three 0:03:26.200 --> 0:03:28.720 twenty five licenses for those have not. 0:03:28.760 --> 0:03:29.560 Been granted yet. 0:03:29.600 --> 0:03:31.960 Even though the White House has said that yes, these 0:03:31.960 --> 0:03:35.920 companies can start shipping these products, yet the formal licenses 0:03:35.960 --> 0:03:36.920 have not been granted. 0:03:37.800 --> 0:03:40.760 Cou John some M and A in your space today, 0:03:40.880 --> 0:03:44.560 Texas Instruments has reach an agreement to buy Silicon Laboratories 0:03:44.560 --> 0:03:48.400 for about seven point five billion dollars. Here what's going 0:03:48.440 --> 0:03:49.720 on here with TI. 0:03:51.120 --> 0:03:53.520 Yeah, so just to give some context, this is sort 0:03:53.520 --> 0:03:55.600 of this size of the deal they have not done 0:03:55.640 --> 0:03:57.600 in the past. The last time they did a deal 0:03:57.680 --> 0:04:01.120 like this was buying National for about seven billion dollars 0:04:01.160 --> 0:04:04.600 in twenty eleven. So this is not their typical nature, 0:04:04.600 --> 0:04:08.080 so a bit of a surprise. Strategically, it fits well 0:04:08.640 --> 0:04:11.800 their industrial segment, which is their largest segment, and that's 0:04:11.880 --> 0:04:14.320 where they want to be focused as a missing piece 0:04:14.360 --> 0:04:17.640 when it comes to wireless connectivity in IoT, so Silicon 0:04:17.720 --> 0:04:20.960 Lab gives them that portfolio. Financially, however, it's a lot 0:04:21.000 --> 0:04:24.159 more important. They have retreated that this has not changed 0:04:24.200 --> 0:04:27.159 their pre cash foot trajectory. This has not changed their 0:04:27.160 --> 0:04:30.400 dividend path and this does not increase. The most important 0:04:30.440 --> 0:04:33.039 thing is the capex, so all those things we really like, 0:04:33.480 --> 0:04:36.200 if they're able to execute to that yet the cost energies, 0:04:36.200 --> 0:04:38.599 then this will be a really good deal for them. Also, 0:04:38.640 --> 0:04:41.080 remember TI has been on a spending spree for the 0:04:41.200 --> 0:04:43.640 last three to five years building up a lot of capacity, 0:04:43.839 --> 0:04:47.760 so this will help bring more loading to their internal factories, 0:04:48.000 --> 0:04:53.120 bring more manufacturing internal to own TI, and help with utilization. 0:04:53.600 --> 0:04:55.440 You know, one of the things we saw in the 0:04:55.480 --> 0:04:59.880 cell off today and yesterday was this capex spending when 0:05:00.040 --> 0:05:03.320 it's all going to be paying off investors getting a 0:05:03.360 --> 0:05:07.240 little impatient with everything. Is it all paying off immediately 0:05:07.400 --> 0:05:09.240 or in the near future for all these firms? 0:05:10.880 --> 0:05:13.240 Well, so there's two preci of CAPEC spending, right, The 0:05:13.600 --> 0:05:15.000 one I think you're referring to is. 0:05:14.960 --> 0:05:16.880 The high AI for everybody. 0:05:16.960 --> 0:05:21.120 Yeah, yeah, it's it's the jury is not out yet, right, 0:05:21.240 --> 0:05:24.760 We still need to see monetization. The capex spending is 0:05:24.800 --> 0:05:27.440 not done yet, so we still need to see a 0:05:27.480 --> 0:05:30.359 lot more proof points of monetization from all of this 0:05:30.640 --> 0:05:33.840 AI hyperscale infrastructure spending that's been going on. 0:05:34.680 --> 0:05:37.840 Stay with us more from Bloomberg Intelligence coming up after this. 0:05:41.680 --> 0:05:45.360 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:05:45.440 --> 0:05:48.560 weekdays at ten am Eastern on Apple, Cocklay and Android 0:05:48.560 --> 0:05:51.880 Auto with the Bloomberg Business app. Listen on demand wherever 0:05:51.920 --> 0:05:55.040 you get your podcasts, or watch us live on YouTube. 0:05:55.720 --> 0:05:58.520 Let's bring in Sam Fazzelli. Bring back Sam Fazzelli. Really, 0:05:58.720 --> 0:06:01.840 he's our Bloomberg Intelligence drug boss. That's the jacket he 0:06:01.880 --> 0:06:05.240 wore yesterday. Actually he's the director of research for Global 0:06:05.240 --> 0:06:08.320 Industries and our senior pharmaceuticals analyst. But Sam here a 0:06:08.360 --> 0:06:08.919 drug boss. 0:06:09.040 --> 0:06:09.599 Let's face it. 0:06:10.279 --> 0:06:13.360 Let's talk a little bit about Eli Lilly and its 0:06:13.520 --> 0:06:17.120 upbeat guidance in contrast to Novo Nordisk. Why is there 0:06:17.160 --> 0:06:19.600 such a stark difference between what Lily is seeing and 0:06:19.640 --> 0:06:21.000 what Novo Nordisk is seeing? 0:06:22.279 --> 0:06:26.600 Right, So, Scarlett, I've always maintained, based on data and 0:06:26.640 --> 0:06:30.000 based on factual comparisons of the drugs that they have, 0:06:30.480 --> 0:06:35.760 that Eli Lily's drug does better the weight loss over 0:06:35.800 --> 0:06:38.680 a serious past a period of time. Then we go 0:06:38.839 --> 0:06:42.039 they didn't head to a trial, so that I think 0:06:42.120 --> 0:06:45.559 is helping them. They are both in the same camp 0:06:45.560 --> 0:06:48.640 in terms of price pressure as Novo, as Lily has said, 0:06:48.640 --> 0:06:53.280 they have several areas where there's price pressure on them. Right. Nevertheless, 0:06:53.520 --> 0:06:58.760 they seem to be at this forecasting a meaningful volume 0:06:58.800 --> 0:07:02.760 gain in twenty twenty six, which you would want to 0:07:02.800 --> 0:07:06.440 see if you've got a price drop. That's the whole idea, 0:07:06.480 --> 0:07:08.839 and we've talked about this right from the beginning of 0:07:08.880 --> 0:07:13.280 this obesity run. That is, if prices come down, volume 0:07:13.280 --> 0:07:15.640 should go up. Nobo seems to be not doing that. 0:07:15.720 --> 0:07:18.800 And there's two ways to explain that. One is Loah's 0:07:18.960 --> 0:07:22.360 thinking and is worried about losing market share so not 0:07:22.360 --> 0:07:26.559 gaining as much volume. Two is that Novah's being over 0:07:26.680 --> 0:07:31.480 pessimistic to deliver. I have a tough time choosing between 0:07:31.480 --> 0:07:35.560 those two. Those two decisions tells you whether you buy 0:07:35.600 --> 0:07:36.360 the stock or not. 0:07:36.560 --> 0:07:41.640 Right Sam, you know, Lily Novo, they're kind of in 0:07:42.000 --> 0:07:44.760 strong positions in this weight loss area. Here talk to 0:07:44.840 --> 0:07:48.920 us about the competitive threat from some of these telehealth 0:07:48.960 --> 0:07:51.280 companies selling cheaper copycat versions. 0:07:51.800 --> 0:07:52.880 Where where is that right now? 0:07:53.560 --> 0:07:56.000 Yeah? But that shouldn't be It should be nowhere in 0:07:56.040 --> 0:07:58.760 the right now because that's illegal. Right at the end 0:07:58.760 --> 0:08:01.600 of the day, this is a patented product and there 0:08:01.600 --> 0:08:06.280 should be no compounding going on. I then buying the 0:08:06.400 --> 0:08:08.440 active ingredient and mashing it up and put it in 0:08:08.440 --> 0:08:11.520 a capsule or whatever and their injector and doing it themselves. 0:08:11.800 --> 0:08:14.840 That should be not allowed, although there's clearly some of 0:08:14.840 --> 0:08:17.120 that's still going on, and I don't know where the 0:08:17.200 --> 0:08:20.080 FDA's teeth is on this because they were allowed to 0:08:20.120 --> 0:08:22.880 do it well. There was a volume, a shortage of supply, 0:08:23.000 --> 0:08:25.680 but there's no more shortage of supply, So what is 0:08:25.720 --> 0:08:28.600 still happening that is not I think what people are 0:08:28.800 --> 0:08:33.440 particularly worried about, or exercising people's mind, is what will 0:08:33.480 --> 0:08:37.440 happen in the longer run between the oral drugs that 0:08:37.559 --> 0:08:39.720 then soon in Q two Lily is going to bring 0:08:40.120 --> 0:08:44.840 versus the well launched nice start to the launch of 0:08:44.880 --> 0:08:47.200 the we go vi oral pill. And then the next 0:08:47.280 --> 0:08:49.240 question is what about other people who are coming with 0:08:49.280 --> 0:08:52.080 other GLP ones and slightly different here once monthly from 0:08:52.120 --> 0:08:54.800 fivez era et cetera, et cetera. And I think that 0:08:55.800 --> 0:08:57.199 we will see how those guys are going to be 0:08:57.240 --> 0:09:00.720 able to compete. It's going to be tough. Is a 0:09:00.800 --> 0:09:05.200 machine that's run by both Lily particularly and Novo two. 0:09:05.559 --> 0:09:08.000 Yeah, you're talking about this weight loss pedal that Lily 0:09:08.160 --> 0:09:10.400 wants to launch. It could happen or the approval, I 0:09:10.400 --> 0:09:13.280 should say, could happen as early as April. Lily did 0:09:13.400 --> 0:09:15.880 just get approval from the FDA SAM to sell zet 0:09:15.880 --> 0:09:20.079 bound in a multi dose pen. Why is this format important? 0:09:20.320 --> 0:09:22.280 Is it because it's more lucrative? Does it make it 0:09:22.320 --> 0:09:23.000 more accessible? 0:09:23.200 --> 0:09:23.320 Like? 0:09:23.360 --> 0:09:26.360 What does that multi dose pen allow Lily to do? 0:09:26.840 --> 0:09:29.960 Here? Well, let's although I know we don't talk about 0:09:29.960 --> 0:09:33.160 sustainable stuff anymore, this is more sustainable rather throwing out 0:09:33.200 --> 0:09:36.720 the pen every time, right, So that's that's nice. And 0:09:36.840 --> 0:09:40.040 number two is therefore that should mean depending on how 0:09:40.040 --> 0:09:43.720 complicated it is to have a multi dose pen, the 0:09:43.760 --> 0:09:45.520 origin is a bit better because you're not throwing out 0:09:45.520 --> 0:09:46.920 the pen every time and they don't have to keep 0:09:46.920 --> 0:09:49.720 making a pen. So all of these are our elements. 0:09:49.760 --> 0:09:52.120 And you know, it's not rocket science that they've done it. 0:09:52.120 --> 0:09:53.720 It's just that you have to also be careful. This 0:09:53.800 --> 0:09:56.440 is an active drug. You need to make sure that 0:09:56.480 --> 0:09:59.160 it's well stored, so it's not sitting in the sunshine 0:10:00.240 --> 0:10:02.559 or frozen outside. That's the sort of thing you have 0:10:02.600 --> 0:10:04.320 to think about when you have a molted those device. 0:10:04.800 --> 0:10:08.360 But I think this would be helpful to both people 0:10:08.600 --> 0:10:10.960 users and the karma companies. 0:10:11.640 --> 0:10:11.960 Sam. 0:10:12.400 --> 0:10:15.160 We all know that President Trump has made cutting drug 0:10:15.200 --> 0:10:18.760 costs a key priority, and a lot of drugmakers have 0:10:18.920 --> 0:10:23.280 cut deals with this administration. Has it resulted in profits 0:10:23.679 --> 0:10:26.080 reductions out there for a lot of these companies are 0:10:26.000 --> 0:10:27.400 annalys taking their numbers down. 0:10:28.559 --> 0:10:31.080 Well, if you go with Noble ICs announcement today that 0:10:31.160 --> 0:10:34.679 specifically calls this out price pressure, then yes, the only 0:10:34.720 --> 0:10:37.200 thing is that they need that price pressure to exist. Really, 0:10:37.240 --> 0:10:39.079 so how come they're not covering? So I think the 0:10:39.720 --> 0:10:43.120 Novo story is more than just the price pressure. It's 0:10:43.160 --> 0:10:47.520 also that they're potentially, as we talked about earlier, losing 0:10:47.600 --> 0:10:53.600 volume going forward, or that they're being over pessimistic. There's 0:10:53.640 --> 0:10:56.880 a couple of other companies like today no artists mentioned 0:10:57.000 --> 0:11:01.080 MFN pricing for some of theirs that will be it, 0:11:01.720 --> 0:11:04.440 I don't think it's as think it hits as Novo's 0:11:04.440 --> 0:11:06.080 talking about. If you look at the share price too 0:11:06.720 --> 0:11:08.680 for twenty twenty six, it sounds like they're going to 0:11:08.679 --> 0:11:10.559 pretty much manage it. But they have pulled it out 0:11:10.640 --> 0:11:13.199 until these companies that don't pulled it out at all 0:11:13.960 --> 0:11:14.559 stay with us. 0:11:14.720 --> 0:11:17.080 More from Bloomberg Intelligence coming up after this. 0:11:21.000 --> 0:11:24.680 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:24.760 --> 0:11:27.880 weekdays at ten am Eastern on Apple, Coarclay, and Android 0:11:27.880 --> 0:11:31.160 Auto with the Bloomberg Business App. Listen on demand wherever 0:11:31.240 --> 0:11:34.360 you get your podcasts, or watch us live on YouTube. 0:11:34.920 --> 0:11:37.520 All right, let's talk about some technology earnings. Here, we 0:11:37.600 --> 0:11:41.480 get super Micro delivers I guess better than expected sales 0:11:41.520 --> 0:11:45.640 forecast in the quarter we had HP. They maintained their guidance. 0:11:45.640 --> 0:11:47.679 Here their CEO left. I don't know what's going on there. 0:11:47.960 --> 0:11:50.200 Let's talk to Wujinho. He doesn't know what's going on. 0:11:50.080 --> 0:11:53.240 There, Senior technology anels from Bloomerg Intelligence. Hey, well, let's 0:11:53.240 --> 0:11:57.480 talk about Hewlett Packer here HP. I guess they kept 0:11:57.480 --> 0:12:00.800 their guidance. But the CEO departure was Is that unexpected? 0:12:01.920 --> 0:12:05.959 Yeah, hey Paul, Yeah, that was highly unexpected. You know, Enrique, 0:12:06.320 --> 0:12:09.200 the CEO was a lifer, started there as an intern, 0:12:09.840 --> 0:12:14.400 and jumping over to PayPal was a surprise to us. 0:12:14.440 --> 0:12:17.880 And he's leaving me at a precarious time because he 0:12:18.160 --> 0:12:22.840 was tasked to navigate the PC business when dram prices 0:12:22.840 --> 0:12:26.680 are spiking, which and then quite frankly, I did find 0:12:26.679 --> 0:12:29.160 it positive that they did maintain their guidance for the year. 0:12:29.880 --> 0:12:31.800 Yeah, let's talk a little bit more about those DRAM 0:12:31.840 --> 0:12:35.160 prices spiking, because this is something that people really zer 0:12:35.240 --> 0:12:37.679 it in on when it came to Apple's results as well. 0:12:38.080 --> 0:12:42.040 How big a cost is these rising prices of memory 0:12:42.080 --> 0:12:45.000 chips for a PC company like HP. 0:12:45.800 --> 0:12:49.000 Yeah, so if we think about the total build up 0:12:49.000 --> 0:12:51.400 of materials d RAM as well as the storage that 0:12:51.400 --> 0:12:54.559 goes in there, it's roughly it went from about ten 0:12:54.600 --> 0:12:56.400 to fifteen percent of the cost, and now it's spiking 0:12:56.480 --> 0:12:59.400 up to about twenty to thirty percent of the cost. Right, 0:12:59.720 --> 0:13:03.040 So what's going to happen. They're not going to give 0:13:03.080 --> 0:13:05.520 it away a gross margin, that's for sure, because we're 0:13:05.520 --> 0:13:08.240 talking about very thin margins for the PC business, and 0:13:08.280 --> 0:13:12.280 we've already we're already hearing about PC pricing going up 0:13:12.320 --> 0:13:16.360 around twenty to thirty percent going into the later twenty 0:13:16.520 --> 0:13:19.760 twenty six. So, Scarl, if we think about it as 0:13:19.800 --> 0:13:25.160 a very elastic, elastic demand for PCs, it is going 0:13:25.160 --> 0:13:28.360 to hit possibly on the demand side, and then keep PCs. 0:13:28.679 --> 0:13:30.400 People keep keeping PCs longer. 0:13:30.720 --> 0:13:34.040 How about the print supply business. Just as a consumer. 0:13:34.320 --> 0:13:35.839 That's where I feel like I pay a lot of 0:13:35.880 --> 0:13:38.079 money when I get the print supply stuff for the 0:13:38.200 --> 0:13:41.360 HP PRI inter talk to us about that business, yeah. 0:13:41.280 --> 0:13:44.199 You know, I will tell you though. I think what's 0:13:44.240 --> 0:13:47.040 being overlooked by investors here is that the print supply 0:13:47.120 --> 0:13:50.200 business is going to be the cushion, you know, the 0:13:50.240 --> 0:13:52.599 inks that you and I pay for. That that's a 0:13:52.679 --> 0:13:55.160 nineteen percent EBIT margin business. 0:13:55.640 --> 0:13:59.160 So more than that, trust. 0:13:58.679 --> 0:14:00.719 Me in my wallet's all I light as well. I'm 0:14:00.720 --> 0:14:02.160 glad my kids are out of school so they don't 0:14:02.160 --> 0:14:05.120 print as much, but it is going to provide a cushion. 0:14:05.760 --> 0:14:09.800 Even though it is the hardware isn't secular decline, there 0:14:09.840 --> 0:14:13.760 are making some move either by subscription UH to UH 0:14:13.840 --> 0:14:16.319 to supply to provide some of that downside risk and earnings. 0:14:16.400 --> 0:14:18.040 What is the long term trend line for that print 0:14:18.080 --> 0:14:20.680 supply business, because I mean, every office is trying to 0:14:20.720 --> 0:14:24.960 go digital and not have printers available to everyone, and 0:14:25.040 --> 0:14:27.160 I know there are some parts of government that can't 0:14:27.160 --> 0:14:31.320 do without actual physical printouts of documents. But I would 0:14:31.400 --> 0:14:34.640 imagine that this shift to you know, everything being virtual 0:14:34.640 --> 0:14:37.120 and digital means that this overall is in a long 0:14:37.240 --> 0:14:39.360 term structural decline. 0:14:40.840 --> 0:14:43.960 Easy answer or the simple answer minus two percent on 0:14:44.000 --> 0:14:46.680 a year one year basis, on a long term basis, right, 0:14:47.080 --> 0:14:49.960 there's always that. Yeah, well there's always that one guy 0:14:50.400 --> 0:14:52.840 who's going to print the ten case and ten qures 0:14:55.800 --> 0:14:57.440 right and in color. 0:14:57.720 --> 0:15:00.720 So you know we're a dying Breed's that's the thing, right, 0:15:00.760 --> 0:15:02.240 I mean, the young people aren't going to do that. 0:15:02.320 --> 0:15:03.400 Yeah, I don't do that. 0:15:04.200 --> 0:15:06.880 Really, you don't pretend anything. Oh that's true, got. 0:15:06.720 --> 0:15:07.440 It on my phone. 0:15:08.800 --> 0:15:11.560 I think the kids are the kids are going back 0:15:11.600 --> 0:15:15.520 to the old school ways of old elder folk of 0:15:16.040 --> 0:15:19.920 printing more and having more photo keepsake. So, uh, you know, 0:15:20.440 --> 0:15:22.760 I don't think it's We're talking about a structural decline 0:15:22.760 --> 0:15:24.440 of ten percent on a year on year basis, but 0:15:24.480 --> 0:15:28.400 there's enough print from a documentation, uh standpoint that is 0:15:28.400 --> 0:15:30.280 going to hold the business. 0:15:30.520 --> 0:15:32.960 How about super Micro? Here, I see the stock of 0:15:33.040 --> 0:15:35.440 fourteen percent here today. Talk to us about their earnings. 0:15:35.960 --> 0:15:40.000 I will tell you. Look, I've talked about this, you 0:15:40.000 --> 0:15:44.320 know at nausea about super Micro. The AI server business 0:15:44.360 --> 0:15:45.240 is a double edged sword. 0:15:45.440 --> 0:15:45.680 Right. 0:15:46.800 --> 0:15:50.040 Where they won out in the last quarter print was 0:15:50.040 --> 0:15:52.680 that the AI servers demand came out a lot better 0:15:52.720 --> 0:15:57.760 than expected, roughly one point five billion beat in in sales, 0:15:57.840 --> 0:16:00.160 and that's primarily because the Blackwell ramp up is or 0:16:00.200 --> 0:16:02.800 to wrap up now, I will tell you I think 0:16:03.000 --> 0:16:05.880 one customer really helped them out. Sixty two percent of 0:16:05.880 --> 0:16:10.560 their sales was from I think from Xai. But look, 0:16:10.640 --> 0:16:13.320 the offset has always been the margin side, four point 0:16:13.320 --> 0:16:17.080 five percent in operating margin, and I think their guidance 0:16:17.120 --> 0:16:19.080 implies is going to be roughly around the same my 0:16:19.160 --> 0:16:19.720 next quarter. 0:16:22.360 --> 0:16:25.280 Stay with us more from Bloomberg Intelligence coming up here for. 0:16:25.360 --> 0:16:31.880 This you're listening to the Bloomberg Intelligence podcast. Catch us 0:16:31.920 --> 0:16:35.360 live weekdays at ten am Eastern on Applecarplay and Android 0:16:35.400 --> 0:16:38.680 Auto with the Bloomberg Business app. Listen on demand wherever 0:16:38.760 --> 0:16:41.840 you get your podcasts, or watch us live on YouTube. 0:16:42.520 --> 0:16:45.400 Let's stay with some earnings news here rights back in 0:16:45.440 --> 0:16:49.040 the middle of a busy, busy week for earnings young brands. 0:16:49.240 --> 0:16:53.440 I think restaurants fourth quarter just at EPs misses estimates here, 0:16:53.440 --> 0:16:56.680 So yeah, hit or missing the restaurant business is kind 0:16:56.680 --> 0:16:58.960 of what we've been seeing more recently. 0:16:59.360 --> 0:17:02.040 Jody Lori joints us here. She is a Bloomberg Intelligence 0:17:02.120 --> 0:17:02.960 credit analyst. 0:17:03.160 --> 0:17:06.080 She covers all things kind of the consumer things, cruise lines, 0:17:06.600 --> 0:17:10.959 theme parks, casinos, parts of the restaurant industry. 0:17:10.960 --> 0:17:11.600 So anywhere you. 0:17:11.600 --> 0:17:15.280 See the consumer spending money, that's where you'll find her. 0:17:15.320 --> 0:17:17.600 So let's check in with Jodi Jody. Let's start with 0:17:18.320 --> 0:17:21.720 young brands there. What are they saying about their business 0:17:21.800 --> 0:17:22.720 and the consumer. 0:17:24.280 --> 0:17:27.400 So it's very clear that they're focused on Taco Bell 0:17:27.640 --> 0:17:30.560 as well as the international component of KFC because those 0:17:30.680 --> 0:17:34.520 are what is driving revenue at the moment. They're also 0:17:34.720 --> 0:17:38.240 looking into strategic alternatives for pizza, which they announced last quarter, 0:17:38.600 --> 0:17:41.399 and they got a little bit more clarity around that 0:17:41.440 --> 0:17:44.240 in terms of closing some stores, really sort of reassessing 0:17:44.240 --> 0:17:48.480 the pizza hut business because it's not necessarily where they're 0:17:48.520 --> 0:17:51.320 seeing growth. I think what was most interesting for me 0:17:51.440 --> 0:17:54.440 is they highlighted the strength of the high income consumer 0:17:54.480 --> 0:17:57.160 as well as the young consumer and the family consumer, 0:17:57.200 --> 0:18:01.200 particularly as it went to Taco Bell. And I mean, 0:18:01.520 --> 0:18:04.520 for me personally, I like to consider myself young, but 0:18:04.600 --> 0:18:06.720 I do fit the family category and I fit the 0:18:07.359 --> 0:18:11.880 you know, higher income category, I would say, and that 0:18:12.280 --> 0:18:14.080 definitely checks out. You know, I think there is an 0:18:14.080 --> 0:18:16.840 appeal to a company like that particularly as you're looking 0:18:16.880 --> 0:18:17.680 at alternatives. 0:18:18.119 --> 0:18:20.200 Yeah, during the snowstorm when I was kind of socked 0:18:20.200 --> 0:18:22.520 in here, I found the Taco bell on Third Avenue. 0:18:22.760 --> 0:18:25.480 I'm sorry, Lexington Avenue. Very good finded. Did not did 0:18:25.480 --> 0:18:27.920 not know it was there. So I'm in good shape there. 0:18:28.040 --> 0:18:31.040 From the credit perspective, Jody, to credit investors, like when 0:18:31.040 --> 0:18:33.080 they look at these restaurant companies that they want to see, 0:18:33.840 --> 0:18:36.480 I guess a diversification of brands, you know, through the 0:18:36.520 --> 0:18:37.200 income level. 0:18:37.359 --> 0:18:38.840 How do they how did they look at it? 0:18:40.560 --> 0:18:42.440 So you do want to see some diversification. You want 0:18:42.440 --> 0:18:46.120 to see some geographic diversication. Something that young It benefits 0:18:46.119 --> 0:18:48.320 from is because they have the franchise model so heavily 0:18:48.359 --> 0:18:51.960 in their business, it's almost all of their their restaurants. 0:18:52.160 --> 0:18:55.119 It helps them from a cash flow and from margin perspective, 0:18:55.200 --> 0:18:58.359 particularly as compared to companies that have more owned brands 0:18:58.400 --> 0:19:01.080 such as Darden. Right, Darden is going into franchise, but 0:19:01.119 --> 0:19:05.080 they're primarily owned brands, and so it's a little bit 0:19:05.160 --> 0:19:07.679 different structure and it does help Young Now. I think 0:19:07.720 --> 0:19:10.800 what's so interesting interesting about youm is if you look 0:19:11.000 --> 0:19:14.280 back ten years ago, they were investment grade rated. Then 0:19:14.280 --> 0:19:16.800 they spun off on China, and then they decided to 0:19:16.800 --> 0:19:20.920 give themselves hefty dividends and share buybacks and stayed high yield. 0:19:21.000 --> 0:19:23.840 Since management is very clear that they're happy with the 0:19:23.880 --> 0:19:26.960 four times debt leverage, they're keeping within that range and 0:19:27.040 --> 0:19:29.920 I don't really see them moving beyond that. But if 0:19:29.960 --> 0:19:31.960 they wanted to be investment grade, I think they could. 0:19:31.960 --> 0:19:34.359 They just don't care too because they'd rather spend their 0:19:34.400 --> 0:19:36.480 money on shareholders and on KPEX. 0:19:37.000 --> 0:19:38.719 Hey, Drea, I thought of you earlier this week when 0:19:38.760 --> 0:19:41.200 we saw the news that Josh Tomorrow has been appointed 0:19:41.280 --> 0:19:43.440 chief executive officer of the Walt Disney Company, and of 0:19:43.480 --> 0:19:47.399 course he runs the experiences businesses for Disney. 0:19:47.400 --> 0:19:49.280 I think the theme parks, the cruise. 0:19:48.960 --> 0:19:51.240 Ships kind of the businesses. 0:19:50.640 --> 0:19:52.399 That you tend to follow here. 0:19:52.920 --> 0:19:56.639 But boy, they seem to be all in on theme parks, 0:19:56.640 --> 0:19:59.600 on cruise ships, that scene. I kind of took it 0:19:59.600 --> 0:20:02.560 as a vote conference for that part of the industry. 0:20:04.000 --> 0:20:04.480 Absolutely. 0:20:04.520 --> 0:20:06.719 I mean, you know, we're seeing in our data that 0:20:06.800 --> 0:20:10.960 experience spending is still very very strong. I've joked many 0:20:10.960 --> 0:20:14.640 times with Steve Flynn, who covers Disney from a credit perspective, 0:20:14.800 --> 0:20:16.760 that really it should be under my coverage because they're 0:20:16.840 --> 0:20:19.080 much more of an experienced company, and I think this 0:20:19.280 --> 0:20:23.719 lands right. But all that aside, you know, Steve's fantastic analyst, 0:20:23.800 --> 0:20:27.160 and you all should read and stuff. But all that aside, 0:20:27.240 --> 0:20:29.560