WEBVTT - BI Weekend: BlackRock Buys HPS, Salesforce Surge 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.400 with Alex Steina and Paul'swhenie. 0:00:14.480 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.880 --> 0:00:20.239 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.120 These are two big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.720 Bloomberg Intelligence with Alex Steinall and Paul's Whennie on Bloomberg Radio. 0:00:43.320 --> 0:00:45.559 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:45.600 --> 0:00:47.840 business stories impacting Wall Street and the global markets. 0:00:47.920 --> 0:00:49.720 Each and every week we provide a DEPP research and 0:00:49.800 --> 0:00:51.519 data on some of the two thousand companies and one 0:00:51.560 --> 0:00:54.080 hundred and thirty industries our analysts cover worldwide. 0:00:54.120 --> 0:00:56.280 Today, we'll break down an internal review of the IT 0:00:56.520 --> 0:00:57.840 company super Microcomputer. 0:00:58.040 --> 0:01:00.680 Plus we'll discuss how the automaker Stilandas is faring after 0:01:00.680 --> 0:01:02.120 the early departure of its CEO. 0:01:02.480 --> 0:01:05.000 But first we begin with a big deal in private credit. 0:01:05.040 --> 0:01:08.240 This week, Blackrock agreed to buy HPS Investment Partners in 0:01:08.240 --> 0:01:10.920 an all stock deal valued roughly twelve billion dollars. 0:01:11.000 --> 0:01:13.440 It's a purchase that will propel the world's largest asset 0:01:13.480 --> 0:01:15.720 manager into the highest ranks of private credit. 0:01:15.840 --> 0:01:18.240 For more. We are joined by Neil Sipes, Boomberg Intelligence 0:01:18.240 --> 0:01:19.160 financials analyst. 0:01:19.480 --> 0:01:22.560 We first asked Neil where exactly this purchase leaves black. 0:01:22.400 --> 0:01:26.199 Rock top five in private credit now and notably top 0:01:26.240 --> 0:01:29.240 five in alternatives as a whole. And so you know, 0:01:29.280 --> 0:01:32.800 they've long been top ten in the space, you know, 0:01:33.520 --> 0:01:36.440 rivaling the names like a Blackstone Apollo. But when you 0:01:36.480 --> 0:01:38.920 think about Blackrock, you're thinking about eleven and a half 0:01:38.920 --> 0:01:42.840 trillion dollars in assets, a couple hundred billion in alternatives. 0:01:42.880 --> 0:01:45.600 That's pretty small piece of the pie for them, So 0:01:45.640 --> 0:01:48.320 you don't necessarily think of them as a main leader 0:01:48.840 --> 0:01:51.840 in the alternative space, in private market space. But what 0:01:51.880 --> 0:01:55.240 we've seen so far this year is three transactions GIP, 0:01:55.720 --> 0:01:59.360 Prequin now HPS, and they're really pushing into this space 0:01:59.600 --> 0:02:01.560 because that's where the growth is and that's where the 0:02:01.560 --> 0:02:02.080 fees are. 0:02:02.720 --> 0:02:04.840 It's just a phenomenal to you can do with all 0:02:04.880 --> 0:02:06.920 stock as well. How cool is that if you're Blackrock, 0:02:07.440 --> 0:02:10.119 who's HPS or the ex Goldman guys. Is that kind 0:02:10.120 --> 0:02:11.680 of how big are they in the space. 0:02:11.880 --> 0:02:14.440 Yeah, so they're about one hundred and fifty billion now, 0:02:15.360 --> 0:02:18.280 and like you noted, I mean Blackrock had about eighty 0:02:18.320 --> 0:02:21.600 billion in private credit prior to this, so it really 0:02:21.639 --> 0:02:24.440 more than doubles that business for them. And I think 0:02:24.560 --> 0:02:26.480 you know what you're seeing a little bit of Blackrock 0:02:26.600 --> 0:02:29.640 is sort of this catch up game. As I just noted, 0:02:29.639 --> 0:02:32.959 those three transactions really geared towards the private markets this year, 0:02:33.639 --> 0:02:37.360 and they're paying, you know, heftier prices for these types 0:02:37.360 --> 0:02:40.080 of transactions. I noted this is where the growth is, 0:02:40.160 --> 0:02:42.600 this is where the fees are. You know, the twelve 0:02:42.639 --> 0:02:45.480 billion dollars price tag for HPS, that's about eight percent 0:02:45.480 --> 0:02:49.680 of assets thirty times you know, fee related earnings. So 0:02:49.680 --> 0:02:51.480 they're sort of playing catch up in this space. And 0:02:51.480 --> 0:02:53.880 when you think about HPS, one hundred and fifty billion 0:02:53.960 --> 0:02:56.760 is not small, but that's about one percent of Blackrock 0:02:56.800 --> 0:02:58.720 as a whole, right, But when you look at the 0:02:58.760 --> 0:03:02.520 fees that HPS generating, that's almost five percent of what 0:03:02.560 --> 0:03:05.519 BlackRock's revenue is. So you can sort of think about 0:03:05.520 --> 0:03:09.800 the dichotomy there of aligning the organic growth opportunity more 0:03:09.840 --> 0:03:11.160 with the revenue opportunity. 0:03:11.639 --> 0:03:13.360 Are there more hps's out there? 0:03:14.320 --> 0:03:14.840 There may be. 0:03:15.360 --> 0:03:18.040 I don't think we're gonna I mean, I won't say 0:03:18.040 --> 0:03:20.560 I don't think we're gonna see Blackrock do anymore, because 0:03:20.600 --> 0:03:23.440 they are showing that they're taking initiative to really beef 0:03:23.520 --> 0:03:25.880 up in a space that you could argue they were 0:03:25.880 --> 0:03:29.000 a little bit under indexed versus some of their traditional 0:03:29.000 --> 0:03:32.160 competitors in the space. So we'll be interested to see 0:03:32.200 --> 0:03:35.480 what is potentially coming down the road. But again, let's 0:03:35.480 --> 0:03:38.600 remember that they are sort of digesting a handful of 0:03:38.600 --> 0:03:42.320 transactions that are pretty sizable in what we'll call transformational 0:03:42.400 --> 0:03:45.200 for a business that you're typically thinking of sort of 0:03:45.200 --> 0:03:47.240 the index and passive type products. 0:03:48.120 --> 0:03:49.600 At the end of the day, who competes with black 0:03:49.680 --> 0:03:51.000 Rock really aren't they just full? 0:03:51.080 --> 0:03:53.320 Okay, what is Blackron now at this point? 0:03:53.400 --> 0:03:53.600 Yeah? 0:03:53.600 --> 0:03:54.560 What is Blackrock now? 0:03:54.560 --> 0:03:54.960 With this one? 0:03:55.280 --> 0:03:59.320 Blackrock is I guess I'll say everything sort of in 0:03:59.360 --> 0:04:00.080 the asset many. 0:04:00.000 --> 0:04:02.160 There are dinner thingsgiving and like someone's like, hey, what's 0:04:02.160 --> 0:04:03.600 Blackrock and you're like, it's everything. 0:04:03.680 --> 0:04:05.760 Yeah, it's a little bit of everything now in the 0:04:05.800 --> 0:04:08.960 asset management space, and again I think they're really filling 0:04:09.000 --> 0:04:12.720 out that space where they were maybe least index two 0:04:13.720 --> 0:04:16.920 and you know, really focusing in on where the fees are. 0:04:17.520 --> 0:04:19.800 And that's what this private credit transaction is going to do. 0:04:20.440 --> 0:04:22.320 So are some of the big private equity guys too, 0:04:22.560 --> 0:04:25.760 like Blackstone et cetera. Are they also just massive asset 0:04:25.760 --> 0:04:28.159 managers now too, rather than just private equity guys. 0:04:28.200 --> 0:04:30.640 So they are, and I mean they're sizable, and it's 0:04:30.760 --> 0:04:33.080 it's a different realm that we're talking about than black 0:04:33.160 --> 0:04:37.320 Rocks eleven trillion. We're talking about single digit trillions and 0:04:37.440 --> 0:04:41.280 high hundred billions. But again, you know that size is 0:04:41.320 --> 0:04:44.600 not necessarily representative of the fees that these that these 0:04:44.640 --> 0:04:47.440 firms are generating. So you think about the names like 0:04:47.440 --> 0:04:52.200 a Blackstone, Apollo, Ares, KKR, Carlisle, all of those. 0:04:52.080 --> 0:04:52.800 As a group. 0:04:53.080 --> 0:04:55.280 I mean, that's where that explosive growth has been in 0:04:55.360 --> 0:04:59.840 asset management, aside from that passive, low fee type space. 0:05:00.000 --> 0:05:03.760 That's right, You're seeing those longer duration assets, those private 0:05:03.800 --> 0:05:07.560 markets really being where investors want to allocate their cash. 0:05:08.080 --> 0:05:11.039 You look at the expectations for allocations to increase pretty 0:05:11.120 --> 0:05:14.479 much broadly across the spectrum in private markets. That's where 0:05:14.520 --> 0:05:19.200 some of those will call them smaller, more specialized alternative managers. 0:05:19.080 --> 0:05:22.960 Are winning our Thanks to Neil Siites Bloomberg Intelligence Financials Analysts. 0:05:23.240 --> 0:05:25.760 Each week we look at research from Bloomberg and EF 0:05:25.839 --> 0:05:27.520 previously known as New Energy Finance. 0:05:27.560 --> 0:05:29.640 They're the team of Bloomberg that tracks and analyzes the 0:05:29.720 --> 0:05:33.440 energy transition from commodities to power, transport, industries, buildings, and 0:05:33.600 --> 0:05:34.320 ag sectors. 0:05:34.520 --> 0:05:36.719 This week we took a look at BNF's outlook for 0:05:36.920 --> 0:05:39.800 US natural guests from what we were joined by Enrique 0:05:39.839 --> 0:05:42.800 Gonzales b n EF, head of US Gas Research. 0:05:42.960 --> 0:05:44.839 First we asked n Rique where we stand now with 0:05:44.920 --> 0:05:47.720 gas and where the US will stand under Donald Trump administration. 0:05:48.200 --> 0:05:51.719 The US is the largest exporter of lergy in the world, 0:05:52.720 --> 0:05:55.400 and in the short term we have a considerable amount 0:05:55.400 --> 0:05:59.120 of new capacity coming online and that was bound to 0:05:59.160 --> 0:06:04.840 happen regardless of whether we had Trump or Camela in office. 0:06:05.520 --> 0:06:08.919 But yeah, we have Plaque Mindes and the Corpus Christie 0:06:08.960 --> 0:06:13.360 Stage three expansions coming in this December or early next year, 0:06:13.920 --> 0:06:18.120 and then the Golden Pass LNG terminal as well, so 0:06:18.240 --> 0:06:23.279 giving us more than seven BC of the seven billion 0:06:23.320 --> 0:06:25.919 cubic feet per day of new export capacity out of 0:06:25.960 --> 0:06:31.479 the US, so further consolidating that role. And then where 0:06:31.480 --> 0:06:34.240 the change could be more significant is in the medium 0:06:34.400 --> 0:06:38.720 term with the terminals coming later this decade for it, 0:06:39.480 --> 0:06:43.880 and especially with the discussions of Trump lifting the DOE 0:06:44.360 --> 0:06:49.440 Non Free Trade Agreement Permit post because this is a 0:06:49.560 --> 0:06:53.320 key permit that the terminal terminals need to be able 0:06:53.360 --> 0:06:57.120 to reach their final investment decision. And there's a few 0:06:57.200 --> 0:07:03.680 high profile projects there such as the the CPTW expansion 0:07:03.720 --> 0:07:06.359 from ben through Global and then we also have a 0:07:06.400 --> 0:07:10.360 subine Pass Corpus Christie expansion alongside other projects that are 0:07:10.720 --> 0:07:11.600 targeted for them. 0:07:11.760 --> 0:07:14.640 So basically, if you're not exporting energy to a free 0:07:14.640 --> 0:07:17.080 trade agreement country, then you're no longer allowed to exit 0:07:17.160 --> 0:07:18.720 to do it. But many said that was like an 0:07:18.720 --> 0:07:21.800 export thing that they were doing that really wasn't going 0:07:21.840 --> 0:07:23.680 to hole. It was just an election thing. So that's 0:07:23.720 --> 0:07:25.520 what we're referring to. So that would really help get 0:07:25.520 --> 0:07:27.240 a lot more investment in. 0:07:27.280 --> 0:07:31.000 There is the expectation in your world of natural gas 0:07:31.040 --> 0:07:36.640 that a Trump administration combined with republic controlled Congress, this 0:07:36.720 --> 0:07:39.320 is going to be the time to get stuff done. 0:07:39.360 --> 0:07:43.680 Whether it's a pipeline or refinery or anything. 0:07:44.800 --> 0:07:45.040 You know. 0:07:45.120 --> 0:07:47.720 Going back to the idea of the LNG terminals, it's 0:07:48.080 --> 0:07:52.280 definitely yeah, you have more support to get this project. Still, 0:07:52.920 --> 0:07:56.600 I think moving to the idea of pipelines new like 0:07:57.960 --> 0:08:01.520 interstate pipelines, that's a bit there needs to be more change. 0:08:01.560 --> 0:08:07.160 It's a bigger conversation, but there's definitely more momentum than 0:08:07.680 --> 0:08:09.280 we would have otherwise had. 0:08:09.240 --> 0:08:11.240 So to that point, and it's a good one that 0:08:11.280 --> 0:08:12.720 you make because a lot of the gas that we 0:08:12.760 --> 0:08:14.720 have is in Appalaysia and it's really hard to get 0:08:14.720 --> 0:08:16.400 that gas out. It's in the northeast, you don't have 0:08:16.440 --> 0:08:18.440 a lot of takeaway capacity, and you do get a 0:08:18.440 --> 0:08:21.560 ton of gas from also shale productions, so within New 0:08:21.600 --> 0:08:24.520 Mexico as well as Texas. So there is that What 0:08:25.000 --> 0:08:26.840 do you think we're going to be able to do 0:08:27.080 --> 0:08:29.960 in terms of getting pipelines in to get gas out 0:08:30.080 --> 0:08:30.800 of Appalachia. 0:08:32.240 --> 0:08:35.120 Yeah, so I would say that's not my subject matter 0:08:35.160 --> 0:08:40.600 expertise the policy behind the pipelines, but I think there 0:08:40.720 --> 0:08:44.160 is space to have more discussions about what can be 0:08:44.200 --> 0:08:46.480 done to get some more gas from But if. 0:08:46.360 --> 0:08:48.080 We don't, we wind up getting a glut at some 0:08:48.160 --> 0:08:50.200 point of gas because there's just too much, we can't 0:08:50.200 --> 0:08:52.280 get it out. Therefore, gas prices here in the US 0:08:52.360 --> 0:08:53.000 kind of really sink. 0:08:53.400 --> 0:08:56.480 Yeah, and when we've already seen this happen, especially this 0:08:56.600 --> 0:09:01.559 early November when the weather was pretty warm, I've seen, Yeah, 0:09:01.679 --> 0:09:04.760 Appalachia can't really send more gas out, there's no internal 0:09:04.800 --> 0:09:08.880 demand in the basin. And then we've seen producers actually 0:09:08.920 --> 0:09:14.559 curtel production because the prices have dropped below the level 0:09:14.600 --> 0:09:18.280 they need to continue producing even from existing wells, and 0:09:18.320 --> 0:09:21.920 they're well below the break events in some cases for 0:09:22.440 --> 0:09:26.120 new wells. So we've already seen that have an impact 0:09:26.400 --> 0:09:31.080 in production in Appalaysia and as well in other parts 0:09:31.120 --> 0:09:33.440 of the country. You have the Haynes Bill as well, 0:09:33.480 --> 0:09:37.640 that's closer to the Gulf and where a lot of 0:09:37.679 --> 0:09:40.600 the rhetoric is that we the production to meet the 0:09:40.679 --> 0:09:43.520 demand from these new allerg terminals is going to come 0:09:43.559 --> 0:09:46.199 from there due to the location. But they do have 0:09:46.960 --> 0:09:51.239 higher break events and higher costs than in the Northeast. 0:09:52.040 --> 0:09:52.360 Coal. 0:09:52.720 --> 0:09:54.920 What's going on with coal and what do you expect 0:09:55.040 --> 0:09:57.840 under Trump administration? Happened to the coal industri in this country. 0:09:58.520 --> 0:10:01.120 Yes, so there's been a a lot of discussion now 0:10:01.160 --> 0:10:06.000 about potentially rolling back some rules from the EPA or 0:10:06.160 --> 0:10:11.520 just having or being easier on pollution from coal. I've 0:10:11.559 --> 0:10:14.320 seen I think it was Duke Energy as well discuss 0:10:14.440 --> 0:10:18.439 the possibility of keeping some of their coal plants operating 0:10:18.480 --> 0:10:23.760 for longer. So that is a possibility and what it 0:10:23.800 --> 0:10:26.760 could mean for gas and for power sector gas consumption 0:10:28.080 --> 0:10:30.800 could be pretty interesting because over the last ten years, 0:10:30.840 --> 0:10:33.520 one of the main roles of gas in the power 0:10:33.559 --> 0:10:39.080 sector has also been replacing, right this retiring cult coal plants, 0:10:39.640 --> 0:10:42.000 which has been a benefit in the sense that we've 0:10:42.040 --> 0:10:46.839 seen lower emissions as well, but this could be more difficult. 0:10:48.440 --> 0:10:51.440 If the coal plants stay operating longer, you might not 0:10:51.520 --> 0:10:56.000 see gas taking over in the same way it had been. 0:10:56.400 --> 0:11:00.920 That's interesting. That would remove like this very cannibal market 0:11:00.920 --> 0:11:05.120 function basically for gas and coal is the coal is 0:11:05.480 --> 0:11:07.800 it green coal, is it like nice coal that we 0:11:07.840 --> 0:11:09.880 can all get behind, or is it still dirty coal 0:11:09.880 --> 0:11:11.880 that eventually is just going to have to be phased out. 0:11:13.160 --> 0:11:16.040 Yeah, and there's a lot of discussion as well about 0:11:16.400 --> 0:11:21.480 integrating carbon capture for coal, try to make make it cleaner, 0:11:22.520 --> 0:11:25.840 but yeah, the economics are difficult, and especially in the 0:11:25.880 --> 0:11:30.480 short term, we probably won't see a lot of that happen, 0:11:31.000 --> 0:11:35.559 so it could result in emissions even increasing. 0:11:36.800 --> 0:11:38.839 Is there the expectation on our Trump administration is that 0:11:38.960 --> 0:11:41.439 just a whole move to renewables will slow down and 0:11:41.480 --> 0:11:45.679 maybe slow down materially or is it just too much momentum. 0:11:45.920 --> 0:11:50.920 Yeah, No, definitely parts for example of the Inflation Reduction 0:11:51.080 --> 0:11:56.679 Act or are repealed or there's some changes in that sense, 0:11:56.720 --> 0:12:01.599 we could see slower deployment of renewables. All leagues in 0:12:01.720 --> 0:12:05.920 vnf IN or clean energy teams look in a lot 0:12:05.920 --> 0:12:09.760 of detail into this, but yeah, this could lead to 0:12:09.800 --> 0:12:14.040 an interesting dynamic where you have less coal retirements, but 0:12:14.120 --> 0:12:19.240 maybe you have a slower deployment of renewables, where gas 0:12:19.920 --> 0:12:23.760 maybe doesn't grow because there's less coal, but takes over 0:12:23.840 --> 0:12:28.000 some of this generation that would be needed that would 0:12:28.000 --> 0:12:31.880 otherwise come from renewables. So I think there's a very interesting, 0:12:32.760 --> 0:12:36.720 very interesting analysis and a conversation to have about how 0:12:36.760 --> 0:12:38.160 this gap is going to look. 0:12:38.800 --> 0:12:42.080 Thanks to Enrique Gonzalez b n EF, head of US 0:12:42.120 --> 0:12:42.840 Gas Research. 0:12:43.120 --> 0:12:45.480 Coming up, we're going to break down potential scenarios related 0:12:45.480 --> 0:12:47.720 to President like Donald Trump's proposed tear ups. 0:12:47.760 --> 0:12:50.439 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:50.480 --> 0:12:52.600 depth research and data on two thousand companies in one 0:12:52.720 --> 0:12:55.439 hundred and thirty industries. You can access Boomberg Intelligence to 0:12:55.480 --> 0:12:57.520 be a big on the terminal Paul Sweeney and a 0:12:57.559 --> 0:12:58.400 Malex Steel and. 0:12:58.400 --> 0:12:59.400 This is Bloomberg. 0:13:03.679 --> 0:13:07.559 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:07.640 --> 0:13:11.000 weekdays at ten am Eastern on Afocarplay and Android Auto 0:13:11.040 --> 0:13:14.000 with the Bloomberg Business app. Listen on demand wherever you 0:13:14.040 --> 0:13:18.239 get your podcasts, or watch us live on YouTube. 0:13:18.960 --> 0:13:21.240 We begin in the tech space with the it company 0:13:21.320 --> 0:13:22.640 super Micro Computer. 0:13:23.120 --> 0:13:25.679 This week's shares a super Micro jump after the company 0:13:25.720 --> 0:13:28.560 sat an independent review of its business found no evidence 0:13:28.600 --> 0:13:29.239 of misconduct. 0:13:29.320 --> 0:13:31.839 However, the re you did recommend the appointment of new 0:13:31.880 --> 0:13:35.079 top financial and legal leadership, including a new CFO, chief 0:13:35.120 --> 0:13:37.040 compliance Officer, and general counsel. 0:13:37.200 --> 0:13:39.800 For more. We were joined by Wouchin Hope, Bloomberg Intelligence 0:13:39.800 --> 0:13:40.920 Senior Technology aannelists. 0:13:40.960 --> 0:13:43.120 You first asked Wujin to remind us what the problem 0:13:43.200 --> 0:13:45.680 is that super Micro has been trying to correct a. 0:13:45.720 --> 0:13:46.280 Couple of things. 0:13:46.280 --> 0:13:50.360 There was a short sell of report back in August, 0:13:50.760 --> 0:13:55.679 citing that there was some fraud you know, with internally, 0:13:56.280 --> 0:14:00.000 and essentially because of that, there was an internal investigation 0:14:00.360 --> 0:14:02.800 and they delighted their ten K and ten Q filings. 0:14:03.040 --> 0:14:06.920 What super Micro is essentially saying their internal investigation has 0:14:06.920 --> 0:14:10.680 found nothing or no evidence of fraud, but the ten 0:14:10.760 --> 0:14:12.960 K and ten Q filings still have yet to be filed. 0:14:13.280 --> 0:14:15.280 But it's not every day that a big four accounting 0:14:15.280 --> 0:14:19.080 firm does what happened here basically says, you know, they 0:14:19.120 --> 0:14:21.200 really can't rely upon the management team and they and 0:14:21.200 --> 0:14:23.880 they just walk away from an account that doesn't happen. 0:14:23.920 --> 0:14:27.800 Yeah, no, Paul, I think between your lifetime and my 0:14:28.000 --> 0:14:32.200 lifetime in the financial industry, probably four or five. 0:14:32.000 --> 0:14:35.720 Times, right, So, yeah, it doesn't happen. It doesn't happen. 0:14:36.160 --> 0:14:41.520 They did find an alternative bdo USA, and you know, 0:14:41.560 --> 0:14:46.440 quite quite frankly, with the special investigation you know, being 0:14:46.440 --> 0:14:50.080 completed without evidence of fraud, it actually almost gives them 0:14:50.120 --> 0:14:53.960 a BDEO a safety net to actually expedite the ten 0:14:54.080 --> 0:14:57.400 Q and ten K filing sign off in my opinion. 0:14:57.480 --> 0:14:59.920 So does this put all the questions to bed at 0:15:00.080 --> 0:15:00.560 this point? 0:15:01.600 --> 0:15:04.920 No, not necessarily, quite frankly, I mean let's see what 0:15:04.960 --> 0:15:07.000 Bdo says. I do think they're going to try to 0:15:07.040 --> 0:15:10.560 push along the filings as quickly as possible, possibly by 0:15:10.640 --> 0:15:15.480 year end. You know, the deadline is sometime in late February, 0:15:15.560 --> 0:15:17.800 but you know, I do think they'll try to push 0:15:17.840 --> 0:15:21.760 it along. Now, I will tell you. The other question 0:15:22.000 --> 0:15:26.240 is that was there so much reputation damaged because of this? 0:15:26.760 --> 0:15:27.960 Did they lose business? 0:15:28.160 --> 0:15:31.200 So, assuming they can put this issue behind them, what 0:15:31.360 --> 0:15:33.760 is the story for this company here, super Micro News? 0:15:33.800 --> 0:15:36.560 How do you position it within your tech stocks? 0:15:37.240 --> 0:15:37.480 Yeah? 0:15:37.640 --> 0:15:41.119 Look, super Micro has been one of the hottest companies 0:15:42.040 --> 0:15:45.760 within the hardware industry. They were on the forefront or 0:15:45.760 --> 0:15:49.320 the poster child of AI servers. And you've seen a 0:15:49.400 --> 0:15:52.560 rapid rise in sales, going from a billion dollars or 0:15:52.640 --> 0:15:55.760 three billion dollars in annual sales and they were on 0:15:55.880 --> 0:15:58.480 track to about twenty six to thirty billion dollars in 0:15:58.520 --> 0:16:01.120 annual sales and fiscal twenty twenty five, right, and this 0:16:01.160 --> 0:16:02.760 is over a span of four years. 0:16:03.400 --> 0:16:05.440 Now, they didn't. 0:16:05.160 --> 0:16:09.280 Retract a guidance, but they didn't affirm guidance either. So 0:16:09.360 --> 0:16:12.000 the question is is that, look, what is the real 0:16:12.040 --> 0:16:14.640 sales going into fiscal twenty five. We do have a 0:16:14.640 --> 0:16:18.880 scenarios scenario analysis that in the draconian way, it's going 0:16:18.960 --> 0:16:21.720 to be sixteen billion dollars in sales. Right, that's far 0:16:21.800 --> 0:16:24.200 off of the twenty six on the low end, but 0:16:24.640 --> 0:16:26.880 you know, it's still sixteen billion dollars in sales as 0:16:26.920 --> 0:16:30.160 super Micro could deliver on the AI story alone. 0:16:30.360 --> 0:16:34.560 And this is AI netlike hardware right versus AI chips 0:16:35.080 --> 0:16:37.960 for example from in Video right, So a competitor would 0:16:37.960 --> 0:16:41.520 be like Dell right, like an AI server play exactly. 0:16:41.560 --> 0:16:43.320 So if I was a customer and I was like, 0:16:43.360 --> 0:16:45.480 you know what, super Micro, I need to go somewhere else. 0:16:45.800 --> 0:16:47.680 Is the only other option Dell? Or are there other 0:16:47.720 --> 0:16:48.520 players out there? 0:16:49.120 --> 0:16:49.600 Oh yeah? 0:16:49.720 --> 0:16:55.600 Look, if we go back to last May at Video's conference, 0:16:55.960 --> 0:16:59.880 there were a host of AI server companies that will 0:17:00.080 --> 0:17:01.680 only to partner with Nvidia. 0:17:01.760 --> 0:17:04.399 So Supermarker is not the only game in town. Now. 0:17:04.440 --> 0:17:05.640 There is Dell nor Hpe. 0:17:06.480 --> 0:17:09.920 There are some Taiwanese ODMs that are more than happy 0:17:09.920 --> 0:17:12.919 to assemble AI servers out there. So we've seen the 0:17:13.520 --> 0:17:17.200 because of the growing competitive pressure, we've seen margins compress 0:17:17.240 --> 0:17:18.960 as a result for the industry. 0:17:18.840 --> 0:17:23.360 So they sacrifice it feels like the CFO here. How 0:17:23.400 --> 0:17:26.240 does the street feel about the rest of the management team, 0:17:26.280 --> 0:17:28.200 the leadership as well as the board. 0:17:29.000 --> 0:17:31.959 Well, look, the main issue in my mind was not 0:17:32.040 --> 0:17:36.000 only the CFO but also the board. When you have 0:17:36.160 --> 0:17:39.439 the wife of the CEO as a member of the 0:17:39.440 --> 0:17:42.720 board and a seventeen year old a person on the 0:17:42.720 --> 0:17:46.200 board who's been on for about seventeen years, there's very 0:17:46.240 --> 0:17:49.240 limited independence. Quite frankly, I do think there needs to 0:17:49.280 --> 0:17:52.160 be some sort of overhaul of the board. And I've 0:17:52.160 --> 0:17:54.240 said in the past on this show and I have 0:17:54.359 --> 0:17:56.959 written that I think the CEO may need to be 0:17:57.000 --> 0:18:00.560 promoted to a chairman role and I may need CEO. 0:18:01.359 --> 0:18:03.680 Now is this what part of all of this has 0:18:03.720 --> 0:18:06.000 to do with just going from a company in the 0:18:06.040 --> 0:18:08.560 Russell to the company in the S and P and 0:18:08.680 --> 0:18:12.000 is growing super fast and having different kind of analysts 0:18:12.000 --> 0:18:13.720 coverage And how much of this was gonna come kind 0:18:13.720 --> 0:18:14.320 of no matter what. 0:18:15.560 --> 0:18:19.080 Yeah, you know, that's a good question, Alex. You know, look, 0:18:19.280 --> 0:18:22.960 this used to be a Russell company or a mid 0:18:23.000 --> 0:18:26.840 cap company, and it was under the radar for a 0:18:26.880 --> 0:18:28.919 lot of analysts, and now we're talking about being in 0:18:28.960 --> 0:18:31.200 the S and P. Five hundred index and you're gonna 0:18:31.200 --> 0:18:34.640 have a lot of magnifying glasses on the financials. And 0:18:34.840 --> 0:18:37.200 keep in mind, you know, it's only been about five 0:18:37.200 --> 0:18:39.800 to six years back where they were delicted from the 0:18:39.880 --> 0:18:43.560 NASDAC and for them to do this again, it's quite 0:18:43.600 --> 0:18:46.040 frankly shameful in my mind. 0:18:46.200 --> 0:18:46.480 Now. 0:18:46.640 --> 0:18:49.760 If there is no wrongdoing here, shame on me. Right, 0:18:50.280 --> 0:18:54.000 But you know Fuolmi wants, you know, shame on them. 0:18:54.119 --> 0:18:57.600 Fool me twice, Shame on me. So you know you're 0:18:57.600 --> 0:18:59.240 going to see a lot of scrutiny going forward. I 0:18:59.240 --> 0:19:00.600 don't know if they'll come back this. 0:19:00.920 --> 0:19:03.840 Have they lost customers to any material basis? 0:19:04.840 --> 0:19:07.359 Nothing reported as of yet. 0:19:08.000 --> 0:19:11.640 What they said on the last earnings call was that 0:19:11.680 --> 0:19:15.960 there were a couple of customers who you know, they're 0:19:16.000 --> 0:19:16.879 trying to retain. 0:19:17.760 --> 0:19:20.719 How much more? Okay, So just pure valuation perspective, How 0:19:20.720 --> 0:19:22.800 do we know how to value this company when they're 0:19:22.800 --> 0:19:23.560 all these questions. 0:19:24.080 --> 0:19:26.640 Look at the end of the day, and Paul taught me, well, 0:19:26.640 --> 0:19:28.160 it's all about cash flow and earnings. 0:19:28.880 --> 0:19:31.800 Nice John, And I don't know what. 0:19:31.960 --> 0:19:34.480 I don't know what earnings is In our scenario model, 0:19:34.520 --> 0:19:38.520 we have a buck sixty in earnings go going forward, 0:19:39.000 --> 0:19:44.399 and hardware companies of this ilk Ai companies are ranging 0:19:44.400 --> 0:19:47.920 anywhere between ten to fifteen times. So if my buck 0:19:48.000 --> 0:19:50.720 sixty is right and it's going at around, let's just 0:19:50.720 --> 0:19:53.480 say at the high end fifteen to sixteen times. No, 0:19:53.680 --> 0:19:57.000 it seems like from a valuation standpoint, it's training at 0:19:57.040 --> 0:19:58.320 the fundamentals all right. 0:19:58.320 --> 0:20:01.640 Thanks to Woojin Hoo, Bloomberg intelligen Senior technology analyst. 0:20:01.520 --> 0:20:03.760 This week, we focused on a Bloomberg Big Take story 0:20:03.880 --> 0:20:07.120 titled A Roadmap through the Drama and Realities of Trump's 0:20:07.200 --> 0:20:07.680 Trade War. 0:20:07.960 --> 0:20:10.520 You can find it on Bloomberg dot Com and the Terminal. 0:20:10.640 --> 0:20:13.399 The story looks at president like Donald Trump's proposed herfs. 0:20:13.520 --> 0:20:16.040 Everyone from Wall Street investors to foreign governments are trying 0:20:16.080 --> 0:20:19.000 to map out Trump's tariff plan and a fog of uncertainty, 0:20:19.200 --> 0:20:21.760 and Bloomberg Economics has mapped out a plausible scenario for 0:20:21.840 --> 0:20:22.560 what lies ahead. 0:20:22.880 --> 0:20:24.920 For more on this, we were joined by Brendan Murray, 0:20:25.000 --> 0:20:26.680 Bloomberg Global Trade Editor. 0:20:26.840 --> 0:20:29.280 We first asked Brendan to break down that latest research. 0:20:29.800 --> 0:20:32.879 So, if you add up all of the tariff threats 0:20:32.960 --> 0:20:37.679 that incoming President Trump made over the past week, about 0:20:37.800 --> 0:20:40.560 half the world's population of eight billion people would be 0:20:40.680 --> 0:20:43.240 hit if you take the countries that he targeted. So 0:20:43.680 --> 0:20:46.320 there's a lot to unpack here. And so what we 0:20:46.480 --> 0:20:50.880