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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 Apple Car playing Android

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

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Big Earnings again after the Clothes, we got Meta, we

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Speaker 2: got Apple, and we got Amazon. And the way we

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Speaker 2: do it at Bloomberg Intelligence. Looking at Amazon, we got

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Speaker 2: to recognize that this is a huge retailer, of course

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Speaker 2: global retailer, but it's also a huge technology company. It's

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Speaker 2: really evolved and developed as technology over the last ten.

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Speaker 3: Years or so.

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Speaker 2: So the way we do it is we get bloom

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Speaker 2: punamg Oil, she covers all the retailers for Bloomberg Intelligence,

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Speaker 2: and we got anaag Rana who covers all the tech

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Speaker 2: for Bloomberg Intelligence. We bring them together and we roundtable them,

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Speaker 2: and that's how we can really get a holistic view

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Speaker 2: what's happening at Amazon on rog Let's start with you here.

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Speaker 2: What do you want to hear from Amazon tonight?

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Speaker 3: What do you need to hear?

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Speaker 2: What's the market need to hear about their cloud business?

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Speaker 4: Paul, the magic would tonight is cost optimization. Not seeing

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Speaker 4: any more of it that customers have started to spend back.

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Speaker 4: That is going to really be magic to my ears.

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Speaker 4: I think we heard some of that from Microsoft, but

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Speaker 4: not entirely. I think that is the direction that is

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Speaker 4: going to set the direction for cloud names for over

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Speaker 4: the next ninety days.

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Speaker 5: Can I ask the dem question in real terms?

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Speaker 6: What is cost optimization?

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Speaker 2: Like?

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Speaker 6: What does that actually mean? If I'm reading through the call?

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Speaker 4: So sorry about that? So that just basically means companies

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Speaker 4: or corporations are not cutting costs in their cloud consumptions,

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Speaker 4: that they've stabilized or started to spend back again. That

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Speaker 4: is going to be the only thing that I care about.

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Speaker 2: See Anonog's whole career find technology. It's always a growth industry.

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Speaker 2: They didn't never have down years. It's just a question

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Speaker 2: of how much growth.

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Speaker 3: So the tech spending, apparently over the last couple.

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Speaker 2: Years the growth rate has slowed, and that's got these

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Speaker 2: tech anals all anxious, and so they want to see

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Speaker 2: a reacceleration of that text spanning.

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Speaker 3: That's my read.

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Speaker 2: Let's get to the important stuff. And you're talking about Amazon.

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Speaker 2: That's like people buying stuff and the box is showing

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Speaker 2: up at my door. Put them you cover the whole

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Speaker 2: retail space. You've got the best view of this. How

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Speaker 2: is retail spending out there and how is Amazon competing?

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Speaker 7: Amazon's taking share and retail spending overall is good, especially online,

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Speaker 7: and when you shop online, Amazon is the clear winner there.

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Speaker 7: So we're actually expecting good results for the fourth quarter.

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Speaker 7: We know holiday was strong and Amazon likely took share there,

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Speaker 7: So from an online standpoint, we think they'll do well

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Speaker 7: and the results will be driven once again by gains

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Speaker 7: in their third party which is the sellers that sell

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Speaker 7: on Amazon versus their own first party goods, will be

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Speaker 7: the reason that they outperform.

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Speaker 5: To that point, aren't we sort of is an Amazon

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Speaker 5: kind of looking into a world where they might now

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Speaker 5: be responsible for those third party sales in terms of

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Speaker 5: safety and quality, et cetera. And how dramatic could that be.

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Speaker 7: That could have an impact. You know, right now, Amazon

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Speaker 7: is not responsible, So if you're the seller and are

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Speaker 7: selling something on Amazon, it's not Amazon's responsibility to authenticate

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Speaker 7: that good or even to maintain the control over that

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Speaker 7: exchange of goods. But if that changes and Amazon is

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Speaker 7: going to be accountable for that and seen as a distributor,

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Speaker 7: as what we're hearing. Then that could change things up,

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Speaker 7: and it could make Amazon institute more best practices and

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Speaker 7: also be held reliable, right because we know that there's

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Speaker 7: a lot of stuff sold on Amazon that could be

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Speaker 7: counterfeit and until today, Amazon has no responsibility over that

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Speaker 7: and doesn't need to.

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Speaker 2: Hey on, Rod, give us a sense of just kind

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Speaker 2: of the landscape of cloud computing. We got Microsoft, Amazon, Google,

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Speaker 2: how does it play out? And then how does Amazon

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Speaker 2: position itself?

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Speaker 4: Yeah, so you know in the cloud infrastructure world, which

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Speaker 4: is basically the storage and the computing that you need

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Speaker 4: to build any application, there are three big players. It

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Speaker 4: is Amazon the number one with the biggest market share.

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Speaker 4: Microsoft has done a phenomenal job over an las ten

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Speaker 4: years to catch up and is the second biggest. So

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Speaker 4: you know, structurally there are two big players, Amazon and Microsoft,

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Speaker 4: and then Google's been catching up and Google's are very

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Speaker 4: viable contender to both of them. What's really happening right now,

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Speaker 4: at least in the last twelve months, is Amazon does

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Speaker 4: not have an AI play as such. Now that's really

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Speaker 4: not true, but that's that's the narrative in the street

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Speaker 4: that Microsoft has a close relationship with open Ai. They're

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Speaker 4: pretty much kind of you know, up very close to

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Speaker 4: open ai and open AI's back end is everything Microsoft Azure.

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Speaker 4: So open ai makes more money. Microsoft really, you know,

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Speaker 4: benefits from that, which is what we saw in their

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Speaker 4: results a couple of days ago. For the case of

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Speaker 4: Amazon and Google, they really need to talk about what

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Speaker 4: is going to be their strategy, and their strategy actually

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Speaker 4: is very simple enterprises or cooperations. When they're going to

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Speaker 4: go out and build those AI models, they're going to

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Speaker 4: use one of those three you know, cloud vendors. I

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Speaker 4: think it's going to for them. It's taking a little

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Speaker 4: bit longer, maybe you know, a year down the road,

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Speaker 4: six months down the road. And that's what everybody says that, oh,

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Speaker 4: Microsoft is head and Amazon. I think in the long run,

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Speaker 4: all three will make a lot of money. It's a

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Speaker 4: matter of when it starts.

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Speaker 5: And to your point, Paulo, as our cloud service sales

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Speaker 5: gain thirty percent, Hello, what company wouldn't want that growth rate?

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Speaker 5: But it was like just one percent more than street expected.

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Speaker 6: But those are some big numbers.

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Speaker 5: I gotta say, we got to turn to Apple because

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Speaker 5: we just have a few minutes left. But I'm having

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Speaker 5: a really hard time getting excited about Apple's quarter today.

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Speaker 5: They're gonna make a lot of money, They're going to

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Speaker 5: sell a lot of stuff. And then what anaag, what

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Speaker 5: are you expecting?

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Speaker 4: This is probably the weakest have gone in in terms

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Speaker 4: of sentiments in you know, for Apple, there isn't much

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Speaker 4: going in their favor at this point, you know, regulations,

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Speaker 4: weakness in China, them losing share in China. Like, it's

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Speaker 4: just probably the lowest expectations I've seen going into a

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Speaker 4: quarter for Apple. I'm not expecting any you know, major

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Speaker 4: positive surprises. But I guess what, Sometimes that's when fun happens,

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Speaker 4: is when you go in with with low expectations.

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Speaker 2: Hey put them as we step back here? What other

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Speaker 2: I mean, how does Walmart compete against Amazon? Because it

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Speaker 2: seemless like the Walmart dot com They've done a really

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Speaker 2: really good job competing from my perspective, just as a user,

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Speaker 2: What do you think?

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Speaker 7: I think Walmart has made some strides on its dot

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Speaker 7: com presence. But you know, when you think about Walmart

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Speaker 7: and you think about Amazon, and I think they can

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Speaker 7: both gro share together. It's not that Amazon loses if

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Speaker 7: Walmart wins. But remember that Walmart's business it's still fifty

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Speaker 7: percent grocery, and grocery is a low signal digit business

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Speaker 7: for Amazon. So there are almost two companies that may

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Speaker 7: seem alike, but they're very different in their product offerings.

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Speaker 7: We think both can grow their online business. Both can

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Speaker 7: drive double digit gains as the online vertical just grows

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Speaker 7: as a channel, irrespectively of what happens to brick and mortars.

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Speaker 5: I love that we spent one question on Apple and

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Speaker 5: then we're like, yeah, Okay, let's go back to Amazon,

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Speaker 5: which I think says a lot about the honor our spody.

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Speaker 2: I think from what I understand talking to anarog and

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Speaker 2: other tech folks, it's all China. If you get comfortable

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Speaker 2: in China, you can get comfort to an Apple. If not,

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Speaker 2: then you know, yeah.

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Speaker 5: And they're just like the sentiments just kind of me

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Speaker 5: at the end of the day, So we go to Amazon.

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Speaker 5: Though for a second, what is going to be the

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Speaker 5: catalyst growth driver though on the retail side or is

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Speaker 5: it all just going to be focused on that cloud.

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Speaker 7: I think a lot of focused on cloud, but keep

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Speaker 7: in mind the retail side brings advertising revenue. The AD

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Speaker 7: revenue growth is going to be a key focus area

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Speaker 7: for Amazon, not just today but also for the foreseeable

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Speaker 7: future as that drives very high profit margins close to

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Speaker 7: fifty percent. So we think you want to see retail grow, right,

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Speaker 7: because as you get those prime members shopping on Amazon,

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Speaker 7: you also get more eyeballs and you get more ad revenue.

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Speaker 3: Yeah, that's right.

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Speaker 2: I mean this the digital advertising business for a long

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Speaker 2: time was infected duopoly Google and Facebook.

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Speaker 3: And then Amazon came on and in.

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Speaker 2: A matter of I don't know what's it been, pun

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Speaker 2: of five to six years, they've become a huge advertising platform.

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Speaker 7: They are they control about ten percent of digital media advertising,

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Speaker 7: and they're at a run rate of fifty billion, and

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Speaker 7: we think they can get to one hundred billion over

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Speaker 7: the next several years.

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Speaker 2: Yeah, and that's literally from nowhere standing starts. So it's

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Speaker 2: really amazing. All right, guys, thank you very much. We

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Speaker 2: appreciate getting both of you together. Put them Goyle on

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Speaker 2: Ragrana the both for Bloomberg Intelligence, covering both the retail

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Speaker 2: side of that story, and as Putam says, that's important

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Speaker 2: for a lot of reasons, including the fact that it's

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Speaker 2: driving this advertising business for them.

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Speaker 3: Then, of course, on the technical.

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Speaker 2: Side, the cloud has really been the profit story for

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Speaker 2: the company, and really probably the multiple story for the company.

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Speaker 3: You get a kind of a hig multiple on that

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Speaker 3: cloud stuff.

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Speaker 5: Right, I mean, hence the whole If you only be

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Speaker 5: by one percentage point for growth, you're kind of disappointed

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Speaker 5: in terms of the valuation.

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Speaker 2: I wonder if you ever, I mean, just put on

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Speaker 2: my banker hat on what's I wonder if everybody has

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Speaker 2: the you know, the gumption to go to Amazon and say, hey,

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Speaker 2: you want to split up these companies, just spin out

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Speaker 2: the cloud business.

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Speaker 3: I mean, that would be kind of cool.

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Speaker 6: What would be the downside to them?

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Speaker 3: I don't I don't know.

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Speaker 2: I mean, you know, they kind of giving up a

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Speaker 2: little bit ownership of it, you know, giving it some

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Speaker 2: more ownership.

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Speaker 3: I don't know. It's interesting.

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Speaker 2: I think it'd be kind of cool because I would

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Speaker 2: think that would get a monster monster gosh.

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Speaker 8: Yeah.

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

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty.

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Speaker 2: Tomorrow and Another Job's Day they just kind of sneak

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Speaker 2: up on you every once in a while.

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Speaker 3: So we've got non farm pay rolls.

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Speaker 2: The consensus is for an edition of one hundred and

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Speaker 2: eighty five thousand jobs.

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Speaker 3: Pretty solid number.

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Speaker 2: That would be down from last month of two hundred

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Speaker 2: and sixteen thousand jobs, but that's certainly something that the

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Speaker 2: Federal Reserve is looking at.

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Speaker 3: So let's get a little bit of a preview there.

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Speaker 2: Julia Pollock joins let's She's the chief economist for zip Recruiter,

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Speaker 2: joining us on zoom from Los Angeles.

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Speaker 3: Joey, thanks so much for joining us here. What are

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Speaker 3: you looking for.

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Speaker 2: In the job's data tomorrow? What do you think the

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Speaker 2: Fed's looking for in the job's data tomorrow?

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Speaker 9: Going to predict that job growth will continue to slow.

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Speaker 9: The three month average right now is one hundred and

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Speaker 9: sixty five thousand, and I think we could even fall

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Speaker 9: below that, So I think the risk is very much

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Speaker 9: to the downside.

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Speaker 10: Job growth has been slowing and narrowing.

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Speaker 9: Over the course of the year, and I think it

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Speaker 9: will continue to do so as long as rates cold

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Speaker 9: steady at these restrictive levels.

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Speaker 5: Well, I was gonna say yes, And also I feel

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Speaker 5: like headline after headline, it's like job cuts, job cuts,

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Speaker 5: job cuts. So from our perspective sitting here, it can

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Speaker 5: feel super dramatic, is it, or are we just like

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Speaker 5: normalizing at this point?

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Speaker 9: So, you know, it's always difficult to figure out the

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Speaker 9: trend in layoffs is in January, and that's because December

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Speaker 9: and January are layoff season. Twenty percent of all layoffs

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Speaker 9: in the year take place in just those two months,

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Speaker 9: So you know, it's kind of like predicting that the

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Speaker 9: temperatures are going to get colder and colder and worse

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Speaker 9: and worse and worse when you're sitting in January and

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Speaker 9: you're sort of bossing, you know, September through January bridgers.

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Speaker 9: We don't know, right, they could get worse. So far,

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Speaker 9: layoff numbers, as tracked by Challenger Gray are lower this

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Speaker 9: January than they.

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Speaker 10: Were last January.

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Speaker 9: And we know we had this huge spike in layoffs

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Speaker 9: in December and January last year, but also that over

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Speaker 9: the course of the whole year, according to Bureau of

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Speaker 9: Labor Statistics JOLT data, layoffs were unusually low. The layoff

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Speaker 9: rate lately has been one point zero percent in twenty sixteen,

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Speaker 9: twenty seventeen, twenty, eighteen nineteen and average one point two percent.

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Speaker 9: So it basically are having twenty percent fewer layoffs and

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Speaker 9: firings now than is normal, even though it feels as

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Speaker 9: though they're all the news.

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Speaker 2: So I see in your notes, Julia, ninety two percent

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Speaker 2: of job games over the past six months through December

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Speaker 2: were just three sectors healthcare, the government, and leisure and hospitality.

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Speaker 3: I did not know that.

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Speaker 2: That doesn't sound like a healthy statistic for the labor market.

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Speaker 9: No, it is actually quite unusual. And the previous month

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Speaker 9: it was even worse.

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Speaker 10: It was ninety eight percent. So last month job growth

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Speaker 10: roddened a little bit. But that is the next big thing.

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Speaker 9: I'm going to be looking at, not the sort of

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Speaker 9: magnitude of job gains, but their breadth across the economy.

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Speaker 9: If they're only happening in these non cyclical sectors, they're

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Speaker 9: basically fueled by the government, healthcare and government.

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Speaker 11: That isn't a.

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Speaker 10: Good sign for the economy at all.

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Speaker 9: It would give us reason to understand why consumers, why

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Speaker 9: job seekers, why workers are still feeling a little glum

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Speaker 9: about the situation, even though we have these huge GDP

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Speaker 9: numbers et cetera.

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Speaker 10: It's because the happiness is not sort of spread equally around.

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Speaker 6: Well, here's a dumb question.

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Speaker 5: Why is that a bad sign if it's mostly leisure, hospitality, government,

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Speaker 5: and healthcare.

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Speaker 9: Well, because lots of people aren't working in those industries, right,

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Speaker 9: There are lots of us who are in tech, or

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Speaker 9: in law, or in consulting or finance.

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Speaker 10: It's you know, there's massive demand for nurses.

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Speaker 9: Healthcare is just hiring, hiring, hiring, leveraged, and that industry

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Speaker 9: shifted to workers during the pandemic and they have not

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Speaker 9: lost that leverage increase. But in the rest of the

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Speaker 9: economy it's different. It's not so easy for everyone to

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Speaker 9: kind of move into healthcare. So when certain industries contract

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Speaker 9: and the number of jobs available just keeps falling, and

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Speaker 9: it's not a matter of one company doing the layoffs,

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Speaker 9: so you can just go to the next one, but

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Speaker 9: the entire sector contracting.

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Speaker 10: Take journalism, for example.

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Speaker 9: The media of the press, Well, you can end up

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Speaker 9: having people who are unemployed for quite a long time

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Speaker 9: because it's very hard for them to make a shift.

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Speaker 2: Hey, Joey, I'm looking at the forecast for some of

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Speaker 2: tomorrow's data on the Bloomberg Terminal average hourly earnings year

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Speaker 2: four point one percent is the projection kind of flat

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Speaker 2: with last period. That seems pretty good to me. What's

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Speaker 2: the wage environment from your perspective.

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Speaker 9: That is pretty good, But most of the data does

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Speaker 9: show a steady slowing in wage growth. We had EASYI

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Speaker 9: data yesterday that showed we've had three straight.

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Speaker 10: Quarters of declines and wage growth. You know, the annualized

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Speaker 10: rate of wage growth for the.

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Speaker 9: Quarter was just three point seven percent, which is actually

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Speaker 9: very close to what the FED would expect, is consistent

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Speaker 9: with two percent inflation, so I think we could actually

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Speaker 9: see a slightly lower number, but you know, we'll see.

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Speaker 9: And it's also I think important not just to fixate

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Speaker 9: on these year over year numbers. Right, wage growth was

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Speaker 9: very very fast last year and the year before in

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Speaker 9: nominal terms, inflation was higher for twenty five months, So actually,

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Speaker 9: if you're looking at real earnings, weges have some catching

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Speaker 9: up to do to make up for the nine percent

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Speaker 9: inflation we saw.

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Speaker 6: Are we seeing labor hoarding? Julia?

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Speaker 5: You mentioned how I mean, I know it's seasonal, but

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Speaker 5: the amount of layofs and normally see is below the

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Speaker 5: norm Yeah, Are we seeing hoarding.

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Speaker 9: So there are several anecdotes in the FED Beaige Book

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Speaker 9: of Companies saying, you know, yeah, business activity is what

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Speaker 9: we have more employees on hand than needed have given

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Speaker 9: card levels of business activity, but we're keeping them because

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Speaker 9: we expect conditions to improve in the back half of

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Speaker 9: the year.

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Speaker 10: I think that's sort of code speed for we're.

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Speaker 9: Expecting I've been to cut rates and invest in to

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Speaker 9: boom again and people to build, buy houses and buy

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Speaker 9: refrigerators of furniture, and so we're holding on to these

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Speaker 9: employees because we were burned once before and we know

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Speaker 9: how hard it is to get them back. So yes,

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Speaker 9: I do think that that is occurring in many industries.

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Speaker 2: I can't imagine if I own a business hoarding employees,

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Speaker 2: like who can afford that?

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Speaker 5: Well, that's kind of the point you have to wonder, too,

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Speaker 5: like how long until they are forced to either does

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Speaker 5: the data deteriorate that much or do they need to

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Speaker 5: see if the FED hikes get pushed out, cuts get

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Speaker 5: pushed out even more?

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Speaker 6: Like what's the tipping point for that one?

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Speaker 3: Don't I know?

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Speaker 2: And you know, Julie, I have another thing that I

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Speaker 2: just can't get my head on what's this this jolts thing.

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Speaker 2: It's still like nine million job openings?

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Speaker 3: Where is everybody? Where are people working?

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Speaker 2: That number is usually five or six million, and now

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Speaker 2: we're at nine. It was as high as twelve million.

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Speaker 2: Are people just hanging around Starbucks all day?

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Speaker 10: So I don't put that much stock in that number.

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Speaker 9: There is a c your upward time trend in the

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Speaker 9: job opening series that is not evident in any other

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Speaker 9: lave market data. So job openings have kind of become

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Speaker 9: decoupled from hires, from quits, from the things that they

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Speaker 9: typically are correlated with. And I think if you remove

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Speaker 9: that time trend.

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Speaker 10: Job openings are actually all the way back to normal.

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Speaker 9: Our data, you know, it's on online job hostings and

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Speaker 9: by our accounts of de duplicated online job postings, we

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Speaker 9: are all the way back to pre pandemic levels, to

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Speaker 9: twenty nineteen levels, and to.

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Speaker 5: That point, Paul, you know, when I was in Florence, Italy,

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Speaker 5: you know, yeah stuff, I was talking a lot of

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Speaker 5: these guys who are doing you know, innovative stuff within

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Speaker 5: energy technology and stuff like that, and they're trying to

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Speaker 5: build all these new facilities. They're the ones who are

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Speaker 5: gonna be using a lot of that IRA money. They're like,

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Speaker 5: we do not have the workforce so at all, Like

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Speaker 5: there's no special training program, this is all new technology.

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Speaker 5: They just don't have the people and they're not going

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Speaker 5: to get them anytime soon. And I do wonder how

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Speaker 5: that winds up distorting. I agree, that's a lot of

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Speaker 5: the data too, yep, right, And so we do.

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Speaker 10: Have very low, very low unemployment.

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Speaker 11: Right.

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Speaker 9: The last year was like the sixth best year on

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Speaker 9: record since nineteen forty when it comes to the unemployment

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Speaker 9: rate after the early fifties and the late sixties, So

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Speaker 9: very very low unemployment. Twenty four months of sub four

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Speaker 9: percent unemployment. So it is still hard for employers to

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Speaker 9: find workers.

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Speaker 10: And so I don't think.

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Speaker 9: It's that unrealistic or unreasonable to hang on to the

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Speaker 9: work because.

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Speaker 10: You've got, for dear life.

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Speaker 2: Where are we in terms of productivity here? I was

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Speaker 2: amazed when the pandemic hit and shut down and lockdowns

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Speaker 2: and all that kind of stuff that people were still

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Speaker 2: able to do their jobs pretty much from remotely.

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Speaker 3: And it's just kind of amazed me. Where are we

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Speaker 3: in the productivity discussion?

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Speaker 4: You know that.

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Speaker 10: Productivity data series is a weird one.

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Speaker 9: It's shot up during the pandemic when there were massive layoffs,

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Speaker 9: and those layoffs are typically concentrated among employees who are not,

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Speaker 9: you know, day to day involved in generating widgets. Then

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Speaker 9: measured productivity tumbles as all of those support staff, the

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Speaker 9: HR people, the marketing people came back. Then it started

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Speaker 9: taking up from a point above the pre pandemic trend.

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Speaker 9: And so it does look as though the investments that

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Speaker 9: happened during the pandemic and a zero interest rate environment,

403
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Speaker 9: when everyone was shifting to the computers, to doing everything

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Speaker 9: on the internet, to digitalizing every industry, those investments have

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Speaker 9: actually improved productivity, and we're seeing your great productivity numbers

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Speaker 9: continue now.

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Speaker 3: I feel more productive, don't I look more productive?

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Speaker 5: Well, I mean you are literally standing in this position

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Speaker 5: for five hours, So just from that alone, the answer

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Speaker 5: is yes. All right, Julia, thanks THO. We really appreciate it.

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Speaker 5: Julia Paula. She joins it from ZipRecruiter. She is the

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Speaker 5: chief economist. I do think though, that longer term the

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Speaker 5: labor shortage in different industries is going to be really hard,

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Speaker 5: and I don't know what the longer term.

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Speaker 6: Fix that is. You have to convince kids to go

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Speaker 6: to trade school.

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Speaker 2: That's exactly what I was going to say, create the

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Speaker 2: incentives for the folks to go to trade schools because

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Speaker 2: and we hear and we heard it just recently from

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Speaker 2: George Ferguson talking about his industry, the aerospace industry.

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Speaker 3: One of the reasons Boeing and.

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Speaker 2: The FAA are having a hard time kind of getting

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Speaker 2: their act together is they lost a lot of workers

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Speaker 2: in the pandemic. And these are just people that hammer nails.

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Speaker 2: These are people that are doing pretty specialized, you know,

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Speaker 2: jobs there, and you got to get them back, you

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Speaker 2: got to retrain them.

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Speaker 3: It's taking harder. I didn't think that would still be

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Speaker 3: an issue, but it is.

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Speaker 2: And we're here from industry after industry, your industry in

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Speaker 2: the energy space.

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Speaker 5: Wonder like, at some point does that wind it becoming

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Speaker 5: longer term inflationary.

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Speaker 3: Yeah. Absolutely. I mean a lot of folks saying, forego college, forego.

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Speaker 2: The debt, debt's assourciate of the college, go to a

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Speaker 2: trade school, a lot of which can be subsidized and supported. Man,

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Speaker 2: you can make a good living in a lot of

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Speaker 2: these industries out there. So we'll have to see how

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Speaker 2: that place out. But good we'll see the jobs numbers tomorrow.

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Speaker 2: We'll get a lot more info on the United States

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Speaker 2: labor market, and of course Bloomberg will have full coverage

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Speaker 2: on that, because that's what we do.

443
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Speaker 1: You're listening to them Bloomberg Intelligence Podcast. Catch us live

444
00:20:02,960 --> 00:20:05,639
Speaker 1: weekdays at ten am Eastern on fo card Playing and

445
00:20:05,800 --> 00:20:09,200
Speaker 1: Broudoto with the Bloomberg Business App. Listen on demand wherever

446
00:20:09,240 --> 00:20:13,120
Speaker 1: you get your podcasts, or watch us live on YouTube.

447
00:20:14,280 --> 00:20:17,280
Speaker 2: Nice and manufacturing data came in better than expected. Let's

448
00:20:17,280 --> 00:20:19,240
Speaker 2: break it down with Tim Fury. He's at the conference board.

449
00:20:19,280 --> 00:20:22,359
Speaker 2: He knows all this stuff. Jim, thanks so much for

450
00:20:22,440 --> 00:20:25,480
Speaker 2: joining us here again. Forty nine point one still in

451
00:20:25,600 --> 00:20:28,679
Speaker 2: contraction move, but a big improvement there from consensus and

452
00:20:28,680 --> 00:20:29,399
Speaker 2: from last period.

453
00:20:30,200 --> 00:20:33,320
Speaker 8: Yeah. Well hi wow, Hi Paul, Hi Alex. So Yeah,

454
00:20:33,359 --> 00:20:36,480
Speaker 8: forty nine to one was a surprise. I mean we're

455
00:20:36,480 --> 00:20:37,760
Speaker 8: heading an ins direction for sure.

456
00:20:37,920 --> 00:20:40,320
Speaker 12: Last time we had a conversation, I've been saying I

457
00:20:40,320 --> 00:20:41,840
Speaker 12: thought we'd hit fifty by March.

458
00:20:42,640 --> 00:20:43,959
Speaker 8: This got there a little bit sooner.

459
00:20:44,480 --> 00:20:47,480
Speaker 12: But you know, I look at it from three standpoints, inputs, outputs,

460
00:20:47,480 --> 00:20:48,040
Speaker 12: and demand.

461
00:20:48,560 --> 00:20:50,480
Speaker 8: Yeah, the input stories, it just gets better.

462
00:20:50,600 --> 00:20:53,040
Speaker 12: They're starting to stiffen up, we're investing in working and

463
00:20:53,200 --> 00:20:56,680
Speaker 12: working capital represented by inventory is not contracting as much.

464
00:20:57,280 --> 00:21:00,119
Speaker 12: On the output side, production is stable in January. We've

465
00:21:00,119 --> 00:21:01,720
Speaker 12: heard of the December to fifty point four.

466
00:21:02,160 --> 00:21:03,000
Speaker 8: That's really good.

467
00:21:03,119 --> 00:21:06,919
Speaker 12: That's no sign of concern or dramatic growth even at

468
00:21:06,920 --> 00:21:09,920
Speaker 12: this point. Employment side, we continue to take people out

469
00:21:09,920 --> 00:21:12,560
Speaker 12: of the organizations which we had said that we would

470
00:21:12,600 --> 00:21:15,439
Speaker 12: starting back in May, and it continues. So the real

471
00:21:15,520 --> 00:21:17,440
Speaker 12: story here is on the demand of fifty two point

472
00:21:17,480 --> 00:21:19,720
Speaker 12: five and new orders that kind of came out of

473
00:21:19,760 --> 00:21:22,760
Speaker 12: almost nowhere. But look at that in context with the

474
00:21:22,760 --> 00:21:26,240
Speaker 12: customer inventory number. So we're saying the customer inventories are

475
00:21:26,280 --> 00:21:28,760
Speaker 12: way too low now and at the same time we're

476
00:21:28,760 --> 00:21:31,239
Speaker 12: saying that the new order level is stepping up. So

477
00:21:31,520 --> 00:21:32,960
Speaker 12: I think those are absolutely related.

478
00:21:33,600 --> 00:21:36,040
Speaker 8: You know, our panelists companies customers have gone back to

479
00:21:36,080 --> 00:21:37,040
Speaker 8: them and they've.

480
00:21:36,880 --> 00:21:40,720
Speaker 12: Probably revised their forecasts for twenty twenty four and now

481
00:21:40,760 --> 00:21:41,560
Speaker 12: things runderway.

482
00:21:41,840 --> 00:21:43,080
Speaker 6: So Tim, hey, it's great to see you.

483
00:21:43,119 --> 00:21:44,800
Speaker 5: By the way, I have to say, this is a

484
00:21:44,840 --> 00:21:47,840
Speaker 5: great set of data here, super surprising on different levels.

485
00:21:48,040 --> 00:21:50,399
Speaker 5: When we talk about the inventory, do you think that

486
00:21:50,480 --> 00:21:53,480
Speaker 5: the orders are being used for en demand or do

487
00:21:53,560 --> 00:21:56,080
Speaker 5: you think the orders will be replenishing that inventory, and

488
00:21:56,240 --> 00:21:58,680
Speaker 5: what does that inventory wind up looking like versus say,

489
00:21:59,400 --> 00:22:00,720
Speaker 5: before a cod.

490
00:22:01,119 --> 00:22:03,240
Speaker 8: Yeah, I think it's I think it's a remedia products

491
00:22:03,240 --> 00:22:04,040
Speaker 8: and raw material.

492
00:22:04,720 --> 00:22:07,439
Speaker 12: So you know, we've been really tight, tight, tight with

493
00:22:07,520 --> 00:22:11,520
Speaker 12: investments in this area. We spent well, we've spent what

494
00:22:11,680 --> 00:22:16,080
Speaker 12: eleven months contracting our manufacturing inventory. That really is reflected

495
00:22:16,160 --> 00:22:18,160
Speaker 12: the fact that we've been managing cash really close.

496
00:22:18,200 --> 00:22:20,879
Speaker 8: In twenty twenty three, we closed the year, We closed

497
00:22:20,880 --> 00:22:22,600
Speaker 8: the end of the year very lean.

498
00:22:22,680 --> 00:22:25,879
Speaker 12: Nobody was really carrying any inventory that they that they

499
00:22:25,920 --> 00:22:28,480
Speaker 12: didn't have to. They cleaned the place out, So now

500
00:22:28,520 --> 00:22:30,240
Speaker 12: there's a bit of a restocking going on. I think

501
00:22:30,240 --> 00:22:33,520
Speaker 12: it's more about intermediate stuff alex and you know, middle

502
00:22:33,600 --> 00:22:36,160
Speaker 12: run steel and aluminum.

503
00:22:35,680 --> 00:22:37,360
Speaker 8: Of truckloads and things like that.

504
00:22:37,480 --> 00:22:40,040
Speaker 12: But I think it's a positive sign that companies are

505
00:22:40,040 --> 00:22:43,200
Speaker 12: willing to reinvestigate and working capital. I think that inventory

506
00:22:43,280 --> 00:22:45,480
Speaker 12: number will get over fifty by the time we hit March.

507
00:22:45,680 --> 00:22:48,199
Speaker 12: I'm still on that March thing. I think March is

508
00:22:48,200 --> 00:22:51,080
Speaker 12: like the magic number. But I've been saying since since

509
00:22:51,520 --> 00:22:54,320
Speaker 12: August September that we were in the trough. But this

510
00:22:54,359 --> 00:22:57,000
Speaker 12: could be a sign that we're finally starting to come out,

511
00:22:57,080 --> 00:22:59,520
Speaker 12: and I think it's about you know, the demand had

512
00:22:59,520 --> 00:23:02,600
Speaker 12: to come back. There's some signs of demand here. We

513
00:23:02,640 --> 00:23:06,119
Speaker 12: do have some headwinds in February. February should have a

514
00:23:06,160 --> 00:23:09,000
Speaker 12: lot more new orders coming in, so we're gonna need

515
00:23:09,000 --> 00:23:11,399
Speaker 12: that to maintain that fifty two to fifty three new

516
00:23:11,560 --> 00:23:13,960
Speaker 12: order level. But you know, everything kind of aligns. The

517
00:23:14,000 --> 00:23:16,359
Speaker 12: other thing that's come up this morning is prices. You know,

518
00:23:16,400 --> 00:23:19,399
Speaker 12: prices are growing, so you know, we have the energy

519
00:23:19,440 --> 00:23:23,119
Speaker 12: markets offsetting growth in the commodity markets. Those commodity markets

520
00:23:23,160 --> 00:23:27,320
Speaker 12: are probably just gonna get stronger. Plastics, aluminum steel prices

521
00:23:27,359 --> 00:23:29,760
Speaker 12: are not going to probably come down there. Lead times

522
00:23:29,800 --> 00:23:32,280
Speaker 12: have been really stubborn, so you know, I think that

523
00:23:32,400 --> 00:23:35,360
Speaker 12: the energy markets events will probably give some probably give

524
00:23:35,400 --> 00:23:38,399
Speaker 12: way in the summertime as as demand increases it for

525
00:23:38,440 --> 00:23:39,520
Speaker 12: you know, for summer travel.

526
00:23:39,760 --> 00:23:42,440
Speaker 8: But I don't see prices really going down anymore, and

527
00:23:42,440 --> 00:23:44,680
Speaker 8: I don't see them going up much. You know, it's

528
00:23:44,760 --> 00:23:45,639
Speaker 8: gonna be I think.

529
00:23:45,480 --> 00:23:48,000
Speaker 12: We're gonna see some slow demand kind of creep in here.

530
00:23:48,359 --> 00:23:50,119
Speaker 12: It's gonna be like a slow take off of a

531
00:23:50,119 --> 00:23:51,200
Speaker 12: cargo plane rather than.

532
00:23:51,160 --> 00:23:53,680
Speaker 8: The fighter jet. But we're gonna be kind of we're

533
00:23:53,680 --> 00:23:54,560
Speaker 8: starting to grow again.

534
00:23:54,600 --> 00:23:57,119
Speaker 12: Nonetheless, and I think I feel even more confident that

535
00:23:57,200 --> 00:23:59,199
Speaker 12: March is the right month to see that really show up.

536
00:24:00,040 --> 00:24:02,480
Speaker 2: What are the companies that you survey, what are they

537
00:24:02,880 --> 00:24:05,520
Speaker 2: Are they baking in a recession for twenty twenty four?

538
00:24:05,560 --> 00:24:08,640
Speaker 2: Do they just think, yeah, growth is slowing, but we're

539
00:24:08,680 --> 00:24:09,640
Speaker 2: still going to grow this year.

540
00:24:10,840 --> 00:24:13,840
Speaker 12: Well, we lived all through twenty twenty three not knowing

541
00:24:13,840 --> 00:24:15,879
Speaker 12: what the future look like, so there was a huge

542
00:24:15,920 --> 00:24:17,680
Speaker 12: constraint on capex investment.

543
00:24:18,080 --> 00:24:19,520
Speaker 8: We undershot our targets.

544
00:24:19,560 --> 00:24:21,920
Speaker 12: You know, we thought we're going to spend twelve percent

545
00:24:21,960 --> 00:24:25,040
Speaker 12: on capex last year, we spent like one percent. All

546
00:24:25,080 --> 00:24:27,240
Speaker 12: of that is now carried over into twenty twenty four.

547
00:24:27,680 --> 00:24:30,960
Speaker 12: I think there's some general optimism now. The softening is

548
00:24:31,000 --> 00:24:33,760
Speaker 12: still continuing on new orders. The fact that the FED

549
00:24:33,840 --> 00:24:35,120
Speaker 12: is that hey, we're at the top of the rate

550
00:24:35,200 --> 00:24:38,280
Speaker 12: cycle is really positive. They don't really so much need

551
00:24:38,320 --> 00:24:40,639
Speaker 12: to know when the first cut comes in. That's not

552
00:24:40,680 --> 00:24:44,000
Speaker 12: a direct relationship really on manufacturing. The fact that they've

553
00:24:44,040 --> 00:24:46,159
Speaker 12: telegraphed that we're at the top of the rate cycle

554
00:24:46,800 --> 00:24:49,159
Speaker 12: was really positive for us. So you know, things are

555
00:24:49,200 --> 00:24:51,920
Speaker 12: being realigned I think, you know, Panneless companies are probably

556
00:24:52,119 --> 00:24:54,760
Speaker 12: putting a stretch plan together for their business plan based

557
00:24:54,760 --> 00:24:57,440
Speaker 12: on a more accommodated market in twenty twenty four.

558
00:24:57,920 --> 00:25:00,000
Speaker 8: We said in our forecast at twenty four would better

559
00:25:00,200 --> 00:25:00,840
Speaker 8: than twenty three.

560
00:25:01,359 --> 00:25:04,080
Speaker 12: We said that first quarter twenty four will be similar

561
00:25:04,080 --> 00:25:06,960
Speaker 12: to the last quarter of twenty three, just slightly better,

562
00:25:07,280 --> 00:25:09,080
Speaker 12: but the last six months of twenty four will be

563
00:25:09,160 --> 00:25:09,600
Speaker 12: much better.

564
00:25:09,640 --> 00:25:11,800
Speaker 8: So I think we're on that trajectory. This is a

565
00:25:11,960 --> 00:25:13,800
Speaker 8: This is probably a month, month and a half before

566
00:25:13,840 --> 00:25:16,000
Speaker 8: I thought it would show up, but it's it's welcome.

567
00:25:16,040 --> 00:25:17,560
Speaker 6: Nonetheless, he sounds so jazzed.

568
00:25:17,960 --> 00:25:18,240
Speaker 10: Tim.

569
00:25:18,280 --> 00:25:20,320
Speaker 5: Going back to the prices paid for a second, you

570
00:25:20,359 --> 00:25:23,520
Speaker 5: mentioned commodities. Is that a supplier a demand story at

571
00:25:23,520 --> 00:25:25,760
Speaker 5: this point, you.

572
00:25:25,720 --> 00:25:29,440
Speaker 12: Know, the utilization is fairly high, but you know, you

573
00:25:29,840 --> 00:25:32,320
Speaker 12: think you see a lot more plant capacity going into

574
00:25:32,359 --> 00:25:34,440
Speaker 12: the system, and I think that's going to happen. Probably

575
00:25:34,600 --> 00:25:36,240
Speaker 12: a lot of this stuff is long lead. It takes

576
00:25:36,280 --> 00:25:38,840
Speaker 12: three years to you know, put a steel plant in,

577
00:25:39,080 --> 00:25:42,880
Speaker 12: you know, aluminum smelter, plastics, chemical plant. It takes about

578
00:25:42,880 --> 00:25:44,919
Speaker 12: three years to do that. You know, I don't think

579
00:25:44,920 --> 00:25:48,240
Speaker 12: we're going to see any relief on the capacity side

580
00:25:48,480 --> 00:25:49,560
Speaker 12: to the second half.

581
00:25:49,320 --> 00:25:51,360
Speaker 8: Of the year, and that's what you're onto.

582
00:25:51,400 --> 00:25:53,760
Speaker 12: My biggest concern here and that is that we may

583
00:25:53,760 --> 00:25:58,080
Speaker 12: see a resurgence of material price inflation at higher levels

584
00:25:58,080 --> 00:26:01,480
Speaker 12: than we expected, sooner than we expected. As demand comes

585
00:26:01,520 --> 00:26:05,960
Speaker 12: back and when you don't have production capacity expanding fast enough.

586
00:26:06,000 --> 00:26:08,199
Speaker 12: We think we're gonna go up about seven percent I

587
00:26:08,200 --> 00:26:11,240
Speaker 12: think on production capacity in twenty twenty four. The question

588
00:26:11,359 --> 00:26:13,680
Speaker 12: is when do you want to do it too early? No,

589
00:26:13,880 --> 00:26:15,840
Speaker 12: not really, you want to do it too late. Well,

590
00:26:15,920 --> 00:26:18,600
Speaker 12: that's going to cause price growth everywhere. So the timing

591
00:26:18,640 --> 00:26:20,800
Speaker 12: of that, that's where you kind of tie in back

592
00:26:20,840 --> 00:26:23,359
Speaker 12: to when of the rate cuts come into place that

593
00:26:23,440 --> 00:26:24,959
Speaker 12: might spurred you know, more demand.

594
00:26:25,240 --> 00:26:27,040
Speaker 8: We may or may not have the capacity in place

595
00:26:27,040 --> 00:26:29,440
Speaker 8: of key prices down. I think the biggest issue in

596
00:26:29,480 --> 00:26:32,200
Speaker 8: twenty four is maintaining an acceptable price level.

597
00:26:32,400 --> 00:26:33,840
Speaker 3: Tim You're based in Miami.

598
00:26:33,600 --> 00:26:36,360
Speaker 8: Right in I'm in Jupiter, Florida.

599
00:26:36,480 --> 00:26:38,280
Speaker 2: Yeah, I've got a huge problem with that. There's no

600
00:26:38,440 --> 00:26:42,200
Speaker 2: manufacturing in Jupiter, Florida. You should be in like Peoria.

601
00:26:42,720 --> 00:26:43,879
Speaker 2: What are you doing in Florida?

602
00:26:43,880 --> 00:26:47,880
Speaker 8: Connecticut, isn't it. I'm in the heart of manufacturing technology

603
00:26:47,960 --> 00:26:50,040
Speaker 8: in Connecticut. Now you're gott to give you some early

604
00:26:51,040 --> 00:26:51,840
Speaker 8: all right, very good.

605
00:26:52,280 --> 00:26:55,760
Speaker 12: That's where manufacturing started in America, right now, Connecticut, yep.

606
00:26:56,320 --> 00:26:58,760
Speaker 3: Absolutely, our Tim Fury, good stuff. Appreciate it.

607
00:26:58,840 --> 00:27:01,880
Speaker 2: Tim Fury, Chairman of the Men Manufacturing Business Survey, Institute

608
00:27:02,119 --> 00:27:05,320
Speaker 2: for Supply Management, Wisconsin, Jupiter, Florida.

609
00:27:05,359 --> 00:27:06,800
Speaker 3: Man, it doesn't get much better than that.

610
00:27:08,440 --> 00:27:12,320
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

611
00:27:12,400 --> 00:27:16,320
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

612
00:27:16,359 --> 00:27:19,119
Speaker 1: with the Bloomberg Business App. You can also listen live

613
00:27:19,200 --> 00:27:22,399
Speaker 1: on Amazon Alexa from our flagship New York station. Just

614
00:27:22,440 --> 00:27:25,080
Speaker 1: say Alexa play Bloomberg eleven thirty.

615
00:27:26,520 --> 00:27:28,760
Speaker 5: So let's talk about things that are working and not working.

616
00:27:28,840 --> 00:27:31,520
Speaker 5: Let's go to Rockwell Automation. So that company is a

617
00:27:31,520 --> 00:27:33,919
Speaker 5: really great indicator of sort of end user demand. It

618
00:27:33,960 --> 00:27:38,400
Speaker 5: provides control devices and software for industrial automation. Now reported

619
00:27:38,440 --> 00:27:41,919
Speaker 5: earnings yesterday, and it tumbled the most intraday since twenty

620
00:27:42,000 --> 00:27:45,560
Speaker 5: twenty two because its fiscal first quarter profit did actually

621
00:27:45,560 --> 00:27:48,719
Speaker 5: miss estimates. The stock now up by almost three percent today.

622
00:27:48,760 --> 00:27:51,480
Speaker 5: We are now joined by the CEO, Blake Morett. We're

623
00:27:51,520 --> 00:27:53,800
Speaker 5: really great to get this perspective. Hey, Blake, what do

624
00:27:53,840 --> 00:27:57,720
Speaker 5: you think the market took away yesterday from your earnings?

625
00:27:58,720 --> 00:28:02,040
Speaker 11: Well, I think they did hear the message of continued

626
00:28:02,280 --> 00:28:07,160
Speaker 11: underlying demand remaining strong. But we had a shipment miss

627
00:28:07,240 --> 00:28:10,719
Speaker 11: in the quarter. A lot of that was execution, and

628
00:28:10,920 --> 00:28:13,800
Speaker 11: we look at that as timing for shipments that will

629
00:28:13,840 --> 00:28:16,240
Speaker 11: come back in the year. You know, we had a

630
00:28:16,720 --> 00:28:20,560
Speaker 11: very strong growth last year of seventeen percent top line

631
00:28:20,640 --> 00:28:24,320
Speaker 11: twenty eight percent adjusted EPs. This is a bit of

632
00:28:24,359 --> 00:28:27,800
Speaker 11: a reset year as we get done shipping off that

633
00:28:28,119 --> 00:28:32,040
Speaker 11: older backlog that piled up as a result of supply

634
00:28:32,160 --> 00:28:37,240
Speaker 11: chain shortages and go back to booking and billing incoming

635
00:28:37,320 --> 00:28:40,120
Speaker 11: new orders. And so we're seeing lower growth in the

636
00:28:40,240 --> 00:28:44,440
Speaker 11: year with some growing pains, but the underlying demand remains

637
00:28:44,480 --> 00:28:45,160
Speaker 11: pretty strong.

638
00:28:45,400 --> 00:28:46,800
Speaker 2: That's kind of where I want to go, Blake, What

639
00:28:46,840 --> 00:28:49,640
Speaker 2: are your tell us and our listeners and our viewers like,

640
00:28:49,720 --> 00:28:52,480
Speaker 2: who your customers are and what are your customers telling

641
00:28:52,480 --> 00:28:53,200
Speaker 2: you these days?

642
00:28:54,160 --> 00:28:59,320
Speaker 11: We may be the most pervasive technology in American manufacturing,

643
00:28:59,480 --> 00:29:05,000
Speaker 11: so every thing from automotive and battery manufacturing to warehouse automation,

644
00:29:05,840 --> 00:29:11,440
Speaker 11: food and beverage, life sciences, energy, both traditional fossil fuel

645
00:29:11,480 --> 00:29:15,720
Speaker 11: as well as renewables, across that whole spectrum. Our technology,

646
00:29:15,760 --> 00:29:19,320
Speaker 11: our hardware, and our software and our services are pretty prevalent.

647
00:29:19,960 --> 00:29:22,400
Speaker 5: So when do you know, Blake, if it's still the

648
00:29:22,440 --> 00:29:26,000
Speaker 5: supply chain issues that you're still working through versus just

649
00:29:26,080 --> 00:29:30,880
Speaker 5: weaker demand, Like, do you even know when that moment shifts?

650
00:29:31,960 --> 00:29:35,680
Speaker 11: Well, So we had an encouraging quarter in the demand

651
00:29:35,800 --> 00:29:38,959
Speaker 11: side in that in Q one, so the quarter ended

652
00:29:39,480 --> 00:29:43,959
Speaker 11: in December. We did see double digit sequential growth and

653
00:29:44,160 --> 00:29:48,200
Speaker 11: orders off of the trough in our fiscal year, our

654
00:29:48,200 --> 00:29:52,760
Speaker 11: fiscal Q four last year, and those orders increases have

655
00:29:52,880 --> 00:29:57,240
Speaker 11: continued into January, so that's a very positive sign. Now,

656
00:29:57,800 --> 00:29:59,960
Speaker 11: a lot of our distributors, and most of our business

657
00:30:00,120 --> 00:30:04,480
Speaker 11: does go through electrical distributors, they had higher inventory than

658
00:30:04,480 --> 00:30:07,200
Speaker 11: they wanted and we expect in the coming couple of

659
00:30:07,240 --> 00:30:10,400
Speaker 11: months that that inventory gets to more of a normal

660
00:30:10,600 --> 00:30:15,080
Speaker 11: level so that their orders to us reflect the strong

661
00:30:15,240 --> 00:30:18,880
Speaker 11: underlying demand from machine builders and end users.

662
00:30:19,400 --> 00:30:22,800
Speaker 2: Blake, how much lead time do you have in your business?

663
00:30:22,880 --> 00:30:26,440
Speaker 2: What's your order book and kind of how much how

664
00:30:26,480 --> 00:30:27,640
Speaker 2: much lead time do you really have?

665
00:30:28,560 --> 00:30:33,600
Speaker 11: So the product business, which is the majority of our business,

666
00:30:33,960 --> 00:30:36,960
Speaker 11: those lead times are typically days and weeks in a

667
00:30:37,040 --> 00:30:40,600
Speaker 11: normal period and part of our challenge in Q one

668
00:30:41,400 --> 00:30:45,280
Speaker 11: was returning all of our products to those fast lead times.

669
00:30:45,320 --> 00:30:50,160
Speaker 11: But in a normal environment, we get an order and

670
00:30:50,200 --> 00:30:53,680
Speaker 11: it either gets shipped that day off our distributors shelf,

671
00:30:54,040 --> 00:30:56,640
Speaker 11: or we're able to make it and ship it within

672
00:30:56,760 --> 00:30:59,080
Speaker 11: days or a few weeks for those products.

673
00:31:00,040 --> 00:31:03,040
Speaker 5: Are you an early cycle economic read?

674
00:31:03,200 --> 00:31:04,040
Speaker 6: Is that fair to say?

675
00:31:05,280 --> 00:31:09,000
Speaker 11: You know, we certainly have exposure early in the cycle,

676
00:31:09,440 --> 00:31:12,720
Speaker 11: but the so called late cycle is also an important

677
00:31:12,720 --> 00:31:17,080
Speaker 11: part of our business. Whether you're talking about the traditional

678
00:31:17,160 --> 00:31:23,320
Speaker 11: process industries or life sciences, we've got pretty broad exposure early,

679
00:31:23,520 --> 00:31:27,040
Speaker 11: mid and late cycle. Although I have to say with

680
00:31:27,200 --> 00:31:30,840
Speaker 11: the supply chain backlog that we had in twenty twenty

681
00:31:30,840 --> 00:31:34,840
Speaker 11: two and twenty three, with the distributor overstock that we're

682
00:31:34,880 --> 00:31:38,080
Speaker 11: working through now, it's hard to pin a particular point

683
00:31:38,120 --> 00:31:41,480
Speaker 11: in the traditional cycle on this time well.

684
00:31:41,360 --> 00:31:43,560
Speaker 5: Also because you're exposed to sort of all the structural

685
00:31:43,640 --> 00:31:47,400
Speaker 5: changes too, like infrastructure act A, Chips ACT, the IRA,

686
00:31:47,680 --> 00:31:50,440
Speaker 5: So that's a structural shift even though you're still cyclical.

687
00:31:50,480 --> 00:31:54,080
Speaker 5: I can imagine that being quite confusing. So based on

688
00:31:54,120 --> 00:31:56,800
Speaker 5: where you are and all the different cycles, how are

689
00:31:56,840 --> 00:31:58,560
Speaker 5: we doing, Like how's the global economy?

690
00:31:58,600 --> 00:32:03,360
Speaker 11: Doing, you know, particularly in our home market in the US,

691
00:32:03,480 --> 00:32:07,320
Speaker 11: where we have the largest market share, we see continued

692
00:32:07,400 --> 00:32:12,080
Speaker 11: strong underlying demand. So we're expecting our orders to be up,

693
00:32:13,880 --> 00:32:18,680
Speaker 11: you know, low single digits, and we've guided to one

694
00:32:18,760 --> 00:32:22,440
Speaker 11: point up in terms of organic shipments. But that underlying

695
00:32:22,520 --> 00:32:26,360
Speaker 11: demand I think remained strong. And one of the key

696
00:32:26,400 --> 00:32:31,200
Speaker 11: indicators for me is continued low unemployment rates in our

697
00:32:31,520 --> 00:32:32,800
Speaker 11: most important markets.

698
00:32:33,440 --> 00:32:36,040
Speaker 2: So, Blake, I'm looking at the PGeo function on the

699
00:32:36,040 --> 00:32:38,440
Speaker 2: Bloomberg termol and I could see just by geography looking

700
00:32:38,440 --> 00:32:40,920
Speaker 2: at your revenue against sixty percent roughly of your revenue

701
00:32:40,920 --> 00:32:43,280
Speaker 2: as North America. So give us a sense of kind

702
00:32:43,320 --> 00:32:45,600
Speaker 2: of North America versus rest of the world. What do

703
00:32:45,640 --> 00:32:47,920
Speaker 2: you guys seeing North.

704
00:32:47,680 --> 00:32:53,680
Speaker 11: America is the strongest market. China has significant problems right now,

705
00:32:54,320 --> 00:32:59,360
Speaker 11: and Europe still dealing with some of their structural issues.

706
00:33:00,000 --> 00:33:02,120
Speaker 11: Out of the business we get in Europe is actually

707
00:33:02,200 --> 00:33:06,800
Speaker 11: for export back to North America from the machine builders

708
00:33:06,840 --> 00:33:11,320
Speaker 11: over there. But we expect for this year North America

709
00:33:11,360 --> 00:33:13,560
Speaker 11: is going to be the strongest market and that's good

710
00:33:13,560 --> 00:33:15,760
Speaker 11: for us because we've got home field advantage.

711
00:33:15,920 --> 00:33:20,000
Speaker 5: It feels like a US exceptionalism conversation, right like yet again,

712
00:33:21,320 --> 00:33:23,520
Speaker 5: So if we just go macro them for a minute,

713
00:33:23,600 --> 00:33:27,120
Speaker 5: if the FED cuts rates in May, what does that do,

714
00:33:27,200 --> 00:33:30,320
Speaker 5: Like if you're already seeing us hold up pretty well,

715
00:33:30,520 --> 00:33:33,480
Speaker 5: does that accelerate the economy from where you stound?

716
00:33:34,640 --> 00:33:39,520
Speaker 11: I think that could help some of the largest CAPEX projects,

717
00:33:39,960 --> 00:33:42,560
Speaker 11: which you know we get some business from. But we're

718
00:33:42,640 --> 00:33:47,040
Speaker 11: not as much of a capex play as some other names,

719
00:33:47,040 --> 00:33:50,360
Speaker 11: and that we're pretty balanced between CAPEX as well as

720
00:33:50,400 --> 00:33:56,200
Speaker 11: op X in terms of improvements additional efficiency in existing

721
00:33:56,320 --> 00:33:59,560
Speaker 11: facilities as well. So I don't know that interest rates

722
00:33:59,600 --> 00:34:03,360
Speaker 11: are our biggest indicator. As I said, for the economy,

723
00:34:03,400 --> 00:34:08,000
Speaker 11: I look at unemployment, and you know, I look at

724
00:34:08,280 --> 00:34:13,040
Speaker 11: the amount of automation investment, both for new green fields

725
00:34:13,320 --> 00:34:18,000
Speaker 11: as well as adding efficiency and resilience and existing facilities.

726
00:34:19,480 --> 00:34:22,480
Speaker 2: Blake, just explain to us kind of what your competitive

727
00:34:22,480 --> 00:34:25,279
Speaker 2: marketplace looks like. Where are you, guys versus your competitors?

728
00:34:25,440 --> 00:34:28,000
Speaker 2: Who do you compete against? And how's that changing?

729
00:34:28,800 --> 00:34:33,960
Speaker 11: So our big competitors are mostly the European conglomerates. Really,

730
00:34:34,000 --> 00:34:40,200
Speaker 11: it's Seamen, Schneider abb in certain narrow parts of the market,

731
00:34:40,320 --> 00:34:46,040
Speaker 11: Honeywell and Emerson Here in the US, where really, you know,

732
00:34:46,080 --> 00:34:50,080
Speaker 11: we distinguish ourselves by having a very balanced exposure from

733
00:34:50,200 --> 00:34:55,600
Speaker 11: discrete applications like automotive, to hybrid applications like food and

734
00:34:55,680 --> 00:35:01,360
Speaker 11: beverage and life sciences, to continuous process applications like energy

735
00:35:01,440 --> 00:35:02,680
Speaker 11: and mining and so on.

736
00:35:03,080 --> 00:35:05,640
Speaker 5: Hey blake to that point, Honeywell's not having a good

737
00:35:05,719 --> 00:35:07,640
Speaker 5: day after reported earnings.

738
00:35:07,680 --> 00:35:09,360
Speaker 6: One of the worst worming stocks in the S and P.

739
00:35:09,760 --> 00:35:13,640
Speaker 5: Semens Energy, part of Semen had just been really hurt

740
00:35:13,800 --> 00:35:16,600
Speaker 5: by offshore wind here in the US, I should say

741
00:35:16,600 --> 00:35:19,360
Speaker 5: not owned by Siemens, but Semens owns a stake in

742
00:35:19,400 --> 00:35:23,880
Speaker 5: Semens Energy. How what's your view on the energy green

743
00:35:23,920 --> 00:35:27,040
Speaker 5: transition build out right now? You're losing money, you making money,

744
00:35:27,080 --> 00:35:27,840
Speaker 5: What does your order.

745
00:35:27,719 --> 00:35:28,319
Speaker 6: Book look like?

746
00:35:29,400 --> 00:35:33,080
Speaker 11: It's still early innings, but we're seeing good business as

747
00:35:33,080 --> 00:35:37,080
Speaker 11: a result of energy transition, and I would bucket it

748
00:35:37,160 --> 00:35:42,080
Speaker 11: in three different ways. I'd look at first, the decarbonization

749
00:35:42,280 --> 00:35:47,160
Speaker 11: of the traditional oil and gas company, so carbon capture projects.

750
00:35:47,360 --> 00:35:50,400
Speaker 11: We've talked about the work we're doing with Occidental in

751
00:35:50,440 --> 00:35:54,480
Speaker 11: their direct or capture projects, the one point five initiative,

752
00:35:55,080 --> 00:35:59,560
Speaker 11: it's renewables, and again we've talked publicly about what we're

753
00:35:59,600 --> 00:36:03,160
Speaker 11: doing with companies like First Solar in creating you know,

754
00:36:03,320 --> 00:36:06,719
Speaker 11: PV panels. And then it's the thing that we've been

755
00:36:06,719 --> 00:36:12,080
Speaker 11: doing for our entire history, and that's driving efficiency across

756
00:36:12,120 --> 00:36:15,960
Speaker 11: all manufacturing, and those are all good applications for us.

757
00:36:16,239 --> 00:36:20,880
Speaker 11: You know, there's some relatively nascent areas like hydrogen that

758
00:36:21,000 --> 00:36:24,160
Speaker 11: are sources of optimism, but you know, I would put

759
00:36:24,200 --> 00:36:25,760
Speaker 11: them in those three main areas.

760
00:36:26,200 --> 00:36:28,279
Speaker 2: Hey, Blake, I'm looking at the an R function on

761
00:36:28,320 --> 00:36:31,000
Speaker 2: the Bloomberg terminal. It shows me that there are eleven

762
00:36:31,040 --> 00:36:34,040
Speaker 2: Wall Street analyst buys on your stock, twelve holds and

763
00:36:34,200 --> 00:36:37,400
Speaker 2: five cells, so pretty mixed across the board. What's the

764
00:36:37,480 --> 00:36:41,960
Speaker 2: message that you bring to your investors into the marketplace that.

765
00:36:42,000 --> 00:36:46,040
Speaker 11: The underlying demand remains strong, that we really have a

766
00:36:46,239 --> 00:36:51,040
Speaker 11: unique position among all of those competitors and among the

767
00:36:51,200 --> 00:36:55,520
Speaker 11: niche competitors. I like the hand we have, and as

768
00:36:55,800 --> 00:37:00,440
Speaker 11: you know, manufacturing picks up and resets from the period

769
00:37:00,480 --> 00:37:03,640
Speaker 11: of supply chain shortages. We're in a great spot to

770
00:37:03,760 --> 00:37:08,000
Speaker 11: accelerate our profitable growth before.

771
00:37:07,719 --> 00:37:08,200
Speaker 6: We end here.

772
00:37:08,600 --> 00:37:11,719
Speaker 5: I don't know ninety seconds left. You mentioned jobs quite

773
00:37:11,760 --> 00:37:14,120
Speaker 5: a few times. We have the jobs data tomorrow, we

774
00:37:14,200 --> 00:37:17,440
Speaker 5: financial jobless claims rising the most in November today. What

775
00:37:17,719 --> 00:37:20,040
Speaker 5: is your assessment of the labor market hard to get

776
00:37:20,120 --> 00:37:21,719
Speaker 5: you're going to keep labor paying more?

777
00:37:21,760 --> 00:37:23,200
Speaker 6: What do you see?

778
00:37:23,440 --> 00:37:27,759
Speaker 11: You know, I think in manufacturing workforce there's still a

779
00:37:27,760 --> 00:37:32,560
Speaker 11: lot of unfilled jobs, and we think that, you know,

780
00:37:32,640 --> 00:37:37,719
Speaker 11: having a skilled workforce is absolutely essential for manufacturers to compete,

781
00:37:37,920 --> 00:37:41,240
Speaker 11: but it's augmented with the kind of technology that we offer.

782
00:37:41,360 --> 00:37:44,920
Speaker 11: So it's really that winning hand of having an enabled

783
00:37:45,360 --> 00:37:48,279
Speaker 11: and engaged workforce, and we do a lot to help

784
00:37:48,320 --> 00:37:52,040
Speaker 11: with workforce development, and it's also given them so called

785
00:37:52,160 --> 00:37:55,080
Speaker 11: superpowers with the technology that we offer.

786
00:37:55,239 --> 00:37:57,400
Speaker 6: Superpowers sounds great.

787
00:37:57,520 --> 00:37:59,640
Speaker 2: Do you find here in the US? Can you find

788
00:37:59,640 --> 00:38:02,719
Speaker 2: people for your type type of work?

789
00:38:03,760 --> 00:38:07,400
Speaker 11: You know, certain jobs it takes longer than in others.

790
00:38:07,680 --> 00:38:12,200
Speaker 11: We're actually helping with workforce development programs that we offer

791
00:38:12,320 --> 00:38:17,799
Speaker 11: in house and then provide labor particularly focused towards technician

792
00:38:17,960 --> 00:38:22,319
Speaker 11: level jobs for manufacturers in America through our Academy of

793
00:38:22,360 --> 00:38:23,640
Speaker 11: Advanced Manufacturing.

794
00:38:23,760 --> 00:38:26,440
Speaker 2: Interesting, all right, Blake, We really appreciate your time here.

795
00:38:26,440 --> 00:38:28,800
Speaker 2: I know you're busy with the earnings and running a business.

796
00:38:28,800 --> 00:38:29,000
Speaker 3: Blake.

797
00:38:29,040 --> 00:38:33,000
Speaker 2: Morrett Rockwell Automation, he's the CEO over there. R okay

798
00:38:33,360 --> 00:38:35,799
Speaker 2: is the ticker for the stock.

799
00:38:37,040 --> 00:38:40,920
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

800
00:38:41,000 --> 00:38:44,520
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

801
00:38:44,560 --> 00:38:47,320
Speaker 1: Auto with the Bloomberg Business app. You can also listen

802
00:38:47,440 --> 00:38:50,560
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803
00:38:50,920 --> 00:38:54,640
Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty.

804
00:38:56,040 --> 00:38:58,680
Speaker 2: Keitha Rongenathen She is one of the top media analysts

805
00:38:58,719 --> 00:39:00,759
Speaker 2: on Wall Street, and I found out just today that

806
00:39:00,800 --> 00:39:03,520
Speaker 2: she also covers Peloton. I'm not sure how that happened,

807
00:39:03,600 --> 00:39:07,160
Speaker 2: but she's a great anlyst. So she joins us here, Githa,

808
00:39:07,200 --> 00:39:08,239
Speaker 2: are you a Peloton user?

809
00:39:09,520 --> 00:39:09,840
Speaker 13: Him not?

810
00:39:10,040 --> 00:39:13,080
Speaker 3: Paul, Oh my god. See this is kind of this

811
00:39:13,120 --> 00:39:15,719
Speaker 3: is the issue, man, So you can come riding with

812
00:39:15,760 --> 00:39:16,680
Speaker 3: me anytime.

813
00:39:17,400 --> 00:39:20,000
Speaker 2: All right, Keith, what's going on in with this company here?

814
00:39:20,040 --> 00:39:23,240
Speaker 2: Is it just a demand thing, a lack of demand?

815
00:39:24,520 --> 00:39:24,719
Speaker 4: Yeah?

816
00:39:24,760 --> 00:39:27,640
Speaker 13: I mean this is this is really a complete train wreck, Paul.

817
00:39:28,239 --> 00:39:31,400
Speaker 13: I think investors are really losing patients right now. And actually,

818
00:39:31,400 --> 00:39:33,719
Speaker 13: if you saw their fiscal second quarter, the quarter that

819
00:39:33,760 --> 00:39:37,600
Speaker 13: they just reported, the numbers were actually fine. More or less.

820
00:39:37,680 --> 00:39:41,200
Speaker 13: They reported subscriber growth, which which is a good thing

821
00:39:41,239 --> 00:39:44,040
Speaker 13: because Previous to that, they were losing subscribers because they

822
00:39:44,080 --> 00:39:48,120
Speaker 13: had a product recall for some of their bike products.

823
00:39:48,280 --> 00:39:51,040
Speaker 13: They had to completely suspend the production of their treadmill

824
00:39:51,120 --> 00:39:53,880
Speaker 13: tread Plus, and then they've kind of restarted the sales

825
00:39:53,920 --> 00:39:56,480
Speaker 13: on that as well. So it was it was, it

826
00:39:56,520 --> 00:39:59,399
Speaker 13: was definitely a decent quarter, I think. But but what

827
00:39:59,640 --> 00:40:02,399
Speaker 13: really has caused so much of frustration I think right

828
00:40:02,440 --> 00:40:06,520
Speaker 13: now for investors is that there is absolutely no catalyst

829
00:40:06,600 --> 00:40:10,080
Speaker 13: on the horizons, so the pain points continue to remain

830
00:40:10,120 --> 00:40:13,120
Speaker 13: pain points. There is no positive revenue growth. In fact,

831
00:40:13,120 --> 00:40:16,120
Speaker 13: they are projecting a decline in revenue, and as you

832
00:40:16,160 --> 00:40:19,719
Speaker 13: pointed out, this is completely due to the lack of demand.

833
00:40:20,200 --> 00:40:23,080
Speaker 13: And along with that you have this persistent inventory problem

834
00:40:23,160 --> 00:40:27,120
Speaker 13: which is causing a huge, huge pressure on the free

835
00:40:27,120 --> 00:40:30,040
Speaker 13: cash flow of the company, and they continue to burn

836
00:40:30,080 --> 00:40:32,480
Speaker 13: cash and they're not going to be cash flow positive

837
00:40:32,560 --> 00:40:34,919
Speaker 13: till till the end of fiscal twenty twenty four.

838
00:40:35,040 --> 00:40:36,759
Speaker 5: So, Githa, I'm going to go with something that Paul said,

839
00:40:36,760 --> 00:40:38,400
Speaker 5: which I found is super interesting earlier.

840
00:40:38,440 --> 00:40:41,000
Speaker 6: That you have super loyal users.

841
00:40:40,920 --> 00:40:42,960
Speaker 5: Why not try and just get more money out of

842
00:40:43,000 --> 00:40:44,880
Speaker 5: them rather than try and all of a sudden have

843
00:40:44,960 --> 00:40:46,359
Speaker 5: mass penetration.

844
00:40:47,239 --> 00:40:48,640
Speaker 13: And they've tried to do that, Alex.

845
00:40:48,719 --> 00:40:50,120
Speaker 6: So so what's the problem their credit?

846
00:40:50,920 --> 00:40:53,719
Speaker 13: Yes, I mean they really face a very very so

847
00:40:54,000 --> 00:40:56,400
Speaker 13: they don't have enough of a subscriber base, right, so

848
00:40:56,800 --> 00:41:00,360
Speaker 13: it's about three million subscribers, and yes, they're already charging

849
00:41:00,400 --> 00:41:02,560
Speaker 13: them a good hefty amount. I mean, you're paying for

850
00:41:02,640 --> 00:41:05,799
Speaker 13: hardware that is pretty pricey, you know, whether it's the

851
00:41:05,840 --> 00:41:08,319
Speaker 13: tread plows or whether it's even even a bike. A

852
00:41:08,360 --> 00:41:11,640
Speaker 13: new bike costs about fourteen hundred and fifteen hundred dollars,

853
00:41:12,320 --> 00:41:15,200
Speaker 13: so you know it is a pricey product, and then

854
00:41:15,200 --> 00:41:18,080
Speaker 13: you have to pay a monthly fee, right so you

855
00:41:18,120 --> 00:41:20,160
Speaker 13: are paying about forty five dollars per month, which is

856
00:41:20,160 --> 00:41:23,279
Speaker 13: that all access subscription fee. They are trying new things

857
00:41:23,280 --> 00:41:25,680
Speaker 13: though they did realize that, you know, they might need

858
00:41:25,719 --> 00:41:27,759
Speaker 13: to to your point, Alex, they did realize that they

859
00:41:27,800 --> 00:41:30,200
Speaker 13: might want to go out and you know, appeal to

860
00:41:30,239 --> 00:41:33,000
Speaker 13: a wider base. And so they're trying something called the

861
00:41:33,120 --> 00:41:36,320
Speaker 13: fitness as a service or a rental program, which is

862
00:41:36,360 --> 00:41:39,640
Speaker 13: actually taken off. So there is obviously there are obviously

863
00:41:39,680 --> 00:41:41,920
Speaker 13: takers out there. It's just not enough to move the

864
00:41:41,920 --> 00:41:43,120
Speaker 13: needle unfortunately for them.

865
00:41:43,200 --> 00:41:45,840
Speaker 2: All Right, enough peloton talk. Let's get to the juicy stuff.

866
00:41:46,160 --> 00:41:49,120
Speaker 2: Let's get to the big media companies that you cover. Githa,

867
00:41:49,320 --> 00:41:52,839
Speaker 2: I guess the most topical name these days is Paramount,

868
00:41:53,080 --> 00:41:58,720
Speaker 2: the former Viacom. Byron Allen, a media mogul of some sort,

869
00:41:59,040 --> 00:42:02,879
Speaker 2: has made a fourteen billion dollar offer. When you talk

870
00:42:02,880 --> 00:42:05,760
Speaker 2: to your vestor clients, is this credible? Is this something

871
00:42:05,800 --> 00:42:07,120
Speaker 2: that could actually happen?

872
00:42:08,440 --> 00:42:11,280
Speaker 13: I don't think so, Paul, I mean Byron I Allen

873
00:42:11,360 --> 00:42:14,400
Speaker 13: has been bidding for for everything in the media space

874
00:42:14,640 --> 00:42:16,279
Speaker 13: over the past few months, and he has like this

875
00:42:16,400 --> 00:42:20,160
Speaker 13: long list of empty bids. Really, you know that the

876
00:42:20,200 --> 00:42:23,000
Speaker 13: bid on its own is not bad at all. It

877
00:42:23,080 --> 00:42:26,800
Speaker 13: was a fifty percent premium to Paramount's trading price, so

878
00:42:27,320 --> 00:42:29,359
Speaker 13: it definitely makes sense, and it's I think it's good

879
00:42:29,360 --> 00:42:32,919
Speaker 13: for investors. The problem is there's absolutely no visibility into

880
00:42:32,920 --> 00:42:35,319
Speaker 13: how he's going to get that money, so financing is

881
00:42:35,320 --> 00:42:37,479
Speaker 13: going to be a huge problem. And then of course

882
00:42:37,480 --> 00:42:41,080
Speaker 13: you have the issue of Paramount's debt or about nearly

883
00:42:41,120 --> 00:42:44,479
Speaker 13: sixteen billion dollars in debt, and there's you know, there's

884
00:42:44,560 --> 00:42:47,480
Speaker 13: like eleven billion dollars in senior notes, which will trigger

885
00:42:47,560 --> 00:42:50,520
Speaker 13: some change of control. Provisions and has to be refinanced immediately.

886
00:42:50,520 --> 00:42:53,920
Speaker 13: So there's there's just a lot of different obstacles there,

887
00:42:54,160 --> 00:42:57,279
Speaker 13: and so I'm not really sure investors are thinking that

888
00:42:57,320 --> 00:42:58,439
Speaker 13: this bid is going to go through.

889
00:42:59,160 --> 00:43:02,880
Speaker 5: Does Paramount Plus need a buyout? Like I feel like

890
00:43:02,880 --> 00:43:05,240
Speaker 5: these rumors do swirl around a lot, like who actually

891
00:43:05,280 --> 00:43:05,839
Speaker 5: needs to.

892
00:43:05,719 --> 00:43:06,319
Speaker 6: Be bought here?

893
00:43:07,560 --> 00:43:08,640
Speaker 13: Paramount does need a bit?

894
00:43:08,760 --> 00:43:08,960
Speaker 11: They do?

895
00:43:09,040 --> 00:43:11,400
Speaker 6: They really do? Okay, so Bills would would do it?

896
00:43:11,440 --> 00:43:13,760
Speaker 5: Then you listened to a lot of reasons why Byron

897
00:43:13,800 --> 00:43:14,879
Speaker 5: Allen won't, but who can.

898
00:43:16,520 --> 00:43:20,920
Speaker 13: So we've had actually multiple suitors kind of circling these assets.

899
00:43:21,280 --> 00:43:24,839
Speaker 13: We have David Ellison, who is the son of you know,

900
00:43:24,960 --> 00:43:28,480
Speaker 13: the mega billionaire Larry Ellison, who has Guy Dance Media.

901
00:43:28,920 --> 00:43:32,440
Speaker 13: He's very interested in getting Paramount Studio. Again, this is

902
00:43:32,440 --> 00:43:37,120
Speaker 13: an iconic Hollywood studio, has some great ip uh you know,

903
00:43:37,200 --> 00:43:41,640
Speaker 13: we have uh, you know, Warner Brothers. Discovery was also

904
00:43:41,800 --> 00:43:46,160
Speaker 13: supposedly interested. You have a Polo which was also potentially interested.

905
00:43:46,160 --> 00:43:48,640
Speaker 13: Of course, none of them have necessarily come out with

906
00:43:48,719 --> 00:43:51,400
Speaker 13: a bid, and so Byron Allen kind of doing what

907
00:43:51,440 --> 00:43:55,480
Speaker 13: he did yesterday really forces other suitors to or other

908
00:43:55,600 --> 00:43:58,000
Speaker 13: serious suitors to kind of come out and show their cards.

909
00:43:58,920 --> 00:44:03,120
Speaker 2: All right, So let's go to Warner Brothers Discovery David Zaslov.

910
00:44:03,400 --> 00:44:05,399
Speaker 2: There's a company with a lot of debt too. I mean,

911
00:44:05,600 --> 00:44:08,840
Speaker 2: what's the future, what's the outlook for that company?

912
00:44:10,000 --> 00:44:12,359
Speaker 13: I mean, I think, Paul, ultimately down the road, it

913
00:44:12,400 --> 00:44:15,440
Speaker 13: has to be some form of consolidation. I mean, there

914
00:44:15,520 --> 00:44:18,040
Speaker 13: is no way that so many of these smaller players,

915
00:44:18,080 --> 00:44:20,919
Speaker 13: whether it's Warner Brothers, Discovery, whether it's Paramount, whether it's

916
00:44:21,239 --> 00:44:24,120
Speaker 13: you know, Comcast with NBC, can necessarily function on their own,

917
00:44:24,200 --> 00:44:27,080
Speaker 13: especially with their streaming businesses. So I'm sure at some

918
00:44:27,200 --> 00:44:29,279
Speaker 13: point they're going to have to look at ways to

919
00:44:29,360 --> 00:44:32,200
Speaker 13: kind of consolidate. I'm not necessarily sure it's going to

920
00:44:32,200 --> 00:44:34,920
Speaker 13: happen right away, just kind of given the regulatory environment

921
00:44:35,239 --> 00:44:37,560
Speaker 13: and kind of given that whole problem with debt and

922
00:44:37,680 --> 00:44:41,320
Speaker 13: very high leverage, but it will eventually need to happen,

923
00:44:41,560 --> 00:44:42,040
Speaker 13: all right.

924
00:44:41,920 --> 00:44:43,520
Speaker 5: Paul, Does this make you feel like you wish you

925
00:44:43,520 --> 00:44:45,440
Speaker 5: were still a banker?

926
00:44:45,480 --> 00:44:47,920
Speaker 2: Yes, because my phone calls would be a private equity.

927
00:44:48,280 --> 00:44:50,920
Speaker 2: We've got private equity right here, go out there. They

928
00:44:50,960 --> 00:44:53,120
Speaker 2: still have good cash flow, they can service the debt,

929
00:44:54,000 --> 00:44:56,799
Speaker 2: and you can sell pieces parts at certain times, and

930
00:44:56,840 --> 00:44:58,560
Speaker 2: that's how you do it. I don't think it's any strategics,

931
00:44:58,560 --> 00:45:01,279
Speaker 2: but that's just me. How goes Keitha Rongingohan. Thanks so

932
00:45:01,360 --> 00:45:03,440
Speaker 2: much for joining us at Githa. She is the senior

933
00:45:03,440 --> 00:45:07,760
Speaker 2: Media Analyst of Bloomberg Intelligence, based in Princeton, chelseoh Cars Teleton.

934
00:45:08,200 --> 00:45:12,719
Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify,

935
00:45:12,920 --> 00:45:16,120
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936
00:45:16,120 --> 00:45:19,520
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937
00:45:19,640 --> 00:45:23,040
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938
00:45:23,160 --> 00:45:26,239
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939
00:45:26,360 --> 00:45:28,200
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