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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence

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Speaker 1: with Alex Steinhl and Paul'sweenye.

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Speaker 2: The real app performance has been in US corporate high yield.

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Speaker 3: Are the companies lean enough? Have they trimmed all the fats?

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Speaker 2: The semiconductor business is a really cyclical business.

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Speaker 1: Breaking market headlines and corporate news from across the globe.

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Speaker 3: Do investors like the M and A that we've seen?

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Speaker 2: These are two big time blue chip companies.

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Speaker 3: The window between the peak and cut changing super fast.

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Speaker 1: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio.

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Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big

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Speaker 2: business stories impacting Wall Street and the global markets.

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Speaker 3: Each and every week, we provide in depth research and

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Speaker 3: data on some of the two thousand companies and one

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Speaker 3: hundred and thirty industries our analysts cover worldwide.

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Speaker 2: Today, we'll discuss why UPS suffered its worst stock decline

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Speaker 2: in twenty five years.

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Speaker 3: Last, we break down Astrazeneco's quarterly earnings in a conversation

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Speaker 3: with its chief financial officer.

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Speaker 2: But first we dive into politics and the aftermath of

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Speaker 2: President Joe Biden dropping out of the presidential race.

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Speaker 3: Many people are now wondering whether Vice President Kamala Harris

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Speaker 3: could defeat Republican nominee and former President Donald Trump in November.

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Speaker 2: And this week Bloomberg Intelligence took a deep dive into

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Speaker 2: how a potential Harris presidency could impact different sectors and

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Speaker 2: policies in the US.

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Speaker 3: For more, we are joined by Nathan Dean, Bloomberg Intelligence

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Speaker 3: senior policy analyst, and we first asked Nathan what life

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Speaker 3: would look like if Kamala Harris were to win in November.

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Speaker 4: It's a lot of status quo for banks, evs, big

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Speaker 4: tech and so forth like that. The one caveat is

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Speaker 4: on taxes, and Kamala Harris's record in her tax aspect

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Speaker 4: of it has been a little bit more, you know,

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Speaker 4: i'd say progressive than what President Biden has said. But

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Speaker 4: ultimately we've viewed President Biden as moving more towards Kamala

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Speaker 4: Harris's policies when he became president, rather than Kamala Harris

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Speaker 4: moving towards Biden's policies. So a lot of this if

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Speaker 4: she becomes president will be status quo.

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Speaker 3: Oh that's really interesting. So I was going to ask,

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Speaker 3: where is Vice President Harris farther left than President Biden.

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Speaker 3: Where is that biggest daylight?

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Speaker 4: So the one thing that we actually hung down on

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Speaker 4: was her record as Attorney General, and you know, just

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Speaker 4: indicative of one of her actions as she joined about

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Speaker 4: forty seven other states, including the District of Columbia, on

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Speaker 4: a twenty five billion dollar settlement on home foreclosure practices,

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Speaker 4: and a lot of her campaign speeches when she was

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Speaker 4: running president in twenty twenty was talking about how she

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Speaker 4: took on big banks. Now, you know, to us, that

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Speaker 4: means there's a lot more consumer protection coming in the cards,

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Speaker 4: whether it's the Consumer for Financial Protection Bureau, or whether

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Speaker 4: it comes through acts of Congress, or maybe it's even

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Speaker 4: executive orders like continuing President Biden's student debt relief pans.

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Speaker 4: But I think there's going to be a lot of

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Speaker 4: focus on this idea of load to middle income consumers,

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Speaker 4: protections against big corporations, and a lot more in terms

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Speaker 4: of disclosures and so forth like that. Now, is this

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Speaker 4: a material impact on big tech or on the big banks.

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Speaker 4: Probably not. A lot of it has to get passed

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Speaker 4: through Congress, but ultimately it certainly headline risk that I

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Speaker 4: would keep in mind for those sectors is in particular,

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Speaker 4: is just to keep in mind, you know that if

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Speaker 4: she were to focus on this and specifically it's just

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Speaker 4: pick on anti trust. If she were to focus on

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Speaker 4: anti trust, there's a lot of you know, intense scrutiny,

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Speaker 4: more scrutiny than she could put there than a Biden

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Speaker 4: administration could.

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Speaker 2: All right, a lot of my M and A banker

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Speaker 2: buddies are wondering what would a Harris administration mean for

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Speaker 2: antitrust because Biden's been nobody into the M and A world.

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Speaker 2: What's the is a feeling statisquo there as well?

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Speaker 4: You know, this is one of those situations where I think,

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Speaker 4: whoever wins as president's probably not going to be helpful

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Speaker 4: to your M and A banker buddies, because on one hand,

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Speaker 4: you have the continuation of the Biden presidency with Lena

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Speaker 4: Khan at the FTC and taking a very skeptical look

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Speaker 4: at mergers. I mean just in the financial space alone.

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Speaker 4: You know, some of these merger reviews go over a year,

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Speaker 4: if not longer, and you know we saw it certainly

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Speaker 4: with the TD Financial merger they pulled out as a

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Speaker 4: result of this. But then on the flip side, you

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Speaker 4: have Senator Advance and President Trump. And remember this idea

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Speaker 4: of economic popularism is rampted through that. You know that

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Speaker 4: RNC agenda at the moment, So you know, Senator Vance

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Speaker 4: even came down to a Bloomberg event here in Washington

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Speaker 4: and called Lena Kahan, the FTC chairwoman Biden's best picked

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Speaker 4: and insinuated that President Trump should even keep around. Now,

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Speaker 4: I don't think that's going to happen, but for unfortunately, Paul,

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Speaker 4: for your M and A banker buddies, I don't think

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Speaker 4: any other way this gets around, whether it's Harris or Trump,

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Speaker 4: it's going to be a very skeptical world for anti

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Speaker 4: trust in M and A.

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Speaker 3: So Paul's talking to his MENA buddies, I'm thinking about

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Speaker 3: my energy buddies, because one area where it feels like

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Speaker 3: President Harris could be farther left, of course, his energy.

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Speaker 3: I was telling Paul earlier that she's been kind of

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Speaker 3: anti fracking, she's been anti offshore. California is notoriously not

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Speaker 3: loving any fossil fuels. How much of that do you

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Speaker 3: think we have to really start considering.

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Speaker 4: I think it's important to consider it. In fact, our

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Speaker 4: colleague Rob Barnett put out a note talking about this

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Speaker 4: in the importance it has on the renewable sector. So

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Speaker 4: Vice President Harris, you know, certainly has pursued a clean

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Speaker 4: energy agenda, and one of the things we see in

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Speaker 4: you know, her presidency is a boosting of the Inflation

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Speaker 4: Reduction Act. I don't want to say going back to

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Speaker 4: the build back Better three point zero, you know, some

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Speaker 4: of the ideas that will float around. She'll have her

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Speaker 4: own ideas here, but this idea of the Inflation Reduction

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Speaker 4: Act needs to be protected and enhanced. So if you're

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Speaker 4: in the renewable sector, a solar sector, it certainly could

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Speaker 4: be a boon idea. If Vice President Harris wins, you know,

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Speaker 4: I would also just offer this that a lot of

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Speaker 4: it also depends on who takes up Congress, because if

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Speaker 4: Vice President Harris wins and the Republicans take one, if

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Speaker 4: not two, chambers of the House, then a lot of

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Speaker 4: those initiatives are going to be scaled down and actually

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Speaker 4: dramatically lowered and so forth like that.

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Speaker 2: All Right, we know Elon Musk is a big supporter

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Speaker 2: of Trump, But what would a democratic Harris administration mean

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Speaker 2: for the Elon Mussel of the world and the evs.

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Speaker 4: So, you know, for the EV side, I think it's

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Speaker 4: actually a continuation of the Inflation Reduction Act tax credit,

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Speaker 4: if not an enhancement of that. You know, look, tax

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Speaker 4: reform is going to have to happen next year no

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Speaker 4: matter what, because the Trump era tax cuts for individuals

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Speaker 4: expires at the tail end of twenty twenty five. And

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Speaker 4: whether it's Vice President Harris or Trump, neither of them

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Speaker 4: are going to want to increase taxes for low and

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Speaker 4: middle and income you know, Americans. So for the EV's

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Speaker 4: of the world, I would say, under a Harris presidency,

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Speaker 4: you'll certainly have protection from that tax credit in the IRA,

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Speaker 4: You potentially could have an enhancement of that. You certainly

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Speaker 4: will have regulatory policies trying to boost EV usage and

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Speaker 4: so forth like that. Comparing it against the President Trump presidency,

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Speaker 4: where you know, he has said that he doesn't like

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Speaker 4: electric vehicles. Obviously he has the Elon Musk whispering in

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Speaker 4: his ear and providing forty five million dollars a month

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Speaker 4: in PAC funding. But ultimately I think the Republicans you

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Speaker 4: probably would see a scaling back of those tax credits.

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Speaker 2: Uh maybe you.

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Speaker 4: Know, just additional you know, restrictions on EV's and so

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Speaker 4: forth like that. But you know, with the Trump presidency,

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Speaker 4: we'll have to see if he wins and also if

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Speaker 4: the Elon Musk is whispering in his ear income January

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Speaker 4: and February taxes.

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Speaker 2: If former President Trump were to get a second term,

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Speaker 2: is there any consensus in Washington given the makeup of Congress.

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Speaker 2: I guess we have to see how Congress shakes out.

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Speaker 2: But what if anything, could Trump ad been tration get

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Speaker 2: done on taxes?

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Speaker 5: Yeah.

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Speaker 4: So, you know, the way I think about the tax

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Speaker 4: debate with my colleague Andrew Silverman is really print some timing.

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Speaker 2: So the first thing you'll note is the election.

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Speaker 4: If the Republicans take the House and the Senate and

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Speaker 4: the presidency, then they have this opportunity for a reconciliation.

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Speaker 4: This is how they got the Trump Ara tax cuts

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Speaker 4: through in twenty seventeen. It allows them to actually move

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Speaker 4: forth and enhance or you know, essentially conduct tax reform

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Speaker 4: and they can bypass the Democrats. So if the Republicans

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Speaker 4: win the House and the Senate and the presidency, then

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Speaker 4: this President Trump's idea of lowering corporate tax rates is

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Speaker 4: certainly in the carts now I have seen statements from

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Speaker 4: House Republicans saying, eh, maybe we don't want to do

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Speaker 4: that so much, but I do think that this would

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Speaker 4: be President Trump driving this. Now, if you get more

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Speaker 4: of a gridlock Congress, well, then the power of Congress

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Speaker 4: is going to come out, and the House in ways

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Speaker 4: and means Committee, whoever controls it, is certainly going to

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Speaker 4: want to play here and tell the Presidency this is

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Speaker 4: what we think. And so if you get a gridlock Congress,

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Speaker 4: a lot of the tax reform or tax relief ideas

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Speaker 4: that are out there are going to be scaled down

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Speaker 4: or narrowed, but with one objective not to increase the

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Speaker 4: individual tax relief or tax cuts for that individual. If

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Speaker 4: you get President Harris, you may see tax increases for

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Speaker 4: individuals who make greater than four hundred thousand dollars, but

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Speaker 4: I think most individuals in the United States at the

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Speaker 4: end of twenty twenty five probably won't have their taxes.

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Speaker 2: Altered all that much. Our thanks to Nathan Dean Bloomberg

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Speaker 2: Intelligence senior policy analyst.

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Speaker 3: We moved out of corporate earnings and begin with the

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Speaker 3: ev giant Tesla. Tesla reporting another quarter of disappointing profit

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Speaker 3: and postponed a highly anticipated unveiling of autonomous taxis.

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Speaker 2: For more and all this, we were joined by Steve Mann,

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Speaker 2: Bloomberg Intelligence, Global Autos and Industrials Research Channels.

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Speaker 3: We first asked for his key takeaways from Tesla's results.

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Speaker 6: I still like their long term medium term outlook on

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Speaker 6: AI in our view, were not including eight billion optimist robots.

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Speaker 6: I think that's a little bit out there. But AI

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Speaker 6: will continue to drive the stock. But I think people

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Speaker 6: are focused on their auto business. It's a little bit worrying.

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Speaker 6: I think investors were expecting their automotive gross margin to

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Speaker 6: flatten out in the second quarter versus the first, but

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Speaker 6: it did decline about one hundred and fifty basis points

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Speaker 6: to thirteen point nine percent, which is in line with

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Speaker 6: you know, the legacy automaker's automotive growth marginal fourteen percent.

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Speaker 6: So there is some concerns with the investors. Is you know,

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Speaker 6: are there any more upside on margin? Are they you know,

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Speaker 6: are they really that good with cost?

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Speaker 3: But I guess the question is how do we value

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Speaker 3: the stock? So I hear you that the auto part

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Speaker 3: of their business is very much maybe in line with

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Speaker 3: what other auto companies are talking about but they trade

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Speaker 3: an estimated pe of like ninety times, Like is it

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Speaker 3: worth it for that if it's also being valued as

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Speaker 3: an AI company.

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Speaker 6: I think there's a couple of things that the investors

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Speaker 6: are focused on beyond this second quarter. You know, they

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Speaker 6: did pull ahead the start of production for a more

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Speaker 6: affordable EV from like the second half of next year

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Speaker 6: to the first half, which is critical. I think the

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Speaker 6: EV market today globally is actually consumers in the EV

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Speaker 6: market actually looking for a more affordable EV, something that's

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Speaker 6: you know, less than fifty thousand US dollars. You know,

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Speaker 6: most of the EV's offered today are above fifty thousand dollars. So,

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Speaker 6: you know, I think the investors are hoping that, you know,

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Speaker 6: into twenty twenty five and into twenty twenty six, we're

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Speaker 6: going to get a rebound in EV sales because there's

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Speaker 6: going to be more affordable EV's, budget friendly EV's for

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Speaker 6: the mass market.

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Speaker 2: Steve Tesla right now is an auto company and it's

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Speaker 2: an other company. Elon wants you to focus on the

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Speaker 2: other Can you define what's in that other bucket and

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Speaker 2: when investors believe it will be material to their revenution profits?

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Speaker 6: Yeah, you know, He talks about AI quite a bit,

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Speaker 6: you know, robo taxi, optimist robot. But if you think

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Speaker 6: of AI, I think there's you know, potentially even more

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Speaker 6: ways to generate revenues from AI. One of the things

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Speaker 6: that I think the market is also focused on other

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Speaker 6: than robotaxi, taking a passenger from point A to point

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Speaker 6: B is for example. You know, these cars have huge

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Speaker 6: battery storage capacity, right, and these things, if they can

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Speaker 6: move about on its own, you can really help out

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Speaker 6: the utilities in terms of, you know, redistributing power across

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Speaker 6: the grid.

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Speaker 3: Well to that point, I mean, their energy business was

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Speaker 3: actually quite impressive. It had its highest installation of batteries

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Speaker 3: and revenue ever, and energy accounted for just twelve percent

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Speaker 3: and sixteen percent of Tesla's revenue and gross profit respectively.

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Speaker 3: I mean, yeah, it's going to fluctuate, but that's pretty strong.

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Speaker 6: Yeah, it's a good, good sign. I think those tend

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Speaker 6: to be a little bit lumpy because the orders are big,

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Speaker 6: and so whenever they deliver the order and when they

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Speaker 6: ever they book it, that tends to be lumpy. I

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Speaker 6: think we'll have to see if it's going to be consistent.

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Speaker 6: But I think the investors are very focused on business.

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Speaker 6: Are they going to be on time in rolling out

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Speaker 6: the new EV, the affordable EV? And then longer term,

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Speaker 6: it's really you know AI. Is he going to deliver

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Speaker 6: What is he going to say in October the AI

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Speaker 6: event that he's hosting. There were a lot of questions

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Speaker 6: about that during the call, but they were pretty tight lip.

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Speaker 2: Our thanks to Steve Man. Bloomberg Intelligence, Global, Autos and

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Speaker 2: Industrials research channels.

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Speaker 3: Coming up, We're going to break down how demand for

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Speaker 3: cloud computing services and advertising impacted Alphabet's quarterly earnings.

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Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

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Speaker 2: depth research and data on two thousand companies and one

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Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via

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Speaker 2: b I go on the terminal.

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Speaker 3: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Affo Card playing Enbroud

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts. Want us live on YouTube.

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Speaker 3: We move next to earning. It's from Logistic company UPS.

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Speaker 2: This week, YOUPS suffered it's worst stock decline it's twenty

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Speaker 2: five years after reporting profit than missed Anamal's estimates for

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Speaker 2: the quarter.

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Speaker 3: The company also trimmed its forecast for the year, and

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Speaker 3: this comes as UPS has failed to deliver fast enough

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Speaker 3: on a turnaround plan to cut costs and increase volumes.

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Speaker 2: For more on this, we were joined by Lee Classical

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Speaker 2: Bloomberg Intelligence Senior Transport, Logistics and Shipping Antals.

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Speaker 3: We first asked Lee why it was another tough quarter

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Speaker 3: for UPS.

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Speaker 7: I think it's a lot of things. You know, they

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Speaker 7: are seeing vuyume growth, which is good, but that mix

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Speaker 7: of growth is not good. What they're seeing is their

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Speaker 7: shippers trading down. So if you were going to maybe

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Speaker 7: send something via air, maybe you decide you go on

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Speaker 7: the ground, which is you know, cheaper and lower margin.

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Speaker 7: And then if you're using ground, maybe you're going to

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Speaker 7: use one of their products like sure Posts, which is

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Speaker 7: like an economy product which is cheaper and again lower

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Speaker 7: margin business. So you're also seeing the mix of B

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Speaker 7: two C outpacing growth of B to B. B two

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Speaker 7: C growth was around four percent and B to B

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Speaker 7: growth was down four percent and B to B. So

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Speaker 7: think like a lawyer sending documents to another lawyer's office.

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Speaker 7: That business tends to have better margins because of the

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Speaker 7: inherent density that follows that business, and density is really

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Speaker 7: good for acid intensive networks like ups is. And then

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Speaker 7: you also, you know, have another negative mixed impact you

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Speaker 7: had too. You know, they called out on their call

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Speaker 7: to large e commerce companies. I'm assuming that you know,

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Speaker 7: these are companies out of China that are you know,

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Speaker 7: are kind of using more economy services, so you're seeing

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Speaker 7: a surge in that demand from from there as well.

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Speaker 3: Is this the trough? Is this sort of the worst

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Speaker 3: it's going to get?

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Speaker 7: It's a great question. I mean, you know, I think so,

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Speaker 7: you know, I think it feels like it's this is

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Speaker 7: the worst. I mean, you know, the company has done

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Speaker 7: pretty well in terms of eating expectations or beating expectations.

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Speaker 7: This is the first miss since I believe the first

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Speaker 7: quarter of twenty twenty, so you know, Carol to May

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Speaker 7: and her team have been on quite a role. They

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Speaker 7: also have some easier comparisons going into the second half.

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Speaker 7: You know, some of your listeners might have remembered they

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Speaker 7: had a new contract that was really you know, heavily

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Speaker 7: weighted in the first year that gets anniversaried in August first,

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Speaker 7: So therefore, you know, those higher labor costs, the comparables

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Speaker 7: will ease significantly, you know, after August first, so that

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Speaker 7: should provide a better cost for them in a third

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Speaker 7: quarter and going forward. Also, you know peak seasons here, right,

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Speaker 7: You know, a lot of the companies that we cover

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Speaker 7: are talking about we you know, most of them are

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Speaker 7: expecting a real peak season and we're not talking about,

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Speaker 7: you know, the peak seasons that maybe we've seen the

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Speaker 7: nineteen nineties or early two thousand, but you're definitely going

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Speaker 7: to see seasonal increase in demand. And that peak season

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Speaker 7: is one of the shortest on record. You know, it's

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Speaker 7: around seventeen days between Thanksgiving and Christmas, and that will

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Speaker 7: allow ups to implement surve charges because they're going to

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Speaker 7: have to you know, get those resources in a short

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Speaker 7: amount of time or a short amount of time to

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Speaker 7: make sure that you know, they're able to deliver at

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Speaker 7: high service levels. So you should see probably some good

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Speaker 7: revenue growth in the fourth quarter from those sur charges.

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Speaker 7: So you know, that coupled with a lot of their

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Speaker 7: cost cutting measurements, they've they've they've reduced a lot of heads.

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Speaker 7: You know, I think a lot of things are going

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Speaker 7: to turn for this company once you're going to see

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Speaker 7: you know that B two B volume return and the

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Speaker 7: company is doing a lot of things I think to

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Speaker 7: position itself longer term, you know, whether that's you know,

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Speaker 7: focusing on the healthcare logistics. Healthcare logistics obviously there's a

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Speaker 7: lot of value add there and those margins are pretty

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Speaker 7: high relative to you know, someone throwing a package on

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Speaker 7: your porch, and so you know, they're really looking to

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Speaker 7: grow that business and they want to be a leader

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Speaker 7: in that business. Uh And and to be frank, it's

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Speaker 7: it's it's a fantastic uh business to be in if

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Speaker 7: you're a logistics provider. And then you know they're also

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Speaker 7: trying to do new things with or more things, I

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Speaker 7: should say, with with what we call SMBs, which are

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Speaker 7: small and medium sized businesses. You know that tends to

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Speaker 7: have better margins than you know, dealing with these super

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Speaker 7: large companies like Amazon, which you know the business is good,

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Speaker 7: but the margins could be better.

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Speaker 2: I have actually no loyalty between these two services, I

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Speaker 2: mean the FedEx store and the UPS store kind of

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Speaker 2: right next to each other in my little strip malls.

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Speaker 2: So whichever's got the shorter line, that's kind of where

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Speaker 2: I go. But from an investment perspective, you know, you

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Speaker 2: got thirty seconds here. What's the difference between these two

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Speaker 2: companies From an investor perspective.

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Speaker 7: Well, it's interesting. So like on FedEx, I think they're

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Speaker 7: dealing with more structural issues because that was a company

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Speaker 7: that I would say was extremely bloated, you know, over

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Speaker 7: the last decade, and they're kind of right sizing there network.

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Speaker 7: They're both making changes to their networks to kind of

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Speaker 7: meet the new demands, you know, that change of increase

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Speaker 7: in the home delivery versus you know, delivering to lawyers

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Speaker 7: or doctors' offices or corporations.

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Speaker 6: You know.

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Speaker 7: I think the biggest difference is, you know, there might

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Speaker 7: be more margin expansion opportunity at FedEx, just because they're

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Speaker 7: starting from a lower base than new ps.

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Speaker 1: You know.

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Speaker 7: But you know, these are two what I would consider

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Speaker 7: blue chip companies that are you know, should benefit with

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Speaker 7: the economy and they should probably be able to grow

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Speaker 7: top line well passed Global GDP just given some of

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Speaker 7: the self help things that they have in front of them.

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Speaker 2: Are thanks to Lee Clasicow, Bloomberg Intelligence, Senior Transport, Logistics

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Speaker 2: and Shipping Annals.

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Speaker 3: We moved now to big tech and Google parent Alphabet,

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Speaker 3: the company reporting second quarter revenue that beat analyst expectations.

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Speaker 2: Alphabet's results for boosted by demand for cloud, computing services

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Speaker 2: and advertising on a search engine.

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Speaker 3: Despite this, investors weren't pleased the capital spending rows more

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Speaker 3: than expected to support Google's AI programs and computing power needs.

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Speaker 2: For more, we were joined by man Deep Singh, Bloomberg

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Speaker 2: Intelligence Senior Tech industry analysts.

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Speaker 3: We first asked man Deep for his take on Alphabet's

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Speaker 3: results this quarter.

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Speaker 8: Companies are not getting a pass on boosting capex. That

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Speaker 8: wasn't the case last quarter. But clearly, I think investors

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Speaker 8: vary about how much CAPEX these companies are going to

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Speaker 8: throw on AI. And look, in the case of Alphabet,

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Speaker 8: there is revenue in the cloud segment, so they quantified

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Speaker 8: the AI impact on cloud, which was high single digit

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Speaker 8: contribution to cloud segment, and cloud segment actually saw on

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Speaker 8: acceleration in top line growth. But YouTube miss, I think

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Speaker 8: I attribute that more to software spending outside of financial

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Speaker 8: services and retail sectors like automotive. They're not spending on

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Speaker 8: digital ads right now because the sector is going through

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Speaker 8: a cyclical downturn. So there is that cyclical element to

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Speaker 8: YouTube's business. But I think there are a lot of positives.

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Speaker 8: Course search growing at fourteen percent. I mean, think about

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Speaker 8: the scale of search and the fact that they are

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Speaker 8: able to grow double digits. That's quite impressive, and that

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Speaker 8: too at a very healthy margin. I mean, the biggest

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Speaker 8: fear for this company was margins are going to get

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Speaker 8: degraded because of you know, AI and whatnot. That we

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Speaker 8: haven't seen that. So a lot of positives, but clearly

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Speaker 8: kapex was an overhang.

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Speaker 2: All right, I've been making a point if any team

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Speaker 2: deserves benefit of the doubt of higher CAPEX, it's Sundarprinchai

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Speaker 2: and all the folks at Google. Stop whining about capex.

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Speaker 2: Have they ever not generated to return on their spending?

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Speaker 8: I mean, the problem with Google's management team is they

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Speaker 8: say very little on their earnings call Like even when

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Speaker 8: you answer them like ask a question, they would answer

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Speaker 8: it with as little words as possible, So you know,

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Speaker 8: it sounded like they are bullish on their AI opportunity

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Speaker 8: and it's actually monetized Uh, some of that capex is

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Speaker 8: going towards Wemo. If you think about you know, robotaxis

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Speaker 8: and what Tesla had to go through there called Wemo

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Speaker 8: actually did two million rides here to date and these

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Speaker 8: are all autonomous rides and they're expanding to other cities.

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Speaker 8: So think about, you know, the scale in that business

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Speaker 8: if they're able to do actually autonomous driving successfully. So

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Speaker 8: I do think their capex as well spent, but they

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Speaker 8: just don't explain it that well to the street, you know,

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Speaker 8: to get the credit.

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Speaker 3: So when it comes to then the AI spend, what

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Speaker 3: other companies are going to get judged in the same

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Speaker 3: harsh light and what's Google's wan up on them?

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Speaker 8: If any Meta I mean you saw a negative reaction

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Speaker 8: with Alphabet, I mean think about what happened to be worse.

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Speaker 8: Meta is going to be worse. Even last quarter when

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Speaker 8: they raise their capex, Meta had a negative stock reaction

438
00:21:53,040 --> 00:21:57,119
Speaker 8: simply because investors are concerned about how much this company

439
00:21:57,160 --> 00:22:00,760
Speaker 8: is going to spend on metaverse versus AI. And so

440
00:22:00,800 --> 00:22:03,760
Speaker 8: in the case of Meta, they're losing eighteen billion dollars

441
00:22:03,800 --> 00:22:07,520
Speaker 8: a year on reality labs. They're spending capex in addition

442
00:22:07,600 --> 00:22:10,600
Speaker 8: to the AI Capex, which they launched a new large

443
00:22:10,600 --> 00:22:13,880
Speaker 8: anglid model, And to my mind, any company right now

444
00:22:13,920 --> 00:22:17,200
Speaker 8: with their own large anglid model, whether it's Alphabet, Meta

445
00:22:17,880 --> 00:22:21,400
Speaker 8: or a Microsoft Open AI, they have an advantage. They

446
00:22:21,600 --> 00:22:25,119
Speaker 8: have the best reasoning capability when it comes to the

447
00:22:25,200 --> 00:22:28,640
Speaker 8: AI spend and it's actually a future driver of revenue.

448
00:22:28,720 --> 00:22:31,520
Speaker 8: So it all comes down to how they are going

449
00:22:31,600 --> 00:22:34,200
Speaker 8: to monetize it, and I think with Microsoft and Google

450
00:22:34,240 --> 00:22:36,439
Speaker 8: they have an advantage because it shows up in the

451
00:22:36,480 --> 00:22:39,600
Speaker 8: cloud revenue. In the case of Meta, they have to

452
00:22:39,680 --> 00:22:45,280
Speaker 8: monetize the AI spend through ad revenue or a subscription

453
00:22:45,440 --> 00:22:48,920
Speaker 8: based you know, chat pot offering, which nobody knows when

454
00:22:48,960 --> 00:22:49,520
Speaker 8: that will come.

455
00:22:50,000 --> 00:22:51,959
Speaker 2: What is Gemini that should I be using it?

456
00:22:52,160 --> 00:22:56,720
Speaker 8: Well, it's a better way to search for certain type

457
00:22:56,760 --> 00:23:01,199
Speaker 8: of queries. So whenever you want you know something with

458
00:23:01,320 --> 00:23:04,240
Speaker 8: a detailed answer as opposed to going through ten blue

459
00:23:04,280 --> 00:23:07,800
Speaker 8: links to find that answer, Gemini is great. The one

460
00:23:07,840 --> 00:23:11,159
Speaker 8: good thing about Gemini is when you search for a query,

461
00:23:11,600 --> 00:23:15,160
Speaker 8: it's going to show you the relevant YouTube link, whereas

462
00:23:15,200 --> 00:23:19,399
Speaker 8: if you search that on Chatchypt or Claude, it's not

463
00:23:19,440 --> 00:23:21,399
Speaker 8: going to have that YouTube link. So it's going to

464
00:23:21,520 --> 00:23:24,440
Speaker 8: generate the text, it's going to generate a summary, it's

465
00:23:24,440 --> 00:23:27,119
Speaker 8: going to answer your query, but it won't have that

466
00:23:27,240 --> 00:23:31,359
Speaker 8: appropriate YouTube link. And that's Google's biggest advantage with the

467
00:23:31,440 --> 00:23:32,439
Speaker 8: large anglid models.

468
00:23:32,440 --> 00:23:33,399
Speaker 2: It's going to have to pay for that.

469
00:23:33,720 --> 00:23:36,679
Speaker 8: Yeah, it's a twenty dollars subscription for the advanced version.

470
00:23:36,920 --> 00:23:38,680
Speaker 3: But some people will that that's kind of.

471
00:23:38,840 --> 00:23:41,480
Speaker 8: And that's where I mean you are, you don't think

472
00:23:41,480 --> 00:23:44,600
Speaker 8: it's a big deal, But I think Google owning maps

473
00:23:44,840 --> 00:23:47,960
Speaker 8: and YouTube is such a big deal in this arena

474
00:23:48,080 --> 00:23:51,080
Speaker 8: of large anglid models, because it's one thing to generate

475
00:23:51,119 --> 00:23:53,919
Speaker 8: a text based response, it's another thing to have a

476
00:23:53,920 --> 00:23:58,080
Speaker 8: blue link with the you know, YouTube video that they

477
00:23:58,200 --> 00:24:00,840
Speaker 8: want you to see or the map link that they

478
00:24:00,840 --> 00:24:04,080
Speaker 8: want you to click on inside that response. And other

479
00:24:04,160 --> 00:24:06,680
Speaker 8: large anguid models can't do it because they don't own

480
00:24:06,760 --> 00:24:07,440
Speaker 8: these assets.

481
00:24:07,480 --> 00:24:11,160
Speaker 3: So well, before we go, if these companies, though, don't spend,

482
00:24:11,560 --> 00:24:13,600
Speaker 3: then at some point when all this is monetizable in

483
00:24:13,640 --> 00:24:15,920
Speaker 3: a big, big way, all of a sudden, them's gonna

484
00:24:15,920 --> 00:24:18,760
Speaker 3: complain that then metas super far behind. So what's the

485
00:24:18,840 --> 00:24:19,840
Speaker 3: chicken in the egg here?

486
00:24:20,400 --> 00:24:22,959
Speaker 8: I mean, I still think nobody wants to be the

487
00:24:23,000 --> 00:24:26,160
Speaker 8: first one to pull back on capex. So it really

488
00:24:26,400 --> 00:24:29,719
Speaker 8: is a question of when do we have sufficient supply

489
00:24:29,840 --> 00:24:33,600
Speaker 8: of GPUs. And because the market is supply constrained when

490
00:24:33,640 --> 00:24:36,240
Speaker 8: it comes to the chip side of the equation, nobody

491
00:24:36,280 --> 00:24:38,960
Speaker 8: wants to come across and say, oh, I have enough

492
00:24:38,960 --> 00:24:42,040
Speaker 8: and I don't need to spend on capex anymore. And

493
00:24:42,119 --> 00:24:45,080
Speaker 8: I think right now, these companies generate so much cash

494
00:24:45,119 --> 00:24:47,920
Speaker 8: every year, like Alphabet will generate over one hundred billion

495
00:24:47,960 --> 00:24:50,720
Speaker 8: in free cash flow, so they can afford to spend

496
00:24:50,880 --> 00:24:54,000
Speaker 8: sixty billion in capex. And they're looking to make our

497
00:24:54,040 --> 00:24:57,280
Speaker 8: twenty three billion dollar acquisition that fell through, but clearly

498
00:24:57,680 --> 00:24:59,560
Speaker 8: they want to spend their free cash flow.

499
00:25:00,040 --> 00:25:03,240
Speaker 2: Thanks to Mandeep singeing Bloomberg Intelligence, senior tech industry analysts.

500
00:25:03,359 --> 00:25:05,239
Speaker 3: Coming up on the program, I'll look at why the

501
00:25:05,280 --> 00:25:09,240
Speaker 3: audio streaming giant Spotify reported record profit last quarter.

502
00:25:09,400 --> 00:25:12,640
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing indifferent

503
00:25:12,640 --> 00:25:14,840
Speaker 2: research and data on two thousand companies and one hundred

504
00:25:14,840 --> 00:25:18,000
Speaker 2: and thirty industries. We can access Bloomberg Intelligence via Bigo

505
00:25:18,080 --> 00:25:19,720
Speaker 2: on the terminal. I'm Paul Sweeney, m.

506
00:25:19,680 --> 00:25:21,120
Speaker 3: Alex Steele, and this is.

507
00:25:21,040 --> 00:25:32,920
Speaker 1: Bloomberg you're listening to the Bloomberg Intelligence Podcast. Catch us

508
00:25:32,960 --> 00:25:36,360
Speaker 1: live weekdays at ten am Eastern on applecar Play and

509
00:25:36,359 --> 00:25:39,280
Speaker 1: Android Auto with the Bloomberg Business app. You can also

510
00:25:39,320 --> 00:25:42,840
Speaker 1: listen live on Amazon Alexa from our flagship New York station.

511
00:25:43,200 --> 00:25:45,960
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

512
00:25:47,400 --> 00:25:50,200
Speaker 3: We move next to corporate earnings from Comcast and Spotify.

513
00:25:50,400 --> 00:25:54,000
Speaker 3: This week, Comcast reported second quarter revenue that missed analysts expectations.

514
00:25:54,280 --> 00:25:56,760
Speaker 3: The global media and tech company was dragged down by

515
00:25:56,760 --> 00:25:59,439
Speaker 3: a slower season and its movie studio and theme parks.

516
00:25:59,640 --> 00:26:01,919
Speaker 2: On the other hand, Spotify reported a record profit in

517
00:26:01,920 --> 00:26:04,679
Speaker 2: the second quarter and strong growth in paying subscribers. This

518
00:26:04,760 --> 00:26:07,480
Speaker 2: comes as Spotify has significantly trim costs over the last

519
00:26:07,520 --> 00:26:09,240
Speaker 2: year to boost profitability for more.

520
00:26:09,280 --> 00:26:12,080
Speaker 3: We were joined by Githa rong Ganathan, Bloomberg Intelligence analyst

521
00:26:12,119 --> 00:26:13,000
Speaker 3: on US Media.

522
00:26:13,200 --> 00:26:16,400
Speaker 2: First ask Etha for her takeaways from Spotify's results.

523
00:26:16,400 --> 00:26:19,280
Speaker 9: Really, the number here for Spotify and the main story

524
00:26:19,320 --> 00:26:22,480
Speaker 9: has not just been great subscriber growth. So they've been

525
00:26:22,520 --> 00:26:26,679
Speaker 9: adding a solid five six seven million premium subscribers every quarter.

526
00:26:27,000 --> 00:26:29,000
Speaker 9: But for them, what it really has been over the

527
00:26:29,040 --> 00:26:32,400
Speaker 9: past few quarters has been this inflection and profitability. Remember

528
00:26:32,480 --> 00:26:34,879
Speaker 9: what we're now looking for streamers across the board, and

529
00:26:34,920 --> 00:26:37,320
Speaker 9: this goes to Netflix and everybody else in video streaming,

530
00:26:37,520 --> 00:26:39,800
Speaker 9: as well as Spotify, which is, you know, the main

531
00:26:39,920 --> 00:26:42,800
Speaker 9: audio streamer with a thirty five percent market share. The

532
00:26:42,920 --> 00:26:46,480
Speaker 9: narrative has really shifted now to profitability, and they absolutely

533
00:26:46,520 --> 00:26:48,760
Speaker 9: blew it out of the park. So the gross margin

534
00:26:48,880 --> 00:26:51,760
Speaker 9: guidance that they had given was twenty eight percent. They

535
00:26:51,800 --> 00:26:54,199
Speaker 9: came in at twenty nine percent. But even better was

536
00:26:54,240 --> 00:26:57,240
Speaker 9: the outlook. So for the longest time Spotify was stuck

537
00:26:57,280 --> 00:27:00,360
Speaker 9: at like a twenty five percent gross margin. They were

538
00:27:00,520 --> 00:27:03,560
Speaker 9: pointing to like longer term margins of thirty percent. But

539
00:27:03,680 --> 00:27:05,080
Speaker 9: looks like they're going to be able to hit it

540
00:27:05,160 --> 00:27:06,080
Speaker 9: right in the third quarter.

541
00:27:06,359 --> 00:27:08,359
Speaker 3: So did it take anyone else's lunch or this was

542
00:27:08,400 --> 00:27:12,080
Speaker 3: just a really good sort of management cost issue.

543
00:27:12,840 --> 00:27:17,480
Speaker 9: Yeah, it's excellent management. More importantly, it's also price increases.

544
00:27:17,840 --> 00:27:20,880
Speaker 9: They hadn't taken any price increase alex for more than

545
00:27:20,920 --> 00:27:23,520
Speaker 9: ten years, and then in a span of two years,

546
00:27:23,520 --> 00:27:26,520
Speaker 9: they've raised prices by twenty percent. And that's just because

547
00:27:26,520 --> 00:27:30,120
Speaker 9: they know that people love Spotify. Nobody's going to churn

548
00:27:30,160 --> 00:27:33,040
Speaker 9: from Spotify to let's say Apple Music or YouTube Music.

549
00:27:33,080 --> 00:27:36,040
Speaker 9: They have a thirty six thirty seven percent share of

550
00:27:36,119 --> 00:27:39,120
Speaker 9: the global audio market, and they're just adding so many

551
00:27:39,160 --> 00:27:42,280
Speaker 9: features and so many new verticals that they're able to

552
00:27:42,280 --> 00:27:44,520
Speaker 9: take those price increases. But of course, apart from that,

553
00:27:45,320 --> 00:27:47,720
Speaker 9: you know, it's also been a very good story when

554
00:27:47,760 --> 00:27:50,080
Speaker 9: it comes to cost cuts. So they were investing heavily

555
00:27:50,160 --> 00:27:52,200
Speaker 9: in their podcasting business, you know, like with the Joe

556
00:27:52,280 --> 00:27:56,200
Speaker 9: Rogan Show and adding all these other exclusive podcasts. They're

557
00:27:56,240 --> 00:27:59,720
Speaker 9: being much more prudent now on that front, and those

558
00:28:00,359 --> 00:28:01,840
Speaker 9: again have really driven profitability.

559
00:28:02,440 --> 00:28:05,480
Speaker 2: How much of their revenue is subscription versus advertising versus

560
00:28:05,600 --> 00:28:06,800
Speaker 2: other These days.

561
00:28:07,640 --> 00:28:11,040
Speaker 9: Almost all of their revenue, Paul, is subscriptions, so it's

562
00:28:11,080 --> 00:28:15,480
Speaker 9: a very Yeah, it's a very very heavy subscription based business.

563
00:28:15,720 --> 00:28:18,680
Speaker 9: They are trying to build the advertising business, but as

564
00:28:18,680 --> 00:28:21,000
Speaker 9: you know, again that takes time. You know, that will

565
00:28:21,080 --> 00:28:23,840
Speaker 9: drive the longer term margin story. But as of right now,

566
00:28:24,080 --> 00:28:25,679
Speaker 9: the mixshift is really subscriptions.

567
00:28:25,720 --> 00:28:27,760
Speaker 3: That's pretty impressive. Hey, can I ask you about Comcast

568
00:28:27,760 --> 00:28:29,680
Speaker 3: and what you made of their earnings that came out

569
00:28:29,680 --> 00:28:32,680
Speaker 3: earlier reported second quarter revenue that misdanalyst estimates they had.

570
00:28:32,720 --> 00:28:34,840
Speaker 3: It was the movie season, you got theme parks, the

571
00:28:34,840 --> 00:28:35,240
Speaker 3: whole thing.

572
00:28:36,280 --> 00:28:39,520
Speaker 9: Yeah, So Comcast is an interesting story. So Comcast is actually,

573
00:28:39,760 --> 00:28:42,640
Speaker 9: you know, your typical media conglomerate. They own both video

574
00:28:42,720 --> 00:28:47,000
Speaker 9: distribution broadband connectivity as well as the media side of

575
00:28:47,000 --> 00:28:50,640
Speaker 9: the business with NBC. Eighty percent of their EBITDA actually

576
00:28:50,720 --> 00:28:53,720
Speaker 9: is related to just broadband subscriptions. And so what happened

577
00:28:53,760 --> 00:28:57,200
Speaker 9: this quarter. We were expecting a little bit of softness

578
00:28:57,200 --> 00:29:01,680
Speaker 9: in broadband and as expected, yes, they did lou subscribers. Remember,

579
00:29:01,720 --> 00:29:04,560
Speaker 9: the whole cable industry is really in a slump because

580
00:29:04,560 --> 00:29:06,560
Speaker 9: of a very very intense competition from some of the

581
00:29:06,600 --> 00:29:10,280
Speaker 9: telecom offerings, both with fiber and fixed wireless access. So

582
00:29:10,320 --> 00:29:12,160
Speaker 9: we're kind of seeing that slump and it looks like

583
00:29:12,240 --> 00:29:14,000
Speaker 9: Comcast is really not going to be able to get

584
00:29:14,040 --> 00:29:17,480
Speaker 9: out of that slump. More interestingly, however, for both Comcasts

585
00:29:17,480 --> 00:29:20,840
Speaker 9: as well as Disney, is that the theme park attendance

586
00:29:21,000 --> 00:29:25,080
Speaker 9: is actually flailing and you know, a twenty four percent

587
00:29:25,120 --> 00:29:29,440
Speaker 9: decline in their theme park ibadah. Yeah, and that's really

588
00:29:29,440 --> 00:29:32,160
Speaker 9: because huge pull forward, or what they're saying was a

589
00:29:32,240 --> 00:29:34,560
Speaker 9: huge pull forward post COVID and now we're kind of

590
00:29:34,560 --> 00:29:38,240
Speaker 9: seeing normalization. So that was a little bit of a disappointment,

591
00:29:38,800 --> 00:29:41,120
Speaker 9: but I think overall the business is fine, but we

592
00:29:41,200 --> 00:29:43,680
Speaker 9: are going to see some extended softness over the next

593
00:29:43,680 --> 00:29:44,320
Speaker 9: few quarters.

594
00:29:44,400 --> 00:29:47,720
Speaker 2: And when you look at Comcasts, you know, great collection

595
00:29:47,800 --> 00:29:51,200
Speaker 2: of assets, but they're all facing serious headwinds. What's the

596
00:29:51,240 --> 00:29:53,720
Speaker 2: feeling among analysts and investors you talk to, like, what

597
00:29:53,840 --> 00:29:57,200
Speaker 2: can a Comcast actually do to become, you know, an

598
00:29:57,200 --> 00:29:58,000
Speaker 2: attractive stock.

599
00:29:59,320 --> 00:30:01,960
Speaker 9: So of course, Paul, as you well know, it's always

600
00:30:02,000 --> 00:30:04,719
Speaker 9: kind of been saddled by this conglomerate discount, I mean,

601
00:30:04,760 --> 00:30:07,320
Speaker 9: the big question. And we know Brian Roberts has always

602
00:30:07,360 --> 00:30:09,760
Speaker 9: been hungry for some kind of deals, so they're obviously

603
00:30:09,760 --> 00:30:11,680
Speaker 9: a wildcard when it comes to M and A. I

604
00:30:11,720 --> 00:30:15,000
Speaker 9: guess once if the administration changes and if it's more

605
00:30:15,400 --> 00:30:19,040
Speaker 9: favorable for deals, I think Comcast will be a major player.

606
00:30:19,120 --> 00:30:21,080
Speaker 9: I mean, we don't know whether they'll look to do

607
00:30:21,120 --> 00:30:24,400
Speaker 9: some kind of joint venture with Warner Brothers or Fox.

608
00:30:24,960 --> 00:30:26,880
Speaker 9: It remains to be seen, but of course they will

609
00:30:26,920 --> 00:30:29,760
Speaker 9: be a major player in the space. You know, again,

610
00:30:29,960 --> 00:30:31,840
Speaker 9: in terms of what would move their stock, maybe they

611
00:30:31,880 --> 00:30:35,000
Speaker 9: spin off their NBC business. I mean, Brian Roberts has

612
00:30:35,040 --> 00:30:38,000
Speaker 9: not indicated any such thing, but I think over the

613
00:30:38,080 --> 00:30:40,840
Speaker 9: near term. What really needs to happen to kind of

614
00:30:41,080 --> 00:30:43,240
Speaker 9: move the sentiment on the stock is they have to

615
00:30:43,280 --> 00:30:45,920
Speaker 9: show positive broadband subscriber growth.

616
00:30:46,040 --> 00:30:48,880
Speaker 3: All right, Thanks to gith Rongganathan, Bloomberg Intelligence analyst on

617
00:30:49,000 --> 00:30:49,640
Speaker 3: US Media.

618
00:30:50,040 --> 00:30:52,680
Speaker 2: We move next to earnings from the pharmaceutical company. Asked

619
00:30:52,680 --> 00:30:55,320
Speaker 2: for Zeneca. The company raised its profit and sales forecast

620
00:30:55,360 --> 00:30:55,800
Speaker 2: for the year.

621
00:30:56,080 --> 00:30:59,080
Speaker 3: The results were boosted by demand for blockbuster cancer drugs

622
00:30:59,080 --> 00:31:03,760
Speaker 3: and for more. Joined by AstraZeneca chief financial officer Radna Sarin.

623
00:31:03,840 --> 00:31:06,320
Speaker 2: Your first asker for her take on this week's earnings.

624
00:31:06,520 --> 00:31:10,080
Speaker 5: All the upgrade is being driven by product revenue. This

625
00:31:10,160 --> 00:31:13,560
Speaker 5: quarter was actually a record quarter twelve point nine billion

626
00:31:13,560 --> 00:31:16,720
Speaker 5: in revenue, and it was driven across the board with

627
00:31:17,560 --> 00:31:21,280
Speaker 5: record revenues in all our therapeutic areas. So oncology which

628
00:31:21,320 --> 00:31:24,800
Speaker 5: is about forty one percent of our business five point

629
00:31:24,800 --> 00:31:30,320
Speaker 5: three billion in revenue, growing nineteen percent, cardiovascular medicines growing

630
00:31:30,360 --> 00:31:34,920
Speaker 5: twenty two percent, Respiratory and immunology growing twenty six percent,

631
00:31:35,160 --> 00:31:37,400
Speaker 5: and a rare disease business which is about a two

632
00:31:37,440 --> 00:31:43,200
Speaker 5: point one billion dollar business growing fourteen percent. And same geographically,

633
00:31:43,280 --> 00:31:45,840
Speaker 5: you know, we're seeing very strong growth in the US

634
00:31:46,520 --> 00:31:50,200
Speaker 5: double digital growth also in emerging markets and in China

635
00:31:50,320 --> 00:31:54,680
Speaker 5: both growing around eighteen percent, Europe twenty four percent. So

636
00:31:55,200 --> 00:31:59,440
Speaker 5: it's really demand for all our innovative medicines across different

637
00:31:59,440 --> 00:32:03,720
Speaker 5: geography and across different therapeutic areas. So we raised our

638
00:32:03,840 --> 00:32:08,240
Speaker 5: guidance for the year both on revenue and EPs to

639
00:32:08,360 --> 00:32:13,680
Speaker 5: now mid teams and it's almost in some ways you

640
00:32:13,720 --> 00:32:17,280
Speaker 5: could consider a double raise because we also said that

641
00:32:17,360 --> 00:32:21,719
Speaker 5: we would meet these guidance without any increase in collaboration

642
00:32:21,840 --> 00:32:24,520
Speaker 5: revenue that we were anticipating.

643
00:32:24,120 --> 00:32:25,000
Speaker 8: Earlier in the year.

644
00:32:25,040 --> 00:32:28,640
Speaker 5: So it's really driven by fundamental underlying growth.

645
00:32:29,200 --> 00:32:31,440
Speaker 2: So doctor, I know, I'm just looking at the Bloomberg

646
00:32:31,480 --> 00:32:33,160
Speaker 2: terminal here. So you have a run right revenue of

647
00:32:33,160 --> 00:32:37,040
Speaker 2: about fifty billion right now. You guys have said that

648
00:32:37,080 --> 00:32:41,080
Speaker 2: you're targeting eighty billion in sales in twenty thirty. What's

649
00:32:41,080 --> 00:32:42,880
Speaker 2: going to bridge the gap? What's going to get you there?

650
00:32:42,880 --> 00:32:44,080
Speaker 2: What should we be keeping an eye on?

651
00:32:44,520 --> 00:32:47,520
Speaker 5: You know, there's a lot going on in the pipeline.

652
00:32:48,040 --> 00:32:52,800
Speaker 5: What's the ambition that we set for twenty thirty of

653
00:32:52,920 --> 00:32:56,920
Speaker 5: eighty billion is driven by I would say three different elements.

654
00:32:57,280 --> 00:33:00,880
Speaker 5: The first element is the products that we have today

655
00:33:01,040 --> 00:33:03,840
Speaker 5: and the indications we have today and growth in those,

656
00:33:03,920 --> 00:33:07,200
Speaker 5: and that's sort of what you see in the quarterly performance.

657
00:33:07,320 --> 00:33:10,720
Speaker 5: The second element is the current products that are on

658
00:33:10,760 --> 00:33:13,880
Speaker 5: the market, but what we call life cycle extension, so

659
00:33:14,720 --> 00:33:19,600
Speaker 5: entering into for example, additional indications or expanding indications and

660
00:33:19,680 --> 00:33:23,440
Speaker 5: other tumor types, etc. That's a second element. And then

661
00:33:23,480 --> 00:33:27,120
Speaker 5: the third element is new molecular entities. So these are

662
00:33:27,360 --> 00:33:32,920
Speaker 5: brand new molecules which we've discovered, we're working on that

663
00:33:33,000 --> 00:33:36,320
Speaker 5: are in phase two or phase three clinical studies and

664
00:33:37,000 --> 00:33:40,160
Speaker 5: hope that will be successful in them and will launch

665
00:33:40,200 --> 00:33:44,120
Speaker 5: them by twenty thirty. We have set an ambition of

666
00:33:44,680 --> 00:33:49,280
Speaker 5: achieving this revenue but also launching twenty new molecular entities

667
00:33:49,320 --> 00:33:55,200
Speaker 5: by twenty thirty, having twenty five blockbusters, so that's products

668
00:33:55,240 --> 00:33:59,400
Speaker 5: over a billion dollars in revenues in the year by

669
00:33:59,480 --> 00:34:03,200
Speaker 5: twenty three. And you know what's going to bridge the gap.

670
00:34:03,240 --> 00:34:06,440
Speaker 5: If you look at the studies we have ongoing, we

671
00:34:06,480 --> 00:34:10,280
Speaker 5: will have probably about forty studies in the next eighteen months,

672
00:34:10,280 --> 00:34:13,359
Speaker 5: so I end up twenty twenty five that we hope

673
00:34:13,400 --> 00:34:17,440
Speaker 5: to read out and that will give us more confidence

674
00:34:18,120 --> 00:34:21,240
Speaker 5: or the trajectory that we're on on achieving that twenty

675
00:34:21,320 --> 00:34:24,640
Speaker 5: thirty ambition. So you know, this is a it's a

676
00:34:24,760 --> 00:34:28,240
Speaker 5: risk business. Obviously, we take risk every day. We invest

677
00:34:28,600 --> 00:34:31,319
Speaker 5: twenty two percent of our R and D of our

678
00:34:31,360 --> 00:34:33,480
Speaker 5: revenue in R and D, so it's a very R

679
00:34:33,520 --> 00:34:37,120
Speaker 5: and D heavy business. And you know, we hope that

680
00:34:37,880 --> 00:34:40,680
Speaker 5: you know, our studies are successful to achieve those goals.

681
00:34:41,000 --> 00:34:44,560
Speaker 3: Our governments your friend or foe right now in terms

682
00:34:44,600 --> 00:34:49,239
Speaker 3: of the UK being an unfavorable or favorable environment. There's

683
00:34:49,320 --> 00:34:52,640
Speaker 3: also the threats of IRA potentially being rolled back under

684
00:34:52,680 --> 00:34:55,280
Speaker 3: President Trump. How do you guys sort of think about

685
00:34:55,560 --> 00:34:57,680
Speaker 3: government interaction with your company?

686
00:34:57,920 --> 00:35:00,920
Speaker 5: You know, governments are a very important state colder for us.

687
00:35:01,160 --> 00:35:04,680
Speaker 5: You know, in the US as well as outside the US,

688
00:35:04,920 --> 00:35:08,359
Speaker 5: many systems healthcare systems are single payer systems, so we

689
00:35:08,440 --> 00:35:10,360
Speaker 5: do work very closely with governments.

690
00:35:11,160 --> 00:35:11,360
Speaker 8: You know.

691
00:35:11,400 --> 00:35:13,839
Speaker 5: The most important thing for us is, you know, once

692
00:35:13,880 --> 00:35:17,439
Speaker 5: we've spent the money and developed innovative medicines, whether it's

693
00:35:17,440 --> 00:35:22,320
Speaker 5: for cardiovastlar disease or oncology, that patients actually get access

694
00:35:22,360 --> 00:35:24,920
Speaker 5: to those medicines, you know, and we can make an

695
00:35:24,960 --> 00:35:28,640
Speaker 5: impact in their lives, and you know from from diseases

696
00:35:28,680 --> 00:35:32,279
Speaker 5: they're suffering from and in that way, we need to

697
00:35:32,320 --> 00:35:36,000
Speaker 5: be able to demonstrate that these drugs have value and

698
00:35:36,040 --> 00:35:39,240
Speaker 5: are bringing value to the patients and to the healthcare system.

699
00:35:39,400 --> 00:35:43,600
Speaker 5: And we work very closely with governments and with systems

700
00:35:43,600 --> 00:35:46,520
Speaker 5: to make sure we get access to those medicines.

701
00:35:47,000 --> 00:35:48,959
Speaker 2: Doctor Saron, you know, I always joke on the show

702
00:35:48,960 --> 00:35:50,319
Speaker 2: that when I come back in the next life, I

703
00:35:50,360 --> 00:35:52,399
Speaker 2: want to be a healthcare m and a banker, because

704
00:35:52,400 --> 00:35:54,400
Speaker 2: it seems every Monday we come in and there's another

705
00:35:55,080 --> 00:35:57,319
Speaker 2: deal out there. How do you and your company think

706
00:35:57,360 --> 00:36:00,000
Speaker 2: about M and A to kind of drive top line

707
00:36:00,080 --> 00:36:02,880
Speaker 2: growth versus the R and D that you've already talked about.

708
00:36:03,400 --> 00:36:07,319
Speaker 5: So the ambition that we set for twenty thirty, the

709
00:36:07,400 --> 00:36:10,200
Speaker 5: eighty billion does not include any major M and A.

710
00:36:10,600 --> 00:36:13,839
Speaker 5: You know, we are always looking from a scientific standpoint,

711
00:36:14,360 --> 00:36:18,359
Speaker 5: not only within our own labs and identifying what could

712
00:36:18,440 --> 00:36:22,279
Speaker 5: be the next most promising molecule, but also looking outside

713
00:36:22,440 --> 00:36:27,200
Speaker 5: and science that is happening in universities and biotech companies

714
00:36:27,480 --> 00:36:30,480
Speaker 5: and so forth. Over the last year and a half,

715
00:36:30,560 --> 00:36:36,240
Speaker 5: we've invested close to seven billion in doing licensing transactions

716
00:36:36,280 --> 00:36:41,399
Speaker 5: and partnerships and smaller M and A transactions that help

717
00:36:41,520 --> 00:36:45,759
Speaker 5: to build our pipeline and really fit very well strategically

718
00:36:45,840 --> 00:36:48,719
Speaker 5: with us in terms of the ambition that we have

719
00:36:49,200 --> 00:36:52,960
Speaker 5: and particularly in new therapy areas where you know we've

720
00:36:53,000 --> 00:36:56,280
Speaker 5: made some investment, but it can help us leap frog

721
00:36:56,840 --> 00:36:59,200
Speaker 5: into the field, for example in the case of cell

722
00:36:59,280 --> 00:37:05,080
Speaker 5: therapies or in the case of radio pharmaceuticals and accelerate

723
00:37:05,239 --> 00:37:08,080
Speaker 5: the investments that we're already making. So you know, we're

724
00:37:08,080 --> 00:37:10,359
Speaker 5: always looking for those types of partnerships.

725
00:37:10,560 --> 00:37:13,000
Speaker 3: So this is a really uncfo question to ask you

726
00:37:13,480 --> 00:37:16,120
Speaker 3: what's the coolest drug that you guys are working on

727
00:37:16,200 --> 00:37:18,840
Speaker 3: right now, the one thing that you're most excited about

728
00:37:19,120 --> 00:37:20,479
Speaker 3: and a potential breakthrough there.

729
00:37:20,719 --> 00:37:22,359
Speaker 5: I don't know if it's an un pool or maybe

730
00:37:22,400 --> 00:37:24,719
Speaker 5: it's unfair. You know, it's hard to pick from brick

731
00:37:24,760 --> 00:37:27,319
Speaker 5: from your children, right so there are just so many

732
00:37:27,360 --> 00:37:30,560
Speaker 5: exciting things happening. You know, every few weeks we get

733
00:37:30,560 --> 00:37:33,160
Speaker 5: some new data that makes us excited. So it's really

734
00:37:33,200 --> 00:37:36,680
Speaker 5: hard to pick a favorite child. But you know, there's

735
00:37:36,719 --> 00:37:39,200
Speaker 5: a there's a lot going on, and and you know,

736
00:37:39,239 --> 00:37:42,880
Speaker 5: we live in very exciting times where not only is

737
00:37:43,440 --> 00:37:46,960
Speaker 5: you know, what we do in astrosenca is important, and

738
00:37:47,040 --> 00:37:51,400
Speaker 5: but science is evolving so quickly, and technology is evolving quickly,

739
00:37:51,440 --> 00:37:54,320
Speaker 5: and you know we're we're sort of at the forefront

740
00:37:54,360 --> 00:37:55,160
Speaker 5: of that innovation.

741
00:37:55,880 --> 00:38:00,160
Speaker 3: Thanks to ask Resenika chief financial officer Radna Saran, they see.

742
00:38:00,000 --> 00:38:04,360
Speaker 1: It's the Bloomberg Intelligence Podcast, available on Apples, Spotify, and

743
00:38:04,520 --> 00:38:07,920
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744
00:38:08,080 --> 00:38:11,000
Speaker 1: ten am to noon Eastern on Bloomberg dot com, the

745
00:38:11,160 --> 00:38:14,600
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746
00:38:14,600 --> 00:38:17,799
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747
00:38:17,960 --> 00:38:19,560
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