December 11, 2025 • 41 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Hollywood has a rich history of personal vendettas, political discord and uncertain loyalties shaping the industry. It just usually doesn’t involve the US president.
Donald Trump’s declaration that he will involve himself in the proposed sale of Warner Bros. Discovery Inc. has thrust an already tumultuous battle between Netflix Inc. and Paramount Skydance Corp. over some of the crown jewels of Tinseltown into uncharted waters.
The decision to inject himself is particularly extraordinary given Trump’s own conflicts and interests, according to legal experts.
Trump has already signaled one personal precondition for a sale: new ownership of longtime bogeyman CNN, in a bid to exert more favorable coverage from the cable network. But the connections don’t stop there for a president who considers himself the dealmaker-in-chief.
Trump’s son-in-law and former aide, Jared Kushner, has helped arrange financing for Paramount chief David Ellison, whose father, Larry Ellison, is a longtime donor and supporter.
The president has received entreaties from both sides. Netflix co-Chief Executive Officer Ted Sarandos has mounted a charm offensive of his own, meeting repeatedly with Trump and even chatting about how the first family were “big fans” of the streamer. The tech giant has spent recent months expanding its lobbying operation in Washington, seeking to boost its influence across a city now controlled by Trump and his allies.
Today's show features:
- Bloomberg News Media Reporter Hannah Miller on Disney’s $1 billion investment in OpenAI and the political battle brewing over a potential Warner Bros. Discovery merger
- Lauren Goodwin, Economist and Chief Market Strategist at New York Life Investments on the market and economic outlook heading into 2026
- Cathy Seifert, Senior Vice President and Equity Analyst at CFRA Research, and Bloomberg News Investing Team Co-Team Leader Katherine “Kat” Chiglinsky, on expectations for Berkshire Hathaway as Warren Buffett prepares to step down
- Jay Goldberg, Senior Analyst, Semiconductors & Electronics with Seaport Research Partners, breaks down Broadcom’s earnings report and outlook
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insights on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Hey, we have a few stocks on our radar, really
in the media and related space, if you will. One
is on the Magic Kingdom's move into AI. And then
of course it's the ongoing not yet ending pursuit of
Warner Brothers Discovery. Yes, it goes on. Covering it all.
Bloomberg News Media reporter Hannah Miller. She's right here in studio. Hey,
let's talk, Hannah. We've been talking to you a lot.
(00:54):
There's a lot going on. Disney shares a little bit
higher this on news at the company agree to invest
dollars in Open AI and licensed iconic characters. What do
we know about this deal?
Speaker 3 (01:05):
Yeah, so we know that it's a big deal.
Speaker 4 (01:07):
It does feel like a really exciting you know, there's
been a lot of tension in Hollywood over the use
of AI for film for animation, things like that, and
Disney has made a huge statement here with this investment.
Speaker 3 (01:21):
And yeah, it's concerning.
Speaker 4 (01:23):
You know, there are a whole suite of characters, you know,
got Marvel, Pixar, Star Wars. You can use that with
open Ai, Sora app and kind of create you know,
these short, you know, social media friendly videos using these
characters without.
Speaker 2 (01:38):
What if they have like Mickey as like a slasher
dude or something like are they okay?
Speaker 5 (01:44):
We could write that, people could draw that anyway. I
mean that stuff happens anyway.
Speaker 2 (01:48):
But there's somebody who so protective of their IP like
you to figure.
Speaker 5 (01:52):
This out, I think, And I think you make a
really good point because if you remember back to the
early days of like Image Generation with in the last
three years, when people were really experimenting with these llms
and getting them to do stuff, they were actually creating
characters that were you know, Disney would never actually create
or other IP owners would never actually create. And everyone
(02:13):
was like, wait a second, this is going to be
a huge headache for these companies.
Speaker 4 (02:16):
Yeah, so we know from the beginning, like you said,
you know, people have been drawn to this. They've been
doing you know, their own creative stuff with these characters.
Some of it is fun, some of it is not.
So you know, i'd have to imagine that there's you know,
maybe restrictions here with how people use this app. You know,
like you can put parameters in with these models.
Speaker 5 (02:35):
So maybe okay, okay.
Speaker 6 (02:36):
You know.
Speaker 5 (02:37):
The other thing that I think of is just Hollywood's
relationship with AI. And when we were at screen Time
earlier this year, a big conversation that we had back
in October was about, Okay, what is and this was
the whole writer's strike too, an the actors strike in
the last couple of years. This is what was the
core attension, right to what extent are these studio is
going to use AI from a script's perspective, from an
(02:57):
actual visual effects perspective, to replace us, to supplement us.
Does this send a signal about how Disney used this
technology to the creative class?
Speaker 4 (03:07):
Yeah, I mean, I think Bob Iger here, he's going
to have to convey a sense of reassurance, you know,
to the people working under him.
Speaker 3 (03:15):
Even though this is a first step forward.
Speaker 4 (03:16):
You know, I just want to point out you can't
use voice with any of these characters. You know, you
can't use like Tom Hanks's voice from Woody from Toy Story,
for example. But it is still a huge development. And
I know a lot of creatives in Hollywood are worried that,
you know, they could be replaced.
Speaker 5 (03:32):
What what go ahead?
Speaker 2 (03:34):
Why is Disney doing this? Is it just I mean,
have they done anything in internally when it comes to
AI on their own or like why are they doing this?
Speaker 4 (03:41):
I mean they've filed a lawsuit against mid Journey similar stuff. Yeah,
so you know that was sort of the earlier sentiment
that they had. Yeah, but you know, I think what
we can see here is they want a piece of
the AI pie. You know that they don't want to
be left out or left behind, and this is a
way to to partnership with.
Speaker 2 (04:00):
The prom queen, right basically Open AI. Everybody's just making
sure they have some kind of relationship with Open AI.
Speaker 5 (04:07):
Yes, but apart from and I think to Carol's point,
also apart from the equity investment and Open AI and
getting a piece of that financial upside, if there is
financial upside, I mean, look, it's still a privately held company.
There's a lot of questions about and even Sam Altman's
concerned about open AI right now, and there's a lot
of competitors. So apart from the financial upside, what else
does Disney get by doing this?
Speaker 4 (04:28):
You know, they get the lead and they're ahead of
other entertainment companies they're embracing AI.
Speaker 3 (04:35):
They also, you know, they get some pluses too, like.
Speaker 4 (04:37):
Their employees now have access to chat GPT other enterprise tools.
Speaker 3 (04:42):
So I think they're looking at this from a you know.
Speaker 5 (04:45):
But from a branding perspective. Is it like, Okay, let's
say my kid loves Toy Story and I can use
then chat GPT to create some sort of cool I
don't know, birthday party invitations for him and his brands
for their birthday. That does Disney see that as okay, well,
this is this is a good use of our brand,
an extension that then gets this kid more interested in
(05:07):
Toy Story and then going to Disney in California or Florida.
Is that the idea?
Speaker 4 (05:12):
I think you hit on a great point here that
you know, they're already establishing brand recognition in a new way.
You know, I mean, everybody knows Disney, but this is
just yet another avenue to get people on board and
show that They're a tech forward company that they're willing
to embrace the future and they're not going to be
left behind.
Speaker 2 (05:27):
I love what Sam Altman apparently said right in an
interview with the NBC that demand for Disney characters is
off the charts, Like, so he understands that this is.
Speaker 5 (05:34):
An important part love Disney.
Speaker 2 (05:36):
Who doesn't love Mickey and Mini or Donald well More.
Speaker 5 (05:41):
You think of it as a thing for kids, any
of them, But it turns out a lot of adults
love Disney.
Speaker 1 (05:46):
Yeah.
Speaker 2 (05:46):
I knew it. I used to know someone kind of
growing up. He used to love to draw the Disney characters.
It was an adult, it wasn't a kid. And investors
are you know, rewarding the company today. So it's interesting.
Speaker 5 (05:58):
All right, Well, Disney's seeing on AI. Other companies are
focused on Wait, how much is this company gonna cost me?
Speaker 2 (06:04):
Can we get the deal done? Can I stop paying
bankers and just sign on the dotted line? We're talking
Warner Brothers Discovery. Where are we?
Speaker 3 (06:12):
Yeah, so we're waiting right now.
Speaker 4 (06:14):
You know, Warner Brothers has ten days to respond to that.
You know, Hostel takeover bid from Paramount.
Speaker 2 (06:22):
To ten days from Monday from Monday.
Speaker 4 (06:24):
And it's it's ten business days. They could come back sooner.
You know, we could see something as early, you know
as next week. And you know, they are waiting to
see what Warner Brothers says, whether there's going to be
a rejection or you know, maybe they want more information,
and you know, if they still decide to go with Netflix,
(06:45):
Paramount has some options here, you know. I mean there's
been a lot of industry talk about whether or not
they'll sue. You know, David Ellison has already talked about
some frustrations with the bidding process. And there's a shareholder
vote on January eighth, so we'll be tracking until then.
Speaker 2 (07:05):
Our understanding too is Bob Iger also said this morning
comments that he wasn't hasn't determined yet if you'll take
a position on Warner Brothers. So wait, is this still
a Comcast has kind of said, we're out right, we've
heard that. But is it possible that Disney somewhere comes in?
Speaker 4 (07:22):
You know, I mean I think the race is really
tight here already. I mean, why would you say that?
Speaker 5 (07:29):
You know, I think a lot of get his competitors
to pay more.
Speaker 2 (07:33):
Yeah, kind of playing around with them.
Speaker 5 (07:35):
Yeah, I don't know. I'm not saying that's why he
would do it, But if I were in his position,
I would want my competitors to pay as much for
other things as possible.
Speaker 2 (07:43):
Make it tough.
Speaker 5 (07:43):
Yeah, say hey, maybe we're sniffing around a little bit.
Maybe increase that price.
Speaker 4 (07:47):
And yeah, we know, paramount you know they've left it
open to an increase, so we could see that down
the line.
Speaker 5 (07:53):
So what about CNN's fate, Because late yesterday Carol and
I were here in the studio and a headline cross
the Bloomberg terminal the press residents essentially saying it should
be guaranteed that CNN is part of it or sold separately.
This is the President said any deal for Warner Brothers
should include the sale of its CNN cable network. So
does that mean that if Paramounts Guidance were to win
(08:16):
the bid, they would have to shed CNN.
Speaker 4 (08:18):
So the thing that President Trump emphasizes he wants to
see CNN under new leadership.
Speaker 3 (08:24):
Then its okay.
Speaker 4 (08:26):
So that doesn't look as good for the Netflix deal
because Netflix only wants the streaming and studios business. Yeah,
Warner Brothers will then continue with the spinoff of its
cable networks, including CNN, and it'll be a separate company
called Discovery Global, but it'll still have you know, the
same people, existing leadership will still Yeah, so that's why
that doesn't look as good.
Speaker 2 (08:47):
So this is about him wanting new people in charge exactly.
Speaker 4 (08:50):
So it's like I think a lot of people in
the industry interpreted that as better for Paramount.
Speaker 2 (08:54):
Can I ask you something in terms of what we've
been talking about, certainly on our planning calls and as
a show unit, just what's happening in media and with
these deals and ownership and the presidents say in this
and now we're talking a lot more traditional whether it's
kind of the old fashioned TV networks forgive me, or
some of the cable guys that had been around for
(09:15):
a while, the all newsers, is it, are we seeing
kind of a shift to more conservative leadership and perhaps
conservative programming?
Speaker 4 (09:26):
Yeah, you know, we've already seen changes at CBS, which
is owned by Paramount, and David Elson has come in
made significant leadership changes there by appointing Barry Weiss, who
founder of the Free Press, is the head of CBS News.
And there's been a lot of talk about how that
will affect programming. You know, we're still kind of seeing
those changes shake out. Yeah, but yeah, there has been
(09:51):
a lot of talk of, you know, whether Paramount will
do similar things with CNN, you know, whether certain anchors
will be out, and you know there's already just been
multiple attacks on CNN from the right.
Speaker 5 (10:04):
Yeah. Look, I think a lot is still unknown because
we don't know who's going to actually ultimately win this deal.
Carol mentioned Disney potentially coming in because of the comments
that Bob Eiger made earlier today. But I'm wondering if
you think there's any other there are any other parties
that we should be watching, or if this is all
coming down to just these two companies, Netflix and paramounts guidance.
Speaker 4 (10:26):
We're keeping our attention right now on Paramount and Netflix.
That's where we're seeing the action and how that's going
to play out. But you know, I can't see the future.
Speaker 2 (10:36):
Well, Bernstein weighing in an analyst there, Lauren to you
and saying Netflix needs to make sure it has an
exit strategy in case the bidding war for Warner Brothers
quote unquote turns irrational. So I mean, right, like, if
you continue, there's a point where maybe then the price
doesn't make so much sense, but you do wonder about strategy,
how important this is for Netflix.
Speaker 5 (10:56):
Shareholders don't love Netflix shareholders don't love this. I mean,
I don't remember the stot yesterda. I think it was
sixteen percent in six days that Netflix was down. This
is its first pump session in six days. It's down. Look,
if you look at June thirtieth, it's high of one
hundred and thirty three dollars a share. Now it's treading
it ninety four dollars a share. Does that make Netflix
think twice that shareholders are not loving this?
Speaker 4 (11:16):
Yeah, I mean we know both parties are going to
be tracking the market closely. Warner Brothers is looking at market.
Speaker 3 (11:21):
Reaction as well. I'm sure.
Speaker 2 (11:22):
Yeah.
Speaker 4 (11:23):
With Netflix, I mean, this is a big reversal for them,
and they've talked about how they're more of a builder
than a buyer, and this is a.
Speaker 3 (11:30):
Huge, huge change.
Speaker 4 (11:31):
There's also a lot of anxiety in Hollywood about this deal,
and you know, concerns that with Netflix emphasizing streaming and
considering the theater experience may be outdated, that this would
hurt film production and theater attendance.
Speaker 2 (11:45):
Yeah, it's kind of fascinating our story here though, about
this Birnsday and Analyst stock has already lost more than
one hundred million value since it reported earnings in October.
So Netflix, I mean investors certainly weighing in and voting
pretty clearly on what they think what they feel about
this move. Netflix. I am sure we will be talking
to you again. Hannah, Thank you so much, really appreciate
all this reporting as we continue to watch this play out.
(12:08):
Hannah Miller, media reporter at Bloomberg News right here in
our New York studio, Stay with us.
Speaker 5 (12:15):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (12:21):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (12:36):
Can I just say, our next guest walks into the
studio and we just get happy, don't we.
Speaker 5 (12:41):
You said the same thing about me, right, yeah?
Speaker 2 (12:43):
I do. Just making sure, come on, we have.
Speaker 5 (12:46):
Favorites, but you know, I don't want to make anyone
want your.
Speaker 2 (12:49):
Your favorite, you know, your favorite. But speaking of guests
that we love to have walk in. We do love
Whenlauren Goodwin's walks in. She's kind of as Chief Argust
judges it in your Life Investments. What I love is
that she can look at the economic metrics, she can
look at the market metrics. It just she ties it
all together. And she's here in studio.
Speaker 7 (13:09):
So good to have you here. How are you. I'm great,
I'm and it makes me happy to be here too.
Thank you for having me.
Speaker 2 (13:15):
We're happy. It's so good. I think we're all happy
that we're getting to the end of this year, which
has been a wild one, and we just had our
last FED meeting of the year. Did it play out
as you expected?
Speaker 7 (13:27):
Yes, with a important exception, which is I just really
was not expecting Chair Pale to say, we've reached a
range of neutral estimates, so your guess is as good
as mine, and I think that's super reasonable.
Speaker 8 (13:40):
Yeah, I mean it.
Speaker 2 (13:42):
J Palell gets real right.
Speaker 7 (13:43):
Yeah, And it's in many ways. It isn't that what
he said is unreasonable or super surprising or weird or
there's nothing like that, but the willingness to just open
that conversation around, Okay, we are in this range of
estimates for the neutral rate is so important because the
quipples that myself and my team have had with the
(14:05):
market pricing of the Fed funds rate recently looking ahead
to twenty twenty six has been really it's on the margin.
It's like, look, if we expect pretty good growth and
sticky ish but nothing problematic on the inflation front, then
like if I say one or two more cuts and
you say two or three, like, is that really the
(14:26):
difference make er? Probably not, But opening this conversation about like, okay,
we're in the range of neutral does raise what I
think is a really important question, which is as we
get as rates move lower, if we get to that
three ish percent range, where it's more or less the
lower bound of what most people think could be neutral
than ten for the Fed funds rate, then that's when
(14:48):
I think we start to see the market say no more,
and actually that Fed cuts become.
Speaker 3 (14:54):
A problem for the long end.
Speaker 5 (14:55):
How do the markets say no more.
Speaker 7 (14:57):
By the tenure moving higher? Essentially a curve opening? You know,
that is such a good question. I you know, in
the sort of four ten four twenty range that we've
been I think we I think as we move below three,
we get ten or twenty basis points pretty quickly, and
if the FED is not sort of signaling, let's say,
any cuts beyond that, being on the hawkish side, then
(15:18):
we could actually go higher.
Speaker 2 (15:20):
So like, well, this is something we talked about with
Kati Kaminsky of Alpha Simplex, like trying to get an
idea of what's the upper range, Like we have quite
a range in terms of movements that we've seen I
feel like over the last year or so, So five percent,
I think is that extreme.
Speaker 7 (15:36):
I think that's that's that would be pretty bad news.
I think it's a it's not extreme in the sense
that if I look at the economic backdrop of strong growth,
a strong a pretty heavy deficit, and still pretty supportive
fiscal backdrop next year ye, and geopolitical backdrop that's very uncertain.
Like I can come up with ten or fifteen ways
(15:56):
that we could get for five get to five percent,
but that's not really the I'm talking about. And the
reason is I think that regardless of who sits in
the FED chair seat next year or second half of
next year, they don't want that. The president doesn't want that.
And so I'm actually not as worried about FED independence
as maybe I would otherwise be as a macro person
(16:18):
because I just think the market's gonna matter.
Speaker 2 (16:21):
So we agree.
Speaker 5 (16:22):
Something that I've been thinking about is if if you
weren't paying attention to any of the data or alternative
data that we've gotten over the last three months, you
had been taking a long nap, for example, Great, you
woke up just to see the press conference yesterday. What
was the impression and what is the impression of the
economy that you got from J Powell?
Speaker 7 (16:44):
Everything's fine, nothing to see here. And I got to
be honest with you.
Speaker 5 (16:48):
He sounded more optimistic, yeah than I thought.
Speaker 2 (16:51):
Well, you said, you know, we keep seeing people lay
lending workers.
Speaker 5 (16:56):
Here anecdotes about the low higher, low fire environment and
people being not getting headhunted at all, and like that's
slowing down so much.
Speaker 2 (17:04):
College graduates not getting jobs, like so we're trying to
kind of square that.
Speaker 5 (17:07):
And it seemed like he was like, everything's kind of fine.
Speaker 7 (17:10):
So here's the thing. I want to come back to,
the college graduates in the low fire no higher, because
I think is really really important, and we have been
in a soft pat I believe that we have been
in a soft patch this quarter, not helped by the
government shutdown, but we've been in a soft patch right
When you have earnings growth like we have seen, you
cannot have a massive wave of layoffs. You could with
(17:34):
sort of the technological developments and AI et cetera. But
that's not what's happening right now, and I don't think
that's what's going to happen in twenty twenty six either.
It is just look coming back then to the no higher,
no fire. If the market has recovered beautifully this year.
But if you're a business of any kind, you are
either saying, looking at the Supreme Court decision on tariffs
(17:58):
and sort of the business back drip ahead, and you're saying, like,
things actually look pretty good, but I don't know, I'm
maybe not leaning into higher add ten people to my team,
or you're saying things look pretty good, but maybe I'll
wait to see what happens in the first half of
the year before hiring, because this a I think maybe
we get some synergies, So I don't think it's a
What I'm not seeing from the labor market is like
a big bearish concern. I'm seeing a wait and see,
(18:22):
And that's again that's a backdrop where if we see,
and I do expect that we will the benefits of
the One Big Beautiful Bill Act for both businesses and consumers,
pulling us out of this soft patch in the first half.
That's probably not a super negative labor market backdrop.
Speaker 2 (18:37):
But is it inflationary?
Speaker 3 (18:39):
I think so, Yeah, I think so.
Speaker 2 (18:41):
How badly or is it manageable? Does it mess up
the FED and its strategies?
Speaker 7 (18:45):
So my based on what I heard yesterday, I think
our base case is actually pretty aligned with the FEDS,
which is still boring. You love to have dev real fights.
Speaker 2 (18:53):
Very good company though, but I think you know, look.
Speaker 7 (18:55):
Inflation's gone nowhere this year, where we've been sitting around
three percent for twelve months. And the answer to your
question is, I don't actually expect the inflationary backdrop to
be incredibly problematic. But we saw these sort of shadow
descents yesterday that are suggesting, look, if things go pretty
well next year, that is a potential staying where we
(19:16):
are or maybe even seeing a hike by the end
of next year.
Speaker 9 (19:19):
For the FED.
Speaker 7 (19:19):
That's a good economy. That's a reasonable backdrop.
Speaker 2 (19:25):
It's responsible in the terms of what the FED or
certain members of the FED being concerned right exactly now.
Speaker 7 (19:31):
If you look at and we did a deep dive
on this, gosh I guess a year ago. But if
you look at the instances of real double peaks and
inflation in US history, and we have a couple ones
after World War Two, ones in the seventies eighties, there
are some ingredients that they have and all of them
are possible in twenty twenty six. So one of the
ingredients you have.
Speaker 2 (19:51):
Is you have sort of just ket about thirty thirty
five seconds.
Speaker 7 (19:54):
Double dip in goods in labor supply demand, imbalance, taroffs
could be providing that for inflation.
Speaker 9 (20:00):
We don't know.
Speaker 7 (20:01):
You have a super accommodated fiscal policy and artificially low
fed funds rate. Those are not worrisome conditions right now,
but they that's an outside risk, but the conditions are there.
Speaker 1 (20:14):
This is fun.
Speaker 8 (20:15):
It's great to see you.
Speaker 3 (20:16):
Good to see you.
Speaker 2 (20:17):
If we don't see you before the end of the year,
happy new year, and we will certainly see you in
the new year. Lauren Goodwin, economists and chief market strategist
at New York Life Investments, joining us right here in studio.
Speaker 5 (20:27):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (20:35):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Atto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (20:50):
More than four years ago, you might remember, I didn't
know this hoppen.
Speaker 2 (20:53):
I love the way this story stay.
Speaker 10 (20:54):
Yeah.
Speaker 5 (20:54):
Yeah, So more than four years after Warren buffet Let's slip,
I didn't know this was a slip that Greg Abel
would be succeeding him. The accountant turned energy executive is
finally taking the reins of Berkshire Hathaway. It's the one
trillion dollar conglomerate with businesses that spand insurance, freight in
retail and employees close to four hundred thousand people.
Speaker 2 (21:13):
And I think it was Charlie Munger who actually let
it slip. And I think you know at their annual meeting,
well they're together usually at this annual meeting. They're a
tag team, if you will, but great catch care yeah,
and just saying what greg will keep the culture and
it was like so it kind of like set things
in motion.
Speaker 5 (21:31):
So that culture also includes three hundred and eighty two
billion dollars. It's a war chest that's enough to come
to the rescue of some America's largest companies with a
single check. We've got a great roundtable on really the
future of Berkshire, Hathaway, Let's get to it.
Speaker 2 (21:45):
Kathy Seiffert's with us, senior vice president equity analyst at
CFI Research and Bloomberg News finance team leader here at Bloomberg.
Let me say that again. Katchaklinski, she's here at studio,
staying with us. We continue our conversation. So good to
have both you, both of you with us. Kat, I
want to start with you. You know here at Bloomberg
(22:08):
you've covered Berkshire for a long time, as has Kathy.
But it's it's the end of an era. It's a
real change and they've been very smart in terms of
grooming folks to take over. But nonetheless it's a massive
change for a companies so identified with Warren Buffett and
I think and Charlie Munger, Yeah, and it's it's tough.
Speaker 10 (22:27):
It's been big shoes for Greg able to feel Phil
and I think you know obviously shareholders know him pretty well.
He's been speaking at the annual meeting he's led the
energy business for years, but it's different and and I
think it's really going to be the yeah and the
end of an era, and we're gonna we've already started
to see a little bit of signs of what's taking
shape there. Well, well this week actually, so we saw
(22:51):
Todd Combs left Berkshire. He's one of the top stock pickers.
He's going to JP Morgan. We also saw they installed
a new general counsel, which for a modern company these days,
not to have a big sort of general company.
Speaker 8 (23:03):
They they didn't have one.
Speaker 10 (23:04):
They relied on actually Munger, Tooles and Olsen for so
many years, that law firm. So you know, we've already
seen these changes that, like I think Greg in some
ways is going to start to run it like a
little bit more like a sort of normal modern company.
Speaker 8 (23:19):
And you're seeing it take shape already.
Speaker 2 (23:21):
Kathy, how long have you covered Berkshire?
Speaker 8 (23:24):
Oh gosh, do you really want me to?
Speaker 6 (23:25):
Yeah? Do that math? And actually Kat and I used
to talk pretty regularly. I've covered Berkshire for more than
thirty years, so I yeah. And the interesting thing now
that you've put my tenure on the table is that
up until now very little changed. You know, it was
(23:46):
truly it was business as usual, and I think now
we're on the cusp of potentially some significant changes.
Speaker 8 (23:54):
I think some are good.
Speaker 6 (23:55):
I mean, you know, kat you mentioned that they're bringing
in a general council, which is, you know, kind of
striking that they didn't have one before. I think the
other thing, and this is a little selfish on my part,
they don't have an investor relations function, so as an analyst,
it's very difficult to get a really good sense of
what management is thinking. The only time you hear from management,
(24:20):
and it's not even the full team, is at the
annual meeting.
Speaker 8 (24:24):
And so when this announcement of.
Speaker 6 (24:28):
Warren's retirement was made and they were talking about business
as usual, I think there were some of us who
follow Berkshire who were kind of hoping it wasn't one
hundred percent business as usual.
Speaker 5 (24:42):
You know, Kathy, it's funny that you say that we
only hear from management at the annual meeting, because Caroly
and I have actually spoken to some of the portfolio
companies of Berkshire Hathaway and they kind of say the
same thing. It's really really hands off. At least that's
how their experience has been that seems to well.
Speaker 6 (25:00):
I think, you know, I think one of the management
changes that may give us a little bit of a
glimmer that Greg may have a more a little bit
more of a buttoned up approach is that, you know,
prior to this, you had Warren, and then you had
the two vice chairmen.
Speaker 8 (25:19):
You had Greg who was in charge of all the non.
Speaker 6 (25:22):
Insurance operations, which is a pretty far flung portfolio, and
then a Jet Jane in charge of insurance. And now
Greg has elevated the former NetJets head to cover sort
of the retail and consumer side of the non insurance business.
He's going Greg is going to retain kind of the
(25:43):
energy and industrial portfolio, and then of course you have insurance.
It's still a very far flung enterprise. And I think
an argument can be made to perhaps not have as
decentralawed a management style, take a look at all of
(26:04):
the holdings and see if maybe there are some economies
of scale to be had from maybe consolidating some.
Speaker 8 (26:11):
Of these names.
Speaker 6 (26:12):
I mean, my I wouldn't be surprised if some of
that takes place. But I think we also need to
discuss kind of the the disappointing part of this transition,
and that is Todd Combe's departure, and.
Speaker 8 (26:28):
That for me was kind of the biggest deal.
Speaker 2 (26:31):
In all of this. We want to come you, We
want to come back to you. I agree with you.
When that hit, I was like, wait, what's going on?
And I was also shrina A Rajaan here at Bloomberg
News and I'm like, wait, is this Jamie maybe thinking
about somebody else for his as a successor? And he
looked at me like I was kind of cuckoo. But
I just thought that was such a big move. Kat
remind everybody. We'll go back to Kathy in a moment,
(26:51):
who Todd Combs was at this company. Yeah.
Speaker 10 (26:54):
So obviously they have a massive stock portfolio, more than
two hundred I think eighty billion at the point, and
they were beyond Warren Buffett, who controlled a lot of
the stocks. There was actually two stock pickers, Ted Wessler
and Todd Combs. So by having Todd Coms exit and
go to JP Morgan, they lost a huge amount of
their sort of equity picking prowess. And I think it's
(27:17):
a big move. I mean I think it means, you know,
there's a lot now on ted to be able to
sort of allocate that money. And it's hard these days.
Speaker 2 (27:23):
You know, it's a lot of money to allocate a
lot of money.
Speaker 10 (27:26):
It's so much easier when you're controlling millions, not billions,
and you're actually trying to enter stocks. You know, they
can't even enter stocks that easily without like affecting the
share price, and so they have to be very careful there.
Speaker 8 (27:37):
So I think this is a huge change at the company.
Speaker 10 (27:40):
I'll be very curious to see, like, do they try
and get someone else to Yeah, they bring somebody else
in it, We'll see.
Speaker 8 (27:47):
Yeah, I think there's no clarity there yet.
Speaker 2 (27:49):
Kathy, what do you think do they bring somebody else in?
Speaker 6 (27:52):
Well, so this is the other you know, there's a
couple of other little pieces on the on the chessboard
that we should probably talk about. The other role that
Todd played, and you know, in the near term was
even more critical, was he was the head of Geico.
Speaker 7 (28:08):
And you know, the insurance.
Speaker 6 (28:10):
Business is not a very sexy business, but it's a
real integral part of Berkshire's operations. The industry itself is
at a little bit of.
Speaker 8 (28:18):
An inflection point.
Speaker 6 (28:19):
Ajite Jane is in his mid seventies. So Todd leaving
not only impacts the investment portfolio but also some of
the operating managerial talent at Geico, and that you know,
that's a big deal.
Speaker 8 (28:33):
But it also brings up the point.
Speaker 6 (28:35):
Of I think there are two other sort of drop
a pin in these two topics and see what happens,
And that is, does Ted Wexler stick around? He is
the remaining of the the Ted and Todd that that
cat reference when they brought in some investment help.
Speaker 8 (28:56):
Ted is still there? Does he stick around?
Speaker 3 (28:59):
Number one?
Speaker 8 (29:00):
And number two? Does a Jeet Jane who's in his
mid seventies? Does he stick around? And then what happens?
Speaker 6 (29:07):
So, you know, I think there are obviously there's what
we know right now, but there's a few other I
think areas of potential uncertainty and weakness that I think
the investment community certainly has on their mind at this point.
Speaker 5 (29:22):
To Kat, the big question that everybody has is how
the investments change. And you know, there was a lot
of questions about, okay, well, what is Warren Buffett's interest
in technology? And that question I think was answered with
an Apple investment many at this point, many years ago
but it was seen as the sort of turning point,
and the company still performed incredibly well despite the fact
(29:43):
that it hasn't made a lot of investments in high
flying tech companies that have performed so well over the
last decade. Does that change?
Speaker 7 (29:51):
It's possible to say, well, I mean they were came in.
Speaker 5 (29:55):
Sorry, I just want Kat jump in and then Kathy
will come to.
Speaker 6 (29:57):
You as sologies too many similar names.
Speaker 10 (30:01):
But I was gonna say, yeah, I mean I think
it's you know, I think the technology, they were a
little bit late on it, but they made a lot
of money on Apple, and like I do think, you know.
Speaker 8 (30:09):
There's a chance you could see it change.
Speaker 10 (30:11):
You know, I think based on what we've learned from
Ted and Todd and now just Ted, you know, like
I think some of his investments echo buffets, at least
in the philosophy of like they want to see strong
you know, economic modes.
Speaker 8 (30:24):
They want to see like they.
Speaker 10 (30:25):
Want to see that the company really has some is
undervalued in ways like that they really think it could
increase over the years to come, so like and buy
and hold stuff. You know, I think a lot of
their main strategies will will remain. But whether that means
they'll still venture a little more into tech or not.
I think remains to be seen.
Speaker 2 (30:43):
Kathy just got about thirty forty seconds. One thing I
think about is, you know Warren Buffett, They're so identified
with the company there for a long time there through crises.
He like Jamie Dimond, there's a couple of voices out
there that we all turn to in moments in tough times,
and we even when performance is off a little bit,
we trust because the record is long, wide, deep and
(31:05):
really successful. Do we give greg Abel the same kind
of luxury or does he have to prove himself pretty quickly?
Speaker 8 (31:13):
Well, I think I think.
Speaker 6 (31:14):
Your answer is in the year to day performance of
the stock because I think the shares have been under
pressure because the buffet premium is sort of coming out
of Berkshire Hathaway shares.
Speaker 8 (31:27):
And I think the investment community has.
Speaker 6 (31:29):
A lot of respect for greg Abel, but I think
he also has enormous shoes to fill. So you know,
I think right now it's very much wait and see,
and people are people are being cautious.
Speaker 2 (31:45):
Well, we'll be all over it. This was really fun,
so appreciated.
Speaker 5 (31:48):
The question is do they get a new website, I
hope not.
Speaker 2 (31:51):
Just go there and you'll understand why we said that.
Kathy Seafford, Senior VP Equity Analyst at CFA Research, and
our own Ketcha Glinski, Finance team leader at Bloomberg News.
This is Bloomberg.
Speaker 5 (32:02):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (32:09):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Apple Karplay and Android Auto with the Bloomberg Business Up,
or watch.
Speaker 2 (32:21):
Us live on YouTube.
Speaker 5 (32:24):
Broad comes out. So I want to pull these numbers up, Carol,
you have them in front of your right Yeah.
Speaker 2 (32:28):
Real quickly, let's go to the outlook seize first quarter
revenue about nineteen point one billion. The estimate on the
street is eighteen point forty eight billion.
Speaker 5 (32:35):
That's big.
Speaker 2 (32:36):
Yeah. Let's go to the past quarter, fourth quarter justin
net revenue. That was a beat, eighteen point zero two
billion versus the street estimate of seventeen point four seven billion.
Let me go a little bit more to the Outlook
sees first quarter revenue. We already mentioned that one, and
that one is a beat. We're seeing that stock up
(32:56):
almost seven percent in the aftermarket. Fourth quarter Semi and
solutions revenue eleven point zero seven billion, the estimate on
the street ten point seven four billion, and fourth quarter
just aed EPs, Tim a dollar ninety five a share,
and that is compared to a street estimate of a
dollar eighty seven. So that's about eight cents better than
what the street was expecting.
Speaker 5 (33:17):
Yeah, here's of about three point eight percent, up four
percent in the after hours as we speak. Fourth quarter
adjusted earnings per share for Broadcom beating estimates, adjusted EPs
coming in at a dollar ninety five. This for the
fourth quarter, just a net revenue coming in above estimates
at eighteen point two billion dollars. And Carol, you're also
talking about the outlook, which beat estimates that came in
(33:39):
significantly above estimates. First quarter revenue about nineteen point one billion,
beating estimates of eighteen point four eight billion.
Speaker 2 (33:46):
Yeah, and my apologies, I was looking at Lulu, which
was up like six seven percent in the after markets.
As Tim mentioned, it's now up Broadcom about three or
four percent here in the after market. And it also
looks like Broadcom is increasing its quarterly dividend and regular
quarterly cash dividend of sixty five cents a share from
the previous dividend of fifty nine cents per share. So
(34:06):
that's what we were projecting here at Bloomberg.
Speaker 5 (34:08):
So let's bring back Jake Goldberg. He's had thirty seconds
to look at these numbers. He's senior analysts were Semiconductors
and Electronics with Seaport Research Partners. A beat across the board, Jay,
anything in here not to like?
Speaker 9 (34:20):
So far, so good? Right, it's a good number. It's
not a crazy big blowout, but it's good. You know,
on first blush, everything looks looks fine. You know, I'm content.
Speaker 5 (34:33):
So far.
Speaker 9 (34:33):
We'll people, they say, lak call.
Speaker 2 (34:34):
Looking at commentary here off of the press release quote,
we see the momentum continuing in the first quarter and
expect AI semiconductor revenue to double year over year to
eight point two billion dollars, driven by custom AI accelerators
and Ethernet AI switches.
Speaker 5 (34:51):
So the question Jay, I was going to ask you
before those numbers came out, and it's probably even a
more pertinent question now, is the connection between Broadcom's earnings
and what we see in terms of capex from companies
like excuse me Oracle yesterday, can you make the connection
for us?
Speaker 9 (35:09):
Yeah, So I think there's a big distinction here in
that a lot of what is going on within Nvidia
is sales to neo clouds sort of cloud service providers
other than the big three.
Speaker 5 (35:19):
Yeah, like you're talking about like Core Weak for example.
Speaker 9 (35:23):
Like Core, we even Nebus right and to some degree
Open Ai and we're So there's a little bit of
there's a growing amount of concern about the ability of
those companies to finance their build out. By comparison, most
of Broadcom's customers are very well capitalized. They're big companies
who can if you can afford to design your own chip,
you can afford to pay the bill to actually see
(35:45):
the project through to completion. The one, the one being
exception to all this, of course, is open Ai and
like they have deals with Nvidia and deals with Broadcom to.
Speaker 3 (35:52):
Do their own chip.
Speaker 5 (35:53):
So that's a little bit of a question.
Speaker 9 (35:54):
But certainly there's less of a financing concern tied to
Broadcoms numbers than there is two some of the things
that are going on with in video.
Speaker 2 (36:02):
Hey, that number that they expect AI seven conductor revenue
to double year of a year to eight point two billion.
That's impressive.
Speaker 9 (36:10):
It's a big number. They've talked about that before. Okay,
so that's that's not a surprise, but it's you know,
they're reiterating that guidance. And you know, I'll tell you
one thing that's been interesting this quarter in particular, is
press releases only tell part of the story. There's been
a lot of sort of big after hour swings, and
some of my names this quarter based on commentary during
(36:30):
the call.
Speaker 5 (36:31):
So I'm kind of curious.
Speaker 9 (36:32):
Hocktan, the CEO of Broadcom, is known for having all
kinds of interesting color and saying really interesting, colorful things,
and so I wouldn't be surprised if he has a
few more surprises on the call itself.
Speaker 5 (36:44):
What do you mean.
Speaker 9 (36:47):
He like when he's when he's bullish, he can be
very bullish. We saw that last quarter with them in
the quarter before, you know, back a year ago, nobody
thought Broadcom had an AI story, and he started talking
about it on a call, so many people realize that
not only do they have an AI story, but it's
a massive story. The stock was up twenty percent that day,
and so they're continuing to build on that and he can.
(37:10):
You know, he'll he's very talkative.
Speaker 5 (37:12):
You might say something. I mean, what's remarkable about that
is if we look at the one year, try to mention,
you know, up seventy five percent so far this year, Carol,
it's up one hundred and twenty seven percent from a
year ago.
Speaker 2 (37:22):
Yeah, that's why I like, it's unbelievable. Let's just in
case you're just joining US. Shares a broadcom er up
about two point seven percent here in the aftermarket off
their highs because they've been a little bit higher coming
off of earnings. The big reason that investors are excited
here in the aftermarket has to do with the outlook
for top line growth. We're talking about Broadcom saying it's
(37:43):
his first quarter revenue about nineteen point one billion versus
an estimate on the street of eighteen point four eight billion.
They also expect AI semiconductor revenue to double year over
year to eight point two billion. We've been talking with
Jay Goldberg over at Seaport Research, who said that number
has been out there for but you know, they're reiterating them,
so doubling down if you will. And the fourth quarter
(38:05):
looking backwards net revenue that was a beat fourth quarter
just at EPs. That was a beat. The company also
saying it's his momentum continuing in the first quarter, and
then it raised its dividend by about ten percent from
the prior quarter to sixty five cents. To share top
of mind, then, Jay, what's what's your top question here?
Or do you just want to let Hockten go and
(38:27):
see where he goes?
Speaker 9 (38:29):
Yeah, one on one, I would just let him go
and see see where he takes us. I think the
main things I'm looking out for are what's he going
to say about other customers beyond the ones that they've announced,
what's the timing of some of these ramps for these
new products, and what he sees in the future if
they're going to gain some more customers. I think that's
that's all sort of He said they have a certain
number of customers lined up for this, but there's also
(38:51):
been a lot of chatter this quarter that they may
have won somebody else, like a Microsoft, And so I
want to see if he takes the bait and talks
about that topic.
Speaker 5 (38:59):
You know, I'm looking at that hoc Ten and he's
in his mid seventies right now, early seventies. Yeah, do
we have questions about succession.
Speaker 9 (39:12):
So last quarter he actually said the board had extended
his contract through twenty thirty and he'd accepted. Okay, he
has been instrumental in making this company and what it is.
He's taking it from almost nothing to what it is,
massive company today, and so there was a little bit
of an overhang, Like I think people thought he was
going to retire next year, but he's clearly. I don't
think he's doing it for the money. I think he's
(39:33):
just having too much fun that he's gonna stay with
it until twenty thirty.
Speaker 2 (39:38):
Hey, jay our Dina bass out with us short right
through off of Broadcom and their results, and you know,
she notes that much of the recent buzz around Broadcom
stem from its ties to some of the biggest AI
model providers, and we've been talking about this with you.
Chet chipet maker open Ai signed a packed with Broadcom
for its own AI chip designs, while Anthropic agreed to
(39:58):
use tens of billions of dollars of computing services based
on Alphabet's Google Cloud TPUs. The latter components also rely
on Broadcom designs, helping fuel investor enthusiasm about the chip
makers AI prospects. We've been talking all about this. Do
you want to see Broadcom broaden out or man? They're
playing with you know, the bells of the ball, if
(40:19):
you will. And so they're in a good position.
Speaker 9 (40:23):
I think there's a little bit more broadening they can do.
There's a few more customers they can pick up. But
the Broadcom model for his entire tenure has been focus
on the sort of the biggest customers and just service
them extensively. Right, So you know when they're a big
player in wireless chips and so they're you know, their
main customer is Apple, and they've been there for Apple
(40:45):
for the entire run of the iPhone, and Apple's like,
if you're not Apple, it's hard to get much attention
from Broadcom. I think they're going to replicate that model
here and it's worked so far, and I think I
think again at a couple at a Microsoft, maybe maybe
at an Apple if they ever get into this. But
they don't have to add one hundred more customers, they
don't have to add ten, two or three already is
(41:05):
driving the numbers pretty significantly, all right.
Speaker 5 (41:07):
Jay, We always love it when you hang out with us.
Thanks for taking the time especially on such a busy day.
Jay Goldberg, Senior Analyst Semiconductors and Electronics with Seaport Research Partners.
Speaker 1 (41:17):
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(41:38):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Hey, we have a few stocks on our radar, really
in the media and related space, if you will. One
is on the Magic Kingdom's move into AI. And then
of course it's the ongoing not yet ending pursuit of
Warner Brothers Discovery. Yes, it goes on. Covering it all.
Bloomberg News Media reporter Hannah Miller. She's right here in studio. Hey,
let's talk, Hannah. We've been talking to you a lot.
(00:54):
There's a lot going on. Disney shares a little bit
higher this on news at the company agree to invest
dollars in Open AI and licensed iconic characters. What do
we know about this deal?
Speaker 3 (01:05):
Yeah, so we know that it's a big deal.
Speaker 4 (01:07):
It does feel like a really exciting you know, there's
been a lot of tension in Hollywood over the use
of AI for film for animation, things like that, and
Disney has made a huge statement here with this investment.
Speaker 3 (01:21):
And yeah, it's concerning.
Speaker 4 (01:23):
You know, there are a whole suite of characters, you know,
got Marvel, Pixar, Star Wars. You can use that with
open Ai, Sora app and kind of create you know,
these short, you know, social media friendly videos using these
characters without.
Speaker 2 (01:38):
What if they have like Mickey as like a slasher
dude or something like are they okay?
Speaker 5 (01:44):
We could write that, people could draw that anyway. I
mean that stuff happens anyway.
Speaker 2 (01:48):
But there's somebody who so protective of their IP like
you to figure.
Speaker 5 (01:52):
This out, I think, And I think you make a
really good point because if you remember back to the
early days of like Image Generation with in the last
three years, when people were really experimenting with these llms
and getting them to do stuff, they were actually creating
characters that were you know, Disney would never actually create
or other IP owners would never actually create. And everyone
(02:13):
was like, wait a second, this is going to be
a huge headache for these companies.
Speaker 4 (02:16):
Yeah, so we know from the beginning, like you said,
you know, people have been drawn to this. They've been
doing you know, their own creative stuff with these characters.
Some of it is fun, some of it is not.
So you know, i'd have to imagine that there's you know,
maybe restrictions here with how people use this app. You know,
like you can put parameters in with these models.
Speaker 5 (02:35):
So maybe okay, okay.
Speaker 6 (02:36):
You know.
Speaker 5 (02:37):
The other thing that I think of is just Hollywood's
relationship with AI. And when we were at screen Time
earlier this year, a big conversation that we had back
in October was about, Okay, what is and this was
the whole writer's strike too, an the actors strike in
the last couple of years. This is what was the
core attension, right to what extent are these studio is
going to use AI from a script's perspective, from an
(02:57):
actual visual effects perspective, to replace us, to supplement us.
Does this send a signal about how Disney used this
technology to the creative class?
Speaker 4 (03:07):
Yeah, I mean, I think Bob Iger here, he's going
to have to convey a sense of reassurance, you know,
to the people working under him.
Speaker 3 (03:15):
Even though this is a first step forward.
Speaker 4 (03:16):
You know, I just want to point out you can't
use voice with any of these characters. You know, you
can't use like Tom Hanks's voice from Woody from Toy Story,
for example. But it is still a huge development. And
I know a lot of creatives in Hollywood are worried that,
you know, they could be replaced.
Speaker 5 (03:32):
What what go ahead?
Speaker 2 (03:34):
Why is Disney doing this? Is it just I mean,
have they done anything in internally when it comes to
AI on their own or like why are they doing this?
Speaker 4 (03:41):
I mean they've filed a lawsuit against mid Journey similar stuff. Yeah,
so you know that was sort of the earlier sentiment
that they had. Yeah, but you know, I think what
we can see here is they want a piece of
the AI pie. You know that they don't want to
be left out or left behind, and this is a
way to to partnership with.
Speaker 2 (04:00):
The prom queen, right basically Open AI. Everybody's just making
sure they have some kind of relationship with Open AI.
Speaker 5 (04:07):
Yes, but apart from and I think to Carol's point,
also apart from the equity investment and Open AI and
getting a piece of that financial upside, if there is
financial upside, I mean, look, it's still a privately held company.
There's a lot of questions about and even Sam Altman's
concerned about open AI right now, and there's a lot
of competitors. So apart from the financial upside, what else
does Disney get by doing this?
Speaker 4 (04:28):
You know, they get the lead and they're ahead of
other entertainment companies they're embracing AI.
Speaker 3 (04:35):
They also, you know, they get some pluses too, like.
Speaker 4 (04:37):
Their employees now have access to chat GPT other enterprise tools.
Speaker 3 (04:42):
So I think they're looking at this from a you know.
Speaker 5 (04:45):
But from a branding perspective. Is it like, Okay, let's
say my kid loves Toy Story and I can use
then chat GPT to create some sort of cool I
don't know, birthday party invitations for him and his brands
for their birthday. That does Disney see that as okay, well,
this is this is a good use of our brand,
an extension that then gets this kid more interested in
(05:07):
Toy Story and then going to Disney in California or Florida.
Is that the idea?
Speaker 4 (05:12):
I think you hit on a great point here that
you know, they're already establishing brand recognition in a new way.
You know, I mean, everybody knows Disney, but this is
just yet another avenue to get people on board and
show that They're a tech forward company that they're willing
to embrace the future and they're not going to be
left behind.
Speaker 2 (05:27):
I love what Sam Altman apparently said right in an
interview with the NBC that demand for Disney characters is
off the charts, Like, so he understands that this is.
Speaker 5 (05:34):
An important part love Disney.
Speaker 2 (05:36):
Who doesn't love Mickey and Mini or Donald well More.
Speaker 5 (05:41):
You think of it as a thing for kids, any
of them, But it turns out a lot of adults
love Disney.
Speaker 1 (05:46):
Yeah.
Speaker 2 (05:46):
I knew it. I used to know someone kind of
growing up. He used to love to draw the Disney characters.
It was an adult, it wasn't a kid. And investors
are you know, rewarding the company today. So it's interesting.
Speaker 5 (05:58):
All right, Well, Disney's seeing on AI. Other companies are
focused on Wait, how much is this company gonna cost me?
Speaker 2 (06:04):
Can we get the deal done? Can I stop paying
bankers and just sign on the dotted line? We're talking
Warner Brothers Discovery. Where are we?
Speaker 3 (06:12):
Yeah, so we're waiting right now.
Speaker 4 (06:14):
You know, Warner Brothers has ten days to respond to that.
You know, Hostel takeover bid from Paramount.
Speaker 2 (06:22):
To ten days from Monday from Monday.
Speaker 4 (06:24):
And it's it's ten business days. They could come back sooner.
You know, we could see something as early, you know
as next week. And you know, they are waiting to
see what Warner Brothers says, whether there's going to be
a rejection or you know, maybe they want more information,
and you know, if they still decide to go with Netflix,
(06:45):
Paramount has some options here, you know. I mean there's
been a lot of industry talk about whether or not
they'll sue. You know, David Ellison has already talked about
some frustrations with the bidding process. And there's a shareholder
vote on January eighth, so we'll be tracking until then.
Speaker 2 (07:05):
Our understanding too is Bob Iger also said this morning
comments that he wasn't hasn't determined yet if you'll take
a position on Warner Brothers. So wait, is this still
a Comcast has kind of said, we're out right, we've
heard that. But is it possible that Disney somewhere comes in?
Speaker 4 (07:22):
You know, I mean I think the race is really
tight here already. I mean, why would you say that?
Speaker 5 (07:29):
You know, I think a lot of get his competitors
to pay more.
Speaker 2 (07:33):
Yeah, kind of playing around with them.
Speaker 5 (07:35):
Yeah, I don't know. I'm not saying that's why he
would do it, But if I were in his position,
I would want my competitors to pay as much for
other things as possible.
Speaker 2 (07:43):
Make it tough.
Speaker 5 (07:43):
Yeah, say hey, maybe we're sniffing around a little bit.
Maybe increase that price.
Speaker 4 (07:47):
And yeah, we know, paramount you know they've left it
open to an increase, so we could see that down
the line.
Speaker 5 (07:53):
So what about CNN's fate, Because late yesterday Carol and
I were here in the studio and a headline cross
the Bloomberg terminal the press residents essentially saying it should
be guaranteed that CNN is part of it or sold separately.
This is the President said any deal for Warner Brothers
should include the sale of its CNN cable network. So
does that mean that if Paramounts Guidance were to win
(08:16):
the bid, they would have to shed CNN.
Speaker 4 (08:18):
So the thing that President Trump emphasizes he wants to
see CNN under new leadership.
Speaker 3 (08:24):
Then its okay.
Speaker 4 (08:26):
So that doesn't look as good for the Netflix deal
because Netflix only wants the streaming and studios business. Yeah,
Warner Brothers will then continue with the spinoff of its
cable networks, including CNN, and it'll be a separate company
called Discovery Global, but it'll still have you know, the
same people, existing leadership will still Yeah, so that's why
that doesn't look as good.
Speaker 2 (08:47):
So this is about him wanting new people in charge exactly.
Speaker 4 (08:50):
So it's like I think a lot of people in
the industry interpreted that as better for Paramount.
Speaker 2 (08:54):
Can I ask you something in terms of what we've
been talking about, certainly on our planning calls and as
a show unit, just what's happening in media and with
these deals and ownership and the presidents say in this
and now we're talking a lot more traditional whether it's
kind of the old fashioned TV networks forgive me, or
some of the cable guys that had been around for
(09:15):
a while, the all newsers, is it, are we seeing
kind of a shift to more conservative leadership and perhaps
conservative programming?
Speaker 4 (09:26):
Yeah, you know, we've already seen changes at CBS, which
is owned by Paramount, and David Elson has come in
made significant leadership changes there by appointing Barry Weiss, who
founder of the Free Press, is the head of CBS News.
And there's been a lot of talk about how that
will affect programming. You know, we're still kind of seeing
those changes shake out. Yeah, but yeah, there has been
(09:51):
a lot of talk of, you know, whether Paramount will
do similar things with CNN, you know, whether certain anchors
will be out, and you know there's already just been
multiple attacks on CNN from the right.
Speaker 5 (10:04):
Yeah. Look, I think a lot is still unknown because
we don't know who's going to actually ultimately win this deal.
Carol mentioned Disney potentially coming in because of the comments
that Bob Eiger made earlier today. But I'm wondering if
you think there's any other there are any other parties
that we should be watching, or if this is all
coming down to just these two companies, Netflix and paramounts guidance.
Speaker 4 (10:26):
We're keeping our attention right now on Paramount and Netflix.
That's where we're seeing the action and how that's going
to play out. But you know, I can't see the future.
Speaker 2 (10:36):
Well, Bernstein weighing in an analyst there, Lauren to you
and saying Netflix needs to make sure it has an
exit strategy in case the bidding war for Warner Brothers
quote unquote turns irrational. So I mean, right, like, if
you continue, there's a point where maybe then the price
doesn't make so much sense, but you do wonder about strategy,
how important this is for Netflix.
Speaker 5 (10:56):
Shareholders don't love Netflix shareholders don't love this. I mean,
I don't remember the stot yesterda. I think it was
sixteen percent in six days that Netflix was down. This
is its first pump session in six days. It's down. Look,
if you look at June thirtieth, it's high of one
hundred and thirty three dollars a share. Now it's treading
it ninety four dollars a share. Does that make Netflix
think twice that shareholders are not loving this?
Speaker 4 (11:16):
Yeah, I mean we know both parties are going to
be tracking the market closely. Warner Brothers is looking at market.
Speaker 3 (11:21):
Reaction as well. I'm sure.
Speaker 2 (11:22):
Yeah.
Speaker 4 (11:23):
With Netflix, I mean, this is a big reversal for them,
and they've talked about how they're more of a builder
than a buyer, and this is a.
Speaker 3 (11:30):
Huge, huge change.
Speaker 4 (11:31):
There's also a lot of anxiety in Hollywood about this deal,
and you know, concerns that with Netflix emphasizing streaming and
considering the theater experience may be outdated, that this would
hurt film production and theater attendance.
Speaker 2 (11:45):
Yeah, it's kind of fascinating our story here though, about
this Birnsday and Analyst stock has already lost more than
one hundred million value since it reported earnings in October.
So Netflix, I mean investors certainly weighing in and voting
pretty clearly on what they think what they feel about
this move. Netflix. I am sure we will be talking
to you again. Hannah, Thank you so much, really appreciate
all this reporting as we continue to watch this play out.
(12:08):
Hannah Miller, media reporter at Bloomberg News right here in
our New York studio, Stay with us.
Speaker 5 (12:15):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (12:21):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (12:36):
Can I just say, our next guest walks into the
studio and we just get happy, don't we.
Speaker 5 (12:41):
You said the same thing about me, right, yeah?
Speaker 2 (12:43):
I do. Just making sure, come on, we have.
Speaker 5 (12:46):
Favorites, but you know, I don't want to make anyone
want your.
Speaker 2 (12:49):
Your favorite, you know, your favorite. But speaking of guests
that we love to have walk in. We do love
Whenlauren Goodwin's walks in. She's kind of as Chief Argust
judges it in your Life Investments. What I love is
that she can look at the economic metrics, she can
look at the market metrics. It just she ties it
all together. And she's here in studio.
Speaker 7 (13:09):
So good to have you here. How are you. I'm great,
I'm and it makes me happy to be here too.
Thank you for having me.
Speaker 2 (13:15):
We're happy. It's so good. I think we're all happy
that we're getting to the end of this year, which
has been a wild one, and we just had our
last FED meeting of the year. Did it play out
as you expected?
Speaker 7 (13:27):
Yes, with a important exception, which is I just really
was not expecting Chair Pale to say, we've reached a
range of neutral estimates, so your guess is as good
as mine, and I think that's super reasonable.
Speaker 8 (13:40):
Yeah, I mean it.
Speaker 2 (13:42):
J Palell gets real right.
Speaker 7 (13:43):
Yeah, And it's in many ways. It isn't that what
he said is unreasonable or super surprising or weird or
there's nothing like that, but the willingness to just open
that conversation around, Okay, we are in this range of
estimates for the neutral rate is so important because the
quipples that myself and my team have had with the
(14:05):
market pricing of the Fed funds rate recently looking ahead
to twenty twenty six has been really it's on the margin.
It's like, look, if we expect pretty good growth and
sticky ish but nothing problematic on the inflation front, then
like if I say one or two more cuts and
you say two or three, like, is that really the
(14:26):
difference make er? Probably not, But opening this conversation about like, okay,
we're in the range of neutral does raise what I
think is a really important question, which is as we
get as rates move lower, if we get to that
three ish percent range, where it's more or less the
lower bound of what most people think could be neutral
than ten for the Fed funds rate, then that's when
(14:48):
I think we start to see the market say no more,
and actually that Fed cuts become.
Speaker 3 (14:54):
A problem for the long end.
Speaker 5 (14:55):
How do the markets say no more.
Speaker 7 (14:57):
By the tenure moving higher? Essentially a curve opening? You know,
that is such a good question. I you know, in
the sort of four ten four twenty range that we've
been I think we I think as we move below three,
we get ten or twenty basis points pretty quickly, and
if the FED is not sort of signaling, let's say,
any cuts beyond that, being on the hawkish side, then
(15:18):
we could actually go higher.
Speaker 2 (15:20):
So like, well, this is something we talked about with
Kati Kaminsky of Alpha Simplex, like trying to get an
idea of what's the upper range, Like we have quite
a range in terms of movements that we've seen I
feel like over the last year or so, So five percent,
I think is that extreme.
Speaker 7 (15:36):
I think that's that's that would be pretty bad news.
I think it's a it's not extreme in the sense
that if I look at the economic backdrop of strong growth,
a strong a pretty heavy deficit, and still pretty supportive
fiscal backdrop next year ye, and geopolitical backdrop that's very uncertain.
Like I can come up with ten or fifteen ways
(15:56):
that we could get for five get to five percent,
but that's not really the I'm talking about. And the
reason is I think that regardless of who sits in
the FED chair seat next year or second half of
next year, they don't want that. The president doesn't want that.
And so I'm actually not as worried about FED independence
as maybe I would otherwise be as a macro person
(16:18):
because I just think the market's gonna matter.
Speaker 2 (16:21):
So we agree.
Speaker 5 (16:22):
Something that I've been thinking about is if if you
weren't paying attention to any of the data or alternative
data that we've gotten over the last three months, you
had been taking a long nap, for example, Great, you
woke up just to see the press conference yesterday. What
was the impression and what is the impression of the
economy that you got from J Powell?
Speaker 7 (16:44):
Everything's fine, nothing to see here. And I got to
be honest with you.
Speaker 5 (16:48):
He sounded more optimistic, yeah than I thought.
Speaker 2 (16:51):
Well, you said, you know, we keep seeing people lay
lending workers.
Speaker 5 (16:56):
Here anecdotes about the low higher, low fire environment and
people being not getting headhunted at all, and like that's
slowing down so much.
Speaker 2 (17:04):
College graduates not getting jobs, like so we're trying to
kind of square that.
Speaker 5 (17:07):
And it seemed like he was like, everything's kind of fine.
Speaker 7 (17:10):
So here's the thing. I want to come back to,
the college graduates in the low fire no higher, because
I think is really really important, and we have been
in a soft pat I believe that we have been
in a soft patch this quarter, not helped by the
government shutdown, but we've been in a soft patch right
When you have earnings growth like we have seen, you
cannot have a massive wave of layoffs. You could with
(17:34):
sort of the technological developments and AI et cetera. But
that's not what's happening right now, and I don't think
that's what's going to happen in twenty twenty six either.
It is just look coming back then to the no higher,
no fire. If the market has recovered beautifully this year.
But if you're a business of any kind, you are
either saying, looking at the Supreme Court decision on tariffs
(17:58):
and sort of the business back drip ahead, and you're saying, like,
things actually look pretty good, but I don't know, I'm
maybe not leaning into higher add ten people to my team,
or you're saying things look pretty good, but maybe I'll
wait to see what happens in the first half of
the year before hiring, because this a I think maybe
we get some synergies, So I don't think it's a
What I'm not seeing from the labor market is like
a big bearish concern. I'm seeing a wait and see,
(18:22):
And that's again that's a backdrop where if we see,
and I do expect that we will the benefits of
the One Big Beautiful Bill Act for both businesses and consumers,
pulling us out of this soft patch in the first half.
That's probably not a super negative labor market backdrop.
Speaker 2 (18:37):
But is it inflationary?
Speaker 3 (18:39):
I think so, Yeah, I think so.
Speaker 2 (18:41):
How badly or is it manageable? Does it mess up
the FED and its strategies?
Speaker 7 (18:45):
So my based on what I heard yesterday, I think
our base case is actually pretty aligned with the FEDS,
which is still boring. You love to have dev real fights.
Speaker 2 (18:53):
Very good company though, but I think you know, look.
Speaker 7 (18:55):
Inflation's gone nowhere this year, where we've been sitting around
three percent for twelve months. And the answer to your
question is, I don't actually expect the inflationary backdrop to
be incredibly problematic. But we saw these sort of shadow
descents yesterday that are suggesting, look, if things go pretty
well next year, that is a potential staying where we
(19:16):
are or maybe even seeing a hike by the end
of next year.
Speaker 9 (19:19):
For the FED.
Speaker 7 (19:19):
That's a good economy. That's a reasonable backdrop.
Speaker 2 (19:25):
It's responsible in the terms of what the FED or
certain members of the FED being concerned right exactly now.
Speaker 7 (19:31):
If you look at and we did a deep dive
on this, gosh I guess a year ago. But if
you look at the instances of real double peaks and
inflation in US history, and we have a couple ones
after World War Two, ones in the seventies eighties, there
are some ingredients that they have and all of them
are possible in twenty twenty six. So one of the
ingredients you have.
Speaker 2 (19:51):
Is you have sort of just ket about thirty thirty
five seconds.
Speaker 7 (19:54):
Double dip in goods in labor supply demand, imbalance, taroffs
could be providing that for inflation.
Speaker 9 (20:00):
We don't know.
Speaker 7 (20:01):
You have a super accommodated fiscal policy and artificially low
fed funds rate. Those are not worrisome conditions right now,
but they that's an outside risk, but the conditions are there.
Speaker 1 (20:14):
This is fun.
Speaker 8 (20:15):
It's great to see you.
Speaker 3 (20:16):
Good to see you.
Speaker 2 (20:17):
If we don't see you before the end of the year,
happy new year, and we will certainly see you in
the new year. Lauren Goodwin, economists and chief market strategist
at New York Life Investments, joining us right here in studio.
Speaker 5 (20:27):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (20:35):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Atto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (20:50):
More than four years ago, you might remember, I didn't
know this hoppen.
Speaker 2 (20:53):
I love the way this story stay.
Speaker 10 (20:54):
Yeah.
Speaker 5 (20:54):
Yeah, So more than four years after Warren buffet Let's slip,
I didn't know this was a slip that Greg Abel
would be succeeding him. The accountant turned energy executive is
finally taking the reins of Berkshire Hathaway. It's the one
trillion dollar conglomerate with businesses that spand insurance, freight in
retail and employees close to four hundred thousand people.
Speaker 2 (21:13):
And I think it was Charlie Munger who actually let
it slip. And I think you know at their annual meeting,
well they're together usually at this annual meeting. They're a
tag team, if you will, but great catch care yeah,
and just saying what greg will keep the culture and
it was like so it kind of like set things
in motion.
Speaker 5 (21:31):
So that culture also includes three hundred and eighty two
billion dollars. It's a war chest that's enough to come
to the rescue of some America's largest companies with a
single check. We've got a great roundtable on really the
future of Berkshire, Hathaway, Let's get to it.
Speaker 2 (21:45):
Kathy Seiffert's with us, senior vice president equity analyst at
CFI Research and Bloomberg News finance team leader here at Bloomberg.
Let me say that again. Katchaklinski, she's here at studio,
staying with us. We continue our conversation. So good to
have both you, both of you with us. Kat, I
want to start with you. You know here at Bloomberg
(22:08):
you've covered Berkshire for a long time, as has Kathy.
But it's it's the end of an era. It's a
real change and they've been very smart in terms of
grooming folks to take over. But nonetheless it's a massive
change for a companies so identified with Warren Buffett and
I think and Charlie Munger, Yeah, and it's it's tough.
Speaker 10 (22:27):
It's been big shoes for Greg able to feel Phil
and I think you know obviously shareholders know him pretty well.
He's been speaking at the annual meeting he's led the
energy business for years, but it's different and and I
think it's really going to be the yeah and the
end of an era, and we're gonna we've already started
to see a little bit of signs of what's taking
shape there. Well, well this week actually, so we saw
(22:51):
Todd Combs left Berkshire. He's one of the top stock pickers.
He's going to JP Morgan. We also saw they installed
a new general counsel, which for a modern company these days,
not to have a big sort of general company.
Speaker 8 (23:03):
They they didn't have one.
Speaker 10 (23:04):
They relied on actually Munger, Tooles and Olsen for so
many years, that law firm. So you know, we've already
seen these changes that, like I think Greg in some
ways is going to start to run it like a
little bit more like a sort of normal modern company.
Speaker 8 (23:19):
And you're seeing it take shape already.
Speaker 2 (23:21):
Kathy, how long have you covered Berkshire?
Speaker 8 (23:24):
Oh gosh, do you really want me to?
Speaker 6 (23:25):
Yeah? Do that math? And actually Kat and I used
to talk pretty regularly. I've covered Berkshire for more than
thirty years, so I yeah. And the interesting thing now
that you've put my tenure on the table is that
up until now very little changed. You know, it was
(23:46):
truly it was business as usual, and I think now
we're on the cusp of potentially some significant changes.
Speaker 8 (23:54):
I think some are good.
Speaker 6 (23:55):
I mean, you know, kat you mentioned that they're bringing
in a general council, which is, you know, kind of
striking that they didn't have one before. I think the
other thing, and this is a little selfish on my part,
they don't have an investor relations function, so as an analyst,
it's very difficult to get a really good sense of
what management is thinking. The only time you hear from management,
(24:20):
and it's not even the full team, is at the
annual meeting.
Speaker 8 (24:24):
And so when this announcement of.
Speaker 6 (24:28):
Warren's retirement was made and they were talking about business
as usual, I think there were some of us who
follow Berkshire who were kind of hoping it wasn't one
hundred percent business as usual.
Speaker 5 (24:42):
You know, Kathy, it's funny that you say that we
only hear from management at the annual meeting, because Caroly
and I have actually spoken to some of the portfolio
companies of Berkshire Hathaway and they kind of say the
same thing. It's really really hands off. At least that's
how their experience has been that seems to well.
Speaker 6 (25:00):
I think, you know, I think one of the management
changes that may give us a little bit of a
glimmer that Greg may have a more a little bit
more of a buttoned up approach is that, you know,
prior to this, you had Warren, and then you had
the two vice chairmen.
Speaker 8 (25:19):
You had Greg who was in charge of all the non.
Speaker 6 (25:22):
Insurance operations, which is a pretty far flung portfolio, and
then a Jet Jane in charge of insurance. And now
Greg has elevated the former NetJets head to cover sort
of the retail and consumer side of the non insurance business.
He's going Greg is going to retain kind of the
(25:43):
energy and industrial portfolio, and then of course you have insurance.
It's still a very far flung enterprise. And I think
an argument can be made to perhaps not have as
decentralawed a management style, take a look at all of
(26:04):
the holdings and see if maybe there are some economies
of scale to be had from maybe consolidating some.
Speaker 8 (26:11):
Of these names.
Speaker 6 (26:12):
I mean, my I wouldn't be surprised if some of
that takes place. But I think we also need to
discuss kind of the the disappointing part of this transition,
and that is Todd Combe's departure, and.
Speaker 8 (26:28):
That for me was kind of the biggest deal.
Speaker 2 (26:31):
In all of this. We want to come you, We
want to come back to you. I agree with you.
When that hit, I was like, wait, what's going on?
And I was also shrina A Rajaan here at Bloomberg
News and I'm like, wait, is this Jamie maybe thinking
about somebody else for his as a successor? And he
looked at me like I was kind of cuckoo. But
I just thought that was such a big move. Kat
remind everybody. We'll go back to Kathy in a moment,
(26:51):
who Todd Combs was at this company. Yeah.
Speaker 10 (26:54):
So obviously they have a massive stock portfolio, more than
two hundred I think eighty billion at the point, and
they were beyond Warren Buffett, who controlled a lot of
the stocks. There was actually two stock pickers, Ted Wessler
and Todd Combs. So by having Todd Coms exit and
go to JP Morgan, they lost a huge amount of
their sort of equity picking prowess. And I think it's
(27:17):
a big move. I mean I think it means, you know,
there's a lot now on ted to be able to
sort of allocate that money. And it's hard these days.
Speaker 2 (27:23):
You know, it's a lot of money to allocate a
lot of money.
Speaker 10 (27:26):
It's so much easier when you're controlling millions, not billions,
and you're actually trying to enter stocks. You know, they
can't even enter stocks that easily without like affecting the
share price, and so they have to be very careful there.
Speaker 8 (27:37):
So I think this is a huge change at the company.
Speaker 10 (27:40):
I'll be very curious to see, like, do they try
and get someone else to Yeah, they bring somebody else
in it, We'll see.
Speaker 8 (27:47):
Yeah, I think there's no clarity there yet.
Speaker 2 (27:49):
Kathy, what do you think do they bring somebody else in?
Speaker 6 (27:52):
Well, so this is the other you know, there's a
couple of other little pieces on the on the chessboard
that we should probably talk about. The other role that
Todd played, and you know, in the near term was
even more critical, was he was the head of Geico.
Speaker 7 (28:08):
And you know, the insurance.
Speaker 6 (28:10):
Business is not a very sexy business, but it's a
real integral part of Berkshire's operations. The industry itself is
at a little bit of.
Speaker 8 (28:18):
An inflection point.
Speaker 6 (28:19):
Ajite Jane is in his mid seventies. So Todd leaving
not only impacts the investment portfolio but also some of
the operating managerial talent at Geico, and that you know,
that's a big deal.
Speaker 8 (28:33):
But it also brings up the point.
Speaker 6 (28:35):
Of I think there are two other sort of drop
a pin in these two topics and see what happens,
And that is, does Ted Wexler stick around? He is
the remaining of the the Ted and Todd that that
cat reference when they brought in some investment help.
Speaker 8 (28:56):
Ted is still there? Does he stick around?
Speaker 3 (28:59):
Number one?
Speaker 8 (29:00):
And number two? Does a Jeet Jane who's in his
mid seventies? Does he stick around? And then what happens?
Speaker 6 (29:07):
So, you know, I think there are obviously there's what
we know right now, but there's a few other I
think areas of potential uncertainty and weakness that I think
the investment community certainly has on their mind at this point.
Speaker 5 (29:22):
To Kat, the big question that everybody has is how
the investments change. And you know, there was a lot
of questions about, okay, well, what is Warren Buffett's interest
in technology? And that question I think was answered with
an Apple investment many at this point, many years ago
but it was seen as the sort of turning point,
and the company still performed incredibly well despite the fact
(29:43):
that it hasn't made a lot of investments in high
flying tech companies that have performed so well over the
last decade. Does that change?
Speaker 7 (29:51):
It's possible to say, well, I mean they were came in.
Speaker 5 (29:55):
Sorry, I just want Kat jump in and then Kathy
will come to.
Speaker 6 (29:57):
You as sologies too many similar names.
Speaker 10 (30:01):
But I was gonna say, yeah, I mean I think
it's you know, I think the technology, they were a
little bit late on it, but they made a lot
of money on Apple, and like I do think, you know.
Speaker 8 (30:09):
There's a chance you could see it change.
Speaker 10 (30:11):
You know, I think based on what we've learned from
Ted and Todd and now just Ted, you know, like
I think some of his investments echo buffets, at least
in the philosophy of like they want to see strong
you know, economic modes.
Speaker 8 (30:24):
They want to see like they.
Speaker 10 (30:25):
Want to see that the company really has some is
undervalued in ways like that they really think it could
increase over the years to come, so like and buy
and hold stuff. You know, I think a lot of
their main strategies will will remain. But whether that means
they'll still venture a little more into tech or not.
I think remains to be seen.
Speaker 2 (30:43):
Kathy just got about thirty forty seconds. One thing I
think about is, you know Warren Buffett, They're so identified
with the company there for a long time there through crises.
He like Jamie Dimond, there's a couple of voices out
there that we all turn to in moments in tough times,
and we even when performance is off a little bit,
we trust because the record is long, wide, deep and
(31:05):
really successful. Do we give greg Abel the same kind
of luxury or does he have to prove himself pretty quickly?
Speaker 8 (31:13):
Well, I think I think.
Speaker 6 (31:14):
Your answer is in the year to day performance of
the stock because I think the shares have been under
pressure because the buffet premium is sort of coming out
of Berkshire Hathaway shares.
Speaker 8 (31:27):
And I think the investment community has.
Speaker 6 (31:29):
A lot of respect for greg Abel, but I think
he also has enormous shoes to fill. So you know,
I think right now it's very much wait and see,
and people are people are being cautious.
Speaker 2 (31:45):
Well, we'll be all over it. This was really fun,
so appreciated.
Speaker 5 (31:48):
The question is do they get a new website, I
hope not.
Speaker 2 (31:51):
Just go there and you'll understand why we said that.
Kathy Seafford, Senior VP Equity Analyst at CFA Research, and
our own Ketcha Glinski, Finance team leader at Bloomberg News.
This is Bloomberg.
Speaker 5 (32:02):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (32:09):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Apple Karplay and Android Auto with the Bloomberg Business Up,
or watch.
Speaker 2 (32:21):
Us live on YouTube.
Speaker 5 (32:24):
Broad comes out. So I want to pull these numbers up, Carol,
you have them in front of your right Yeah.
Speaker 2 (32:28):
Real quickly, let's go to the outlook seize first quarter
revenue about nineteen point one billion. The estimate on the
street is eighteen point forty eight billion.
Speaker 5 (32:35):
That's big.
Speaker 2 (32:36):
Yeah. Let's go to the past quarter, fourth quarter justin
net revenue. That was a beat, eighteen point zero two
billion versus the street estimate of seventeen point four seven billion.
Let me go a little bit more to the Outlook
sees first quarter revenue. We already mentioned that one, and
that one is a beat. We're seeing that stock up
(32:56):
almost seven percent in the aftermarket. Fourth quarter Semi and
solutions revenue eleven point zero seven billion, the estimate on
the street ten point seven four billion, and fourth quarter
just aed EPs, Tim a dollar ninety five a share,
and that is compared to a street estimate of a
dollar eighty seven. So that's about eight cents better than
what the street was expecting.
Speaker 5 (33:17):
Yeah, here's of about three point eight percent, up four
percent in the after hours as we speak. Fourth quarter
adjusted earnings per share for Broadcom beating estimates, adjusted EPs
coming in at a dollar ninety five. This for the
fourth quarter, just a net revenue coming in above estimates
at eighteen point two billion dollars. And Carol, you're also
talking about the outlook, which beat estimates that came in
(33:39):
significantly above estimates. First quarter revenue about nineteen point one billion,
beating estimates of eighteen point four eight billion.
Speaker 2 (33:46):
Yeah, and my apologies, I was looking at Lulu, which
was up like six seven percent in the after markets.
As Tim mentioned, it's now up Broadcom about three or
four percent here in the after market. And it also
looks like Broadcom is increasing its quarterly dividend and regular
quarterly cash dividend of sixty five cents a share from
the previous dividend of fifty nine cents per share. So
(34:06):
that's what we were projecting here at Bloomberg.
Speaker 5 (34:08):
So let's bring back Jake Goldberg. He's had thirty seconds
to look at these numbers. He's senior analysts were Semiconductors
and Electronics with Seaport Research Partners. A beat across the board, Jay,
anything in here not to like?
Speaker 9 (34:20):
So far, so good? Right, it's a good number. It's
not a crazy big blowout, but it's good. You know,
on first blush, everything looks looks fine. You know, I'm content.
Speaker 5 (34:33):
So far.
Speaker 9 (34:33):
We'll people, they say, lak call.
Speaker 2 (34:34):
Looking at commentary here off of the press release quote,
we see the momentum continuing in the first quarter and
expect AI semiconductor revenue to double year over year to
eight point two billion dollars, driven by custom AI accelerators
and Ethernet AI switches.
Speaker 5 (34:51):
So the question Jay, I was going to ask you
before those numbers came out, and it's probably even a
more pertinent question now, is the connection between Broadcom's earnings
and what we see in terms of capex from companies
like excuse me Oracle yesterday, can you make the connection
for us?
Speaker 9 (35:09):
Yeah, So I think there's a big distinction here in
that a lot of what is going on within Nvidia
is sales to neo clouds sort of cloud service providers
other than the big three.
Speaker 5 (35:19):
Yeah, like you're talking about like Core Weak for example.
Speaker 9 (35:23):
Like Core, we even Nebus right and to some degree
Open Ai and we're So there's a little bit of
there's a growing amount of concern about the ability of
those companies to finance their build out. By comparison, most
of Broadcom's customers are very well capitalized. They're big companies
who can if you can afford to design your own chip,
you can afford to pay the bill to actually see
(35:45):
the project through to completion. The one, the one being
exception to all this, of course, is open Ai and
like they have deals with Nvidia and deals with Broadcom to.
Speaker 3 (35:52):
Do their own chip.
Speaker 5 (35:53):
So that's a little bit of a question.
Speaker 9 (35:54):
But certainly there's less of a financing concern tied to
Broadcoms numbers than there is two some of the things
that are going on with in video.
Speaker 2 (36:02):
Hey, that number that they expect AI seven conductor revenue
to double year of a year to eight point two billion.
That's impressive.
Speaker 9 (36:10):
It's a big number. They've talked about that before. Okay,
so that's that's not a surprise, but it's you know,
they're reiterating that guidance. And you know, I'll tell you
one thing that's been interesting this quarter in particular, is
press releases only tell part of the story. There's been
a lot of sort of big after hour swings, and
some of my names this quarter based on commentary during
(36:30):
the call.
Speaker 5 (36:31):
So I'm kind of curious.
Speaker 9 (36:32):
Hocktan, the CEO of Broadcom, is known for having all
kinds of interesting color and saying really interesting, colorful things,
and so I wouldn't be surprised if he has a
few more surprises on the call itself.
Speaker 5 (36:44):
What do you mean.
Speaker 9 (36:47):
He like when he's when he's bullish, he can be
very bullish. We saw that last quarter with them in
the quarter before, you know, back a year ago, nobody
thought Broadcom had an AI story, and he started talking
about it on a call, so many people realize that
not only do they have an AI story, but it's
a massive story. The stock was up twenty percent that day,
and so they're continuing to build on that and he can.
(37:10):
You know, he'll he's very talkative.
Speaker 5 (37:12):
You might say something. I mean, what's remarkable about that
is if we look at the one year, try to mention,
you know, up seventy five percent so far this year, Carol,
it's up one hundred and twenty seven percent from a
year ago.
Speaker 2 (37:22):
Yeah, that's why I like, it's unbelievable. Let's just in
case you're just joining US. Shares a broadcom er up
about two point seven percent here in the aftermarket off
their highs because they've been a little bit higher coming
off of earnings. The big reason that investors are excited
here in the aftermarket has to do with the outlook
for top line growth. We're talking about Broadcom saying it's
(37:43):
his first quarter revenue about nineteen point one billion versus
an estimate on the street of eighteen point four eight billion.
They also expect AI semiconductor revenue to double year over
year to eight point two billion. We've been talking with
Jay Goldberg over at Seaport Research, who said that number
has been out there for but you know, they're reiterating them,
so doubling down if you will. And the fourth quarter
(38:05):
looking backwards net revenue that was a beat fourth quarter
just at EPs. That was a beat. The company also
saying it's his momentum continuing in the first quarter, and
then it raised its dividend by about ten percent from
the prior quarter to sixty five cents. To share top
of mind, then, Jay, what's what's your top question here?
Or do you just want to let Hockten go and
(38:27):
see where he goes?
Speaker 9 (38:29):
Yeah, one on one, I would just let him go
and see see where he takes us. I think the
main things I'm looking out for are what's he going
to say about other customers beyond the ones that they've announced,
what's the timing of some of these ramps for these
new products, and what he sees in the future if
they're going to gain some more customers. I think that's
that's all sort of He said they have a certain
number of customers lined up for this, but there's also
(38:51):
been a lot of chatter this quarter that they may
have won somebody else, like a Microsoft, And so I
want to see if he takes the bait and talks
about that topic.
Speaker 5 (38:59):
You know, I'm looking at that hoc Ten and he's
in his mid seventies right now, early seventies. Yeah, do
we have questions about succession.
Speaker 9 (39:12):
So last quarter he actually said the board had extended
his contract through twenty thirty and he'd accepted. Okay, he
has been instrumental in making this company and what it is.
He's taking it from almost nothing to what it is,
massive company today, and so there was a little bit
of an overhang, Like I think people thought he was
going to retire next year, but he's clearly. I don't
think he's doing it for the money. I think he's
(39:33):
just having too much fun that he's gonna stay with
it until twenty thirty.
Speaker 2 (39:38):
Hey, jay our Dina bass out with us short right
through off of Broadcom and their results, and you know,
she notes that much of the recent buzz around Broadcom
stem from its ties to some of the biggest AI
model providers, and we've been talking about this with you.
Chet chipet maker open Ai signed a packed with Broadcom
for its own AI chip designs, while Anthropic agreed to
(39:58):
use tens of billions of dollars of computing services based
on Alphabet's Google Cloud TPUs. The latter components also rely
on Broadcom designs, helping fuel investor enthusiasm about the chip
makers AI prospects. We've been talking all about this. Do
you want to see Broadcom broaden out or man? They're
playing with you know, the bells of the ball, if
(40:19):
you will. And so they're in a good position.
Speaker 9 (40:23):
I think there's a little bit more broadening they can do.
There's a few more customers they can pick up. But
the Broadcom model for his entire tenure has been focus
on the sort of the biggest customers and just service
them extensively. Right, So you know when they're a big
player in wireless chips and so they're you know, their
main customer is Apple, and they've been there for Apple
(40:45):
for the entire run of the iPhone, and Apple's like,
if you're not Apple, it's hard to get much attention
from Broadcom. I think they're going to replicate that model
here and it's worked so far, and I think I
think again at a couple at a Microsoft, maybe maybe
at an Apple if they ever get into this. But
they don't have to add one hundred more customers, they
don't have to add ten, two or three already is
(41:05):
driving the numbers pretty significantly, all right.
Speaker 5 (41:07):
Jay, We always love it when you hang out with us.
Thanks for taking the time especially on such a busy day.
Jay Goldberg, Senior Analyst Semiconductors and Electronics with Seaport Research Partners.
Speaker 1 (41:17):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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