WEBVTT - P&L: Josh Green Goes Inside The Trump Bunker 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg pim L Podcast. I'm pim Fox. 0:00:08.119 --> 0:00:11.159 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.880 you and your money, whether at the grocery store or 0:00:16.920 --> 0:00:20.680 the trading floor. Find the Bloomberg p L Podcast on iTunes, 0:00:20.840 --> 0:00:30.000 SoundCloud and at Bloomberg dot com. All right, let's turn 0:00:30.040 --> 0:00:33.000 our attention now to a program in the future. It 0:00:33.080 --> 0:00:35.519 maybe a Donald Trump program, and it may come to 0:00:35.520 --> 0:00:38.280 you courtesy of Facebook. I want to bring in Joshua 0:00:38.320 --> 0:00:41.840 Green are Washington correspondent for Bloomberg News. He also also 0:00:41.920 --> 0:00:45.320 the co author of this week's cover story of Bloomberg 0:00:45.440 --> 0:00:48.640 Business Week, which is as much about the future of 0:00:48.720 --> 0:00:52.519 political campaigns as it is about marketing. Josh Green, thank 0:00:52.560 --> 0:00:55.320 you very much for being with us. All right, So, 0:00:55.680 --> 0:00:57.920 in fact, there was a quote in this story where 0:00:57.960 --> 0:01:01.040 I believe someone who interviewed said, oh, yeah, you know, 0:01:01.120 --> 0:01:05.440 political campaigns, they just like marketing campaigns. Yeah. My my source, 0:01:05.640 --> 0:01:08.400 high level Trump official, liking at the selling burgers in 0:01:08.480 --> 0:01:10.319 a burger shop, that you have to you have to 0:01:10.319 --> 0:01:12.520 appeal to a wide audience and convince them that you 0:01:12.600 --> 0:01:14.759 got the right product and doing that is the key 0:01:14.760 --> 0:01:16.920 to success. All Right, I kind of pushed you ahead 0:01:16.920 --> 0:01:18.520 a little bit. I want you to step back. Tell 0:01:18.560 --> 0:01:21.280 everybody what the story is about and why this is 0:01:21.319 --> 0:01:24.240 such an interesting look inside a political campaign. Well, I've 0:01:24.240 --> 0:01:26.920 been covering the Trump campaign the whole cycle, and during 0:01:26.959 --> 0:01:29.399 that time and speaking to a few senior Trump officials 0:01:29.400 --> 0:01:32.319 and members of the family. Uh, they have said the 0:01:32.319 --> 0:01:34.880 contrary to the public perception that Trump's campaign is really 0:01:34.880 --> 0:01:36.640 just Trump and a Twitter feed, they actually have a 0:01:36.640 --> 0:01:41.240 pretty sophisticated voter targeting and turnout operation that they built 0:01:41.240 --> 0:01:44.640 in San Antonio, Texas of all places. So I appealed 0:01:44.680 --> 0:01:47.720 to them to let me go down and check it out, 0:01:48.280 --> 0:01:51.760 and along with my colleague Sasha Eisenberg, we got exclusive 0:01:51.800 --> 0:01:54.560 access to Trump's digital operations for the cover story in 0:01:54.560 --> 0:01:57.080 this week's Business Week. So what did it look like 0:01:57.480 --> 0:02:00.720 in their in their sort of campaign operations that could 0:02:00.720 --> 0:02:03.520 easily parlay into a media It's like, on what what 0:02:03.600 --> 0:02:07.640 interstate is it? I forty? I think it's four ten. 0:02:08.760 --> 0:02:13.440 But it looks honest, Yeah, any other campaign headquarters. You know, 0:02:13.480 --> 0:02:17.400 you've got Trump signs everywhere, You've got a lot of 0:02:17.560 --> 0:02:22.000 you know, young eager. Um, uh, kind of geeky looking people. Frankly, 0:02:22.040 --> 0:02:25.120 this is a digital operations. They also had a call 0:02:25.200 --> 0:02:27.840 center there where the folks were a little older and 0:02:27.919 --> 0:02:29.959 tend to be carrying guns. Who's the guy that looks 0:02:30.000 --> 0:02:33.360 like a martial mixed martial arts expert. This would be 0:02:33.400 --> 0:02:36.600 Brad par Scale, who is Trump's digital director and has 0:02:36.639 --> 0:02:40.280 a wild backstory. Uh, never been involved in politics before, 0:02:40.360 --> 0:02:44.239 but did make the Trump Foundation's website, also made Trump 0:02:44.280 --> 0:02:47.120 wineries websites. Is a guy who's in the Trump orbit, 0:02:47.639 --> 0:02:51.760 and as Trump cycled through various campaign staffers, par Scale 0:02:52.480 --> 0:02:55.160 kept rising with each successive turnover to the point where 0:02:55.160 --> 0:02:58.480 he now runs the campaign's media budget and oversees the 0:02:58.520 --> 0:03:01.919 staff of about a volunteers, more people down in San 0:03:01.960 --> 0:03:05.520 Antonio than there are in Trump Tower, New York. So, um, 0:03:05.560 --> 0:03:09.680 you said that they carry guns, Well that was you know, 0:03:10.000 --> 0:03:12.600 you don't usually see that at campaign headquarters. Remember this 0:03:12.639 --> 0:03:15.320 is in Texas and San Antonio, Texas to Republican candidate, 0:03:15.720 --> 0:03:18.200 open carry gun law, second Amendment, big big deal to 0:03:18.240 --> 0:03:21.280 voters down there. So yeah, they have a volunteer call 0:03:21.320 --> 0:03:23.840 center where you call Trump State hundred number. The volunteers 0:03:23.840 --> 0:03:26.440 answering the phone, and sure enough the guy started talking 0:03:26.480 --> 0:03:28.239 about look down and he has a gun hanging off 0:03:28.240 --> 0:03:32.040 the ship. Evidently he brings into work every day just 0:03:32.080 --> 0:03:34.400 in case, you know, somebody I don't know bum rushes 0:03:34.440 --> 0:03:36.800 him or something and he feels the need to defend himself. 0:03:36.840 --> 0:03:39.880 But you wouldn't see that in a Hillary Clinton headquarters 0:03:39.920 --> 0:03:42.360 for sure. Um And frankly, I don't know. If you 0:03:42.440 --> 0:03:45.120 go around uh San Antonio, you find a lot of 0:03:45.160 --> 0:03:47.800 people with guns just sort of hanging off them either 0:03:47.840 --> 0:03:51.160 despite the free carry laws. But so we're what's the 0:03:51.280 --> 0:03:54.400 what's the end goal of this operation? I mean, it's 0:03:54.440 --> 0:03:58.040 obviously to get Donald Trump elected president? But is there 0:03:58.080 --> 0:04:02.040 some sort of ambition lying underneath this that goes beyond 0:04:02.040 --> 0:04:04.920 the election? Yeah? I think so. I mean Jared Kushner's 0:04:04.920 --> 0:04:06.800 son in law, is the one who really put together 0:04:06.880 --> 0:04:09.680 this organization after Trump won the nomination, you know, and 0:04:09.760 --> 0:04:11.520 up to that point he really wasn't much more than 0:04:11.520 --> 0:04:13.760 just Trump and a Twitter feed. But I think Kushner 0:04:13.840 --> 0:04:16.279 recognized that, look, if we're gonna run a presidential campaign, 0:04:16.360 --> 0:04:20.120 we need a serious, small dollar fundraising operation. Reached down 0:04:20.120 --> 0:04:22.800 to a lot of Silicon Valley marketers and essentially looked 0:04:22.800 --> 0:04:25.360 at it like a like like you would any ordinary 0:04:25.400 --> 0:04:27.680 business problem, like we need to get customers in the door. 0:04:28.400 --> 0:04:31.279 So what they did was spend an awful lot of money, uh, 0:04:31.320 --> 0:04:34.400 some of which they raised selling the Trump hats. They 0:04:34.440 --> 0:04:36.880 also had a bunch of autopen machines down they're signing 0:04:36.920 --> 0:04:39.280 Trump hats like full time, all day, every day to 0:04:39.320 --> 0:04:41.960 sell the people. But they've used this, this influx of 0:04:42.000 --> 0:04:46.640 money to essentially build a massive Facebook list of Trump 0:04:46.760 --> 0:04:50.680 supporters and donors, which and this is key because it 0:04:50.800 --> 0:04:53.880 was paid for with Trump campaign funds. Trump's campaign will 0:04:53.920 --> 0:04:57.159 own this after the election win or lose, and could 0:04:57.320 --> 0:05:00.800 conceivably pored it over to become the audience or say 0:05:00.800 --> 0:05:03.680 a Trump TV network or a Trump new media venture. 0:05:03.839 --> 0:05:06.440 So as usual, Trump kind of has his eye, I 0:05:06.440 --> 0:05:09.720 think on the bottom line, regardless of what the outcome is. 0:05:09.760 --> 0:05:12.760 Un November eight, Josh, could he also end up selling 0:05:12.880 --> 0:05:15.960 or at least renting some of that information to the 0:05:16.000 --> 0:05:22.080 Republican National Committee? Is his operation more sophisticated than the GOP? Well, 0:05:23.360 --> 0:05:26.400 yes and no. His list is bigger than the GOP's 0:05:26.440 --> 0:05:29.039 because it includes not only the r n c's information, 0:05:29.080 --> 0:05:31.480 which they handed over to Trump when he became the nominee. 0:05:31.760 --> 0:05:34.760 But also information that Trump's own campaign has managed to 0:05:34.800 --> 0:05:38.200 go out and harvest from commercial databases from supporters. So 0:05:38.240 --> 0:05:40.640 he has a very big and very valuable list that 0:05:40.760 --> 0:05:45.359 strategists would value anywhere between probably fifty and a hundred 0:05:45.360 --> 0:05:48.600 million dollars. Now, what what presidential means typically do if 0:05:48.600 --> 0:05:51.880 they lose is they can license that to other candidates, 0:05:51.880 --> 0:05:54.760 other entities. You know, Mitt Romney has a list that 0:05:55.120 --> 0:05:57.520 you know he'll rent out to other Republicans to raise money. 0:05:57.560 --> 0:06:00.520 So Trump could could do that. But but a wink Trump, 0:06:00.520 --> 0:06:03.880 that could also be broader commercial applications, and so he 0:06:03.880 --> 0:06:06.120 could really do any number of things with it. Thanks 0:06:06.240 --> 0:06:09.760 very much, Josh Green. He is our national correspondent Bloomberg 0:06:09.960 --> 0:06:15.640 Business Week cover story getting inside Bunker Trump. This is 0:06:15.640 --> 0:06:30.279 Bloomberg Trunk. We just can't stop saying that name. Today, 0:06:30.320 --> 0:06:33.800 Ganette dropped its six eighty three million dollar bid for 0:06:34.080 --> 0:06:37.320 rival Trunk. Here with us to break down what this 0:06:37.360 --> 0:06:40.279 means for both companies going forward, why it failed, and 0:06:40.320 --> 0:06:44.080 everything else related to Trunk is Alex Srman of Bloomberg News. Alex, 0:06:44.120 --> 0:06:45.560 thank you so much for being with us. How long 0:06:45.600 --> 0:06:47.320 does this segment when we only four minutes? Can we 0:06:47.360 --> 0:06:50.040 just go back and forth saying Trunk, I'll say Trunk 0:06:50.120 --> 0:06:54.240 and then you can please you're speaking my language. Um. Yeah, Look, 0:06:54.240 --> 0:06:56.400 this is something that I've been following for months now. 0:06:56.960 --> 0:06:59.080 This is this is going to be in a Harvard 0:06:59.120 --> 0:07:01.800 case study on how to do M and A. Um. 0:07:02.080 --> 0:07:06.279 Ghannette came after Trunk a few months ago, offering twelve 0:07:06.279 --> 0:07:09.240 dollars and cents a share for Trunk after just three 0:07:09.279 --> 0:07:13.600 months or so after Trunk sold shares to h it's 0:07:13.680 --> 0:07:16.400 new chairman, Michael Farrow at eight dollars and seventy five 0:07:16.400 --> 0:07:18.920 cents a share. So it seemed like if Trunk felt 0:07:18.960 --> 0:07:20.560 like the value of its company was eight dollars and 0:07:20.560 --> 0:07:24.440 seventy five cents or roughly in that ballpark in February, 0:07:24.600 --> 0:07:28.040 then it should be certainly worth twelve just three months 0:07:28.120 --> 0:07:30.480 or so later. And yet Michael Farrow said, no, we 0:07:30.520 --> 0:07:34.040 feel like it drastically undervalues the company. So ghanett up, 0:07:34.040 --> 0:07:37.080 that's been to fifteen dollars a share, and still Trunk 0:07:37.160 --> 0:07:40.360 said no, this is not good enough, simultaneously selling more 0:07:40.440 --> 0:07:44.000 shares to a billionaire Patrick Sun Chiang four fifteen dollars 0:07:44.000 --> 0:07:46.800 a share. But the thinking they're being that Patrick Sun 0:07:46.880 --> 0:07:49.400 Chiang was going to participate in the growth strategy, which 0:07:49.440 --> 0:07:51.360 I want to talk about in a minute of trunk, 0:07:51.520 --> 0:07:53.760 so it's not worth it to just sell out. So 0:07:54.040 --> 0:07:56.480 Gannette went back to the drawing board and offered eighteen 0:07:56.520 --> 0:07:59.640 dollars and seventy five cents a share, an enormous premium 0:08:00.040 --> 0:08:02.040 a company that earlier this year was trading under eight 0:08:02.040 --> 0:08:04.239 dollars a share. But of course it's in the hyper 0:08:04.240 --> 0:08:10.440 growth industry of newspapers. So finally, yes, finally the two 0:08:10.480 --> 0:08:13.880 sides reached a deal. Uh, And yet the financing was 0:08:13.920 --> 0:08:17.920 not there at eighteen dollars. In other words, banks felt 0:08:18.000 --> 0:08:21.600 uncomfortable lending at that price because of the deteriorating businesses, 0:08:21.800 --> 0:08:25.600 and potentially because of the banks that Gannette used in 0:08:25.640 --> 0:08:29.400 this case, which were p NC, SunTrust, Jefferies. These are 0:08:29.440 --> 0:08:32.240 not sort of your bulge bracket banks, and many of 0:08:32.240 --> 0:08:35.400 the sources I'm speaking to today have told me they 0:08:35.480 --> 0:08:38.600 think that if Gannette had used different banks, maybe this 0:08:38.600 --> 0:08:41.600 would have worked out differently. But in essence, this morning 0:08:41.600 --> 0:08:43.839 we learned that Gannette throwing in the towel. So these 0:08:43.840 --> 0:08:47.360 two companies will operate as standalone entities, and the shares 0:08:47.440 --> 0:08:52.040 of Trunk down more than fifteen and a half percent currently, 0:08:52.120 --> 0:08:56.640 which basically they're trading about ten dollars ten dollars a share. Trunk. 0:08:56.840 --> 0:09:00.240 The name was supposed to, as you described earlier, to 0:09:00.280 --> 0:09:04.840 do with Tribune online content, but it also is a 0:09:04.960 --> 0:09:07.120 term if you happen to be in the British Isles. 0:09:07.800 --> 0:09:10.880 It describes the tip jar in a restaurant. In fact, 0:09:10.960 --> 0:09:13.480 there's the name of a person is called the trunk master, 0:09:13.600 --> 0:09:15.880 and that's the person that you know gets the tips 0:09:15.880 --> 0:09:19.480 and sort of pays out everybody in the establishment in 0:09:19.600 --> 0:09:22.040 details now, But the reason I go there is because 0:09:22.360 --> 0:09:25.200 this is not me saying. This is Mr Farrow who 0:09:25.280 --> 0:09:27.719 described it this way when they changed the name of 0:09:27.760 --> 0:09:32.960 the company. Are there pieces of trunk that really are 0:09:33.040 --> 0:09:36.160 worth a decent amount of money. Yeah, there's a reason 0:09:36.200 --> 0:09:38.280 why Kennette wanted to go after this. And they have 0:09:38.320 --> 0:09:40.800 a couple of prize assets. They own the l A Times, 0:09:40.840 --> 0:09:43.280 that's probably the biggest prize and they own the Chicago Tribune, 0:09:43.280 --> 0:09:46.560 which is another prize asset. Gnnett owns USA today, but 0:09:46.640 --> 0:09:50.680 after that they don't own any large regional newspapers. So 0:09:51.360 --> 0:09:53.080 the feeling would be that there are a lot of 0:09:53.080 --> 0:09:56.280 potential synergies the big newspapers could sort of funnel into 0:09:56.360 --> 0:09:59.040 USA today in l A. Is there an l A magnet? 0:09:59.120 --> 0:10:03.040 Is there a person in Los Angeles? Patrick? Right? I mean, 0:10:03.040 --> 0:10:06.640 why not just have because Jeff Bezos correction, why not 0:10:06.720 --> 0:10:09.200 him just and in fact, from my understanding that that 0:10:09.360 --> 0:10:13.040 actually that structure was in fact contemplated here, but they 0:10:13.040 --> 0:10:15.400 had already gone so far down the road with sort 0:10:15.400 --> 0:10:19.120 of the transaction as is, meaning Genet buying Trunk that 0:10:19.280 --> 0:10:21.800 in the days that in the recent days where this 0:10:21.840 --> 0:10:24.360 deal was coming apart, it just seemed like it was 0:10:24.400 --> 0:10:26.800 sort of a nonstarter from Trunk. So maybe this continues. 0:10:26.880 --> 0:10:29.320 Maybe maybe he comes in now and he says, okay, 0:10:29.440 --> 0:10:32.360 if Trunk can't push its stock price back up to 0:10:32.400 --> 0:10:35.000 at least fifteen dollars a share. Look, Patrick soun Sunk 0:10:35.120 --> 0:10:38.640 himself is underwater significantly now because he bought in that 0:10:38.679 --> 0:10:40.800 fifteen a share and the stock is currently under ten 0:10:40.840 --> 0:10:43.839 dollars a share. Trunk reports earnings later today, and certainly 0:10:43.880 --> 0:10:47.199 they're going to speak to what their go forward strategy is. 0:10:47.480 --> 0:10:50.080 But I want to talk about what that might be. 0:10:50.280 --> 0:10:52.560 There is a video online for people that have not 0:10:52.600 --> 0:10:55.880 seen this where Trunk describes why they changed their name 0:10:55.920 --> 0:10:58.920 to Trunk. And I want to read you two sentences 0:10:59.000 --> 0:11:01.160 from this video so you have an idea of what 0:11:01.240 --> 0:11:04.160 you will hear. This is from their chief digital officer 0:11:04.240 --> 0:11:06.440 and him, as you pointed out, the whole strategy for 0:11:06.480 --> 0:11:09.719 Trunk is to go online. Here's the quote. One of 0:11:09.760 --> 0:11:11.880 the key ways we're going to harness the power of 0:11:11.920 --> 0:11:15.680 our journalism is to have an optimization group. This Trunk 0:11:15.760 --> 0:11:18.599 team will work with all of the local markets to 0:11:18.640 --> 0:11:21.600 harness the power of our local journalism, feed it into 0:11:21.600 --> 0:11:24.480 a funnel, and then optimize it so we reach the 0:11:24.480 --> 0:11:28.400 biggest global audience possible. So there it is. There's the 0:11:28.440 --> 0:11:34.360 strategy optimize. What does that doesn't mean anything? Pim It 0:11:34.480 --> 0:11:38.040 is a bunch of nonsense. So I have no idea 0:11:38.080 --> 0:11:40.200 what they're going to say today. If it's just gonna 0:11:40.240 --> 0:11:43.959 be buzzwords, maybe maybe turnalists will be put into it. 0:11:44.600 --> 0:11:47.319 But this is also tell me about the distribution that exists, 0:11:47.320 --> 0:11:49.120 because as you said, there's got to be some value 0:11:49.160 --> 0:11:51.719 here for somebody that knows what they're do. Sure, Look, 0:11:51.800 --> 0:11:55.240 the whole idea of of newspapers going online, you can 0:11:55.280 --> 0:11:57.280 sell the so called native ads, and you can make 0:11:57.320 --> 0:11:59.000 a little bit more money by sort of building the 0:11:59.080 --> 0:12:04.720 ads right in to the content and having them. And 0:12:04.760 --> 0:12:07.640 of course video adds that you can put online make 0:12:07.679 --> 0:12:10.719 a lot more money than sort of your display advertising. 0:12:10.840 --> 0:12:12.480 And you can go to a pay wall. And there's 0:12:12.480 --> 0:12:14.360 all sorts of things that have been tried and none 0:12:14.360 --> 0:12:17.120 of it really works. I mean, you know, the newspaper 0:12:17.160 --> 0:12:20.920 industry continues to decline. The transition from print to online 0:12:21.120 --> 0:12:25.000 has certainly not been a flying success for any newspaper companies. 0:12:25.280 --> 0:12:28.640 But that's I was gonna wonder, you know, is Trunk 0:12:28.760 --> 0:12:32.760 more valuable? Uh? Is split into pieces? Right? I mean, 0:12:32.800 --> 0:12:35.200 if somebody buys the l A Times, the Chicago Tribune 0:12:35.440 --> 0:12:38.080 rather than buying the whole thing and optimizing and funneling 0:12:38.120 --> 0:12:41.200 and etcetera, maybe maybe we'll have to see, you know 0:12:41.280 --> 0:12:43.320 that the idea here is the answer to that is no, 0:12:43.440 --> 0:12:46.040 according to Michael Farrow, that this company really is going 0:12:46.080 --> 0:12:48.480 to do something different than the rest of the newspaper industry, 0:12:48.640 --> 0:12:51.120 and therefore it was worth it to refuse a takeout 0:12:51.160 --> 0:12:54.560 offer at fifteen a share. But how much rope do 0:12:54.600 --> 0:12:57.520 they have here before shareholders revolt was going to the 0:12:57.520 --> 0:13:00.160 big question. I was gonna say, just give you the numbers, right, 0:13:00.160 --> 0:13:02.320 because you always work off the off the sales, right, 0:13:02.360 --> 0:13:04.640 the numbers right, So we're talking one point six is 0:13:04.679 --> 0:13:09.400 a one point six billion dollar sales for the year, right, 0:13:09.600 --> 0:13:12.240 and you come out with net income of eighty million dollars, right, 0:13:12.320 --> 0:13:15.040 Net income of eighty million dollars on a one point 0:13:15.080 --> 0:13:18.520 six billion sale exactly, So that is not a strong business, 0:13:18.600 --> 0:13:21.160 as is uh. And again, the the ideas that have 0:13:21.200 --> 0:13:23.400 been thrown around by the newspaper industry in general, this 0:13:23.520 --> 0:13:26.080 is not just speak to trunk, have not been so 0:13:26.200 --> 0:13:29.480 compelling that there has been a wave of you know, 0:13:29.559 --> 0:13:32.160 euphoria in this industry. And in fact, the reason we 0:13:32.240 --> 0:13:35.040 see consolidation in the newspaper industry is the same reason 0:13:35.080 --> 0:13:37.360 we see it in so many industries that in many 0:13:37.360 --> 0:13:39.280 ways these companies have run out of ideas. And so 0:13:39.400 --> 0:13:41.160 you can solid it, you can at least cut costs 0:13:41.400 --> 0:13:44.360 and just look across the entire newspaper industry. When people 0:13:44.360 --> 0:13:46.839 talk about synergies, you know, everyone says, oh, that means 0:13:46.960 --> 0:13:50.079 layoffs in the newspaper industry. It's true, certainly, these companies 0:13:50.160 --> 0:13:52.440 really tighten up. They've been doing it for years, and 0:13:52.480 --> 0:13:55.640 we just see continued layoffs even at the big national newspapers. 0:13:56.080 --> 0:13:58.160 I want to thank you very much, Alex Sherman, as 0:13:58.200 --> 0:14:02.800 always are Bloomberg Deals reporter, giving us the lowdown on 0:14:03.040 --> 0:14:17.160 Gannette walking away from an acquisition of Tromp pleasure. You 0:14:17.240 --> 0:14:19.040 know when we get to talk to the CEO of 0:14:19.080 --> 0:14:23.080 a company, Synaptics, this one particularly. It has a market 0:14:23.080 --> 0:14:26.440 cap at one point eight billion dollars based in San Jose, California, 0:14:26.760 --> 0:14:29.600 and you've probably interacted with many of their products because 0:14:29.640 --> 0:14:34.640 they are leaders in display driver technology. Rick Bergman is 0:14:34.680 --> 0:14:37.040 the chief executive and he joins us now from our 0:14:37.080 --> 0:14:41.400 San Francisco studio home to nine sixty Bloomberg nine six. 0:14:41.560 --> 0:14:43.360 Thank you very much for being with us. Rick Bergman, 0:14:44.320 --> 0:14:46.320 thank you very much. It's great to be here. Okay, 0:14:46.320 --> 0:14:49.280 now tell me what's going on with with Synaptics, because 0:14:49.320 --> 0:14:51.600 you've got to dial back to June. You were in 0:14:51.720 --> 0:14:55.200 talks perhaps with a Chinese company about a takeover. The 0:14:55.240 --> 0:14:58.960 stock is up today substantially, but it's down about thirty 0:14:59.040 --> 0:15:01.720 three so far, uh this year. Maybe just tell us 0:15:02.440 --> 0:15:04.520 a little like six month history what's been going on 0:15:04.560 --> 0:15:08.320 at Synaptics. Well, of course, we're a major supplied to 0:15:08.320 --> 0:15:11.400 all the smartphone manufacturers in a couple of them have 0:15:11.560 --> 0:15:14.440 had some stumbles over the past six months, and kind 0:15:14.440 --> 0:15:17.920 of as they go, we go. But based on our 0:15:17.920 --> 0:15:22.120 guidance in what we just announced last week, we're back 0:15:22.240 --> 0:15:25.400 in a healthy growth period again for the company. Does 0:15:25.440 --> 0:15:30.000 that mean that smartphone UH purchases are increasing faster than 0:15:30.040 --> 0:15:32.480 you've expected, or just that you've got more contracts than 0:15:32.480 --> 0:15:36.320 you expected? What's that do too? Well? Where we're seeing 0:15:36.320 --> 0:15:39.160 our growth as an area where we've really innovated, which 0:15:39.240 --> 0:15:42.080 is around integration. So earlier you mentioned that we're in 0:15:42.120 --> 0:15:45.040 the display business, and we certainly are, but we're combining 0:15:45.080 --> 0:15:47.560 that actually with a touch controller, so when you touch 0:15:47.680 --> 0:15:51.080 your smartphone, that's that Synaptics behind that technology, and we're 0:15:51.120 --> 0:15:54.000 combining those two and are really leading the industry in 0:15:54.040 --> 0:15:57.320 that particular area. Well, can you just expand a little 0:15:57.320 --> 0:15:59.800 bit more on what the strategy of the company has 0:15:59.840 --> 0:16:05.520 been because I recalled directly that um in that review 0:16:05.600 --> 0:16:09.800 that you gave. I believe in June UH you talked 0:16:09.800 --> 0:16:13.440 about that sizeable revenue shortfall during the March quarter and 0:16:13.480 --> 0:16:15.320 you said that that was going to carry into fiscal 0:16:15.400 --> 0:16:19.760 Q four. Well, we finished up our fiscal Q four 0:16:19.800 --> 0:16:22.920 and and and certainly did that come to fruition. That 0:16:23.000 --> 0:16:24.840 is that what happened because you talked about the week 0:16:24.880 --> 0:16:29.040 PC business as well. Well, we did have a weaker 0:16:29.320 --> 0:16:32.520 Q four Now for us, that was June, the September quarter. 0:16:32.600 --> 0:16:38.000 We just announced it was sequentially growth versus at Q four, 0:16:38.080 --> 0:16:40.880 So and then we guided to another seventeen percent if 0:16:40.880 --> 0:16:43.360 you take our midpoint. So, so we feel we we 0:16:43.400 --> 0:16:46.840 have the growth engines back on track. For Synaptics. Earlier 0:16:46.880 --> 0:16:50.720 this year, there was a Chinese buyer group. Uh, you're 0:16:50.760 --> 0:16:56.200 an active negotiations with to possibly take over Synaptics. The 0:16:56.280 --> 0:17:00.760 shares are down more than of Synaptics so far this year. 0:17:01.040 --> 0:17:05.160 Is that still on the table? Well, I can't confirm 0:17:05.240 --> 0:17:08.280 or deny market speculations, and that's kind of in our 0:17:08.320 --> 0:17:11.639 stance for about a year now. Uh. And so we 0:17:11.680 --> 0:17:13.639 are focused on growing the company, as I said, and 0:17:14.040 --> 0:17:17.280 we're actively out there. We've been pretty open about that 0:17:17.359 --> 0:17:19.879 about looking up targets ourselves for M and A to 0:17:19.960 --> 0:17:23.480 allow us to go forward with inorganic growth in the 0:17:23.560 --> 0:17:26.920 human interface area. What would be the natural thing to acquire. 0:17:26.920 --> 0:17:29.480 I mean, what would be um a natural type of 0:17:29.520 --> 0:17:32.800 business that you would be interested in acquiring that bolster 0:17:32.880 --> 0:17:36.640 your existing platform. That's a great question. So as as 0:17:37.000 --> 0:17:40.240 we discussed, Synaptics is well known for our touch technology 0:17:40.359 --> 0:17:42.679 and also our our display technology, so you kind of 0:17:42.720 --> 0:17:46.359 get the touching and seeing part of the human interface experience. 0:17:46.560 --> 0:17:48.760 So as you can imagine, we're also interested in things 0:17:48.840 --> 0:17:54.760 like audio or voice, or motion or three D gestures. Well, 0:17:54.760 --> 0:17:58.840 smells probably ways out there, but uh we we look 0:17:58.880 --> 0:18:01.920 at other technolog metal goal health technologies certainly also fall 0:18:02.000 --> 0:18:05.760 under that umbrella. Talking about gross margins and how they 0:18:05.880 --> 0:18:11.520 are performing at Synaptics well as as in an American 0:18:11.840 --> 0:18:14.760 company or semi conductor company, our margins are are lower 0:18:14.800 --> 0:18:17.600 than what you see from other semi conductor companies. We 0:18:17.680 --> 0:18:20.440 made a strategic decision that we're going to co compete 0:18:20.600 --> 0:18:24.320 in the consumer markets like smartphones are PCs, and that's 0:18:24.320 --> 0:18:26.719 how we're going to get growth and actually grow our 0:18:26.720 --> 0:18:30.199 earnings for share. What what that's meant over the last quarters, 0:18:30.200 --> 0:18:34.480 our gross margins have come down, But as I mentioned conversely, 0:18:34.560 --> 0:18:36.840 is what's going up is our top line. You know, 0:18:36.880 --> 0:18:39.600 assuming that you're talking about how Synaptics really relies on 0:18:39.640 --> 0:18:42.760 the smartphone industry. There's been a lot of talk about 0:18:42.840 --> 0:18:45.840 how the industry is is saturated, that it's not going 0:18:45.880 --> 0:18:48.040 to expand that much more. Anyone who wants a smartphone 0:18:48.040 --> 0:18:51.800 probably has one at this point. What's your take on this, Well, 0:18:51.840 --> 0:18:54.880 we have some great innovations coming and when people talk 0:18:54.920 --> 0:18:59.040 about slow growth, it's still mid single digit type of growth. 0:18:59.040 --> 0:19:01.080 And you're talking about a billion and a half smartphones 0:19:01.119 --> 0:19:03.160 per year sold. So if you just do the math, 0:19:03.240 --> 0:19:07.160 it's a hundred million units of smartphones in addition each 0:19:07.240 --> 0:19:09.560 year that we can can participate and where and our 0:19:09.600 --> 0:19:12.520 plan is to grow our footprint within that smartphone market. 0:19:12.520 --> 0:19:16.680 We've added fingerprint sensors is another example where we've really 0:19:17.119 --> 0:19:21.199 grown our dollar contribution per phone. Rick bergband president and 0:19:21.280 --> 0:19:24.679 CEO of Synaptics, thank you so much for being with us. 0:19:34.040 --> 0:19:36.960 You know, Lisa Abramo, it's uh. The price of oil 0:19:37.400 --> 0:19:40.640 is trading higher by more than eight percent right now 0:19:40.680 --> 0:19:44.280 on the New York NIMEX. This comes after a an 0:19:44.280 --> 0:19:48.720 explosion in the western Shelby County, Alabama, and this is 0:19:48.800 --> 0:19:53.080 a pipeline that was being worked on and apparently it 0:19:53.200 --> 0:19:57.600 supplies a great deal of gasoline to the southeast. In fact, 0:19:58.000 --> 0:20:01.520 this is a sort of major hub for for a 0:20:01.560 --> 0:20:04.439 major transit point. I beg your pardon for gasoline, and 0:20:04.480 --> 0:20:06.720 here to tell us about it is Laura Blewett, our 0:20:06.760 --> 0:20:10.560 own first word Bloomberg first word oil reporter. Laura, thank 0:20:10.600 --> 0:20:12.840 you very much for being with us. Tell us about this, 0:20:12.840 --> 0:20:18.680 this pipeline, it's connection to higher gas prices in the southeast. Yes, 0:20:18.720 --> 0:20:22.480 absolutely so. This is the major artery shifting gasoline from 0:20:22.520 --> 0:20:25.520 the Gulf Coast refining hub into the main consuming hub 0:20:25.560 --> 0:20:29.560 in New York. Um. It's the pipeline that was hit yesterday. 0:20:29.640 --> 0:20:32.640 It flows from Houston to Greensboro, North Carolina, and then 0:20:32.680 --> 0:20:35.919 there are some connecting lines that Hallett Field north to 0:20:36.400 --> 0:20:41.280 New York. So. Um. This explosion comes about uh six 0:20:41.359 --> 0:20:45.160 or seven weeks after another spill in September that shut 0:20:45.200 --> 0:20:48.400 the line for twelve days. Um. So Um. They were 0:20:48.440 --> 0:20:51.760 working on the pipeline, working to make some repairs after 0:20:51.800 --> 0:20:54.399 that spill, and it looks like in the midst of 0:20:54.400 --> 0:20:58.520 that work, UM, a track ho was doing some digging 0:20:58.640 --> 0:21:02.000 and it hit the line. And I'm right now colonial 0:21:02.040 --> 0:21:04.440 pipeline has shut down. Both of the main lines that 0:21:04.520 --> 0:21:08.159 ship gasoline and diesel up to the Northeast. And I 0:21:08.200 --> 0:21:11.639 just want to correct myself. I believe gasoline is higher 0:21:11.680 --> 0:21:16.520 on the nymex It is higher dollar fifty three a gallon. 0:21:16.600 --> 0:21:18.159 Right now on the n I mix up eight and 0:21:18.200 --> 0:21:20.960 a quarter percent. I beg your pardon. Yeah, that was 0:21:21.000 --> 0:21:24.399 a flash jump yesterday on the news. M Gasoline traders 0:21:24.400 --> 0:21:26.160 here in the US that I speak to, we're up 0:21:26.160 --> 0:21:29.680 all night trading. Um. This looks like at this point 0:21:29.760 --> 0:21:32.840 it's all speculation, but this line could be shut down 0:21:32.880 --> 0:21:36.760 for several weeks, which would have a huge, huge impact 0:21:36.880 --> 0:21:40.920 on drivers in the Northeast stand Eastern Seaboard. So pair 0:21:41.080 --> 0:21:45.040 this with the dynamic that's the opposite dynamic over in 0:21:45.080 --> 0:21:48.120 the Middle East, where it seems like perhaps OPEC will 0:21:48.119 --> 0:21:53.520 struggle to get some agreement together on limiting UH limiting output. Um, 0:21:53.560 --> 0:21:56.720 and there is evidence that US stockpiles are increasing. I mean, 0:21:56.760 --> 0:22:01.720 does this materially eat into those stockpiles and potentially UH 0:22:02.359 --> 0:22:06.680 put a floor under oil prices regardless of an opaque agreement. Yes, 0:22:06.800 --> 0:22:10.120 I think it would actually because I'm at this point, Um, 0:22:10.160 --> 0:22:12.840